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Debate Heats Up Over Health Care for S.F. City Retirees
By Wyatt Buchanan, San Francisco Chronicle
December 7, 2007
A San Francisco city supervisor is proposing to reduce health care benefits for city government retirees because the large proportion of the budget allocated to cover insurance costs is compromising funding for other city workers. The city supervisor’s proposal to amend the City Charter to extend length of service before employees can become eligible for retiree benefits is expected to encounter contention from organized labor, but is supported by San Francisco Mayor Gavin Newsom. The amendment proposes extending service as much as fifteen additional years before retirees can receive benefits.
A San Francisco supervisor, with the backing of Mayor Gavin Newsom, wants to pare back the city's generous health care benefits for city government retirees as runaway insurance costs consume ever larger chunks of the budget and threaten funding for police, parks, firefighters and other basic municipal services.
But Supervisor Sean Elsbernd appears headed for a political confrontation with organized labor over his plans for a City Charter amendment to extend the period of service before new employees become eligible for the benefits and to pay down over 30 years the estimated $4 billion it will cost to cover health expenses for the city's current and already retired employees.
Left alone, those costs - which the city is legally required to pay - could lead to the doomsday scenario of the city selling assets such as police cars to pay the bill, Elsbernd warned. San Francisco spent $115 million on health care for retirees this year, up from $68.8 million in 2004.
"It's a fiscal time bomb ready to explode," said Elsbernd, who plans to introduce the charter amendment on Tuesday. In 30 years, "we will not be able to deliver basic services and there will be massive layoffs. The city as an employer will not be able to sustain itself."
City and labor leaders have for months been talking behind the scenes on a plan to bring before voters - and they still have meetings scheduled. But Elsbernd said the unions are demanding an increased pension benefit that would "trade one liability for another."
Tim Paulson, executive director of the San Francisco Labor Council, would not talk in detail about the negotiations but blasted the idea of putting a measure on the ballot without labor's backing.
"It's premature and irresponsible to be saying they are going forward unilaterally," Paulson said.
San Francisco's health care benefits for its government retirees are currently some of the most generous. After five years of work, city employees are guaranteed lifetime health benefits at age 50 for themselves and 50 percent benefits for a spouse or domestic partner.
Under Elsbernd's proposal, which Newsom said Thursday he fully supports, new city employees would have to work 20 years before they received full retiree health coverage. Employees who had worked 10 years would have half of their benefits paid and those who worked 15 years would get 75 percent.
The city would raise the age at which new employees would become eligible to receive the benefit - from age 50 to age 55 - and new employees would have to pay into a new trust fund to cover the costs. That trust fund would also draw on the city's "rainy day" reserve fund.
Employees who stop working for the city would have to fully retire within 120 days to be eligible - meaning they could not resign and then begin a new job or career.
None of the changes would impact current municipal workers.
San Francisco's unfunded liability for retirees is bigger than those of the city of Los Angeles ($3.2 billion), San Diego County ($1.38 billion) and San Mateo County ($469 million). The state of California's unfunded liability for retired workers is $48 billion.
The Elsbernd proposal will likely face an uphill battle at the labor-friendly Board of Supervisors.
Board President Aaron Peskin said he hopes the two sides will compromise. "It's a long time between now and Tuesday and I'm hopeful cooler heads will prevail," Peskin said.
Supervisor Gerardo Sandoval has been working on a separate proposal and plans to introduce a separate charter amendment at the Board of Supervisors meeting Tuesday, which is the deadline to introduce an amendment for the June ballot.
Sandoval said his measure will address the retiree health care costs as well as increase pensions for city employees.
"I'm dead certain the mayor can't pass a one-sided measure just as I'm certain labor cannot," Sandoval said. "We have to find a formula that works for both sides and that's my goal."
Newsom said he thinks his and Elsbernd's plan is the best solution and that the time is right to put it before voters.
"We have made a determination that we can't wait," Newsom said, "that we need to move forward."
Proposed changes in S.F. retiree health insurance
New employees would be:
-- Fully vested after 20 years instead of the current five years.
-- Required to contribute to the city's retirement health insurance fund.
-- Eligible for retiree health insurance at age 55 instead of the current age 50.
-- Required to be retired from employment to receive the benefits.
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