Sunday, January 24, 2010

Political Opinion

It has been a long time since I have taken the time to read material about our pension, DROP and retiree medical. This weekend I read with interest our illustrious City Attorney’s latest attempt at a legal opinion (Opinion Number 2010-1) related to “Pension Benefits and Other Post-Employment Benefits.” “Just Wondering” beat me to the punch in detailing the highlights of this political opinion. I call it a “political” opinion because I firmly believe a first year law student could challenge much of what has been written and successfully refute the many opinions offered.

I believe, as “Just Wondering” has stated, the “opinion” is a clear play book of where the City is headed in negotiations that have just started. The city attorney’s writings will no doubt result in an “Un-Fair” labor practice complaint by the other unions when changes are imposed because the city team is unwilling to change their demands during negotiations this year. As police officers, we cannot file “Un-Fair” labor practice complaints because we are not covered by the Public Employees Relations Board (PERB).

The issue most on my mind as I read the opinion is the retiree medical benefits and the changes already undertaken and changes undoubtedly coming. I entered the DROP in June of 2007. When I signed my “DROP Contract” I had to initial twenty-four (24) items agreeing to and acknowledging the terms of DROP. The title of the form; “DEFERRED RETIREMENT OPTION PLAN (DROP) ELECTION TO PARTICIPATE IN DROP AND AGREEMENT TO TERMINATE EMPLOYMENT” is four (4) pages in length and spells out the terms.

The salient points of the agreement are in bold type. The agreement as written on the first page reads;

“Once you enter DROP, you will not be able to change your election to participate in DROP or your agreement to leave employment and retire, regardless of what happens between now and your retirement date. For example, if you elect to participate in DROP and your family circumstances change such that you would rather continue working, you still must retire at the end of your designated DROP period. Also, if any benefit improvements occur between the time you enter DROP and the date you retire, you will not be eligible for these improvements.

This Agreement is designated to help you think through your decision to participate in DROP. You should consider this decision very carefully. This Agreement asks you specific questions to ensure the Retirement Administrator and the Retirement Board that you have, in fact, carefully considered your decision to participate in DROP, and that you understand the consequences of your decision. In fact, your decision is so important that you will have 7 calendar days to reconsider your election to participate in DROP after you sign it.

Please take these questions and this Agreement very seriously. If anything is unclear, do not complete this Agreement without first speaking to a Retirement System staff for clarification.

The Retirement System and your employer will rely on the following facts. Each is important because it demonstrates you have carefully considered your election to participate in DROP.”

The process is clear for entering DROP. Each person sits with a Retirement System staff person who explains all of the details of the agreement. On page 2 of the agreement there are ten (10) statements you must initial. The eight statement states;

“I understand that if benefits are improved or otherwise changed after I enter DROP, through meet and confer or any other process, I will not be eligible for any of these benefit improvements or changes.”

In 2007, when I signed my DROP contract agreement, the MOU with the SDPOA for which I and the City were bound, stated I would receive retiree medical benefits; my DROP account would earn guaranteed interest in an amount equal to the amount earned by the plan (the amount to be set by the actuary as the assumed rate) and the annuity was set at 8%.

According to the agreement (contract) I signed, the city could not change these agreed upon “retirement benefits.” First the change in the amount of interest earned on DROP accounts was forced upon DROP participants; then the retiree medical insurance benefit was reduced; and finally the annuity interest rate was reduced.

According to the DROP agreement I entered into; “if benefits are improved or otherwise changed after I enter DROP, through the meet and confer or any other process, I will not be eligible for any of these benefit improvements or changes.” Remember the first line of the last paragraph on the first page of my DROP agreement; “The Retirement System and your employer will rely on the following facts.” Yet the City Attorney has opined the city can make changes at will and I am bound by these changes. So my signature on the agreement seems to only bind ME to the agreement.

Let’s take a look at what the City Attorney wrote in his latest opinion regarding Retiree Health Insurance. Beginning on page 54 of the opinion the City Attorney discussed the “RETIREE HEALTH BENEFIT.” I believe the City Attorney’s opinion is clearly not supported by the facts.

On page 59, the Purpose and Intent of Division 12 of the Municipal Code was set forth as follows:

“Effective August 1, 1997, a health insurance program shall be offered to Health Eligible Retirees as set forth in this Division. This benefit shall be administered by the Retirement System, Notwithstanding any other interpretation of law to the contrary, it is the intent of the City Council to deem this benefit as defined and vested within the meaning of City Charter section 143.1 for those individuals who are retired on the date this benefit becomes effective and thus attain the status of Health Eligible Retirees by operation of law. Health Eligible Retirees may enroll in a City Sponsored Health Insurance Plan or participate in the plan of their choice, subject to payment and reimbursement limitations set forth in this Division. For active employees, this benefit may only be modified in accordance with provisions set forth in section 23.1204 and after a vote of approval by active Members. This City Sponsored Health Insurance Plan shall include at least on HMO plan and at least one PPO plan.”

Clearly in my mind, the City Council agreed to provide retirees Health Insurance when they enacted the above Municipal Code. “The retiree health benefit was initially created when the City withdrew from the Social Security System, effective January 1, 1982. The City Council first authorized the establishment of a City-sponsored group health insurance plan for eligible retirees on January 4, 1982. The City declared that certain benefits would be provided to employees in lieu of social Security participation including City-sponsored group health insurance for eligible retirees of the City. The City Council stated, “it is the intent of this Council to provide such coverage as a permanent benefit for eligible retirees.”

When I entered DROP, I became a “Health Eligible Retiree” if you apply the ruling in Thorning v. Hollister School District, 11 Cal. App. 4th 1598 (1992). The last paragraph of the City Attorney’s political opinion clearly makes my case. The City Attorney wrote;

“In addition to the holding in Thorning, there are several factors that support the conclusion that retiree health benefits as to retirees are vested. First, unlike active employees, retirees can demonstrate a detrimental reliance on the representations and promises made by the City in relation to the provision of the benefit. Second, unlike active employees, retirees have retired with the actual provision of the benefit. Third, unlike most active employees, retirees likely were employed in the 1981-1982 time period when the City ceased Social Security participation, and in turn promised a retiree health benefit. Fourth, unlike active employees, retirees are not represented by the employee bargaining groups that negotiate changed in the benefit. Even if the court does not find the retiree health benefit to be a vested benefit for retirees, it is likely that retirees can successfully claim that the City is estopped from eliminating or detrimentally modifying their benefit.”

The contract I signed states my benefits could not be altered for the better or worse through the collective bargaining process (meet and confer). The Retirement System recognizes me as a “retired” member; the City recognizes me as an “active employee” and subject to all changes.

The City continues to alter the DROP contract I entered into in good faith. The City Attorney opines this is acceptable and the contract I signed is not binding on them. The mayor reduces retiree medical insurance, forcing hundreds to retire before anticipated and refuses to acknowledge a twenty-eight (28) year agreement entered into when then Mayor Pete Wilson asked employees to withdraw from Social Security with the promise of a City provided retiree health insurance.

The posturing, pontificating and continued attack of employees and their benefits is unconscionable. The press, members of the city council, mayor and pundits all spin, twist, exaggerate and flat out lie about current benefits with impunity. The mayor if you remember said DROP and our other retirement benefits were “political” and he refused to tell the truth about them from the very beginning. His political career more important to him than honesty, integrity, or the men and women who put their lives on the line on a daily basis.

To all of those already retired, it appears the City Attorney has put to rest any thoughts of going after any of your benefits. Rest easy and enjoy the retirement you earned and paid for. It is also clear the City Attorney has given a license to the mayor to further eviscerate retirement benefits of Police Officers.

The little rube, Lani Lutar, editorials in the Union Tribune and others continue to assail benefits earned by Police Officers as being excessive and not sustainable. The mayor made a comment at the beginning of his State of the City address that highlighted why you should all be concerned with the people who a clamoring for reductions to your benefits. The mayor was ad libbing at the beginning of the address and not following his prepared speech. He laughed and said his staff gets nervous when he goes off the script. No doubt his many handlers have been telling him he needs to satisfy the calls for further reductions and elimination of benefits.

The latest revelation the city is required to contribute an additional $19 million dollars to the Retirement System should not come as a surprise to anyone. The mayor forced hundreds of senior employees to leave city service and scare hundreds more to enter DROP, in many cases years before planned as well as refusing to allow new entries into the system and the layoffs of hundreds; all contributing to fewer dollars being contributed by members requiring the City to make up the difference. This is but a drop in the bucket of things to come because of the City’s short sighted actions.

The worst is yet to come in my opinion. I am a glass half full type of person but also a realist. With the current climate and lack of testicular fortitude to do what is right, we are left with politicians who simply lick a finger and place it in the air to gage current wind direction so they can ensure they are not heading into that wind for fear of having a rough go of it.


Just Wondering said...


Will the legal opinion recently published by City Attorney Jan Goldsmith being another run to the retirement door? Who knows, but in a piece in today's VoSD they've reasoned that those City employees who are already retired are safe with their retiree medical benefits.

Active employees and their retiree medical benefits...well that's a whole other enchilada and Goldsmith believe completely negotiable.

With the current trends all solidly against government employees and their benefits no one needs a crystal ball to predict where we're headed.

The question is will there another stampede for the door.

Just Wondering said...


Today the California Supreme Court tossed out all of the conflict of interest criminal complaints against all defendants except Ron Saathoff, former head of the Fire Fighters Union and former SDCERS Board Member.

The Court said all of the defendants except Saathoff received same pension benefits as other city workers so no conflict occurred.

Saathoff on the other hand, negotiated for, and received, the so called Presidential benefit tied to a combination of his wages as leader of IAFF Local 145 and his pay as a Fire Captain for the City of San Diego. The Court let that complaint against Saathoof stand so a determination would be made at the trial court level.

Over the past several years the IRS ruled the so-called Presidential Pension benefits illegal.

Still a City employee said...

It’s been a long time since the City decided to remove its employees from social security, Medicare, etc. and start its own retirement system. Somewhere in the back of my mind, I remember reading that in order for the City of San Diego, Inc. to do so, they would have to provide an adequate retirement payment and a retiree health care benefit, since the employees would no longer be eligible for a federally sponsored benefit. In other words, the City had to promise that it would take care of its employees and ensure that they were never a financial burden the Federal Government, i.e. claiming indigent care, welfare, etc.

I am one of the current employees who the City never covered with Medicare. It was never even optional for me. The City of San Diego had promised to pay for my health care upon retirement. Now they want to eliminate, limit, reduce or severely restrict that benefit! Someone (labor unions??) needs to research the original agreement and benefits negotiated throughout the last thirty years! I know of one retired City Attorney that is very knowledgeable in this area. Maybe he should be utilized as a resource!

The pre and post Medicare issue needs to be addressed. Those pre Medicare employees do not have anything to fall back on as far as supplemental health care. Shouldn’t the City be obligated to insure them? What a mess, and it all boils down to the City attempting to back out of promises made years ago, and the City’s underfunding into the retirement system.

Tired of the BS said...

The POA is not a 'labor union'; it's not even a 'union' for gawd sakes. It's an 'association' akin to the Thursday Club of La Jolla. Don't expect anything from the POA. Are they trying? Absolutely, but they just don't have the experience at the top to help its members whatsoever. The sad part of it all is they ALL know it!

The members should reorganize the POA into a real 'union' so the REAL truth can be told without repercussions!