Supervisors send charter amendment to ballot to pre-fund retiree health care and cap employer contributions

The Board of Supervisors voted to place a charter amendment on the November ballot that, according to sponsors, would shift San Francisco from a pay-as-you-go model to a prefunded retiree health care trust, cap employer contributions, and revise governance of the trust.

Supervisor Farrell, the measure's sponsor, told colleagues the amendment targets the city's roughly $4.4 billion unfunded retiree health care liability and aims to eliminate it in approximately 30 years by establishing employer contribution caps and moving to fully funded employer subtrusts. "Through the measure, we're gonna effectively switch from a pay as you go model to a fully funded model to pay for our retiree healthcare costs," Farrell said during debate.

Supporters described the proposal as a bipartisan compromise that included labor, business and retiree groups, and said it provides more predictability for the city's budget while protecting earned retiree benefits. Farrell noted the coalition Protect Our Benefits, representing current and retired employees from city departments and related agencies, had been part of the discussions, and listed a series of public-employee unions and business groups that endorsed the measure.

Why it matters: the charter amendment would change the city's long-term liabilities and how retiree health benefits are funded and governed. Backers said pre-funding will allow investment returns to help pay future benefits and reduce pressure on future taxpayers; critics (not recorded in this hearing) have historically worried about impacts on current budgets or benefit changes.

Vote: The clerk recorded 11 ayes; the board submitted the charter amendment for placement on the November ballot.

Ending: Sponsors said they will continue to work with labor and community stakeholders during the outreach and campaign phase before the ballot decision.