SAN DIEGO (CNS) - The San Diego City Council gave its blessing Friday to 15-year agreements on health care for retirees with five of the city's six employee unions.
Mayor Jerry Sanders said the deals could save the cash-strapped budget more than $700 million over the next 25 years by capping city contributions and requiring workers to pay into their health plans.
Under the old system, the city would be on the hook for $2.49 billion in retiree health benefits. The new deals are expected to lower that number to about $1.72 billion, according to an actuarial report.
The mayor's office also believes the deals will soon allow the city to pay its full annual contribution for the first time. The unfunded liability has grown to about $1.13 billion over the years.
Payments for retiree health and pensions are consuming larger portions of the city's revenue pie, lowering the amount of money available for the general fund, which pays for public safety, libraries and recreation centers.
"This is a business decision that significantly reduces the city's costs and makes (the benefit) a sustainable program," said Andrea Tevlin, the city's independent budget analyst. She also said the deal was fair to employees.
Council approval came on a 6-2 vote, with Carl DeMaio and Lorie Zapf dissenting.
DeMaio said the mayor's office failed to demonstrate the level of savings the city would generate under various scenarios, and said municipal employees would receive benefits that the average taxpayer "does not even dream to receive."
DeMaio asked several times how much the savings would be if the city dropped the retiree health benefit entirely, but did not receive an answer from staff, who said that was never part of the discussion with the labor unions.
The councilman questioned the necessity of the city paying for the health care of retirees on top of already-generous pensions.
He and Zapf both said the city could have saved even more money, but City Attorney Jan Goldsmith said the agreements will abort lawsuits by the unions.
"A settlement means you give something and you get something," Goldsmith said.
The city's white-collar workers and firefighters tentatively agreed to the deal last week, pending ratification of their memberships. Lifeguards, blue-collar employees and deputy city attorneys signed on this week.
Sanders earlier said the Police Officers Association probably won't agree to the deal and could take the issue to court.
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