Deal aims to diffuse ‘fiscal time bomb’

Faced with ballooning retiree health care costs — an estimated $4 billion during the next 30 years — an agreement brokered with The City’s labor groups would restructure benefits and provide financial security, its backers say.

Supervisor Sean Elsbernd has spent weeks in negotiations to strike a deal that would solve what he has likened to a “fiscal time bomb.” The proposed charter amendment is expected to come before voters for adoption in June.

In 2000, The City spent approximately $17 million in retiree health benefits; in this fiscal year those costs have skyrocketed to $115 million. During the next 30 years, The City will face approximately $4 billion in unfunded retiree health care costs, the City Controller’s Office estimates.

“This is notabout saving The City money in 2009, in 2019. This is about saving The City money in 2039. We are looking beyond the short-term impact,” Elsbernd said.

The charter amendment has the support of The City’s labor leaders, according to a joint statement they issued with Elsbernd, along with Mayor Gavin Newsom and Board of Supervisors President Aaron Peskin.

The proposal will go before union members for a vote in the coming weeks, with the Board of Supervisors slated to vote on Feb. 26 whether to place the measure on the ballot.

The measure would establish a Retiree Health Care Trust Fund and those city employees hired after Jan. 10 would be required to contribute 2 percent of their paycheck into the fund, with The City contributing another 1 percent.

The measure also changes retiree benefits for those hired after Jan. 10. The City would no longer provide workers with 100 percent retiree health care coverage after five years of employment. Instead, after 10 years of employment, new employees would get 50 percent health care benefit coverage, 75 percent after 15 years and 100 percent coverage after 20 years of service.

For agreeing to the changes, organized labor negotiated an increase in retirement pension payouts for city employees — current and new — as well as an increase in cost of living adjustments.

“This is a responsible proposal that moves our pension benefits toward those of other California cities and recognizes the need to protect current employees as costs of living escalate,” said Tim Paulson, executive director of SF Labor Council.

The measure also comes with a wage freeze for city employees until December 2010.

Resolution urges return of Muni funds

A policy statement urging Mayor Gavin Newsom to return Muni funds used to pay for staffers in his own office was unanimously approved Tuesday by the Board of Supervisors.

Board of Supervisors President Aaron Peskin, who introduced the policy statement, has criticized Newsom for using $749,232 in funds from San Francisco Municipal Transportation Agency to fund several senior staff members and support staff. The resolution urges the mayor to return funds “not directly related to the operations of the agency.”

The vote came after Supervisor Sean Elsbernd, a Newsom ally, said, “A lot of this issue has, frankly, spiraled out of control into the politics and personality, and that’s terribly unfortunate.”

In recent weeks, allegations that Peskin has threatened city employees have surfaced and Newsom recently publicly called on Peskin to move forward with a mayoral ballot measure.

“The mayor makes no apologies for bringing the very best people to work on transportation issues in his office,” Newsom spokesman Nathan Ballard.

jsabatini@examiner.com

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