O.C. Board Trims Benefits for County Government Retirees
Orange County supervisors on Tuesday unanimously approved a plan to reduce funding for retiree medical benefits as part of a deal to raise wages for current workers.
The decision came after more than three hours of emotional testimony by retirees emphasizing the bond between workers and supervisors as that of a “county family” in which workers placed their loyalty despite management fumbles that cut their pay and increased their workload.
Of the 30 people who spoke before the supervisors, 29 criticized the deal, all but one of them retired county workers.
The plan is an attempt to gain control over a ballooning gap in the county’s retiree medical care fund, created in part by medical inflation and retirees who are living longer. The fund has $1.4 billion less than it needs to provide coverage for retirees over the next 30 years.
The cost of funding the benefits has consumed a growing share of county resources, to a projected $130 million next year, setting off alarms that it could begin to force cuts in public services.
The cuts in retiree medical funding would reduce the shortfall in the medical fund by $815 million and reduce the county’s costs as much as $90 million per year.
But they are coming at a stiff cost to retirees, who packed the boardroom. Many said they lived on fixed incomes and would struggle to afford increases in their healthcare premiums. Several said they had paid into the medical system for years and that their current coverage was part of their labor agreements when they were active employees.
An actuary hired by the county said healthcare premiums would rise modestly and in some cases wouldn’t increase. She said current retirees under age 65 in a Kaiser program would see their monthly premiums increase from zero to $63. But Gaylan Harris, who retired as the county’s director of employee benefits, said rates could increase thousands of dollars a year for some plans.
Stephenie Gonzalez of Fountain Valley, who worked for the county healthcare and social services agencies for 34 years, said it seemed as if supervisors expected retirees to follow the way of Indian tribes in her native Alaska, and walk into the sea when they grew old and burdensome to their families.
“I am not ready to go out to sea,” she said. “I’m asking you today to see me as a person and not as an ‘unfunded liability,’ ” the technical term for the fund’s shortfall.
Jana Rogers, a retired probation officer from Garden Grove, said the county is one of the wealthiest in the nation and should not be “balancing the budget on the backs of our retirees.”
“It doesn’t seem fair that I worked hard and played by the rules, and you can now change the rules after I have retired,” she said.
The biggest savings will come from splitting active and retired employees into two pools for whom the county buys insurance, reducing the county’s cost of ensuring current workers and making retirees pay more.
Also included is a 50% reduction in the monthly subsidy retirees receive to cover their insurance premiums once they become eligible for Medicare. Current retirees 65 and older will not be affected. And in an effort to stem early retirements, the county will reduce the subsidy for workers who retire before 60 while increasing them for workers who retire past that age.
The medical costs were part of a bargain to give 4.75% raises to nearly 14,000 employees in the final year of a three-year contract. Part of the raise will go into the county’s pension fund, which faces a $2.3-billion shortfall.
Supervisors said the cuts were less draconian than others that had been considered, including doing away with the retiree medical program altogether. Something had to be done, they said, to keep the fund from going insolvent.
“The money simply isn’t there,” Supervisor Chris Norby said.