Hey Buddy, Can You Spare $167 million? City of St. Pete has $167 million unfunded liability health insurance benefits for retirees and their dependents!

So, you have over a hundreds of retired employees and you are an organization that only makes money by forcing others to pay you.  Your top leadership has made deals with Union representatives for years because the union members are the ones who keep the leaders in charge.  You have promised your union members that they will have nearly free health insurance – along with their families – for their entire life after they retire; even if they retire at age 50. Turns out that you have no money to actually pay for those health benefits – but that’s okay!  Why?  Because you can just force the people in your town to pay the tab – even if they were never asked to agree to it.

OPEBHealthbenefitobligationThe City of St. Petersburg has a $167 million completely unfunded liability to retired workers and their family members for health insurance.
The annual cost has more than doubled since 2008.
Do you get nearly free health insurance after you retire at age 50-60?

Well, it turns out that the organization is the City of St. Petersburg and they owe $167 million in health benefits to over 1,100 participants in the program. These 1,168 people receive a check to cover 75% of the cost of the health insurance for them and their family member.  This seems odd, since the vast majority of people who are actually paying the bill for these non-workers don’t have anyone else buying them nearly free health insurance when they quit working. In fact, most of these taxpayers actually have to work longer so they can pay the taxes to keep these retired government workers living at a better standard than they are! In only three years, the amount of the annual obligation to retired workers and their family has more than doubled to $25.7 million from $10.1 million!  This is for employees that can retire after 10, or 25 years of service at age 50 or 60 (Fire or Generally employees) or age 55 (for police) respectively.

The City of St. Petersburg, like most cities in the country, has many deals with government workers who are usually heavily unionized. Up to now the politicians have gotten away with voting very generous benefits to the government workers .These same workers then use their union dues or their community connections to help get these folks re-elected. The unholy alliance lives on.  Now, no person would discount the value that a police office or firefighter bring to our lives. But can the taxpayers be sure that we will even HAVE a police department if the City Council and the Mayor keep approving these sweetheart deals for government workers. If the city goes bankrupt paying for these benefits everyone will suffer: politicians, Police officer, Firefighters, General employees, and citizens most of all.

The city needs to change its approach for these benefits in many ways.  Here is a better way forward for the city of St. Pete.

  1. Modify the current health benefit plans to Health Savings Accounts with High Deductible Health plans. This is a low premium, high value plan that puts cash in the hands of insured folks (both current and retired) so they pay the first few thousand dollars of their health care every year. That will help patients shop for better medical care when they are healthy and have time.  When they reach the maximum out of pocket, 100% of costs will be paid. Nearly all common preventatives services are paid for in these plans.  Pay a much lower subsidy to those who enroll in Cadillac benefit plans.
  2. Re-negotiate union contracts.  Advise the Police and fire Departments that they  will need to accept a much less generous health retirement benefit in the future for all future workers.  Offset some of this with a pay raise so these workers can save for themselves for their future health insurance needs.
  3. Adjust all non-union benefits.  For workers that are not unionized, make the tough decision that the city can’t afford to pay 75% of the health care benefits for retired workers and their family members.  Give a pay raise to offset this so that the workers can save for their own future health insurance needs.
  4. Adjust retirement ages.   Most workers aren’t assured the luxury of retiring at age 50 after only 10 years of service. While certain labor intensive jobs may justify lower retirement ages, some adjustments up at least five years seem very possible.

The Taxpayers can’t bear these overly generous benefits any longer. It is time for a real change that will keep our city from going bankrupt like so many others in the country. It is time for a change that will not provide special treatment for government workers at the expense of the people they serve. In other words, it is time for some common sense for our City Budget.