Statement: “No other city has had discussions about retiree health reform. We’re in those discussions and negotiations and we’ll continue with those,” Mayor Jerry Sanders at a press conference Aug. 5 promoting November’s financial reform ballot measure.
Analysis: Of the 10 fiscal reforms on the city of San Diego’s November sales tax ballot proposition, reducing retiree health care costs is city’s the biggest opportunity for savings.
The city owes more than $1 billion in health care costs to retirees and current employees once they retire. It has funded only 3 percent of that amount and doesn’t pay enough to keep the liability from increasing each year.
At a press conference this month of ballot measure supporters, Mayor Jerry Sanders said voters should trust city leaders to make strong reforms because they have in the past.
San Diego, Sanders said, was talking about cutting retiree health care benefits and no other cities were.
Recent national surveys show numerous cities, counties and states all are not only talking about reducing health care benefits and liabilities, but also actually making those cuts.
A study on retiree health care released this month from the Center for State and Local Government Excellence, a Washington D.C.-based nonpartisan think tank, showed of the 112 jurisdictions examined since 2007:
• 36 percent have increased or plan to increase the years of service required to vest;
• 11 percent have increased the retirement age;
• 39 percent have eliminated or plan to eliminate retiree health benefits for new hires.
“Local governments have already implemented policies, are talking about implementing different policies or are at the least examining it,” said Joshua Franzel, the center’s vice president of research.
The U.S. Government Accountability Office also showed last November that local governments are reducing health care liabilities. Gainesville, Fla., the report notes, cut its liability by $6 million, or 12 percent.
New government accounting rules established in 2004 prompted many of these discussions, the studies said. The rules require governments to declare their retiree health care liabilities in public financial statements to bond investors.
The city of San Diego’s primary strategy so far has been to talk about cutting benefits. A joint city-union study on the benefit is expected next month and negotiations on reducing retiree health costs will commence soon after. City union contracts mandate those negotiations and the ballot measure, if it passes, would do the same. The city has frozen its health care contribution rates for some employee groups.
Sanders’ office doesn’t dispute our Fact Check’s findings.
“I don’t think he meant to mislead,” Sanders spokeswoman Rachel Laing said. “But I don’t know what information he was working off of when he said that.”
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— LIAM DILLON