Proposition E - Medical Benefits for Retirees

Voter Guide
November 1, 2000
This measure appeared on the November 2000 San Francisco ballot.

 

What it does

The intent of this proposed charter amendment is to achieve more parity between the health benefits of active and retired employees. It would have the city (or the school district, or the community college district as the case may be) pay half of the out-of-the pocket costs for health insurance for retired employees and one dependent. The amendment was placed on the ballot by the Board of Supervisors and the Mayor.

Why it is on the ballot

Since 1937, the city has sponsored employee health benefits. A 1973 charter amendment provided that the city would contribute to the cost of health care premiums and that retired employees would pay the same amount for health care premiums as did active employees. A disparity between active and retired employee health benefits arose in 1990 when active employees gained the right to negotiate wages and benefits through collective bargaining. The active employees negotiated agreements that public entities would pay 100% of the insurance costs for both employees and dependents, eliminating any employee contribution. Dental insurance for employees and dependents was also added. These 1990 negotiated agreements did not apply to retired employees. As a consequence, when an employee retires he or she effectively loses up to $4,000 per year of employer contributions toward the cost of medical and dental coverage.

Pros

Those who support this measure state:

  • The passage of this charter amendment would reduce some of the disparity between active and retired employees. This is a matter of fairness.
  • Because retired employees by definition do not engage in labor contract negotiations, they do not have the ability to negotiate changes to their benefit package. But given the everescalating cost of medical care and the lack of universal health coverage in the United States, the old health benefits are not sufficient. Given that benefits are set by the charter, there is no other recourse for retired city employees than to bring this measure to the ballot.

Cons

Those who oppose this measure state:

  • The Retired Employee Association is yet another group attempting to take advantage of the current city budget surplus to advance their special interests. Their proposal will increase the ongoing cost of city government. If city revenues decline in the future, there is no provision to modify this benefit cost as might occur during active employee contract negotiations.
  • The school and community college districts do not have current budget surpluses; therefore this charter amendment may reduce funds for educational services or for salary and benefits for active employees.
  • The charter amendment is a piecemeal approach to resolving the disparity. It invites future charter cluttering amendments rather than setting a percentage formula relationship between active and retired employees that would reflect the changes in the health care program as well as economic and revenue realities.
  • The city’s retirement package is already far more generous than most private employers would provide, and certainly no private employer would consider these new benefits. As it is, one has to work for the city for only five years, and can then leave to work elsewhere, and be able to collect the full package of retirement benefits.

SPUR's analysis

If voters adopt this charter amendment the city, the community college, and the school district would each contribute 50% of the out-of-pocket costs that retired employees now pay for medical premiums. The proposed amendment would also add a new benefit requiring the agencies to also pay half the cost of providing health coverage for one dependent of each retired employee. It would not cover dental insurance. The total annual cost for covering the 17,000 retired employees would be $12 million ($8 million for the city; $2.5 million for the school district; and $1.5 million for the community college district).

While universal health care may be an appropriate goal in our prosperous society, this is not the way for the city to pursue that goal. We believe the city does have an obligation to take care of its long-term employees. However, as long as the system remains such that one has to work for the city for only five years, SPUR cannot support measures like this, which invite individuals to take advantage of the system.

SPUR recommends a "No" vote on Proposition E.