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Committee advances charter amendment to prefund retiree health benefits, citing $4.4 billion liability
Summary
The Special Rules Committee voted to forward a charter amendment that would move San Francisco from pay-as-you-go retiree health funding to a prefunded trust model intended to eliminate a reported $4.4 billion liability over about 30 years; supporters said it protects benefits without new employee costs while some retirees urged added withdrawal safeguards.
Supervisor Daryl Farrell, who sponsored the measure, told the Special Rules Committee that his charter amendment would move the City and County of San Francisco from a pay-as-you-go model to a fully prefunded retiree healthcare trust, with the stated goal of eliminating about $4,400,000,000 in unfunded retiree healthcare liabilities over roughly 30 years. "We're not requiring any additional contributions from employees," Farrell said, and he repeated that the proposal would not reduce retiree benefits.
Public commenters representing labor and retiree groups largely supported the measure but urged safeguards. Rebecca Rhine of the Municipal Executives Association said the proposal represents "government working together with employees and retirees" and helps ensure money is available when needed. Bob Muscat, Executive Director of Local 21, told the committee the plan appears to address the liability "without increasing cost to public employees." By contrast, Sharon Johnson, a retiree and vice chair of Protect Our Benefits, asked the committee to add protections so that subtrusts could not be tapped too early — suggesting a two-thirds funding trigger or allowing withdrawals only once every ten years to preserve fund integrity and bond ratings.
Controller Ben Rosenfield provided technical context on funding milestones and tradeoffs. He said that if actuarial assumptions are met the city would likely reach roughly two-thirds funded status ‘‘in around year between year '20 and '25'' (i.e., approximately 20–25 years), while 100 percent funding is projected over about 30 years. Rosenfield warned that a hard two-thirds-only trigger could remove needed flexibility in future, because it could prevent necessary amendments without returning to the voters.
Farrell and colleagues described the measure's "escape valve" as an extreme, tightly constrained option requiring multiple approvals — including the mayor, the Board of Supervisors and the Retiree Healthcare Trust Fund board — and the proposal also contemplates Controller and actuarial review. Farrell said those multiple checks, together with fiduciary duties of trust board members, limit the practical risk of premature withdrawals.
The committee voted to forward the charter amendment to the full Board for placement on the ballot; the motion was seconded and carried without objection. The committee record shows the sponsor, multiple labor organizations and retiree groups participated in drafting and outreach to build support and to identify possible technical amendments requested by stakeholders.
Next steps: the committee forwarded the measure to the full Board of Supervisors for consideration of placement on the ballot; committee members and advisors said they would continue to refine safeguard language in consultation with stakeholders.
