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San Francisco County, CA March 5, 2002 Election
Proposition B
Cost of Living Benefits
City of San Francisco
Charter Amendment - Majority Vote Required

11,183 / 55.44% Yes votes ...... 8,990 / 44.56% No votes

See Also: Index of all Propositions
Information shown below: Summary | Fiscal Impact | Yes/No Meaning | Arguments |

Shall the City change the way it pays cost of living increases to retired employees?

Summary Prepared by San Francisco Department of Elections Voters Information Pamphlet:
The way it is now: The City has a retirement system which makes investments and uses the investment earn-ings to pay retiree pensions. The retirement system also pays for an annual cost of living adjustment (or "COLA") for retired employees. The COLA adds about 2% to the origi-nal pension each year. (For example, a retiree receiving $1000 a month in the first year, would receive $1020 the next year, $1040 the next, and $1200 after 10 years.)

Each year, the retirement system estimates investment earnings for the year. If the actual earnings exceed the estimate, the "excess" earnings are used to increase the COLA from 2% to 3% and the COLA is compounded. (For example, a retiree receiving $1000 a month would receive $1334 a month after 10 years.) The "excess" also increases the pensions of long-term retirees.

This 1% increase to the COLA is not permanent. In any year when there is not enough money to increase the COLA, the benefit paid to retired employees is calculated as if the annual 1% increase to the COLA had never been paid. (For example, the retiree receiving $1334 a month after 10 years now would receive $1200 a month.) Also, the pension increases to long-term retirees would end.

The Proposal: Proposition B is a Charter amendment that would change the way the City pays cost of living increases to retired employees. Any 1% increase to the COLA would be permanent. In any year when there is not enough money to increase the COLA, the retirement bene-fit would continue to be calculated based on past increas-es to the COLA. The pension increases to long-term retirees would continue.

Fiscal Impact:
City Controller Edward Harrington has issued the following statement on the fiscal impact of Proposition B:

Should the proposed amendment be adopted, in my opinion, the cost to the City and County would increase, as estimated by the Retirement System Actuary, by about $19.1 million per year for the next 20 years, dropping after 20 years to an ongoing cost of approximately $7.4 million per year. However, no cash would be required since the City's Retirement System has a large surplus. While the cost of this proposal would reduce that surplus, the City nonetheless would not be required to make employer con-tributions to the Retirement System for approximately the next 15 years. Towards the end of the estimated 15 year period, this proposal may contribute to bringing forward the time at which City contributions to the Retirement System would be required.

Meaning of Voting Yes/No
A YES vote of this measure means:
If you vote yes, you want to make these changes to the way the City pays cost of living increases to retired employees.

A NO vote of this measure means:
If you vote no, you do not want to make these changes.

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Arguments For Proposition B Arguments Against Proposition B
Our City retirees are facing a financial crisis! Over 14,000 City retirees, many who are over 80 years of age with average pensions of less than $1000 per month, face cuts of up to $700 and more per year from their current pensions unless Proposition B is approved. Proposition B doesn't require the City to pay any additional tax dollars for many years because over $1 billion in surplus funding exists in the Retirement System to meet pension obligations. Proposition B keeps City pensions in line with other government jurisdictions. Proposition B does not increase current pensions. Proposition B will avoid the prospect that many older retirees will suffer a severe decline in the pensions they currently receive. Proposition B is fair both to retirees and to the City. It protects elderly retirees from the severe financial hardship that will result from a significant decrease in their current pension benefits. These cuts for many pensioners on fixed incomes can only increase the serious problems that the elderly face in dealing with rising costs of daily necessities, trying to find a way to pay for costly drugs and medical expenses, and having their HMOs withdrawing medical services. And it doesn't cost the

City additional tax dollars! Vote Yes on Proposition B. It is fair to the City. It is fair to the City's retirees.

Supervisor Tom Ammiano Supervisor Chris Daly Supervisor Matt Gonzalez Supervisor Tony Hall Supervisor Mark Leno Supervisor Sophie Maxwell Supervisor Jake McGoldrick Supervisor Gavin Newsom Supervisor Aaron Peskin Supervisor Gerardo Sandoval Supervisor Leland Yee

How Supervisors Voted to Submit this Argument

The Supervisors voted as follows on December 17, 2001:

Yes: Ammiano, Daly, Gonzalez, Hall, Leno, Maxwell, McGoldrick, Newsom, Peskin, Sandoval, Yee

Rebuttal to Arguments For
REBUTTAL TO PROPONENT'S ARGUMENT IN FAVOR OF PROPOSITION B BAY AREA LINCOLN LEAGUE (" BALL") OPPOSES PROPOSITION B. Your Bay Area Lincoln League (" BALL") nominees oppose B (Retirement System Overspending). Read REBUTTAL OF PROPOSITION G OPPONENT (below). VOTE "NO" ON PROPOSITION B. Your BALL Central Committee nominees urge all Republicans to vote AGAINST Proposition B (Overspending). VOTE REPUBLICAN!

-Dr. Terence Faulkner, J. D. -Gail E. Neira Past San Francisco Republican Republican State Assembly Party Chairman Candidate

PROPOSITION B IS UNSOUND FROM AN INSURANCE VIEWPOINT: The San Francisco Republican County Central Committee met with City Retirement System Actuary Kieran Murphy on December 13, 2001. They voted to oppose Proposition B. The extra 1% cost of living adjustments being requested in Proposition B are financially unsound over the long term. This new "COLA" will have some serious negative results over the years and decades ahead. WHAT IS WRONG WITH PROPOSITION B?: In a December 10, 2001 letter, City Controller Edward M. Harrington pointed out the financial impact of the proposed Proposition B:

"Should the proposed [Charter] amendment be adopted, in my opinion, the cost to the City and County would increase... by about $19.1 million per year for the next 20 years, dropping after 20 years to an ongoing cost of approximately $7.4 million per year." From an insurance viewpoint, Proposition B is financially unsound.

Committee To Improve Local Government. Dr. Terence Faulkner, J. D. Past County Chairman of the San Francisco Republican Party

Rebuttal to Arguments Against
Proposition B corrects a flaw in the city charter that could result in already granted pensions being reduced if Retirement System's investments don't greatly exceed estimates. What kind of insurance cuts the pension of a 75 year old widow by more than 10%? That's just not fair or equitable -but it can happen if Proposition B isn't approved. For the past 5 years all revenues of the Retirement System have come from employee contributions and from investment income. The City hasn't contributed because the System has a large surplus. And that surplus, according to the Retirement System and the City Controller, should be sufficient to spare the City from contributing to costs of Proposition B for the next 15 years or more. According to the Controller's statement: "... no cash would be required since the City's Retirement System has a large surplus." Respected City fiscal experts such as former Treasurer Mary Callanan, former CAO Rudy Nothenberg, former Controllers John Farrell and Sam Yockey, former Tax Collector Richard Sullivan, all support Proposition B as a sound fiscal investment that is fair to retirees and is not costly to the City.

Proposition B does not increase existing pensions. It's about fairness and protecting elderly pensioners from losing a significant portion of their current income at no cost to City taxpayers for many years.

Supervisor Jake McGoldrick

How Supervisors Voted to Submit this Argument Supervisor McGoldrick submitted this rebuttal argument on behalf of the Board of Supervisors.

On December 17, 2001, the Supervisors voted as follows to authorize Supervisor McGoldrick to prepare and submit the rebuttal argument on their behalf.

Yes: Ammiano, Daly, Gonzalez, Hall, Leno, Maxwell, McGoldrick, Newsom, Peskin, Sandoval, Yee

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Created: April 19, 2002 10:59 PDT
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