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Listen to this auto-dial message the Otay Water District sent out Friday. The minute-long dialogue highlights a point I made in my story today: how the district is omitting any reference to the liability it could be taking on as it makes it case for promising its employees lifetime health care after they retire.
Mark Watton, the district’s general manager, said the message went out after the San Diego County Taxpayers Association (which provided us the clip) did its own auto-dial message criticizing the deal, eliciting 300 phone calls to the district in a 30-minute period. Watton said the district’s call only went to people who’d called.
The message begins by saying the district “would like to clear up false information being spread about board actions.” It continues:
First, the district is not voting next week on any proposed change to your water rates.
That’s true. The district has already approved a 7.7 percent water rate increase that goes into effect in January. It continues:
The board is scheduled to hear a proposal from district employees regarding health care benefits. This is a cost-neutral proposal that will have no impact on water rates. If approved, it will be entirely funded by employee contributions.
District leaders have made similar pitches, both on their website and in a Union-Tribune op-ed.
But the proposal won’t be “cost neutral” in its first year, nor will it be entirely funded by employee contributions the first year. It will cost the district $439,100, according to projections. It wouldn’t save money until 2018, district figures show.
The district expects the deal could save $5 million total between now and 2046. District leaders acknowledge, however, that there’s no guarantee the health care deal will save money long-term, even though they say their savings projections are conservative. “Guarantee would be a strong word,” Watton told me last week.
Why? Because health care costs could rise faster than the district projects. And while the district will have to pay its health care tab for retirees, no matter how much the bill is, it has limited how much employees will contribute.
As I noted in my story today:
Whether the district ends up saving those millions depends largely on whether it has accurately projected health care costs. If they end up being higher than expected, the district will be on the hook. If they aren’t, the district could save.
To fund the deal, non-union employees will pay 8 percent of their salaries toward their pensions (up from 1 percent today). Union employees will also do that and contribute an extra .75 percent to their health care.
That’s enough to save money in the short term, district figures show. But retiree health care is a long-term expense — one that other government agencies across the country are currently trying to shed.
The district’s board has already awarded the benefit to non-union employees. It will decide Wednesday whether to award it to its union employees. It meets at 3:30 p.m. at 2554 Sweetwater Springs Blvd., Spring Valley.
Rob Davis is a senior reporter at voiceofsandiego.org. You can contact him directly at rob.davis@voiceofsandiego.org or 619.325.0529.
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