City Budget May Face Cliff

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What’s larger than the Bahamas, Cuba, Haiti, Belize, Aruba and Jamaica combined, but not as much fun to frequent on a sunny day?

The answer is the City and County of San Francisco’s budget, which is larger than the combined budgets of those six nations. It’s also bigger than 13 states and, at $11,100 per citizen, every American city per capita except Washington D.C.

Since Ed Lee took office in 2011, which coincided with the end of the Great Recession, CCSF’s budget has increased from $6.4 to $9.6 billion. About half of that, $4.7 billion, goes to salaries and benefits, as the number of full-time municipal employees rose by 5,090 during the period, eclipsing the roughly 1,000 lost during the recession.

Soaring costs of living triggers the need for higher salaries for City employees, and larger cost of living increases for pensioners. The average municipal employee now makes $108,774 in salary and $49,864 in benefits.

San Francisco’s population swelled from 805,000 to 877,000 in the same timeframe, creating new demands on infrastructure and services. In a statement to the View, the Mayor’s Office reported that between October, 2014, and October, 2015, street cleaning requests increased 30 percent, tonnage removed from streets jumped 36 percent, and steamer requests rose 20 percent. That led to 10 percent staffing growth at the Department of Public Works last year.

The City faces unique demands. Being California’s only combined city and county, it has to pay for the Sheriff’s Department, jails and health services. The budget includes a seaport, an international airport and the Hetch Hetchy water system.

According to Lee spokesperson Ellen Canale, staff increases have been necessary to maintain and improve the quality of life that San Franciscans expect. “These investments have been made to keep our City safe, clean, and healthy as it continues to attract new residents and businesses,” she said.

During his time in office, Lee has added 450 positions to San Francisco International Airport, which has seen the number of passengers rise each year, from between 3.2 percent and 8 percent. He created 1,100 new positions for the Department of Public Health, 1,000 for San Francisco Municipal Transportation Agency and 300 for the San Francisco Police Department. While there are 500 additional administrative and finance spots, according to the Mayor’s Office, 86 percent of the new jobs have been in service areas. In the 2016-17 budget, not a single department experienced cuts or lost personnel.

The San Francisco Unified School District, which operates outside the control of the Mayor’s Office, now employs more than 9,000 people, up from 5,500 ten years ago.

Budget growth may not be sustainable. With a sales tax measure failing at the ballot box last November, fiscal projections have slipped into the red, showing a deficit of $348 million over the next two years, and $848 million by 2022. That’s not accounting for any damage the Trump Administration might wreak on the City. The 2017-18 budget reflects an additional 277 employees, but Lee has asked municipal department heads to avoid adding new positions going forward.

In the meantime, a natural question is, have staff increases maintained or improved the City’s quality of life?

Municipal parks are meeting maintenance standards, last year rating 86 percent for upkeep, one percent above the goal adopted 11 years ago by Recreation and Parks Department and the Controller’s Office. Parks in Districts 10 and 11 were the only ones falling below that, at 81 percent. The District 10 parks pulling the numbers down are all located in Bayview and Visitacion Valley.

Street maintenance, as no surprise to those with construction fatigue, is also at a high point. In fiscal 2016, 721 blocks of streets were paved; in the previous nine years, the amount ranged between 243 and 521.

Muni, meanwhile, has struggled to keep up with timetables. While 99 percent of scheduled busses did arrive in 2016, a 10-year-high that’s likely due to 700 new drivers being hired over the past two years, they’re not necessarily showing up on time. During the last four years the percentage of busses that come within a window of one-minute-early-to-four-minutes-late dropped to less than 60 percent. From 2007 to 2011, the figure was in the high 70s.

One area that’s not keeping up with staffing demand is the 911 call center, which accrued $351 million in overtime last year, almost triple the 2011 total. Over the past 10 years, the center has seen the average number of daily calls rise from 1,224 to 1,780. National standards advise that 90 percent of emergency calls be answered within 10 seconds, a benchmark San Francisco hasn’t met since March, 2012, falling to a low of 74 percent last December. Non-emergency calls have followed the same arc but, whereas national goals advise 80 percent be answered within one minute, the City was already lagging at 70 percent six years ago, and has since fallen to 55 percent.

On a brighter note, when it comes to emergency medical response time – that is, after the request comes through – the City is meeting designated goals in getting an advanced life support (ALS) team and ambulances to the scene. The desire is to see ALS arrive within seven minutes, ambulances within 10 minutes, 90 percent of the time. The City exceeded that in the past year and a half, after seeing a low point of 74 percent for ambulances in the summer of 2014.

Police response to high priority calls, meanwhile, dropped in 2016, from an average of 4:55 to 2:07 between fiscal years 2015 and 2016.

An increased municipal employee population will affect future pension and retiree benefits expenditures. Municipal pensions have been a hotly debated topic for the past decade.  It’s unclear whether the City can even meet current demands. Numbers are tight enough that last fall Controller Ben Rosenfield filed a suit against the retirement board to stop cost-of-living increases for 8,300 long-term retirees. In 2011, voters passed Proposition C, which halted those increases until the retirement fund is fully funded. In 2015, however, courts limited the statute to those who retired before 1996; the year voters first approved cost-of-living increases. Last summer, the retirement board announced it’d honor pension increases for those retirees as well, leading to Rosenfield’s suit.

Rosenfield told the View that, “in the big picture the City is performing better than most local governments.” While the retirement fund isn’t fully funded, as it was pre-recession, levels recently have been between 85 to 90 percent, which Rosenfield said wasn’t worrisome.  That the budget is forecast to slip into the red in the next five years could prove problematic, however. “We are seeing an $800 million structural imbalance. About one-quarter of that is driven by pension,” he said.

Equally perilous is that the City has been assuming an annual 7.5 percent rate of return on pension investments, while in the last two years the fund earned just 3.9 percent and 1.3 percent respectively. As of last June, the liability for the San Francisco Employees’ Retirement System (SFERS), overwhelmingly the largest of the City’s six pension plans, reached $2.16 billion, an increase of $496 million from the previous year. Ironically, the top earning city employee last year was William Coaker Jr., SFERS chief investment officer, at $512,485.

“In my mind, pension is more of a concern than retiree benefits right now,” said Rosenfield. That’s despite the fact that the benefits liability was calculated at $4.21 billion in its last valuation.  Due partly to steps taken over the past few years that require higher employee contributions, the Retiree Health Care Trust Fund’s resources jumped 57 percent last year and shows assets of $114.8 million.

The Controller’s Office has seen one of the largest jump in employees, from averaging less than 200 in recent years to 253 in 2016. Rosenfield explained that higher staffing levels are needed to implement a new financial system. The last one was installed in 1980, and hasn’t been upgraded since 1997.

As for the other highest paid employees last year, Coaker was followed by two assistant medical examiners, Ellen Moffatt and Amy Hart, who grossed $397,754 and $345,100 respectively. Other top earners included former Police Chief Greg Suhr, $328,355, Fire Chief Joanne Hayes-White, $327,774, and the chief administrator of San Francisco General Hospital, Susan Currin, $338,390.