San Francisco's tab for public pensions may jump by $80M 

San Francisco’s pension bill will increase by tens of millions of dollars.

The San Francisco Retirement Board was scheduled on Wednesday to reconsider a controversial decision made last month to lower its projected rate of return on its pension fund investments from 7.75 percent to 7.50 percent. But the board ended up leaving the rate at 7.50.  

That means The City’s pension contribution and those of city workers will increase more than expected. The board will phase in the new rate over three years. The City’s pension bill could increase by $80 million in three years, beginning at a $25 million increase next fiscal year, according to board member Victor Makras.  

The decision to lower the rate was supported by Supervisor Sean Elsbernd, who sits on the Retirement Board. Elsbernd said going with the more conservative estimate was the fiscally responsible thing to do.

The rate change was criticized by labor leader Bob Muscat, who, after Wednesday’s meeting, said, “We don’t think it’s necessary. We’re disappointed.” He said it could mean layoffs.

The decision comes at a sensitive time for labor unions. Twenty-seven labor contracts are up for negotiation this fiscal year, and larger deficits mean increased pressure for greater labor concessions. Before the board lowered the projected investment return rate, the deficit projection was $263 million for the fiscal year beginning July 1.

Mayor Ed Lee now faces a tougher budget challenge.

“Mayor Lee is of course concerned about the impact of what this means to The City’s general fund and city services,” Lee’s spokeswoman Christine Falvey said. “He will be working hard to find greater efficiencies, enter into public and private partnerships and continue to attract jobs and businesses to The City to offset the impact. The budget for the next fiscal year is being developed now, and this is one of many challenges.”

jsabatini@sfexaminer.com

Correction: This article was corrected on Jan. 12, 2012. A previous version of this article incorrectly stated how much the pension costs will increase. The costs will increase by $80 million in three years.

Pin It
Favorite

More by Joshua Sabatini

Latest in Government & Politics

Saturday, Feb 17, 2018

Videos

Most Popular Stories

© 2018 The San Francisco Examiner

Website powered by Foundation