S. Tahoe overhauls employee benefits package
By Kathryn Reed
While South Lake Tahoe employees will have more in their paychecks, it’s going to cost many of them more to retire. This is because retiree health care coverage is going away for almost all current workers.
The South Lake Tahoe City Council at a special meeting this morning at 8 is expected to approve agreements with five of the six bargaining units. A tentative agreement has been reached with the 11-member Police Employees Association that will come back to the council at a later date.
“Transformative” is the word City Manager Nancy Kerry and Mayor Hal Cole used during an exclusive interview with Lake Tahoe News this week when describing the changes that are about to unfold.
By changing the health care plan, eliminating retiree health benefits for employees not yet retired, and modifying coverage the city will see a cost savings of $1.5 million a year for each of the next three years. This starts with the fiscal year that began Oct. 1. The city is taking that savings and reinvesting it in the employees.
So, while there are raises and the introduction of deferred compensation programs that are similar to the private sector’s 401(k), the money for these benefits has already been allocated and nothing is being taken away from the public to make it happen.
“The most important element of the overall financing strategy for the restructuring of wages and benefits is that it is funded from current and anticipated available resources, not additional taxes from the taxpayers, and in fact, it will reduce the city’s and therefore the taxpayers’ contribution payments to the other post-employment benefits trust over the next many years,” Kerry told Lake Tahoe News.
When Kerry was hired the unfunded liability for health care was $47 million. With getting retirees onto Medicare, that figure dropped to $25 million. Today’s changes should bring that amount to $15 million. An actuarial study will be completed after the first of the year that will provide a detailed analysis of the unfunded liability.
“We could never have set enough aside,” Kerry said of the promises previous councils and city managers made to employees.
Kerry has been working to resolve the health care and other unfunded liability issues for nearly three years. Cole said he tried to address the issue with previous city managers but they never wanted to deal with it or said nothing could be done.
“Pressure forces you to be innovative,” Kerry said. She said it took a strong council and knowing the community would not tax themselves to deal with the debt or raises.
While in years past each employee group usually got the same percentage of raise, that is not happening now. The pot of money has been split equitably, which means fairly by dollar amount and not percentage. Each group decided if they wanted the money in the form of raises, deferred compensation, health care or other benefits.
Salaries will increase between 2.5 and 4 percent this year and next, and from zero to 4 percent in 2016-17. It has been nearly five years since most employees received a raise.
The city was paying $19,000/year for a family health plan. Now it will be paying $12,000.
A change is that employees may opt out of the health plan – something that was not allowed before.
“We have to stay self-insured because we have so many retirees. They are the most expensive,” Kerry explained.
There are 800 people in the plan, though only 175 of them are employees. Without the change, that number could have grown to 1,200. When the current crop of retirees and their dependents are no longer covered by the city then officials can look at not being self-insured.
The city has created what it calls Plan A. That is a basic health plan that has a $5,500 deductible. The city picks up the cost for singles, couples and families. Vision and dental are no longer offered. If people want a better plan, they can pay the difference for it.
Changes in the first year will see a positive net fund balance of approximately $500,000. The recommendation is for that money to be set aside to pay for changes in the following two fiscal years.
For employees who are close to retiring and would not have been saving for post-retirement benefits there will be a transitional plan.
Council members and current retirees are also impacted by the changes. The latter have always been subjected to whatever current employees agree to. This means they will be on Plan A for health coverage, with the option to upgrade if they want.
Councilman Tom Davis is considered a retiree because when he left the council he took on retiree status – unlike Cole and Brooke Laine when they initially stepped down. Even though Davis is on Medicare, when he retirees again from the council this will allow him to tap the city’s supplemental health insurance for the rest of his life like all other current retirees. The other current council members are eligible for Plan A and will receive no medical benefits when they leave the council.
South Lake Tahoe is the only public entity in the Lake Tahoe Basin that offers any retirees medical coverage. It’s also one of the only public agencies to have not given raises in the last five years.
It’s possible the changes South Lake Tahoe is making to its medical plan will be precedent setting. City officials have been asked to speak to other cities about what South Lake Tahoe has accomplished in overhauling its health care offerings.
Our City would have followed several other California cities in to bankruptcy, if Nancy Kerry hadn’t gotten hold of the health care problem and fixed it. It can’t be easy to make these difficult decisions while at the same time facing the anger of the people who were lied to by previous City Managers and City Councils. They were never going to get the money/health care they were promised. She is fixing an enormous problem that has swamped other towns. It is no surprise that other cities want to find out how SLT accomplished overhauling its health care – – – I would not be surprised if other cities try to hire her away from us. She has saved the local taxpayers an astounding amount of money.
More of the usual BS. The comment about forcing retirees into Medicare is a crock. The City has ALWAYS required retirees to enroll in Medicare at 65. What they changed was forcing retirees on Medicare to go to a Medigap plan which was far less expensive. That being said, how dare she say retirees are the most expensive part of the problem? Those under 65 don’t cost any more than a current employee & those over 65 cost a hell of a lot less. Also, now that vision & dental will no longer be offered to current employees, does that mean retirees will have to start paying for that too? With a $1K cap on dental, it never really covered much anyway. And is drug coverage for those under 65 also going to become severable? City retirees have been demonized & thrown under the bus so many times it’s appalling but now expected any time the City finds itself in more financial trouble of their own causing.
x local my reading of this article is that retirees get the same benefits as the current employees. Which is always been the case so since the current employees have voted to decrease their coverage that means retirees will have to follow suit, both employees and retirees withh have the option to purchase an better plan.
And what cuts did Nancy Kerry take? This question seems to evade answer.
If this article is accurate then Nancy Kerry is the first City Manager I’ve heard of that’s come up with any type of solution to a problem that has caused cities throughout California and the country to go into bankruptcy. Her value as a City Manager just went through the roof, there is no doubt that she’s being headhunted to other cities, and they’ll be offering her a whole lot more money. I would venture to guess that the private sector is also interested in her because everyone looks for individuals with innovative ideas that work.
If I was in her shoes I would be seeking and holding out for employment at a very large private foundation that has huge assets and resources for altruistic grant making purposes where you don’t need to answer to the public and only have to answer to a very savvy Board of Directors, where budgets aren’t an issue, where you associate with and work with incredibly intelligent and educated people, you get paid a mountain of money and have excellent benefits, and you’re highly regarded and respected. And for those of you who say those places don’t exist, you are wrong—they are out there, but they’re not in Tahoe.
go figure:
What?
4-mer, Maybe Kerry and Howie are just like a lot of us and love Tahoe and don’t plan on going anywhere. Maybe the lure of big/mid city life are not on their list of things to do.
In the end the city will survive with her or not. There is always a new fresh face looking to make a difference who will be ready to jump into the job. That’s how people progress their careers. No one is irreplaceable.
4merusmc, imagine that, an agenda for Nancy Kerry for self gain at the cost to others.
The average tax paying citizen doesn’t have a clue as to what the dynamics are to this whole process. Kerry bolsters her “campaign” through the media and not through good faith bargaining as is mandated. The city council has and will continue to ponder away the tax payers dollars while fumbling their way through as the best of the worst people to be elected to do a job that they have no idea how to do while pursuing their own personal agenda (i.e. lodging, tourism, schools) for personal gain during and after their reign as one of the village idiots. Let’s see in 10 years where things are at in SLT. Same problems, same structure, same process. Good luck with that,,, I wouldn’t let these people be responsible for the change in my change jar let alone the fiscal responsibility of the city.
Guy above ^^^^^ from the I don’t want any positive change troll family because I partied my young life away and now I’m stuck with my miserable life so I’m going to spread conspiracies and negativity and not offer any solutions.
4mer usmc,
my question is what consessions has Nancy Kerry given up as she takes benefits from other employees that also have value. Sure, NK. is doing a bang up job (according to some) but as she slices and dices others livlyhoods, what is she giving up? This question has been asked but never answered which leads me to believe there is something to hide. She probably got a raise? Or maybe some other benefit. It just seems that she would lead by example, especially when turning others jobs up side down.
go figure – Nancy Kerry has given up her benefits as well, so has all other management staff and the Council. She also consistently works six and seven days a week, ten to even sixteen hours a day. Even on salary, most people would not, and do not, perform at that level. We have to “command” her to take time off sometimes. All those “employee parties” people criticize were paid for by Nancy Kerry out of her own pocket. Until yesterday, she has refused all raises we have offered. Yesterday, she finally accepted a three percent raise, which is even lower than some of the employees received. I’d say that is “leading by example.” Bottom line is, the tough job has been done, nobody wished for this, but the spiraling cost of health care has driven some cities into bankruptcy, a path we chose not to follow. All the employees and retirees and staff should be praised for making the hard choices to fix a problem we did not create. At least we were able to keep some health care for our employees and retirees, and give raises that have not been had in five years. All this, with savings to the taxpayers.
Council Member Conner:
Thank you for providing clarification on a number of matters. That was very much appreciated.
so you gave the employees raises that actually add up to less than the cost of the new health insurance. woo! Mean while the people who make 6 digits got a 4% raise to cover the cost. Fair? I think not N. K.
JoAnn Conner, Thanks for setting the record straight in regards to Nancy Kerry. I’ve never met her but from what I’ve seen on tv and read she seems like a pretty darn good city manager. JoAnn thanks for telling the truth! OLS
Joe, it was 3% not 4% also earlier this year all employees were given a bonus Nancy refused her bonus.
Joe – Reloman is correct, Nancy’s raise was 3%, not 4% (less than some City employees received), and she did turn down the bonus. Please understand: Nancy Kerry didn’t give or take anything from anybody, the City Council made these decisions. You state the raises for the employees are “less than the cost of the new health insurance.” Do you not realize you still get a basic health care plan, paid for by the City? Yes, you may wish to buy up to a better plan or secure additional coverage from another source. You may also, for the first time in the history of the City, choose to opt out if you have a better option, such as coverage through a partner. People are paid according to a value placed on their services, by their employer, which in this case, is also the public. It is logical that someone who earns more will actually be paid a higher dollar amount for their 3% raise. That’s the way our society works, at least in most cases.
First, I would like to bring to people’s attention that Nancy Kerry is not some saint who came in and saved a sinking ship, because there is no sinking ship. This City is well in the black. This was all about taking away a medical retirement benefit from people who have given 25 plus years of service life to this City with a promise to receive this benefit. Additionally this benefit was maintained by the employees refusing raises over many years in order to maintain this medical retiree benefit or in essence the employees helped fund it. Secondly, having been a Police Association negotiator for years I have never seen such intimidation and strong arm tactics utilized. Kerry came in offering the medical plan. The Police Association turned down the offer and stated they would agree to go flat with no raises or increased in benefits for three years and then re-open negotiations. Kerry refused this offer. This is all about the greed of Kerry and Council to take away benefits from retired and current employees and to take away benefits from current employees who DO NOT fall under the retiree medical tier that older employees and retirees do.
The article reads there are 800 people on the plan but only 175 are employees. That 800 number is arrived by including working spouses who have to declare their own medical plan as primary over the City plan as secondary and includes child dependents, and retirees. Few retirees actually reach the full 25 years of service credit to receive the full retiree medical and they have been supplementing their own plan. The article mentions how with people moving into Medicare the costs decrease. This is true and it is the law to go onto Medicare. This is nothing created by the City. The retiree group, which I am a part of, is a group losing numbers by age attrition to Medicare age every year. Yet, rather than being fair and allowing those of us to remain with our negotiated benefits it has been taken away by Kerry forcing the current employees to vote it away. Kerry told the Police Association that if they did not accept her offer of Plan A, then they would be out of contract and she would impose it on the employees along with taking away all previously negotiated roll up incentives such as longevity pay, education pay, detective pay, etc. For any employee this would be a great hardship and many officers were concerned that if it occurred they would loose their homes.
I retired with 25 years of City service credit. Now Councilman Tom Davis gets the same medical plan that I do and he would have had 100% retiree medical for being a part time, off/on again council member where myself and others gave 25 plus consecutive year careers to this City. Other council members in the past have had the same full medical retirement.
So my question to you Councilman Davis is are you seriously going to take this medical plan for the limited amount of part time you have been on council compared to a 25 year full time employee of this City? This is how you lead by example as a council member? Once again, this is mismanagement by the City.
The article mentions the City is trying to get away from being self funded. This City has always been self funded and refused for years to go to a medical plan. The City remained self funded so that it saved money during years where there were not as many outgoing medical expenditures. This money was then transferred over into the General Fund. It was not saved from year to year to bolster the next year’s medical costs which could rise or fall based on employee usage. This is why it was an “unfunded liability.” Ironic the change in the medical plan will save the City about 500k the first year and this was the amount which prior City Manager Tony O’Rouke took out of the medical budget to use for the City budget and never repaid it. Once again the employees and retirees have been forced to carry the burden of this city’s mismanagement.
Council Member Joanne Conner mentioned in the article that Kerry took a one percent reduction in her raise over many other City employees along with her offered bonus. Seriously? A three percent raise on Kerry’s salary is worth almost double what a cop’s 4 percent raise is. Then there is the offered bonus. A bonus for just doing her job? Do people working in the casinos, waitresses, teachers, ski resorts, etc. get bonuses for doing their job? The answer is no.
Moral within the rank and file of the Police Department is at an all time low. Many are looking at leaving. But that will save the City more money to keep hiring new people at entry level pay. The Police Department will be a training ground of inexperience.
Having a promise that was made to me 25 years ago and taken away while on a fixed retirement leaves me understanding how the American Indian felt with broken treaties.
Retired Cop – I have the greatest respect for public safety employees. However, the City is not “well in the black.” We have balanced the budget and we do have some money in reserves. Maybe you are unaware of the state of the vehicles your fellow officers were, and some still are, driving. We want them to be safe, just as you were entitled to be safe when you were on the job. Same for fire. Our equipment and vehicles are antiquated and of questionable safety and efficiency in some cases. Our roads are in terrible shape and desperately need to be repaired. We do not want to lay off more employees, especially in public safety. You are getting the same plan your fellow working officers are getting. They are the ones in the field now, taking the risks you took. If you are on PERS, you have been receiving two percent raises every year on your retirement check. Our current officers and other employees have not had a raise in five years. There may be some leaving, but we have to consider the whole picture. At the California League of Cities Conference, I spoke with many Police Chiefs, Fire Chiefs, City Managers, and Council Members. I did not encounter a single one who has not or is not facing this same issue. Cities are cutting retiree health care and health care for employees all over the United States. No one wanted to do this, but the cost of health care is driving cities into bankruptcy. Look at Stockton. The courts just ruled they do not have to honor anything to their retirees after claiming bankruptcy. We don’t want to go down that path.
The Council directed Nancy Kerry to be tough on this issue. It had to be done, and I wish I had a magic wand to make it all okay for everyone. I do not have such a device, and I am sorry you have to make some adjustments.
“Council Member Joanne Conner mentioned in the article that Kerry took a one percent reduction in her raise over many other City employees along with her offered bonus.”
This is incorrect. Nancy Kerry did not get a bonus, she got a raise.She did not ask for higher than three percent. Some officers got the highest percentage of raises, at four percent, higher than Kerry’s three percent.Just as patrol officers make less money than a watch commander, watch commanders got a larger number of dollars, as did Kerry.
As far as Tom Davis, my only comment would be that he is the only Council Member who will get this, also based on his retiree status. A retiree is a retiree, and I would point out that he works on Council for about $3.90 cents an hour. The job requires an average of twenty-five to thirty hours a week. I don’t know of any other City or private sector employees that work for less than half of minimum wage. We all work our other jobs or businesses around our Council schedule to earn our living. I am not complaining; this is our way of serving our community. I would just appreciate that fact being taken into consideration in your thought process.
Retired cop, if you could supply numbers to back up your statement that would be great as I know that there are a few officers that make more money than Nancy. Are you saying that all of the employees that received bonuses earlier this year did not deserve them and should have refused them like Nancy refused hers, Even though those employees have not received raises like you have every year in quITE a number of years.
Council Member JoAnn Conner:
Well stated.
JoAnn Conner, Thanks for your well informed, true, and rational comments concerning city business. Do I agree with everything you vote on ? …well?, not always, but I usually do agree with you on most city related issues.
JoAnn,you have this voters support (altho your seat doesn’t come up for a coupla’ years) along with Tom Davis (who’s running for his re election this year), I’ll be voting for Tom. Wendy David, who’s running for council for a first time, yep, she’s got my vote.
You’re all good folks workng to make this town better!!
Together, we can do this! like it or not, good ol’ So. Shore is getting better in many ways. Don’t believe me? Just look around town! OLS
Move along here retired cop. The issue is decided.
The carpet was pulled out from under the retirees. It was a promise that was paid for and funded by the retirees. Call it what it is, a broken contract and a broken promise!!! The city is going to get sued over this. There will be no savings and Kerry will quit her position as cm. shame on you council members for directing her to do this and cause her to lie to the public and the employees!
Observer what what you have the city do? Should we raise taxes? What should we cut? The rec center? Let’s cut the kids programs? Snow plowing, further reduce the number of officers? These benefits have been far to generous for years. pleae don’t tell us Nancy Kerry makes to much. You don’t think employees in the private sector have seen promises broken, benefits reduced or taken away? Get real. The city and the employees did what was smart for everyone, a very tough decision but for the good of everyone. Maybe we should have let these liabilities drive us into bankruptcy then you would have seen a real haircut. Enough already move on.
Will move on when the court orders the city to fund the retiree medical plan. Read the case that was just heard and judgement delivered in Los Angeles. It is a vested right and deferred compensation.
Observer – you might want to reread that ruling and your contract. You have the same plan your fellow officers have, the officers who are risking their lives today.
Ms Conner, your earlier comment clarified this issue quite well. But you’d be best served leaving it at that. You’ve done fairly well with keeping out of the fray of this comment forum since just after you were elected two years ago. And I say that as someone who voted for you and is a somewhat regular participant on this forum.
Observer please provide this forum with your suggested ways to fund this monstrosity. Please tell us…. Oh I know it’s not your problem.
The employees are given compensation to buy a decent medical plan, the nexus has been established. Just watch justice play out. Kerry has already offered retirees money to buy up because she knows that it is wrong and breaking a promise made to employees while they served the city….this is going to cost the city a lot more than the hired gun they paid for to tear it apart.
Bankruptcy-the final solution.
Yep slapshot, everyone can have a choice. Lots of people walked away from homes letting them foreclose even though they could still afford the payment. As Americans and honest people we pay what we owe and our word is solid. There is over five million in the medical fund. The money is there, the plan is not broken, the city forced this on employees and the employee groups noted hold harmless clauses in the offers. The city needs to fulfill its obligation and promise.
Incompetent past city councils and union greed.
Yep seems to be a buzz word but its still a debt that must be paid. I think the police department is hiring put in an application or are you too scared to carry a gun or die for someone you don’t know!!!!
A debt can only be repaid if there is money to repay it. You have milked the system dry. We are still waiting for your suggestions on where to cut so you get yours. Your silence is deafening….
I’m sorry Joanne, but Kerry made this personal. From her personal attacks demonizing our retirees in the media to her whole socialistic pie theory for negotiating. According to her own equal slice of the pie theory, she should have gotten a .5% pay raise, not a 3%. Just like the local 39 got a 12%, because their overall income is less than the police who got the 7.5%. And her personal attacks against people who devoted 20-30 years of their lives to this city is totally uncalled for. And her over inflated numbers are a complete lie, there is no other way to put it. Very few employees retire at 100% coverage and at the very top pay step. As for her mouth, well this statement alone makes me not want to be part of the “retiree group”. In the Tribune; Kerry explains that the multi-million dollar debt, if left unchecked, would “be collected by the City from our local residents and in turn sent to retirees, most of whom live outside the City.” And she has already started making statements about going after the PERS benefits the second the state laws change. Anyone in their right mind who can leave this city and go work somewhere else, would be stupid to stick around. This city obviously does not value their employees.
Lets place the blame where the blame belongs, with our city council. They took out a mortgage and never made a single payment on it, now they are putting the debt on the backs of the city workers and praising Nancy for doing their dirty work. I might feel differently about the whole thing if I did not personally sit and watch this council along with many others just blow through their money like its someone else’s. How many times are we going to repave the Lakeview commons parking lot? How many “consultants” are we going to pay to tell them how to do their jobs?
You have if you don’t like how the council is working then maybe you and others like you should run it really doesn’t take many votes to win an election only 1500 or so.
The associations recognized increasing medical costs a few years back and in contract agreed to split future medical increases fifty/fifty with the city, which we did for a few years. The medical fund was as low as 250k back in the day and is now about 5.6 million, oh and the city a couple years back told the employees go to this slightly higher deductable and you won’t have to split increases because the rates are actually getting cheaper. The fund keeps growing 5.6 million, tony Roark skinned off 500k for something, was it ever paid back??? Over the years employees deferred raises telling the city to put the money in the medical fund. In the 1990s pers was super funded and no contributions had to be made. Employees requested to have the savings set aside to find medical. The future depositions will tell all!!!
Reloman your talking thru a paper hat.
you have no idea what it takes to get on the Council.
Please tell us how many under age 65 retirees are on the medical plan and what percentage the city pays for their insurance???? I’m thinking back real hard it’s not many???? The city needs to come clean with the cost they continually say 800 people are on the fund. This is BS!!! This is a portion of employees and current dependents. How many under 65 retirees are on the fund at 100 percent 90 85 80 75 70 65 60 55 50??? All these premiums go into a fund that tony skinned off of, oh and what about the embezzlement of funds that was swept under the table and the city hiring Rebecca who scammed thousands!!!!! Come clean…..what are you saving for announce it!
Chief please tell us how many votes it takes, or do you know and are you speaking out of your hat as iI have seen you do on more than one occation. I looked up how many votes it took tom . Last time and it was around 1500