Retiree health costs weigh on San Francisco 

Melissa Griffin - S.F. EXAMINER FILE PHOTO
  • S.F. Examiner File Photo
  • Melissa Griffin

San Francisco is often rated No. 1. This is the No. 1 place to trick or treat, with the No. 1 city park system and the No. 1 healthiest city for women. Well, we have a new distinction to add to the list.

Last week, a nonpartisan nonprofit called California Common Sense released a study of the retiree health care finances of the 20 California cities with the largest budgets. With a $4 billion liability, San Francisco had the distinction of having the largest unfunded retiree health care debt on the list and zero dollars put away to pay for it. Even Bakersfield looks good by comparison. Our first-place finish might have something to do with the fact that the city and county of San Francisco employs more people than most cities.

You might think that we solved this problem by voting for Proposition B in 2008. That proposition required employees hired after July 10, 2009, to pay 2 percent of their salaries and San Francisco to pay 1 percent of employees’ salaries into a new trust fund to cover retiree health costs. (I should mention that in exchange for endorsing Prop. B, all city employees received a pension increase.) That 3 percent amount should be enough to cover the health care of those new employees, but the $4 billion debt we owe for folks hired before that date is unabated.

Even right in the voter guide for Prop. B, the city controller wrote, “There is a substantial unfunded liability, estimated to be approximately $4 billion in total, for the future cost of retiree health benefits that current employees have already earned. That liability is somewhat reduced by the proposals in this Charter amendment which address future hires, but the bulk of the cost, estimated at between $250 [million] and $300 million annually at current rates, will have to be otherwise addressed by the City.”

Or as the California Common Sense study put it, “Prop B is still insufficient in addressing the city’s unfunded liability. This plan might have been effective had the city not already accrued a large unfunded liability.”

So how did we get here? San Francisco uses a “pay as you go” system whereby we use today’s dollars to pay for today’s retirees, instead of having put money away back when we promised those retirees lifetime health care benefits. That failure to fund the program at the time the union contracts were signed means that we never earned interest or dividends from any money put aside.

And you can put the blame squarely on the elected officials who have failed to properly fund retiree health care (along with infrastructure maintenance), much to the detriment of the financial health of this city.

The one official who has consistently worked to keep the city finances in check is Supervisor Sean Elsbernd, who was the architect of Prop. B in 2008 and also pension reform Proposition C in 2011. He is termed out at the end of this year, but has one more contribution to make.

At Tuesday’s Board of Supervisors meeting, Elsbernd said he plans to introduce legislation that would require the controller to include the amount of The City’s retiree health obligation in the annual revenue letter. The purpose of the legislation is to shed light on the $300 million or so that we accrue each year in unfunded retiree health liability because, Elsbernd said, “You’re not going to get anywhere unless there’s a common agreement on what the problem is.”

And the problem is that when it comes to avoiding reality, our City Hall is No. 1.

U.S. House might put cellphone labels on hold, but court is diving in

U.S. Rep. Dennis Kucinich, D-Ohio, introduced the Cell Phone Right to Know Act on Friday. The bill would allow labeling on phones and establish a program to study the effects of cellphones on users. The bill has already been assigned to the House Energy and Commerce Committee, where wireless providers and an industry group named CTIA-The Wireless Association have contributed to a bipartisan majority of the members and been especially generous to committee chairman Rep. Fred Upton, R-Mich.

In 2010, a state representative from Maine tried to enact legislation that would have put radiofrequency warnings on cellphones, but her colleagues in the statehouse wouldn’t go along, leaving San Francisco as the only place where such a law was actually passed. Of course, it has never taken effect because the CTIA got a federal court to temporarily prevent the labeling until the association’s legal challenges to the law can be sorted out. Some two years later, the matter is still being litigated and a big hearing before the 9th U.S. Circuit Court of Appeals is scheduled for today at 9 a.m.

Showing remarkable timing, the Government Accountability Office released a report July 27 
criticizing the Federal Communications Commission for not updating its radio-frequency exposure limits since 1996.

Though the FCC was quick to point out that the report “finds that scientific research to date has not demonstrated adverse human health effects of radiofrequency [RF] exposure from mobile phone use.”

I’m sure the city attorneys defending our local ordinance will wave the new report at today’s hearing, where, unlike with the House committee, the law will be given an impartial hearing.

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Melissa Griffin

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