San Francisco’s Incredible OPEB Spending

The City of San Francisco spends more than $400 million per year — 14x the city’s spending on Children, Youth and Their Families, 4x Recreation and Parks, and 2x Homelessness and Supportive Housing — to unnecessarily subsidize health insurance for retired city employees. Referred to as “OPEB” (“Other Post Employment Benefits”), SF’s OPEB subsidies are multiples of those provided by cities in adjoining states:

That’s because San Francisco’s OPEB benefits are extravagant and the city doesn’t make use of subsidies offered by others — including new state benefits enacted into law last year. A SF public safety employee who retires at age 50 with a lifetime annual pension equal to 90 percent of final compensation receives medical and prescription drug coverage from the city even if the retiree takes another job or is eligible for Medicaid or premium support from the Affordable Care Act or Covered California’s new Middle Class Subsidies, which provide support to families of four with up to $150,000 per year of income. Non-safety employees who can retire at age 53 with an annual pension equal to 75 percent of their working compensation are similarly subsidized. Worse, because San Francisco pays for its OPEB Expense with a combination of cash and debt, it has also built up OPEB Debt that, at $3.6 billion, swamps the OPEB Debt of other cities:

San Francisco’s extravagant spending on OPEB subsidies is bad enough in good times but takes on even greater importance in bad times such as the city now faces:

If the city eliminated just its annual cash spending on OPEB, that would be enough to fund the Homelessness and Supportive Housing program while the city’s retired employees would still be protected by generous OPEB subsidies funded by others, including subsidies not available in adjoining states.

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Originally posted on Medium, 5/21/20.