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By Miriam Raftery

May 24, 2011 (San Diego) –San Diego City Council has approved the biggest cost cutting move in San Diego’s history: reforming retiree health benefits, which is estimated to save the City $714,000,000 in coming years.


“With this agreement the City is keeping faith with retirees and taxpayers by creating a sustainable benefit and freeing up hundreds of millions of dollars needed for City services like public safety, libraries and parks,” said Councilmember Marti Emerald, who announced the pending agreement during her recent State of the District address.


Emerald added that on the heels of recent pension reforms, taxpayers will be relieved of enormous financial burden during the years ahead. “This is truly a historic moment.”

For years, San Diego’s retiree health plan has been underfunded. The agreement erases $330 million in underfunding, according to actuarial data. It would also save the City’s general fund $33 million on its annual required contribution to the pension.



About 7,500 employees would be affected by the agreement, which creates three tiers for retirees. Employees close to retirement can opt to pay $100 a month and receive a $8,880 annual benefit when they retire. All other qualified employees can choose between a plan that costs $50 a month and provides $5,500 a year upon retirement or they can choose not to contribute and receive a lump sum of money, about $100,000, when they become eligible for retirement and be responsible for investing his or her own money. It's estimated the changes will save $714 million over 25 years, KPBS reports.

Councilmembers Carl DeMaio and Lorie Zapf voted against the plan; De Maio wanted to know the cost savings if the city would eliminate retiree healthcare entirely.

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