Ruling on retiree health benefits may help city cut deficit

City News Service

The city of San Diego might be able to lower its $1.36 billion deficit for retiree health thanks to a judge's ruling that the benefit was optional and not vested, the City Attorney's Office announced Friday.

The ruling by San Diego Superior Court Judge Ronald Prager came in a lawsuit filed by two police officers who wanted to end an $8,880 annual limit on city contributions to ex-employees' health care. The court case tested a section of the City Charter that says changes to retirement benefits must be approved by a vote of employees.

Prager noted that the charter says the city "may" offer health benefits to retirees at its discretion, so it was not subject to employee approval.

But since it was a term and condition of employment, City Attorney Jan Goldsmith said San Diego officials are still obligated to bargain in good faith on retirement benefits.

"This decision brings an opportunity and a choice,'' Goldsmith said.

"We can either continue litigating this issue for years through the appellate courts or we can resolve retiree health by coming together on a reasonable plan that will save taxpayers hundreds of millions of dollars. This court ruling offers an opportunity to get results.''

Goldsmith said the retiree health benefit amounts to about one-quarter of the unfunded pension liability, and affects employees hired before 2005. The benefit was eliminated for those hired after 2005.

Increasing pension payments have put a squeeze on the general fund, which pays for many city services.

The city faced a $56.7 million shortfall for the upcoming fiscal year, a gap Mayor Jerry Sanders opted to close, in part, by severely cutting hours at libraries and recreation centers.

   
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