Study reports San Diego can reduce health costs by $1 billion - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Study reports San Diego can reduce health costs by $1 billion

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SAN DIEGO (CNS) - San Diego's $1.36 billion unfunded retiree health care obligation would be reduced by nearly $1 billion if the benefit were eliminated for existing city employees, according to a study scheduled to go before the City Council Tuesday.

The 40-page study - prepared by a committee comprised of city officials and representatives of employee labor unions - found that if the benefit is
cut off for current city employees, San Diego's retiree health care shortfall would decrease from $1.36 billion to $442 million.

If the benefit is frozen at $8,880 annually, the unfunded retiree health care liability would drop to $969 million.

As it stands now, the shortfall for retiree health care costs is greater than San Diego's annual general fund budget.

Lowering retiree health care costs is one of the 10 financial reform measures that must be achieved before a proposed half-cent sales tax hike - if approved by voters in November - could take effect.

Last year, San Diego's employee labor unions agreed to the study on retiree health care. The benefit has largely gone unfunded, resulting in the huge potential obligation to the city and taxpayers.

Employee groups argue that retiree health care is a vested benefit and cannot be modified or eliminated. In January, City Attorney Jan Goldsmith opined that retiree health care is not a vested benefit.

The study was based on figures compiled by Buck Consultants.

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