Mayor and white-collar union reach a deal on retiree healthcare

The San Diego Mayor's office and the union that represents the city's white-collar workers have reached a tentative deal that they say would reduce the city's humongous retiree-healthcare liability by more than $300 million. That's nearly a 30-percent cut in what the city would owe the healthcare fund—from the current $1.12 billion down to roughly $800 million. 

For the reduced benefit to take effect, the deal would have to be approved by six of the eight members of the City Council and be ratified by members of the union, the Municipal Employees Association (MEA). Although the deal was negotiated between the Mayor's office and the MEA, it is likely be presented to four of the city's other five employee unions—AFSCME Local 127 (blue-collar), IAFF Local 145 (firefighters), the Deputy City Attorneys Association and the union representing the city's lifeguards. The situation with the remaining union, the Police Officers Association, is complicated by a lawsuit filed against the city over benefits.

Under the deal, the city and its workers would be bound by a 15-year memorandum of understanding. The terms would apply to employees hired before July 1, 2005 (those hired after that date are excluded from the city's retiree health plan) and who retire after April 1, 2012. Those employees would be allowed to choose from three options:

• The current guaranteed benefit of $8,880 with an annual escalator of 2 percent. The difference is that employees choosing this option—which is available only to workers nearing retirement—would contribute monthly to the plan.

• A guaranteed benefit of $5,500 with no annual escalator, requiring a smaller monthly contribution.

• A defined-contribution plan that aims to approximate an annual benefit of $8,500. The amount the retiree receives is subject to investment losses, but it doesn't cost the employee anything.

If the deal falls through, the parties would be left with the city's last and best final offer, which the Mayor's office proposed to the unions last month. Under that, retirees would get a guaranteed allowance of $5,500 with no annual escalator and the eligibility age would be raised from 55 to 60 for most workers and from 50 to 55 for police officers and firefighters.