A San Francisco civil grand jury warned today that the already financially beleaguered city faces a possible tsunami of pension and healthcare costs that could reach nearly $1 billion per year in five years.
“San Francisco is at the edge of a precipice,” said Craig Weber, an accountant who headed the 2009-2010 grand jury committee that wrote the report released today.
The report, titled “Pension Tsunami: the Billion Dollar Bubble,” says serious reform is needed to prevent pension costs from causing deep cuts in city services over the next several years.
“The increase in pension costs cannot be sustained in San Francisco without serious cutbacks in services and loss of jobs,” Weber said at a news conference.
The report, using figures from the city controller’s office, estimates the costs of retiree pensions and health insurance will rise from $413 million in the current fiscal year to nearly $1 billion five years from now.
The increase would be due to generous pension measures passed by voters, contracts negotiated between the city and union workers, and inflation in health care costs, the report said.
The city pays about 61 percent of these costs from the general fund each year to make sure its multibillion-dollar pension fund is adequately financed and to cover the inflationary health benefits.
The cost to the general fund is therefore expected to increase by about $60 million per year to a total of nearly $600 million within five years, the report says.
The report also says that while most of the city’s 23,175 current retirees receive “a modest pension after many years of service,” about 900 are receiving pensions of more than $100,000 per year. The majority of these are former police officers and firefighters.
The report has no legal standing, but Weber and other grand jury members said they hope it will cause city officials to work on reforms.
San Francisco Firefighters Local 798 President Thomas O’Connor said that while the safety workers’ pensions are a “generous benefit,” firefighters and police officers have shorter life expectancies than other city employees because they suffer job-related cancer, heart disease and respiratory problems.