City may cap retiree health outlay

If city employees don't agree to start paying a percentage of their salaries for health insurance, the city should freeze the amount it pays for retirees' health care at current levels, the city's top financial officer said Thursday.

In a memo to Mayor Antonio Villaraigosa and the City Council, City Administrative Officer Miguel Santana recommends that city employees who retire after June 30, including police and firefighters, pay 100 percent of the increase in their health care costs in the future if they don't begin picking up some of the costs now.

The freeze would save more than $100 million a year - or $525 million over the next five years, Santana said.

He added that if the Coalition of City Unions accepts a tentative agreement to pay some of their health care costs going forward, then the freeze would not be necessary.

"If they approve the contract, they would not be affected by this cap," Santana said. "And, if other employee unions adopt the same contribution, they would be exempt."

The City Council is expected to take up the recommendation next week. It would require an ordinance to be drafted by the City Attorney and approval from the council and the mayor.

Currently, the city pays 100 percent of employee health care costs.

However, Mayor Antonio Villaraigosa and the City Council in mid-March announced

a tentative agreement with the Coalition of City Unions, which represents the bulk of civilian city employees, for workers to begin contributing to retiree health care for the first time.

If the Coalition, which represents 19,000 city workers in six unions, votes to approve the plan for employees to start paying 4 percent of their salaries toward health care July 1 - which is equivalent to a 4 percent drop in their take-home pay - the freeze would not go into effect for them. All other city workers would still be affected.

"Through collective bargaining, we have negotiated pension reforms that assure a secure retirement for city employees," said Barbara Maynard, spokeswoman for the Coalition. "City workers will have the opportunity to vote on these changes and ballots are now in the mail."

The Los Angeles Police Protective League adamantly opposes anything that is not an increase in city contributions to health subsidies.

"If subsidy increases are not granted, the retirees would have to make up for the difference out of their pension checks," LAPPL President Paul Weber said earlier.

Under the proposed changes being voted on by the Coalition rank and file, total pension contributions for coalition-represented workers would go up to 11 percent of their incomes, saving the city's General Fund an estimated $400 million over the next four years.

The city now pays about $1,100 a month to each retired employee to cover health costs - a total of $169 million from the general fund.

If it is not capped, Santana warned, the cost to the general fund will grow to $l.2 billion in 2014-16.

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