San Diego, Unions in Heath Care Deal

San Diego has reached tentative agreements with its employee unions on a retiree health care plan that will save the city more than $700 million over the next 25 years, according to Mayor Jerry Sanders.

The plan requires employees for the first time to contribute to the retiree medical costs and allows the City Council to change the agreement if finances worsen, according to a statement from the mayor.

The tentative deals will reduce the city retiree health care liabilities immediately by $323 million, the statement said.

San Diego retiree health care liabilities have been pegged at $1.13 billion.

“The city began offering retiree health benefits to employee in 1982, but subsequent administrations failed to track the liability associated with the active employees and retirees, resulting in significant unfunded liabilities,” the statement said.

The city recently won a court ruling that affirmed that retiree health care benefits, unlike pension benefits, don’t become vested until retirement, rather than when an employee starts working.

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