Photo: Alain Picard via Flickr
San Francisco’s public pension crisis is way worse than many thought, according a new study from Stanford professor Joe Nation.Here are some highlights from the report:
- The San Francisco Employees Retirement System (SFERS), which covers most of the city’s municipal workers,faces an unfunded liability of $4.4 billion on a market value basis. That’s nearly $35,000 per every San Francisco household.
- SFERS’ reported liability is based on an optimistic 7.75% annual rate of return. If the 1990-1999 historical average rate of return – 6.2% – is used, the city’s unfunded pension liability grows to $6.8 billion.
- The city also reports more than $4.364 billion in unfunded retiree health care costs. That figure will likely grow to $9.5 billion by 2028. Without major policy changes, “the probability of San Francisco meeting its unfunded health care obligation is zero.”
- The city now spends $514 million on pension and healthcare. By 2016, that cost is likely to balloon to $1 billion – more than the police department, fire department, sheriff’s department, DA’s office and probation departments combined.
The report concludes that the only way San Francisco could even begin to dig itself out of its pension hole is through serious pension reform – namely, increased employee contributions. The city’s labour unions, however, have made it clear that any changes will meet stiff resistance.
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