than later. what we are doing is moving to a shared growth model. shared risk, shared benefit periods -- shared risk, sure benefit. they will benefit, as the city does, when the rates are ultimately reduced. in addition to the cost sharing, and let me also mention, the cost sharing follows a model that excludes the people who earn less than $50,000 a year. then there is a graduated bonus, reflecting the fact that they do have a more expensive pension plan. our plan also includes employees who are not in the retirement system. we have approximately 8000 city employees in the california pension system. they will be participating by

three different methods. the details -- we have some months to work out, because they are extraordinarily complex. we are happy that our brother and sister employees will be joining us in the program. we have new retirement tears. -- tiers. we are raising the minimum age at which one is eligible for retirement. this will encourage employees to stay longer. which not only reduces pension costs, but will reduce our costs for retiree health care. when people retire, we pay for their health care, and also for the health care to replace them. so, it is a two-for-one in that regard. on public safety, the retirement age is raised to 58 spurious --

to 58. we have a pension double salary cap which is 75% to 85% of the irs base. i can go into detail. . very complex. we are moving to a final compensation. for new hires, so the final pension will be calculated for new hires a son their three highest years, another fine a one-year -- not their final one year. we are eliminating what has been known as the best in retirement, also known as the annuity program, for new hires. instead we will of the service retirement option which is approximately half the cost. we're very pleased about that as well. supplemental, which is paid when

the funding has earnings in excess of that which is predicted, will now be paid only when the fund is healthy enough to pay them. so, the fund will have to be fully funded to pay those supplemental cost. they will continue to be shared in payoffs, but only when the fund can afford it. also, our elected officials will be joining us in the cost sharing and paying their own retirement contributions as well. [laughter] and i'm sure they are happy about that. the health service board is in a very contentious issue because the city has wanted to move to the model from 2004. i would call the city appointee's beneficiaries of the fund. after much struggle, we have come up with the new model.

the members of the health service board will be made up of 3 beneficiaries, members of the trust, three city appointees, and they will choose a tie- breaker, if you will, the denominates by the comptroller. we're very happy with that compromise solution. that as a part -- a very large part of the increase in our health costs. a lot of that has to do with the decisions we make in terms of our health coverage. we are also, as mayor lee mention, already we're requiring people who hire -- people who were hired since january 2009 to contribute to retirement. it is an unfunded liability. did not pay for the health care they promise to their retirees. we started doing that in 2009. now, we will begin contributing

in our wrap up, and acting out with unmatched -- maxing out with a matched contribution from the city. this is only a minimum. the city and negotiate. -- the city can negotiate. there are certain retiree health benefits that were improved after people left city service, and the city will be making -- the amendment makes changes to ensure that any windfalls or benefit improvements that came after someone was no longer in city service will not be in effect. benefit improvements will be restricted to those who have not yet retired -- they will not receive benefits that were not in effect when they left. and that is pretty much my summary. i would like to thank everyone for working on it. thank you to the people who calculated all of it. [laughter]

thank you, micki. mayor lee: very comprehensive. we began with people asking, why should we sacrifice? what do we get for ourselves? and that great leap, i think, started very early to "what can we do to help to make sure our pension is solvent?" that is the changing role that labor has made. i was pretty excited from the beginning where we were making a lot of proposals. where we started having union representatives make their proposals, then we knew we were on our road to ultimately thinking together how we could solve this problem. again, i want to attribute, really, where the cost of this matter lies. and that is with our labor unions and labour representatives working together

with us to build consensus so we all sacrifice to make our system work better. with that, i would like to introduce rebecca ryan. [applause] >> thank you so much. i want to acknowledge my colleagues standing beside me and behind me. i think it is important to understand what a difficult process consensus is. it is always preferable, but what it requires is a balancing of many different interests. people stayed in the room when things get difficult. people continued the hard work. we did not allow ourselves to get sidetracked or splintered. i think there is a myth out there about public employees, and what i am here to say is public employees are the solution in san francisco. they always step forward.

after the election in november, where they said to the voters, if there is a problem, we will figure it out and we will not shy away from it. they came together. based upon the facts, they found a fair and equitable solution. and i think the message is, the employee -- coppell -- the public employees step forward and the right thing in the right way. that is what this measure represents. that is what we should be celebrating. these are real human beings that have to make real sacrifices. but we understand why. and believe me, nobody has a better interest in the financial health of the city and the programs and services it provides then the workers who provide them. so, thank you for the opportunity to do the right thing, and i hope that the message that is shared from this

is that the workers in san francisco did do the right thing. thank you. [applause] mayor lee: i also noticed from the san francisco labor council, we began with a lot of the union reps saying, "please just talk to was." after a few months, it was "ok, talk with us. " tim paulsen, from our labor council. >> thank you, mr. mayor. as you say, this is historic. i speak to my colleagues all over the country, and there has never been a partnership with a city family that we have seen like we have seen in san francisco. usually, someone has to run good idea or they're doing it

unilaterally. and there's all kinds of friction. here in san francisco, we really have done it as a good way. where do we get business, labor, progressives, and moderates coming together for solutions to save jobs and city services? here. in san francisco. by the way, this has also been done with the account of the impact on working men and women in town. this is done deliberately. this is done smartly. during those long, long meetings during which we crafted this proposal -- i want to thank warren hellman for helping lead this charge. i want to thank all the sector unions. the public safety, the lawyers. everyone was at the table. i want to give an extra shot out to the chair of our public

employees union from local 21. i am surprised his marriage is still together, the amount of hours he has spent on this. i want to knowledge everyone surrounding us today. some of the other people working. i know tommy o'connor from the firefighters. the police representatives. along with the board of supervisors. there was a lot of number crunching to people were fully prepared when the move to the table. this is historic. i am really proud of both the public sector and the private sector that we can craft this kind of resolution. thank you. [applause] mayor lee: i also said the transparency was well beyond the labor unions as well, as well as our city workers. so, i know this transparency was reflected in the san francisco chamber of commerce and their ongoing participation. they listened very quickly to

our efforts. >> thank you, mayor lee. the chamber of commerce and the entire business community of san francisco want to thank you for your leadership, and supervisor tells burns -- supervisor tells burns -- supervisor elsbernd, for your leadership. businesses have had to reduce their work forces. we have 40,000 unemployed san franciscans. it was time that we faced the reality of helping the city of just -- i just needed pension reforms. we're pleased to be part of this process. again, the best kind of reform is consensus reform. there are many times when you see in front of you city leaders, labor leaders, business

leaders agreeing this is the right solution of the right time. thank you, mayor, again for your leadership, and we look forward to balancing the city budget and getting a raw economy back on track. thank you. [applause] mayor lee: by the way, if you are keeping count, i counted nine supervisors here. the other two who could not make it, i believe it was because they could not get here on time. we also have with us david metcalf from spur. we had a representative from the labor foundation. i also want to emphasize tim paulsen stood up for working families. that included rebecca ryan,

roxanne sanchez, tom o'connor, tim paulsen, and we are joined by the fire chief joann hayes- white. i want to make sure i recognize throughout the process that our city attorney contributed to all the legal questions that came up. knowing how difficult these aspects were, they stepped up to help us review all these proposals. with that, this press conference is concluded, and we will move forward. yes, we will take questions. >> [unintelligible] >> first of all -- [unintelligible] in this proposal, we're talking

about 35%. how can we afford that? mayor lee: it does, but obviously we have a long-term view on this. our talks relations indicates -- our copulations indicate this over 10 years. a lot will depend on how -- our calculations indicate the server 10 years. a lot will depend on how our investments do. we've always said employee contributions would be the major part and for a lot of current sacrifices are reflected. >> 35% -- it never gets to 35%. [unintelligible] mayor lee: it is a safety net. we have made the calculations just in case.

>> [unintelligible] mayor lee: the very first year this takes effect, we anticipate $60 million in year 2013. in addition to that, all the new hires will begin contributing in a different way beginning january of next year. that is the savings. there is no smoothing in this process, because there is no smoothing in the economics of what we are facing. so we did not consider that a dog. >> the 10-year plan will not get going before a couple of years. mayor lee: we do have labor contracts in place right now that we have to honor. we currently have a lot of obligations that we have to

honor with current retirees. so we did not touch that the legal obligation. so we had to start making significant changes as of nest -- next fiscal year. >> [unintelligible] mayor lee: the service employees are right here. they are right here among us. >> [unintelligible] can you talk about how they came on board? >> i would just say, we are happy to be here today. [laughter] i am the staff director in san francisco for the service employees. i am joined by members of our bargaining team. we are pleased to be here. we are especially thankful to warren hellman for his guidance and participation. we do have meetings with the

mayor, issues we will be discussing. it is a healthy process and we're happy to participate. >> [unintelligible] >> we will be discussing with the mayor. >> analysis negotiation different from previous years? >> negotiation is always a difficult process. both sides come in with their interests and ideas. what was different is we spent a great deal of time at the beginning and got beat up from the press because of the time that we did take because -- so that we fully understood what was going into the discussions. >> there is a particular elected official not ammonia. [unintelligible] mayor lee: i did meet with him yesterday. we explained our proposals. we will leave it to him whether he wants to present those or not. we to believe that our consensus

approach is the right thing to do. it signals that if you do want a sacrifice, you have to work directly with people who will offer that sacrifice and will do it in a way which is comprehensive and reflective of the values of san francisco. that is what we have done. i leave mr. adachi to his viewpoint. i am sure he has to recognize this is the official city family and he does not represent that. >> [unintelligible] do you think that was in his interest? mayor lee: i do not. the city attorney has been giving us advice. there is no doubt in my mind that that advice has been completely apart from anything that is political. we have kept politics out of this and focused on the numbers and the legality of the proposals we presented, and we

are extremely confident this will pass before the board of supervisors and the public in november. mayor lee: >> lee: thank you. [applause] >> i am glad to see some many of you people survived the apocalypse. he is doing a great job here. i see you've. who else is here that i can recommend.

could deceive from the redevelopment agency. los is here? could this deal, it is good to see you. we have a great celebration today because i get to a 0.12 commissioners, -- get to appoint 12 commissioners, about half of them are repeats. i just wanted to signify that we got the opportunity to welcome new and existing commissioners, but to let the public know even more about what we're doing. they wanted to put together

something that was in the works. making sure that we have an online ability to let the public and tell all of the positions, who is serving on them, when the terms are up. decentralized online database that represents all of the commission's and all of the appointments that we have, the terms that are about to expire at the terms continuing are now on line for the public. all your lives are going to be much more public. we have just a diversity of the apartments and commissions to fill today. our deputy administrator is here.

think you for being here. the mayor's office of housing, thank you. as henry here, too? we cover a let me. let me go through the names as we start out. thank you for being one of our new commissioners and coming aboard. your expertise has been in the private sector, making sure that the ordinary citizen has an understanding of our changes that we want to make. how to thank you for your ability to communicate even better put goals of our department and the environment. thank you for joining the family. we have in the veterans affairs commissions, thank you for

joining back up again. and chris, you and i have talked at some length. i will personally be working with the veterans commissioned this year because of what to understand even better not only the work that the commission does the what goals we have to welcome back our troops and our people who, i think they found dignity in the work for the country. can define dignity as they come back here? a lot to thank the member for working with us as well. you and alexander are two of three women already on the commission. i know your expertise works making sure that there is a look at the health of our survivors

and people coming back making sure that these people are critical to our approach. allowed to make sure that we also have dignified jobs for everyone that wants and can work. what to make sure that we are hooked up with our community colleges when we do that. thank you for agreeing to serve. our goal and a concourse authority. the key for serving again and helping us. certainly with nancy conner, thank you very much for agreeing to work with us. we're going to be working together as well because i am so interested in making sure that the music concourse is activated for the benefit of everyone in the city and to make sure that we have good approaches, to fill that area more as we are in

between the two fantastic and wonderful institutions. thank you for serving on and helping me make sure that the golden gate concords gets filled and it's done right. to the housing authority, we are challenged by some money different things that affect our economy. and with housing being as critical as it is for those economically struggling, it is important that we have expertise. a lot to thank you for bringing your expertise interiors of commitment and your shallots and connections. lead them everywhere we can to help the housing authority. and the residence of that

agency, vacuum much for of the housing authority. and of course to our new commissioners, thank you for stepping ahead and helping our report. for the many years the use serve, at the helm of their international real-estate, it will bring us tremendous talent for the port commission. think you very much for stepping up. thank you for being such a wonderful candidate for us. i want to thank supervisor scott wiener. you identified what we could have. and the the the mta is going to be a very big challenge for anyone that serves on that. it will be one of those years of

service that are very sacrificing for all of us. i know all of you love the city in some anyways had to reflect very strongly what i feel the city needs. with that, i also want to thank our rules committee of the board of supervisors for making it a very smooth the appointment process. supervisors kim, elsbernd and farrell have worked with me on the rules committee to make sure that the appointees are transferred -- the transition to correctly. had received by unanimous vote of confidence that is very reflective of how we are administering government here. and the closeness with the board of supervisors. with that, please stand and we

will take the oath and if you could raise your right hand and repeat after me, we will go through every one of your names and we will say that the commission you will be serving on that will go through that as well. [inaudible] i do solemnly of firma the i will support and defend the constitution of the united states and the constitution of the state of california. the state of california. against all enemies foreign a