PropA6 VOTE NO ON PROP A --- Charter Amendment, Retired Health Care Trust Fund WHY? Because it permits and promotes raiding of the Retired Health Care Trust Fund and violates employees’ rights Background: What is the Retired Health Care Trust Fund? It’s a City and County of San Francisco Charter-mandated Trust Fund, to cover the employer’s obligation to pay for retired health care benefits for all beneficiaries. Beneficiaries are active, working employees… whose retiree health care costs will be spent when they retire… and existing retirees’ health care costs. Active employees and the employer (such as the general City, County, and Unified School District) contribute to the Trust Fund. Their combined contributions are invested; earnings accumulate until the Trust Fund has enough to pay 100% of the retired health care costs, or is fully funded. The accumulation period is called the interim phase. It’s estimated that it will take about thirty years from inception for the Trust Fund to reach fully funded status. In the interim phase, the employer budgets and pays its share of the existing retirees’ health care costs from the general fund on a pay-as-you-go basis. And the Trust pays only its basic administrative costs and, as of 2020, only minimal retiree health care costs. Prop A amends and dramatically changes the existing Trust Fund expenditure rules during the interim phase. And it leaves, untouched, the worst aspects of the original Charter provisions. Raiding the Trust Fund Prop A adds “stabilization” provisions that allow the employer to take….not borrow… Trust Fund money to pay existing retirees’ health care costs. While this “take” does not, of itself, violate the Trust Fund’s purpose…to cover retiree health care costs…it does relieve the annual general fund of its usual obligation to pay these costs. As a result, so-called “savings” are created in the general fund, which the politicians can then divert to pay for anything they want. So, in a round-about-way, the purpose of the Trust is violated. And the employees’ Trust Fund contributions, plus accumulated earnings thereon, are stolen for non-retiree health care purposes. Any limitations on how much can be raided from the Trust? Very few. Sections, A8.432 (d)(2) and (d)(3) apply. (d)(2) says that when “total City retiree health care costs”, defined as the sum of the employer’s existing retirees health care costs and its contributions to the Trust Fund, exceed 10% of the “City payroll costs“ in the coming fiscal year, the employer can tap the Trust Fund for a cap of 10% of those City payroll costs. Some Prop A proponents say that would happen only if the City were in awful fiscal shape. (San Francisco is not like Detroit!) But we don’t have a handle on how “total City retiree health care costs” compare to “City payroll costs” historically or prospectively. (d)3 is one open door to limitless raiding. It says that regardless of any other Trust provisions, such as (d)(2), “different limitations” may apply. “Different limitations” are totally unexplained! The only caveat in developing “ different limitations” is that the desirability of a fully funded Trust Fund should be subservient to the employer’s overall financial obligations. (!!!) What is the stabilization process; what are the “approval” mechanisms? A8.432(d)(2) and (d)(3) are similar in the following ways. The controller, in consultation with a governmental accounting standards board actuary (AKA, a GASB actuary) develop a recommendation, which goes to the mayor, board of supervisors, and Trust Fund board for approval. (d)(3) requires a 2/3 “for” vote from the board of supervisors and (d)(2) only a majority. Prop A proponents hail this process as gold standard democracy. Notice, however, that employees are completely left out of the process, which exacerbates the existing Charter provision, left unchanged, that employee organizations cannot negotiate employee contribution rates except to increase them. Also, the mayor appoints the controller, so independent judgment there is questionable. The board of supervisor members are famous for developing fiscal knowledge only for the projects they want, and the Trust Fund board is comprised of three management positions: the City controller (!), the City treasurer, and the executive director of the San Francisco Employees’ Retirement System, and only two elected employee representatives (one is an active employee, the other is a retiree.) Any limitations as to when stabilization can be used? No. Prop A proponents say that stabilization is to be used only in fiscal emergency situations, when the employer is almost broke. But Prop A does not say this, anywhere. Given that the Trust can be raided, almost at will, at any time…what about shortages in the Trust Fund? If the shortages are not made up, the prospective fully funded date will be extended…maybe never reached at all. That is, unless the employer cons the employees into increasing their contributions to the Trust. What are the other inequities, not mentioned above, that Prop A leaves untouched from the existing Charter? During the interim phase, employees hired on or after January 10, 2009 contribute 2% of salary to the Trust Fund, the employer contributes only 1%. After fully funded status is reached, employee contributions to the Trust Fund continue; the employer’s contributions stop. VOTE NO ON PROP A! VOTE NO ON PROP A! VOTE NO ON PROP A! …………………………………………………………………………………………………………………………………………………….. NO ON A ENDORSERS: SF Green Party . SF Grey Panthers . United Public Workers for Action . SF Employees and Retirees for Responsible Governance . SF City Retiree, Earl Gilman, El Nuevo Topo*, SF Grey Panthers Eboard . Bea Cardinas Duncan, past President-SEIU 1021 Retirees Chapter* . SF City Retiree Vernon Duncan, past President SEIU 1021 Retiree Member Council* . Kay Walker, past President SEIU 535 City Workers Chapter*, Retired Social Worker . SF City Employee Sylvia Lynch, member Groupo Presente* . SF City Retiree Denise D’Anne, SF Grey Panthers-E board* . SF Retired Accountant/Auditor, Jean Thomas, retiree activist . Steve Zeltzer, Labor Video Project* (partial list) * For identification purposes only Labor donated – in house
Posted on: Sun, 29 Sep 2013 21:55:55 +0000
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