Alameda's firefighters have reached an impasse with the city in their contract negotiations. Their contract, like those for rank-and-file police officers, as well as police and fire management, expired Jan. 5.

While neither the city nor the firefighters will talk about what's at issue, one point of contention is clearly retiree health benefits.

As part of a deal reached in 1990 when the city shifted public safety employees to the state pension system, firefighters received lifetime medical benefits for themselves and their spouses. They're eligible for those benefits after five years of service. Retired police officers get the same lifetime medical coverage (for themselves and a spouse), but after 20 years.

Anyone who balances their books has noticed the crazy-rapid rise in health care costs. Most of us, even those with "good" benefits, are paying hundreds and often thousands for health care each year.

This year the city's cost for retiree health benefits is $2.1 million and rising fast, says city Treasurer Kevin Kennedy. Last year it was $1.8 million. By way of comparison, the city's entire General Fund budget for 2008-09 is $75.5 million. The entire annual library budget is $3.3 million, and the Rec and Park budget is $3.9 million.


Advertisement

There has long been a difference in the way public safety employees are compensated. Given the stresses and risks of the jobs, such a difference makes sense. In Alameda, for example, police and fire are eligible to retire at age 50. For every year of service, they're entitled to 3 percent of their salary in pension. That means a firefighter could work 20 years and retire at 50 with 60 percent of his salary and full medical coverage. Most Alameda firefighters have an annual base salary of more than $90,000 a year.

In contrast, nonpublic safety city employees are eligible for retirement at 55. An engineer, for example, could retire at 55 with 20 years of service and receive 40 percent of his salary as well as a fixed stipend for health insurance, currently less than $100 a month.

The city pays for future pension costs by contributing about 30 percent of each police officer's or firefighter's salary (and about 13 percent for all other employees) into pension funds each year. When employees retire, the money is there. But the cost of health insurance in retirement has not been funded.

"What the city has done is 'pay as you go,' " said Kennedy. As the price tag grows, that's getting tricky.

Alameda's recently-formed Fiscal Sustainability Committee, which Kennedy chairs, has looked at future health care costs for current employees and suggested that in order to pay for them Alameda should be socking away an additional $2.4 million a year — on top of ongoing retiree health care costs.

"That's a big chunk of change," Kennedy told me. "That's not just trimming the budget. That's big cuts to services. That's whole departments."

Firefighter union rep Jeffrey DelBono told me, "I'm not going to apologize for a benefit that we've hung on to, that has not been taken away from us." He shouldn't apologize: Firefighters should earn good salaries and enjoy security when they retire. But without a plan to pay these costs, the city will be spending a greater and greater portion of its budget on retiree benefits and in the process leave an ever-shrinking pot of money for current employees — including the next generation of police and fire people, whose services on the street we as a community value greatly.

"We don't get to have everything we want, and we need to make some serious choices," Mayor Beverly Johnson told me. "We can't continue paying for these benefits and provide anything close to the level of service we currently provide."

We're looking at hard budget decisions in the not-so-distant future.

Eve Pearlman also writes the Alameda Journal Blog. Look for news, impressions and opinion at www.ibabuzz.com/alamedajournal.