Willow Glen Resident
News
City council and union leaders scuffle over retirement benefits
By Stephen Baxter
San Jose lawmakers rolled up their sleeves in early August for a probable scuffle with city unions about employees' retiree benefits.
Mayor Chuck Reed again called San Jose's structural budget deficit "public enemy No. 1" and pointed to city projections that show unfunded retiree health benefits totaling more than $1 billion.
On Aug. 7, the city council heard the first staff presentation on changing the benefits as well as the reaction of some rankled workers and union leaders.
The mayor's staff said San Jose residents should be concerned because money tied up in benefits could limit spending on other projects at parks and libraries.
"If we don't solve the deficits long-term, all of the concerns [residents] have about parks maintenance and other matters will be more difficult to solve," said Michelle McGurk, spokeswoman for the mayor.
Starting in 1984, San Jose city employees who worked for at least 15 years became eligible for retiree benefits. City workers include police, firefighters and federated employees.
Retirees' medical benefits are paid half by the city and half by the retiree, and dental benefits are paid 75 percent by the city and 25 percent by the employee. They receive a separate pension.
The city now pays retirees' benefits out of its current revenue and sets some aside for the future. The city staff calls the method "partial pre-funding."
In a July 24 memo, the staff recommended phasing in full pre-funding to save more money for future benefits. Putting more money into pre-funding will save the city $500 million over paying "as you go," said Alex Gurza, director of employee relations for San Jose.
Changes might also limit future retiree benefits.
Union leaders acknowledged that San Jose's benefits are more generous than those of other cities and agencies, and that the benefits have attracted workers. Unions met with city officials after the memo was released.
Erik Larson, president of Local 101 of the American Federation of State, Local and Municipal Employees, said he hoped the council would be open to compromise.
"We want to see an honest dialogue about this issue," Larson said at the council meeting.
Councilman Sam Liccardo indicated more support for full pre-funding than the other council members, who mostly wanted more facts. Willow Glen Councilman Pierluigi Oliverio called the workers' benefits "a massive issue," but did not make any commitments.
