proposition d, and if that passes, than the existing terms of the mou's will act as a contract to the enforcement of that measure. that measure stands in contrast to the measure that the mayor and board of supervisors has placed before the voters. with that, we believe we have a contract that saves us at least the 20 two million dollars, as referenced by the controller's report. that is essential to the budget, and the city's budget was built around at these savings, so we feel that this is the fourth year in a row that the police and fire contracts have stepped forward with concessions. we thank them for that. we recommend this contract for your approval. supervisor chu: thank you. in summary, for the fire, as well as fire unit two, we see wage deferrals of 1% for six

months, and that is effective july 1, 2011. and then effected july 1, 2012, we are going to see that those employees and those bargaining units will begin paying an additional 3% on pensions, basically. >> correct. supervisor chu: and for the police and the different units, we will see a 2% wage deferral for three months, effective july 1, 2012, and the same 3% retirement contribution beginning july 1, 2012. >> correct. supervisor chu: all of the savings, the $22 million, is roughly anticipated in the budget we just passed? >> yes, in years past, we have had the contingencies affect the wage concessions that were in effect at the time of the election. this year, we wanted to ensure that those 3% contributions would stick and would not be affected. and with the 1% wage increase.

if the proposition d or some other state measure passes that is detrimental to the unions, then what happens as a remedy, this year as opposed to last year, is that we have got the protection in the two out-years, or the concession, in essence, would not continue, and that would be the difference between this year and last year. but it is the same principle. labor was clear that they're not going to take a way to decrease, start contributions, and then live with additional burdens that they feel were unfairly placed before the. if that happens, we have an agreement that we go back to the bargaining table and negotiate from that point, and those would be subject to the charter. so if we were to reach impasse, we would have binding arbitration over that pursued. supervisor chu: if we were to approve these contractual commitments, we would realize a savings from the percentage of deferrals on wages, and we would

continue to see the 3% pick up from the employees on retirement contributions irrespective of what would pass. and then what happens is if a certain measure would pass. >> yes. we had a 1%. when the two years of 3% retirement contributions additional to what their plan. if prop d or another state measure passes in san francisco, then we will see renegotiations of what happens in the years passed that implementation, and that is subject to interest arbitration. in the meantime, by virtue of the contract, the existing language would already bar implementation of prop d or many other provisions. the contract already says that the retirement contribution is locked in at 7.5%. that exists already, even if we did nothing today. what we're saying is that there

is a waiver to go ahead and start paying unde, under the agreement, if that is implemented, but not for prop d. supervisor chu: ok. we do not have a budget analyst report. i no cost estimates were prepared. is there anything you would add to the presentation? given that, why don't we open this item up for public comment. any members of the public who wish to speak on item number four, six, seven, eight, or nine? >> supervisor chu gonzales used to extend public comment to five minutes when there were few people speaking and there was a key issue. any chance of doing that? supervisor chu: we're going to keep it how it is now, three minutes. >> thank you. that is an extra minute. this is an outrage, and you all know it. this is shielding the city's richest workers from carrying part of the burden of pension

reform. that is all it is. just the rich, that is it. what do you get? you have 350 cops on drop now. they make 300,000 -- $300,000 a year total. this morning, i am going across the street for coffee, and there were six big cops surrounding one little chinese-american woman selling her groceries to pay for her rent. on every other corner, it is full of heroin dealers and people buying stolen goods. the police department is dysfunctional, to put it mildly. the idea of shielding them from something -- and i have a message for you from? solomon. you cannot be here today, because he actually has worked. it is hard to get work. he says, just do not do any taxes, and that is against all pension reform, because his partner works for the city, and he does not want anything cut. he sex, do not give any raises to anybody, let alone the cops

and the richest employees you have got. what these guys just that is garbage. they are getting raises. you are losing on it. a public defender will follow me, and i got a chart this morning. you'll see the reality. but the idea -- where is your -- i will just go slow. three minutes is plenty of time. why are you not exempting local 1021? 13,000 workers, why are you not shielding them from having to pay anything more? where are they? where are their representatives? no, you're only shielding the richest workers in the city, and you should be ashamed of yourself. that is enough. i did not need any more minutes, but thank you for going at least 23. but, honestly, on key issues like that, you guys do not like the public. you really do not like the public. i can understand what the public

comment at the full board. that is a regular zoo. two minutes there makes sense. but when you have been born hearings, you should listen to people. supervisor chu: thank you. i want to recognize the public defender. >> good morning, supervisors. i am here today as a proponent of proposition d, san francisco pension reform act. it was placed on the ballot by 50,000 voters who signed a petition to put real pension reform before the voters in november. the san francisco pension reform act does three things. it requires a fair apportionment of pension costs on a graduated scale among employees. it stops penchant spiking and creates a new sustainable retirement plan for new or future employees.

mr. grand says this is a good deal. i agree, it is a good deal for the police and fire units, but it is not a good deal for the people, the people of the city. i am here to ask you, at a minimum, to have an independent cost analysis done of what this mou will cost the people of san francisco. we have many able people who could perform that, including mr. rose, who is here. i am sure he is very busy, but this is a contract that could cost the city over $100 million. there are two parts to this contract which affect pension costs going forward.

the first is a 4% raise. that 4% raise, mr. grand says, is going to be offset by a 3% contribution in pension costs. what will that cost the city? it is not cost-neutral. if you look in the short-term costs to the city, and i have a chart here, it shows that the cost to the city is going to be about $4.5 million a year. that is the difference between the increased contribution and their race. that, incidentally, is in nearly enough to fund a new academy class. that is enough to fund a summer school, which has been cut for the last two years for four years for over 10,000 kids a year. in the next 10 years, we're talking about $45 million in costs.

now when you go beyond that, the second problem is that the pension costs are going to be increased. why? because when you give a 4% raise to every officer, it results in a spiking of their pension. so they will get 90% of a 4% increase. the result is, over the next 10 years, $127 million to $381 million over 20 years. one last thing, this contract also shields the police and fire from making additional contributions between 2013 and 2015. according to the comptroller, that will cost the city and county $61 million if proposition d passes. i am asking you to please have an analysis done before making a decision. supervisor chu: thank you. are there any other members of the public who wish to speak on

items not -- number four, six, seven, eight, or nine? >> good morning. my name is tom o'connor, a san francisco firefighter, and president of local 798. the public defender believes that if he tells you a lie often enough that it will become the truth. these concessions are very real concessions, entered into by police officers and firefighters to reach into their own pockets to help pay for public safety. the value of the going forward is a $22 million in the first two years. then in the last two years, we will pick up the increased contribution on the consensus measure, proposition c, which should pass. those calculations have not been made yet because the actuaries have not determined how much the pension increase cost will affect the city. but these are very real concessions that the men and women, the fire department and

police to permit, are feeling in their pocket. it is money coming out of their paychecks to make sure every police station is staffed at every firehouse is kept open. when you're shown these charts to say it is an increased cost to the pension system, he refuses to listen to the information he has been given time and time again by the retirement board that these raises were already factored into the retirement system five years ago when his contract was signed. this 3% raise that we are taking and putting back into the pension, this money will actually decrease the cost of the pension going forward because we are front-loading the pension with money immediately that the retirement system had never calculated. this is a real effort by police and fire to get ahead of the curve to help try and solve the pension problem, show our commitment to pension reform, and support proposition c, which addresses the same things he tries to fix. this does it smarter, better, and legally. i urge you to support this wage

concession and help us address the real problems facing san francisco. thank you. supervisor chu: thank you. any other members of the public who wish to speak on these items? seeing none, public comment is closed. supervisor mirkarimi. supervisor mirkarimi: i would like to hear from the city. speaking to some of the assertions that have been made to help us may be reconcile some of the difference of perspectives. >> thank you, supervisor. and through the chair, yes, i was about to swing forward, and i am glad to give me the chance to point this out. you'll be seeing this chart at a number of hearings. the point that a significant flaw in the logic. we have a comparison of apples and oranges. in 2007, we had a contract which called for a 4 peace and raise, which has been pushed out over and over again. we're way beyond the expected end up the original contract.

so we're now seeing sending that was decided upon five or six years ago. so when we evaluate the cost- savings impact of this amendment, we have to look at where we are now and what we have done by this amendment to save money. and what we have done in this amendment to save money is in the neighborhood of $22 million to $30 million over the first two years. that is locked in. he is saying to look 4% raise that has been deferred time and time again, look how much that is costing us. that is not what is before the board today. what is before the board is an amendment which drastically reduces the cost of a five-year old contract. so is charged, as colorful as is, is misleading. i wanted a chance to point that out. thank you. supervisor mirkarimi: through the chair, and the future focus

of the public defender's comments about 2013-2015, were then the contribution and then it ceases, can you speak to that? >> as i said, labor made very clear last year and this year that it is willing to step up and make concessions. last year it made eight% in concessions over a two-year time span. we're still feeling the effects of that. on top of that confession, they have agreed to start another 3% concession for two years. that is locked in. as in last year, they said that if the measure passes, we're not going to pay the public defender's real contribution level on top of a big concession. we did not have a voice in that, so they made it very clear that we could only get the money by agreeing that if that happens, we will go back to the bargaining table, and that is

what our contract reflects. this year, we think we have improved the contingency plan for the city in that we have locked in the concessions. they will not disappear in years one and two. for protection, it was a way to saying we are not going to pile on your original 7.5% contribution that is locked in the charter in contract and then have you pay the mayor's consensus measure contribution and then agreed to a new 3% contribution under the contract and then have to deal with the public defender's measure. that will not happen. in the event that the voters approved proposition d and it is implemented, then we'll go back to the bargaining table. but in response to what labor is saying, we're comfortable saying that we will deal with that of the bargaining table. we will not change your contract to change the language that bars

the public defender oppose the measure from being implemented. the contract already does that. supervisor mirkarimi: since the board has just now returned from its august recess, this is the first time we have congregated since propositions c and d have been made official on the ballot. so there has been no conversation regarding the level of information that has since emerged or questions about lack of information. what about the call for an independent analysis? what is missing in the data? >> i think the analysis is complete. it does reference increases that will be due to the changes we have made. it reflects every aspect that the public defender is questioning. supervisor mirkarimi: maybe you can speak to the inference. i am hearing this from a senior retirees in the public union system who believe that there is

a bit of a caste system that suggests that police and fire are protected and others are not. i think that is an inference that should be addressed head- on. i hear this from police and firefighters about the important contributions they are making. but it is not an argument in which to shy away from. i want to hear your response to that. >> the three-year contract that you see has a wage deferral for the first year. that locks in a zero wage increases for the next three years. first of all, if any other union would like to come forward and give us a 5% concession for this year and next year and agreed to two years of wage freezes, we will take that deal. so no one has stepped up to make that offer to us. supervisor mirkarimi: you are suggesting that the benchmark by public safety unions are and is

that particular group that has offered to do that? >> yes. you're asking, is there something nefarious or are we protecting police and fire, and we're saying, no, we're not. they have stepped up and make concessions for the fourth year running. it is driven by contract. they are the only ones to do that. i do not know that anybody in the -- in any other union would have grounds to say that somehow unfair. supervisor mirkarimi: ok, i would like to hear from the controller. five weeks is a long time when it comes to election season. when there is now been the blessing of the proposition that has come on board since they were in discussion and now a full-fledged campaign, i would like to hear anything has developed where there is the analysis that is needed to help give us a better understanding of what is before us. >> through the chair, i am from

the controller's office. the controller did wait until we receive to the most up-to-date actuarial information before we submitted our costs of these mou's, as required. and using the most up-to-date information, the dollar sign22 -- the dollar sign -- the $22 million is the amount that was calculated. and we had the latter two years. again, what we did is we costed out the difference between the original contract and the amendments. the delta between those two. the wage concession, wage concee deferral, the wage concessions, and the agreement to pick up the additional share.

the $22 million is based on information that we have, which is current as of about one week ago. supervisor chu: to be clear, with regards to the value at the comptroller's office, in general practice they do provide an estimate of the expected value of ballot measure savings. so, we will be seeing that, though it is not the topic of conversation for the day. i do appreciate the comments that were made. a lot of interesting topics did come up about what equity should be and what it should be in terms of receiving any wage increases. an interesting question, given

the times that we are in. taking a look at the contracts and amendments, the way that i look at it, what are we getting back and what do we have to give? in this situation, the city is not giving anything. through a contract we had actually promised wage increases, right or wrong, it while ago. we are contractually obligated to pay those. we are seeing those unions stepping up to say that we are not going to take what the agreement was previously had actually led to go on some of that. we would not have gotten, contractually, a 3% concession. something, contractually, they had no right to get from either of those unions. if you compare that, in

contrast, to what they had given up in richmond, there are benefits going to those employees. it is clear that we have savings from two years that we would not have otherwise had. the comparison about what happened to the pension, i do agree that we have a pension issue. i do take that that is a very serious problem that we have to address. i think that the issue before us is that these mou's pickup benefits that they otherwise would not. for those reasons, colleagues, i would be supportive of these amendments. they are simply savings that otherwise would not have been allotted to the city within the budget.

>> thank you so much -- supervisor kim: thank you so much. i want to thank the fire department and police department for really coming to the table and giving back to the city. these concessions are real. many of our members that fight to keep a safe haven within the deal feel the impact in their pockets. my main -- i do feel uncomfortable -- my main sense of discomfort is around prop c. to a certain extent, much less the further inequities that they might create within public- service employee unions, contracts not up currently, there for they will be out, i

believe, at the end of june, if it passes, taking into effect at this time, because this is just coming to me yesterday, i need more time to consider that measure. considering the equity issue, and i completely understand the city's issue on that, second employee unions would be allowed to make the same concessions and we would be happy to take that contract the day. however, i do not think that that is a fair comparison because i think many of us make far less and may not have as much to give back to the city. i am not prepared to support it today. i am very supportive of the contract in general and to the men and women who keep this city safe. i wanted to address the equity

issue between public sector unions. we will not have this same measured next year if the other prop was to pass. supervisor chu: thank you. supervisor mirkarimi: in terms of the concluding comments, simply reading from the department of human resources presentation that was provided to all of us, it well lays out the relationship and contingencies between both. this portion of the mou's is not compartmentalized or disconnected between c and d. what i am reading here are the economic terms. pending those terms being realized, those contingencies are literally attached are tethered to whether or not they

prevail or not. questions that may be looked misplaced are not at all in the eyes of the department of human resources. i think it is very important that we get to the bottom line. as to the important contributions being made, i agree that they are unprecedented. to understand what this translates into based on a larger analysis that either the controller says is complete or need more information, that is the job here today. i am open to what the supervisor was saying. i support the solidifying of the mou's, but was looking for more

information. if that requires us to delay this a little bit, i am definitely game for doing so, if that is the supervisors wish as well. supervisor chu: could we ask about the timeline that this mou needs to be approved by the full board? >> supervisors, the contract is a session agreement under the forms of property. -- prop d. not similar to the contract deadlines but others, but the agreements that you do see before you are ongoing. they have agreed to voluntarily start the payroll deductions and

wage decreases, the understanding being that if this was rejected by the board or the union membership's, when it came to vote, all bets are off and money will be returned to the members. while we do not need strict charter deadlines, the budget is built on savings and encapsulated within contracts. the farther off that we go, the deeper in the hold the city would find itself. supervisor chu: anything else? supervisor mirkarimi: fine, thank you. supervisor chu: with regards to what would be approved in these contracts, we would see immediate wage deferral and 3% retiree health benefits, correct? >> correct.