Category Archives: Elsewhere in America

San Francisco public defender: pension reform is a progressive cause

I popped into San Francisco the other day, its windswept sky deep cerulean, the streets and sidewalks a high-voltage chiaroscuro, the coffee at Trieste Café like something in a barrel depending from the neck of a bear-sized dog that finds you buried in the Alps.

I had hoped to drop in on Jeff Adachi, for 10 years that city’s public defender, and now one of California’s most important politicians: a progressive Democrat who is fighting for pension reform in one of the nation’s most liberal cities. We spoke later by phone.

“What got me focused on the issue of pensions was that I saw, year after year, basic services slashed at the same time our pension costs were going through the roof,” Adachi says. “In San Francisco, four years ago, we saw annual pension costs under $175 million; now they’re close to $500 million, and we’re paying for that through drastic cuts in many of the city’s progressive institutions and services.” In four more years, he says, “that number will grow to $800 million.” The city owes another $4.6 billion in unfunded healthcare liabilities for current and retired workers.

He doesn’t oppose pensions in general. “The idea of a pension, I think, is a good idea, and the reforms I’ve proposed would protect the system from total failure.” Without reform, he says, San Francisco will end up the worst of both worlds—with neither social services nor the pensions promised retired workers.

Adachi’s reform proposals are indeed modest, depending as they do primarily on a requirement that employees pay into the system. “I saw it as way to preserve the system by insuring it was properly funded,” he says. “Otherwise, they’re going to run out. We saw that in Vallejo, which went bankrupt three years ago.”

With that sort of evidence widely available, why has it been so difficult to reform the system? “Labor unions have steadfastly taken the position that pension reform is not a progressive issue,” he says. Then, too, there’s been the successful political tactic, popular among those unions and the lawmakers they support, of “simply pushing pension costs into the future. Now, of course, they’re coming home to roost.”

Labor has been especially hard on Adachi. Last summer, when the public defender showed up at the funeral of a city firefighter, union members, offended by his pension reform proposal, asked him to leave. When he was asked a second time, he obliged.

A few months later, San Franciscans went to the polls and crushed Adachi’s reform measure, supporting the union’s measure in what the San Francisco Chronicle called “a surprisingly easy victory.”

“The reality,” says Adachi, “is that if we don’t fix this problem, we’re going to see cuts in every social service.”

That makes pension reform a progressive issue. “If progressives don’t insure that that government finances are sound,” Adachi concludes, “we’ll see the dismantling of everything we’ve fought hard to implement.”

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Beyond Costa Mesa: The pension fight has legs, walks upright

Even as local union leaders tell you there’s no pension crisis in Costa Mesa, evidence mounts that it’s real (the pension crisis is)—and that Costa Mesa is merely a microcosm of a much larger, global problem.

You could go to Europe, where similar financial disasters have jeopardized national governments. Or consider wee Rhode Island: In a meeting there last week, “the mayors of nearly every city and town” in the state asked Gov. Lincoln Chafee “for greater authority to suspend automatic pension increases and make other changes to reduce rising pension costs.” A few days later, the Associated Press reports, the governor met with public employee union leaders who threatened a lawsuit if Chafee moves unilaterally to reform the pension system.

Like California, Rhode Island has problems. Last summer, Central Falls, RI, was placed in receivership. Local officials throughout the state, facing a massive $2 billion in unfunded pension liability, worry that they’re next.

Rhode Island’s AFL-CIO president has a solution: he recommends raising taxes on Rhode Island’s rich.

But that suggestion doesn’t take into account new technology that would allow high-income individuals to avoid that tax: legs.

Legs first became popular some 3.2 million years ago. Today, they’re developed in utero, and almost everybody has a pair. Indeed, the typical human baby is “able to stand holding on to something when he’s between six and 10 months,” the capital liquidity site babycentre.co.uk reports. ”From then on it’s a matter of gaining confidence and balance.”

Confidence, balance and a motive: Now widely available, legs allow anyone—even the rich—to avoid situations they find unpleasant.

Chafee may have had legs in mind when he observed that it might be easy to assess but difficult to collect higher taxes. The governor, “who has said he is open to considering tax increases this year, said an income tax hike could backfire if high earners leave the state,” the Associated Press reported.

“I’m open to all suggestions,” Chafee said, “but that’s a huge fear I have.”

SF firefighters boot pension reformer from funeral

San Francisco public defender and pension reform advocate Jeff Adachi (see his speech on the subject here) is a progressive who favors pension reform. No surprise that his “efforts to force city workers into contributing more to their pension and health care benefits has made him persona non grata–especially among police and firefighters.” Firefighters asked Adachi to leave the Friday funeral of two firefighters killed in a recent house fire. Read the rest of the SF Chronicle story here.

State prison guards union block reform

“By taking advantage of a decades-old bidding war between Democrats and Republicans, all of whom want the union’s endorsement in order to appear tough on crime, the union has resisted any reform that would reduce costs in the state’s prison system.” Former Register editorial writer Steven Greenhut says the state’s powerful prison guards endeavor to jail as many Californians as possible–a kind of job insurance. Total cost to taxpayers: approximately $47,000 per prisoner per year, or about the cost of sending someone to the University of Southern California for one year. Read more of Greenhut’s City Journal article here.

A progressive’s response to the pension crisis

We’re at a crossroads: we can support the services that make cities, counties and states livable, or we can continue to fund pension and healthcare programs demanded by public employee unions–but not both.

In winning the pension and healthcare benefits they have, the union leaders did what they’re supposed to do: they persuaded local leaders–Democrats and Republicans–to give union workers the highest possible incomes. But they also put Costa Mesa on the hook for something that’s simply unsustainable.

Today, the city is running out of cash, and two options are on the table–massive cuts in city services and a reduction in badly needed capital investments, on the one hand, and rising pension and healthcare benefits, on the other. But the leadership of the Orange County Employees Association is playing a game of chicken, betting that its relentless misinformation campaign will undermine the city’s political will to balance the budget. If the union leadership wins–if the city’s elected leaders sign off on unsustainable pension and healthcare programs for city employees–their victory will be short-lived: Costa Mesa will follow other local governments into real financial crisis, and then the union’s members will have neither their jobs nor the sustainable community we know they want to create.

This is not an observation that originated in the high-tech laboratories at RCM World Headquarters. Here’s San Francisco Public Defender Jeff Adachi on the same theme, a year ago:

Adachi was part of a progressive San Francisco coalition that attempted to reform (if only modestly) that city’s pension program, a coalition that included “included Willie Brown, a Democrat who was mayor of San Francisco from 1996 to 2004 and speaker of the California State Assembly from 1981 to 1995, and the Green Party’s Matt Gonzalez, former president of the San Francisco Board of Supervisors and Ralph Nader’s 2008 vice presidential candidate.”

Then, too, there’s this threat from the Right: if progressives can’t see the truth of what’s plain to everybody else, conservatives who come naturally by their hatred of government will use the pension crisis as a wedge issue. They’ll persuade critical swing voters to their side. And they won’t stop with pension reform.

 

 

Brea beats CM to two-tier pensions

While we’re all mesmerized by sexy, sunny Costa Mesa, Register columnist Frank Mickadeit was in Brea days ago watching the city council there drop pensions for new hires to  2 at 50–in layman’s terms, a pension formula that allows city employees to retire at 50 years of age with 2% of their most recent salary multiplied by the number of years served. A $100,000 city employee with 30 years of service would clock in at $60k per year, plus full health benies, until he goes into a fast-moving creek to retrieve his golf ball and ends up floating face down in the mighty Santa Ana River, still clutching his nine-iron and, it seems to go without saying, still sans the Titleist (which he insisted until his recent death on pronouncing “tit-lee-ist”).

“Councilman Marty Simonoff, a former cop, indicated he thinks the lower rate is fair, recalling that in 1973, ‘we were quite thrilled to get 2-at-50,'” Mickadeit reported.

In Costa Mesa, meanwhile, the same employee would pull down $90k until death. That’s a good reason to live.

Atherton considers outsourcing city work

Leaders of the union representing Costa Mesa city employees often assert that outsourcing city jobs is either unworkable or even “prohibited under California law.”

Costa Mesa “hasn’t even looked at the consequences of outsourcing,” Orange County Employees Association spokesperson Jennifer Muir told the Daily Pilot in March. “If you have a leaky roof, you don’t demolish the house; you fix the roof. This is to advance a political agenda.”

Other cities have, in fact, looked at the consequences of outsourcing, and they’ve determined it’s precisely the way you repair metaphorically leaking roofs. *

The Bay Area city of Atherton “could outsource its public works and building departments as it looks to erase a nearly $1 million budget deficit,” the San Jose Mercury News reported. “Atherton is facing an estimated $900,000 budget deficit in the 2011-12 fiscal year, largely because of rising employee health and pension costs and declining property tax revenue. Its general fund reserves will be exhausted by 2015 if changes aren’t made, according to a five-year financial forecast.”

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* The March 17, 2011, Daily Pilot article cited here (“City’s layoff action ‘like a sinking boat’) is problematic in that it’s not the city’s plan to lay off employees in order to outsource their jobs that is anywhere compared to a foundering seagoing vessel, but the city itself, and then not merely by a city employee but the city councilman who ordered the pink-slipping. In any case, the article has to to have established some sort of record for Public Utterances of Analogies in  a Single Place. In addition to Muir (“leaky roof”), a city mechanic compared Costa Mesa with “a sinking boat,” a nautical image that seemed simultaneously to have captured things for Councilman Steve Mensinger, who said the outsourcing plan was one among many “plausible options to fiscally right our ship.” Mensinger then said the council has to act now because (shifting metaphors here), “We’ve come to the end of the road,” and because (shifting them again), “We can’t kick the can any longer”–though it’s arguable the “end of the road” cliche and the game of “kick the can” are etymologically related. Another city mechanic said the council majority’s willingness to issue pink slips before the outsourcing option had been thoroughly studied put “the cart before the horse,” an observation that is true but required (the cart before horse, that is) by the union contract, an agreement that binds the employer (the city) to give its employee six months’ notice of its intention to lay off the employee. So, sure, the city did indeed place its conveyance oddly ahead of its equinic power source, but only because the union wished it so. In other parts of the world, especially at the management level where union protection is rare, a different policy prevails–the policy of being handed a lightweight cardboard box that might once have held HammerMill® Copy Plus Copy Paper and being told you have 15 minutes to clear out your office while an uncomfortably silent and awkward corporate security officer or HR director watches to make sure that you don’t use that moment to dash off a hasty, poorly conceived and angry email for general distribution or make off with the team playbook.

San Ramon workers will take unpaid furlough

“SAN RAMON — City employees will have to take unpaid furlough days, pay more into their pensions and continue to work without raises — all cost-cutting measures San Ramon plans for the coming fiscal year. […] Mayor Abram Wilson praised city staff for being understanding about the furloughs and for continuing to do more work with fewer people and no raises.” Read the rest of the San Jose Mercury News story here.

Detroit downshifts pension costs

Costa Mesa could limit internal bleeding by instituting a two-tier benefits system today–that is, providing new hires with pension and healthcare plans that are far less expensive than those offered to existing and former employees. Even lowly Watsonville (the city that brings you Martinelli’s sparkling apple cider) has figured that out.

In Detroit, where the union has accepted severe cuts to current employees’ benefits, union leaders see two-tier as a way of saving jobs and city services. Teamsters Local 214 president Joe Valenti told the Detroit News “he’s open to some changes in pensions such as instituting a two-tier system in which the terms change for new employees, for example, because ‘that doesn’t hurt the people who are here now, and those are the jobs that we’ve got to protect now.'”

Valenti’s remarks came after Detroit Mayor Dave Bing won “$60 million in concessions last week from the city’s two pension systems,” the Detroit News reported. “[B]ut officials still want to trim costs that threaten to engulf the city.”

As in Costa Mesa, pension payouts in Detroit “now amount to 25 percent of the city’s $1.2 billion general fund this year and would grow to 50 percent by 2015 if structural changes are not made.”

Ventura high why? Pension spiking!

Pension spiking–the tactic of artificially raising public-employee retirement benefits through last-minute pay increases–costs Ventura County $42 million per year for just 335 former employees, according to the Ventura County Star.