Proposition G - Retirement Credit for Unpaid Parental Leave

What it does

Proposition G is an amendment to the San Francisco City Charter that would provide City employees who took unpaid parental leave before July 2003 the option of buying back the time they were on leave. Under this measure, to buy back the time they were on leave, employees would pay into their retirement account an amount equal to what the employee and the City would have contributed to the employee's account if he or she had been working. The employee would bear the entire cost of buying back the time he or she was on leave.

If passed, this measure also would allow employees choosing to exercise this option to retire earlier than otherwise might be the case, or it could increase the amount of retirement credit to which they might be entitled. The time an employee was on unpaid leave would be counted toward calculating that employee's years of service. Currently, employees are allowed to count toward their retirement benefits only time spent serving in the military or time working for another county (if they offer reciprocal retirement benefits), the state, or the federal government.

City employees earn retirement benefits as a function of the amount of time they are employed with the City. A City employee's pension and the age at which they can retire are all determined by the length of time they work for the City. Every pay period, employees pay into their pension a share of their earnings, with the City matching some share of the employee's contribution.

This measure would apply only to those City employees who took unpaid parental leave before July 1, 2003. Paid parental leave was created after the passage of Proposition I in November 2004. Employees who already have applied for retirement would not be eligible to receive credit for unpaid parental leave.

If passed, this measure would allow eligible employees to buy back time for each parental leave they took before July 1, 2003. For example, if an employee took unpaid leave at three different points in his or her career, he or she would be eligible to buy back time for each period of leave. However, the measure limits the amount of time each employee can buy back. For each period of leave, an employee can buy back a maximum of four months. If an employee chooses to exercise the buy-back option, he or she must at a minimum buy back two months of time. In the example given earlier, if the employee chose to buy back the maximum allowable time for each period of leave, he or she would receive credit for a total of 12 months.

Eligible employees would be able to buy back the time they were on leave in today's dollars, which is likely to make it costly to those employees who choose to participate. It is estimated that it would cost an employee between 17 and 20 percent of their current salary earnings to buy back time.

Why it is on the ballot

Prop. G was placed on the ballot with the support of a majority of the Board of Supervisors.

A specific group of employees, many of whom are employed by public safety agencies and are uniformed officers in those agencies, would be affected by this measure. For example, in the Police Department it is estimated that up to 70 female and three male police officers would be eligible under this measure. These officers joined the department in the early 1980s, and the female officers were some of the first uniformed women in the department. These women took unpaid leave to care for their children at a time when paid parental leave was not available. As a result, while their male colleagues have reached full retirement age, these women in the department are faced with working for an additional one to two years before they can retire.

In the original version of the measure, only employees in the police and fire departments would have been eligible, and they would have been able to buy back up to 12 months of the time they were on leave. The measure was revised to include all City employees and to limit the amount of time employees could buy back to four months per leave.

Pros

Arguments in favor of Prop. G:

• This measure creates parity for a generation of the City's workforce. By providing female employees who took time off to care for their children with the opportunity to retire at the same time and with the same benefits as male colleagues who did not take parental leave, the measure seeks to provide redress for a time when the City did not offer paid parental leave.
• Eligible employees would bear the full cost of buying back the time they were on leave. The City would bear no cost if employees choose to exercise the option provided by this measure.

Cons

Arguments against Prop. G:

• This measure would fundamentally alter the basic premise of the City's retirement plan, as the amount of retirement allowance an employee would receive under this measure would no longer be based solely on the employee's service to the City. In doing so, it creates a circumstance in which retirement benefits are available for purchase rather than earned through service hours.
• By extending the buy-back option only to employees who took unpaid leave to care for newborn children, the measure creates a disparity between employees who took unpaid leave to care for a sick parent or spouse.
• The City frequently revises the benefits it offers to employees. This measure could create a precedent whereby a change in the City's benefits must be made retroactively available to all those who would have been eligible if the change had been implemented earlier.
• This measure could result in a push for some public-safety officers to enter into the City's Deferred Retirement Option Program, a program that was the subject of a recent ballot measure that SPUR opposed. Under that program, the specific beneficiaries of this measure could retire early at a higher level of benefits and theoretically could enter the DROP program at a time when they would be earning their higher level of pension benefits as well as their current salary.

SPUR’s analysis

While ensuring parity between male and female employees in San Francisco is an important goal, this measure fundamentally alters the mechanism through which employees earn retirement benefits in a way that would not promote effective government. By making retirement credit available for purchase, this measure would create a circumstance in which a small number of employees would be eligible for benefits they did not earn through service hours. While the full cost of buying back retirement benefits would be borne by the eligible employees, it creates a precedent for retroactively extending changes in the benefits plan to employees who otherwise would not have been eligible. We respect the goals of the measure but do not agree with establishing this precedent as a change to the pension plan.

SPUR recommends a "No" vote on Prop. G.