Newsom Considers Committee To Evaluate Cost of City Employee Benefits, Including Retiree Health Benefits
In a recent interview, San Francisco Mayor Gavin Newsom (D) said that he plans to form a task force to consider benefits for retirees and current workers, including the "spiraling cost" of San Francisco's retiree employee health benefits program, the San Francisco Chronicle reports. The cost of San Francisco's retiree health benefits program is expected to increase from $23.7 million in 2001 to $68.8 million in 2004; the program is projected to cost $119.2 million by 2007. According to the Chronicle, a provision that makes the benefit available to city employees beginning at age 50 who have worked for the city for only five years may have caused San Francisco's spending on retiree benefits to increase higher than national averages. In addition, the retiree benefits program does not have income restrictions and employees who left their city jobs for positions with other employers still are eligible for city retiree benefits. Under the current retiree benefits package, the city pays half of retirees' health insurance costs, and retirees can enroll dependents in the program. According to Paul Fronstin of the Employee Benefit Research Institute in Washington, D.C., only 10% of private employers in 2002 offered employees retiree health benefits after five years of work, and those workers were not able to retire until they reached age 55. Newsom called for an evaluation of City Plan -- the most generous of the four health plans San Francisco offers to retirees -- because of high costs. According to the Chronicle, changes to employee benefit offerings, including health benefits, would require voter approval of a charter amendment. Newsom "has his eye on the November 2005 election" for pursuing such changes, the Chronicle reports.
Of the city's projected $352 million general fund deficit, $11 million can be attributed to the rising costs of retiree health benefits, according to Todd Rydstrom, director of budget and analysis for the city's controller. Rydstrom said, "We just can't afford everything, not as we are currently doing business." David Novogrodsky, leader of the Professional and Technical Engineers Local 21, the second-largest union in the city, said city retirees are not "getting anything they don't deserve," the Chronicle reports. Novogrodsky said that the city health insurance offering "is a very good insurance for the future. Otherwise you'd find people ending up on the public trough at [San Francisco] General Hospital" (Lelchuk, San Francisco Chronicle, 4/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.