Proposition A: Retiree Health Care Trust Fund Uses (Charter Amendment)

PROPOSITION A
RETIREE HEALTH CARE TRUST FUND USES (Charter Amendment)

Placed on the ballot by: Board of Supervisors

Opponents: SF City Employees & Retirees for Responsible Governance, SF Green Party, SF Gray Panthers, United Public Workers for Action, Libertarian Party

THE QUESTION:

Shall the City change its Charter to allow payments from the Retiree Health Care Trust Fund only when the Fund is fully funded or only under specified circumstances?

BACKGROUND:

Currently retiree health care costs are paid, as they come due, from the General Fund of the City and County of San Francisco.  In January 2009 the City established the Retiree Health Care Trust Fund to set aside money to pay for future retiree health care costs estimated at $4.4 billion. A five-member Trust Fund Board administers the fund and the City and its employees make contributions. Presently only those employees hired on or after January 20, 2009 contribute.  On July 1, 2016 all employees will contribute.

SFUSD, the SF Superior Court, and SF Community College District can also participate.  So far only the Community College District participates and their contributions are kept in an account separate from the City’s.

Presently, these contributions cannot be used for retiree health costs until January 1, 2020.

THE PROPOSAL:

To keep the trust fund from being depleted and to bar use of the funds for anything other than retiree health care Proposition A would allow for payments from the Fund only if:

  • The City’s account balance in any fiscal year is fully funded;
  • The City’s retiree health care costs exceed 10% of the City’s total payroll costs in a fiscal year, after approval by the Controller, Mayor, Trust Board and a majority of the Board of Supervisors.

The Charter amendment would allow other agencies to spend money in their fund accounts only if:

  • The Agency’s account is fully funded;
  • 2/3 of the Agency’s governing board and a majority of the Trust Board approve.

CONTROLLER’S STATEMENT:

The restrictions proposed by this Charter amendment would ensure that the Trust Fund would more rapidly accumulate sufficient funding and investment earnings to pay for required City health costs and would therefore reduce the burden of these costs on the City’s annual budget.

The City’s external actuary has estimated that given these proposed provisions, the Trust Fund would be fully-funded in approximately 30 years.  At that time, the City’s annual costs would drop to approximately $50 million in current dollars or about two percent of payroll expenses. 

RELEVANT POSITIONS:

LWVSF:

None. Although the League opposes having this kind of detail in the Charter.

LWVCA:

State and Local Finances:

None

LWVUS:

None

LWVSF Recommendation: 

No Position

 

 

 

 

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