For years, I have been confronted by state employees who insist that county employees are paid better, by city employees who insist that state employees are paid better, and by federal employees who insist everyone is paid better. The very idea that the “grass being greener” instantly takes over.
What transfixed government employees in Sacramento last week was the front page of the Sacramento Bee on Wednesday. The story was “County urged to keep benefit; speakers protest plan to cut some retiree’s health coverage.” There it was summed up in a headline, wasn’t it? Sacramento County employees don’t have guaranteed health coverage in retirement. The Board of Supervisors must allocate money every year and no promises are made.
The top proposed benefit for county employees under this year’s proposal was $244 a month–and that’s only if the Board of Supervisors decides to keep funding the benefit. That compares to the state’s benefit of $1042 a month. That’s a $10,000 a year difference in retirement income. In addition to the dollar value, it is critical to note that the benefit payment is tax-free.
More importantly, the state’s benefit is cost of living indexed with no limit. Basically, if health insurance goes up for retirees, the state covers the increase forever. The formula provides for 100 percent coverage for the retiree. Every year the amount goes up based upon CalPERS’s contracts. State employees can choose to allocate this amount to a variety of health plans. For example, the state’s retiree benefit fully covers the Kaiser cost of $869 a month for family Medicare coverage.
Most government employees retire in the 55 to 60 year age bracket and likely will have at least 20 years of coverage. The Department of Personnel Administration calculated this stream of payments last year to equal $493,851 (see the calculation at www.dpa.ca.gov/tcs2006/benefits.htm#retireeHealth). Remember, the benefit goes up with medical inflation and is payable every year. The county’s benefit amount of $244 was capped in 2003 and has not increased.
Even if Sacramento County guaranteed payment of the $244 a month to its retirees, after 20 years a county retiree would be reimbursed a grand total of only $58,560. State employees would have had $493,851 in additional compensation over a 20-year career. Divide the difference by 20 years and you have $24,692 a year to add to your salary when comparing to county salaries.
Guarantee in law. We know most employees don’t pay attention to retirement benefits when choosing an employer. Even if they did, there is paucity of information out there and almost no help for you when you are ascertaining the differences. All you hear is “the county pays more–take that job!” Such simplistic statements are not helpful.
The first thing you’d want to do is find out about the promise of retiree health benefits. If it is part of a union contract, current employees vote on the changes and may vote you off the island! In other public agencies, there are benefit-plan handbooks that serve as the “contract.” These plan handbooks always include language that the plans are “subject to change.” Good lawyers make sure those words are there.
The best place for guaranteeing an employer’s promises is to find the guarantee in state law. State employees can find the guarantee in Government Code Section 22873. You’ll have to read Section 22871 carefully, as well. You can find the text of code sections easily on the state Senate’s Web site, www.senate.ca.gov, under “legislation” and then “statutes.”
Section 22871 indicates that the employer contribution for an employee who is “retired from service with the state