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Pension Talks Near Collapse

Unions livid over mayor's "shadow" meetings with Adachi, may abandon talks

The collaboration between labor unions and City Hall to solve San Francisco’s pension crisis may be close to collapse.

Union leaders are livid after learning that Mayor Edwin M. Lee has included the unions’ nemesis, Jeff Adachi, in what they called the mayor’s own “shadow” meetings on the issue. Adachi, the public defender, spearheaded a controversial and unsuccessful ballot measure on pension reform last fall.

The unions had believed that Lee was committed to a plan being developed with a group headed by Warren Hellman, the investor and philanthropist. After months of negotiations, one union leader said that Hellman and the unions on Wednesday afternoon discussed abandoning those talks and setting off on their own, possibly mounting a ballot challenge in November.

The negotiations have been aimed at establishing a single, consensus solution to the pension and employee-benefits crisis, which many civic leaders believe is the most important issue facing San Francisco. The city faces a $380 million budget shortfall for the coming fiscal year.

But that effort now appears at risk of splintering. Adachi, in an interview, said there could be as many as three pension initiatives on the ballot this fall.

Asked about that prediction, a union official, half in jest, responded: “There could be 10.”

But the divisions are not only over the “shadow” group.

During a meeting Wednesday at City Hall, the Hellman-led group, which includes the unions, unveiled a proposal to change the way the city’s pension fund accounts for its losses, according to two participants. The plan would essentially allow the city to “smooth” its losses over as long as 20 years, reducing the city’s burden to replenish the fund.

To wipe away much of the pension problem with an accounting gimmick will likely be controversial as its import sinks in. “It is in essence borrowing from the future,” said one official who attended Wednesday’s meeting. The official said he would reserve final judgment, but added that the concept “is not a positive thing.”

Adachi was more blunt.

“Pension-smoothing is an accounting trick that allows a pension fund to stretch out its losses over a longer period of time so it seems as if it didn't lose as much,” he wrote in an email Thursday night. “It's like losing $50,000 gambling, and then telling your spouse that you only lost $2,500, because you are spreading your losses over the next 20 years.”


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