Wednesday, February 3, 2010

San Francisco's Budget Nightmare May Mean Retirement Payment Cuts for SF Government Employees

SF government employees are likely to see huge cutbacks in their retirement plans. The numbers don't work any other politically feasible way, not that cutting retirement payouts will be a favorite among government employees, but it is the choice that city leaders will be forced into making, even if their heads are in the fog .

SF Gate explains the problem:
San Francisco's enormous budget deficit for the coming fiscal year has swelled even more in recent weeks due to poor performance by the city's retirement investment accounts and bleak budget news from Sacramento.

The projected deficit for the 2010-11 fiscal year had been $522 million, of which Mayor Gavin Newsom shaved off more than $20 million through his recent midyear cuts. But that small dent has already been negated by news the city must pay $20.7 million more into its retirement system next year than anticipated.

The city planned to contribute 12.1 percent of its total payroll to the retirement system, but the investments are performing so poorly it must instead pay 13.6 percent.

And that's the relatively good news. The same actuarial projections show the city must pay an even bigger percentage every year for the next several years, topping out at 27.3 percent of its total payroll in 2014-15. That's equal to a one-year contribution of $675 million - or more than it takes to run San Francisco General Hospital for a year, said Supervisor Sean Elsbernd.


1 comment:

  1. Reality bites!
    Maybe this is why Newsum dropped out of the governors race. Its difficult even for a progressive to persuade the voters that he has the answers to California's state government budget deficits when he can't even handle the budget for one of its cities.