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Rules Committee advances broad charter amendment on pensions and retiree health to special meeting after extensive testimony
Summary
The Rules Committee adopted technical amendments and moved a 250+ page charter amendment (pension tiers, employee cost-sharing, supplemental COLA rules, and Health Service System changes) to a special Rules meeting after lengthy presentations by department staff and extensive public testimony, much of it from retirees opposing changes to the Health Service System board.
The Rules Committee on June 23 advanced a comprehensive charter amendment addressing city retirement benefits and retiree health care after a two-hour staff presentation and extensive public testimony. The measure, sponsored by Mayor Lee and supervisor co-sponsors, was amended at the hearing and formally continued to a special Rules meeting Tuesday at 09:00 for further consideration.
Mickey Callahan, director of the Department of Human Resources, summarized three principal elements: new pension tiers for future hires (including a move from a two-year to a three-year final salary average and caps on pensionable salary); a cost-sharing "floating" employee contribution tied to actuarial changes that would take effect when labor contracts expire; and modifications to supplemental cost-of-living adjustments (COLAs) so that supplemental COLAs for new hires would be paid only when the system is fully funded. Callahan also described changes to the existing "vesting retirement" annuity benefit, replacing a 100% match with a 50% match for certain shorter-service separations.
"These changes are intended to provide long-term structural savings and to encourage longer service, which in turn reduces retiree health liabilities," Callahan said in his presentation. He emphasized that many elements affect only new hires or require contract changes before they can be implemented.
Public testimony was lengthy and sharply divided. Union representatives said the package was a negotiated, balanced response to pension cost increases and expressed willingness to share costs. Retiree groups and Health Service System board members urged removing changes to the Health Service System board from the package and raised alarm about the proposed change to the board—9s voting majority and potential impacts on retirees—9 access to providers. Several speakers also warned that the plan risked reducing supplemental COLA benefits for low-income retirees.
The committee adopted the technical amendments presented at the hearing and continued the item to a specially noticed Rules Committee meeting on Tuesday at 09:00 to allow for additional public comment and further cost analysis from the controller—9s office. Supervisors noted the need for a complete controller costing and technical review of actuarial assumptions before final action.
The full scope of the amendment runs to more than 200 pages in the committee packet; staff said the final legislative language and supporting actuarial analysis will be posted online and supplied to the Board before the follow-up hearing.
