Ventura County Star
August 1, 2007

Ventura will cut health benefits for retirees

By Kevin Clerici

The Ventura City Council took steps to corral the soaring costs of
retiree health benefits this week, reducing long-standing subsidies
that will force dozens of former city employees to pay higher
premiums.

Ventura, like most local governments and school districts in
California, has put aside no additional money to cover the
fast-growing cost of delivering on healthcare coverage pledged to
workers once they hit retirement age.

REPORT:
http://www.cityofventura.net/newsmanager/articlefiles/2477-item%2006.pdf

In its most decisive move to date, the council voted 6-0 Monday to
eliminate some $440,000 in increased healthcare subsidies for 140
retired city employees at the end of 2008.

To soften the blow, however, the council agreed to dip into city
coffers to pay half next year -- $220,000 -- that otherwise could
have gone to pay for citywide services.

"I think a soft landing is important," Councilman Brian Brennan
said, echoing the sentiments of Councilman Ed Summers, who persuaded
his colleagues to extend a portion of the subsidy 12 months.

Retirees preferred the subsidy be phased out gradually over four
years.

"To do this to retired city employees, many of whom gave 20 to 30
years to this city, is unconscionable," Jackie Quintana, a retired
police corporal, told the council. "You are penalizing loyal retired
employees."

How exactly the $220,000 will be distributed among the retirees next
year has not been decided but will be done in the "most equitable"
manner, human resource officials said.

About 140 retirees -- 100 are not eligible for Medicare -- and
roughly 650 active employees use city healthcare plans.

Health insurance costs have risen dramatically in the past decade as
people are living longer and the cost of providing healthcare has
skyrocketed, said Jenny Roney, Ventura's human resources director.

Had the council decided to eliminate the full subsidy at the end of
this year as recommended, city calculations showed a retiree under
65 with no dependents would have seen his or her monthly HMO premium
of $302 increase to as high as $529.

New federal accounting rules are forcing public agencies for the
first time to report the cost of future retiree medical benefits.

Last year, the City Council agreed to restructure how current
premiums are calculated in an effort to reduce the city's future
healthcare liability, estimated at $5 million.

The changes were suggested because that large debt liability could
affect the city's credit rating and ability to borrow money.

The restructuring also benefited active employees who have paid
higher premiums for decades to cover the cost of insuring retirees.

In November, at the urging of retirees, the council agreed to spend
an additional $140,000 in 2007 to "compassionately assist" retired
employees, some of whom were staring at double- and triple-digit
rate increases and scrambling to find alternative care.

This spring, a special task force charged with finding a more
affordable plan for retirees that would better fit their needs
discovered a new initiative in Riverside County: a healthcare plan
called Exclusive Care Select, specially for public sector retirees.
The point-of-service plan offers three levels of benefits using
Riverside County's hospital network and Blue Shield's nationwide
network of hospitals and physicians.

Orange County is about to join, and other municipalities are
considering it, Roney said, which could pay dividends.

The more agencies that enroll, she said, "will help the stability of
the plan and the stability of the rates" for Ventura retirees in the
future.