Retiree Health Care Deal Gets Council Nod

By Gene Cubbison
|  Friday, May 13, 2011  |  Updated 9:32 PM PDT
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Retiree Health Care Deal Gets Council Nod

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Retiree Health Care Deal Gets Council Nod

A City Hall showdown ends in favor of a retiree health care plan ratified by five of San Diego's six municipal labor unions.
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A City Hall showdown over hundreds of millions of tax dollars ended Friday in favor of a retiree health care plan ratified by five of San Diego's six municipal labor unions.
 
Critics say it's short on long-term savings, and that its financial projections are too sketchy.

  The reform plan -- aimed at heading off litigation and trimming more than $1 billion worth of unfunded obligations -- got its formal, initial approval from the City Council on a 6-2 vote.
 
Details are being posted on the city's website, and there will be a couple of public briefings before it comes up for a final vote on "second reading".
 
Among the opposition's main themes is that the deal is based on actuarial assumptions that might not pan out, and lock the city into further indebtedness for at least two years, if not longer because changes can be made only by a 6-vote majority of the Council.
 
And, that city negotiators should have driven a harder bargain.
 
"This tentative agreement is going to result in employees having the option of contributing zero, zero, not a single penny towards their retirement plan," said Lani Lutar, president and CEO of the San Diego County Taxpayers Association.
 
"In the best-case scenario it allows for a contribution of $100 a month," Lutar added.  "How is that fair?  How is that a fair contribution in the context of the fiscal crisis that our city is facing?"
 
The agreement would cover about 7,500 city workers hired before the cutoff date of July 1, 2005.
 
Actuaries say that by reducing retiree health care benefits and collecting employee contributions for the first time, it'll cut taxpayer costs by more than $700 million over 25 years.
 
City Councilman Carl DeMaio, who voted against the plan along with colleague Lorie Zapf, argued that city negotiators left several hundred million more dollars in potential savings on the bargaining table.
 
He complained that the city's actuaries weren't asked to evaluate a scenario whereby health care benefits are eliminated, based on a recent court ruling that they're not vested pension benefits.
 
"Eliminating the benefit is the public's right to know," DeMaio said during a sharp verbal skirmish with Jay Goldstone, Mayor Sanders' chief operator officer.
 
From the labor side of the table came testimony from Ann Smith, attorney for the Municipal Employees Assn.
 
"This is not comparing a bird in the hand to only two in the bush," Smith said.  "This is a flock of birds in your hands.  And it comes with sacrifices by city employees.  Sacrifices that they would rather not make -- but they are willing to make."

City Attorney Jan Goldsmith weighed in with this note: "For those who think there's more on the table ... if you want capitulation, send us to court, instruct us to play it out win or lose, and we'll do our best.

"But a settlement means you give something and you get something.  And that's the difference, that's where the business decision comes in."
 
A second and final Council vote on the plan is expected May 26.
 
The Police Officers Association, on the losing end of the court ruling on retiree health care, is said to be weighing an appeal of the case.

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