Faced with burgeoning costs for retiree health care benefits, The City could look to voters this June to approve benefit changes for new public employees.
In 2000, The City shelled out $17 million in retiree health care costs; during this fiscal year those costs have skyrocketed to $115 million. During the next 30 years, The City is looking at $4 billion in unfunded retiree health care costs, according to the City Controller’s Office.
Supervisor Sean Elsbernd said he will introduce a charter amendment Tuesday that would make significant changes to The City’s retiree health benefits. In particular, a city worker would no longer obtain 100 percent retiree health care coverage after five years of employment. Instead, coverage would be based on a graduating scale. After 10 years of employment, new employees would get 50 percent coverage, 75 percent after 15 years and 100 percent coverage after 20 years of service.
The charter amendment — which is co-sponsored by Mayor Gavin Newsom — would also require employees hired after July 1, 2008, to contribute up to 3 percent of their earnings to a “new employee retiree health trust fund.”
Elsbernd said his proposal has yet to gain the support of labor unions.
“They’re not happy. They don’t like it. It frustrates me. No one likes to see change on the paycheck [but] this is about the solvency of the employer,” he said.
The charter amendment would also allow The City to take a portion of funding from its “rainy-day reserve” to pay for the retire health benefits, among other provisions.
The increasing cost of retiree health care “is a serious problem that threatens the long term fiscal stability of The City and we need to address it now,” Newsom spokesman Nathan Ballard said.
In order to make it on to the June ballot, Elsbernd would need six votes fromhis colleagues on the board. The deadline to place a charter amendment on the ballot is Feb. 12.
Elsbernd said that if he doesn’t get the support of his board colleagues he would seek to get it on the ballot through a voter petition.
Elsbernd’s proposal will not be the only one under consideration. Supervisor Gerardo Sandoval said he plans to introduce a charter amendment as well to address the problem. Seen as a more labor-friendly ballot measure, Sandoval said his measure would “address the unfunded liability problem by getting employees to work longer and the way you do that is to give them an incentive to stay.”