Prop. B

Today we deal with Proposition B.

Prop. B is a settlement the city reached with various union and worker representatives to head off an impending financial disaster. See, several years ago the city signed an agreement with various city worker unions and representatives that guaranteed health care benefits for life after retirement if an employee worked for the city for 5 years. So, say you were a low level janitor cleaning up schools- after 5 years, the city would guarantee your health care coverage after reaching retirement age, regardless of wherever or whatever you did after those 5 years. It doesn't really take a genius to realize that the city is on the hook for a lot of money once those employees start hitting retirement age; estimates put it at over $4 billion in total over the life of the agreement. This proposition is a revision to that agreement.

So, what does it do? An employee is still eligible for health care benefits after 5 years, but the city will not fully pay it upon retirement; instead, it bases payment on how many years one works for the city. A person with 10 years experience will get 50% paid, with 15 years will get 75% paid and a person with 20 years of service will get 100% paid. To help pay for these costs, the city will also establish a trust fund. The employee will pay 2% of their salary into the fund and the city will kick in another 1%. I will note that these provisions only apply to employees hired AFTER January 10, 2009. Additionally, wages are frozen for the 09-10 fiscal years to help the city pay and set up these new programs. Finally, there are associated changes to the pension and retirement benefits by raising the percentage of final salary and what age a former employee can earn a pension- 2.3% of the final salary will be available when a former employee reaches the age of 62.

Ok, that was really confusing. The basic thing to take away from all of this is that the city is trying to fend off an unfunded retirement health care fiasco. The city had not been accounting for these increases in retirement benefits and health care as part of their normal budgetary process, and this is a way to help meet that expected increase. At this point in the game, any solution probably looks good, and that an agreement was reached on this at all is important. I have no idea if this will ultimately make any difference in helping the city meet its duty to provide for retired employees, but it certainly looks like it can't hurt. Coupled with an employee funded trust fund, I don't think it will make up all the difference, but every little bit helps.

So, with all of that enthusiastic praise, go ahead and vote Yes on Prop. B.