Proposition A

Retiree Supplemental Cost of Living Adjustment

Would eliminate the full funding requirement for supplemental cost of living benefit payments to members of the San Francisco Employees' Retirement System who retired before November 6, 1996, subject to a monthly monetary cap for retirees and their beneficiaries. Proposition A requires a simple majority (50% + 1) to pass.

Fiscal Impact: Would result in expected costs to the City of approximately $8 million annually for ten years, of which $5 million would be paid from the General Fund.

Next San Francisco County Measure: Proposition B

See Endorsements for Proposition A

Background

1. Supplemental Cost of Living Benefits for Members who Retired Before November 6, 1996. For many years, retirees have been entitled to a "basic" cost of living adjustment. At the November 6, 1996 election, the voters adopted a "supplemental" cost of living benefit for retirees. At the November 8, 2011 election, the voters added a "full funding" requirement to the supplemental benefit, meaning that, to pay supplemental cost of living benefits, SFERS had to be fully funded based on the market value of the previous year's assets. That requirement was challenged as an unconstitutional impairment of a vested contractual right. In Protect Our Benefits v. City and County of San Francisco (2015) 235 Cal.App.4th 619, the Court of Appeal held that the full funding requirement could not be applied to current employees or to those who retired on or after November 6, 1996, but could be applied to those who retired before November 6, 1996. This amendment in essence overrides the Protect Our Benefits decision as to members who retired before November 6, 1996, allowing them to receive supplemental cost of living benefits even if the full funding requirement is not satisfied - except that in years when that requirement is not satisfied, the supplemental cost of living benefit is capped at $200 per month for this group of retirees (and their qualified survivors and beneficiaries) if their gross monthly pension allowance exceeds $4,167 (the equivalent of $50,000 yearly). And SFERS will adjust the base allowance for this group to account for supplemental cost of living adjustment payments not received in 2013, 2014, 2017, 2018 and 2019, as a result of the full funding requirement (subject to a $200 monthly cap for those receiving a gross monthly pension allowance over $4,167).

2. SFERS Executive Director Contract. Due to the complexity of the executive director job and the expertise/experience required, as well as the desire to recruit the highest quality candidates, the amendment authorizes the Retirement Board in the future to enter into individual contracts with executive directors.

Amendments to Current Law

1. Supplemental Cost of Living Benefits for Members who Retired Before November 6, 1996. The amendment:

  • eliminates the full-funding requirement for members who retired before November 6, 1996 ( and their qualified survivors and beneficiaries);
  • provides that SFERS will adjust the base retirement allowance to account for the supplemental cost of living adjustment payments not received by this group in 2013, 2014, 2017, 2018, and 2019 due to the full funding requirement; and
  • caps the monthly supplemental cost of living adjustment payments at $200 for members who retired before November 6, 1996 whose gross monthly retirement allowance exceeds $4,167 per month.

The amendment does not provide for retroactive supplemental cost of living adjustment payments.

2. SFERS Executive Director Contract. The amendment allows the Retirement Board to enter into an individual contract with executive directors hired on or after January 1, 2023. The amendment does not apply to the current executive director.

Source: Legislative Digest of Proposition A

City and County of San Francisco Office of Elections