August 9, 2007

City council begins discussion on retiree medical benefits

Passes mayor’s task force member list for General Plan update

By Carol Rosen
Editor

The San Jose City Council met for the first time after a five-week hiatus with the session’s major topic beginning discussion on retiree medical benefits.

The topic, guaranteed to bring out strong feelings from employees and unions, did just that with more than 40 people signed up as public speakers to ask for employee inclusion into the process. However, not all those people got to speak, the council meeting was to end at 4 p.m. so that the council could return to closed session to discuss the auditor’s office (see related story, page 1).

The mayor provided a one-hour discussion session, giving 20 minutes each to the staff members researching the program, city council members and members of the public. The public was limited to one-minute instead of the usual two, and due to those time constraints only 17 people were allowed to speak.

The issue concerns both federated or city employees and members of the fire and police departments. When hired, these employees were given a benefits plan that included medical benefits upon retirement as well as a pension. Most were told they would be vested after 15 years.

However, there are potential problems associated with the benefits now, most notably the city’s structural budget deficit and the possibility that city could reach an unfunded liability for future retiree health care needs of $1.65 billion.

Mayor Chuck Reed opened the discussion stating that Tuesday’s discussion was the beginning of the process. This is the starting point in a “much longer discussion. It’s part of a process to get the city council, city employees and the public to get out and to look for methods of solving the situation,” he said.

“There are many more phases and stages and the costs already are large. The situation won’t go away and it won’t mellow with age…We need ideas and solutions from all corners of the city…we have to look at all the options, even the ugly ones,” he told a packed council chamber.

The new city manager, Debra Figone, followed with a speech noting that the council respects and values the city’s “dedicated employees. This is a significantly challenging topic for employees and the city, and it’s an unsettling topic. We’ve made no decisions yet, but we need education and to keep the lines of communication open.”

The next step was a staff presentation by Human Resources Director Mark Danaj, Finance Director Scott Johnson and Employee Relations Director Alex Garza. They prefaced their remarks by saying that other cities were facing the same problems and that there were many options available, but the key strategy is a long-term approach.

When the current plan was developed, in 1984, there were 1,100 city employees, today that number has grown to 3,400 and costs have risen exponentially. Acknowledging that employees as well as the city contributes to the program, it still will cost the city a significant amount to continue to pay retiree health care benefits.

District 10 Councilmember Nancy Pyle then led the council discussion on possible solutions including inquiries as to what other cities with similar problems are doing.

Garza said the staff currently was in the process of discovering how other cities are handling the problem. “The outlook is daunting, but the options are diverse and wide ranging,” Garza answered.

Councilmember Sam Liccardo said there is state legislation in the pipeline that would allow San Jose to join CalPers, which offers retirement and health benefits to public employees, retirees, and their families and more than 2,500 employers, providing yet another option. Garza noted that while the state legislation may provide an option, it is not yet law and there’s no proof it will become law.

“When you look at that $1.65 billion, you know that it requires surgery…we need to take an honest approach at the front end, the cuts appear somewhat inevitable because the city must become solvent,” Liccardo said.

Councilmember Judy Chirco suggested that the staff partner with “other city, state and national municipalities to find options that would help.”

Along with Forrest Williams, Madison Nguyen and Dave Cortese, Chirco suggested that more employees be allowed to participate.

“They [the employees] run the place and they are the reason why the city exists. The key is we don’t expect them to bear the entire burden [of the deficit or their retirement],” said Williams.

Finally, city employees and their labor unions had their 20 minutes.

Most of those lucky enough to speak noted that one reason they took jobs with the city is the benefit package. Some included the number of days and hours per week they work, adding that taking away their retirement benefits “opens the door to an unsecure future.”

Many indicated they wanted to be involved in finding and determining other options. “We are a great group of employees that are not under any union,” said one speaker who works in the city attorney’s office, “we are good employees who have saved the city millions. It’s a breach of contract to take those benefits away from us now.”

One firefighter said he was there to represent the city’s 740 fire fighters. “We’re concerned about the process; limiting us to one minute isn’t fair. The process needs to be kept honest.”

Another union officer brought in 800 cards from city employees that are opposed to negotiating or changing without being involved in the dialogue.

Finally, Phaedra Ellis Lampkins, head of the South Bay Labor Council, told the Times after the discussion that she was pleased “the city council sent the message to the staff that employees need to be part of the process.”

The council unanimously voted to continue the item to Aug. 28.

With very little discussion and only a question about providing biographies for all 37 members of the new task force for the General Plan Update, the city council voted unanimously for the following people to be the task force members.

Task force members include co-chairs Sam Liccardo and Shirley Lewis along with Vice Chair David Pandori and Councilmembers Judy Chirco and Pierluigi Oliverio. Other members are Jackie Adams, council District 2 representative; Teresa Alvarado, Hispanic Foundation; Shiloh Ballard, Silicon Valley Leadership Group; Michele Beasley, Greenbelt Alliance; Beverley Bryant, Home Builders Association of Northern California; Frank Chavez, Story Road Business Association and Alum Rock School Board; Gary Chronert, council District 9 representative; Yolanda Cruz, City Labor Alliance; Pastor Oscar Dace, Bible Way Christian Center; Harvey Darnell, Neighborhood Organizations; Pat Dando, San Jose Silicon Valley Chamber of Commerce; Dave Fadness, council District 10 representative; Enrique Fernandez, council District 7 representative; Phaedra Ellis-Lampkins, South Bay Labor Council; Leslee Hamilton, Parks and Recreation Commission; Sam Ho, San Jose/Evergreen Community College District; Dan Hoang, Vietnamese American Federation of Northern California; Lisa Jensen, council District 3 representative; Frank Jesse, BEA Systems, Inc.; Matt Kamkar, Planning Commission; Nancy Ianni, council District 6 representative; Charles Lauer, council District 1 representative; Karl Lee, Chinese American Real Estate Association; Linda LeZotte, Berliner, Cohen, LLC; Dick Santos, council District 4 representative; Patricia Saucedo, National Association of Industrial and Office Parks; Erik Schoennauer, land use consultant; Judy Stabile, past deputy director, San Jose Downtown Association; Neil Struthers, Santa Clara County Building Trades Council; Alofa Talivaa, council District 5 representative; Michael Van Every, Republic Urban Properties; and Jim Zito, council District 8 representative.