Otay Water District To Vote Today On Expanding Health Care For Life Benefits

Bradley J. Fikes Bradley J. Fikes 4 Comments


Simply amazing. Otay Water District’s board, far from chastened by the reaction to its approving health care for life for top executives,  is set to vote today on extending them to all its rank-and-file employees.

From a San Diego Union-Tribune editorial about this grab for more money from Otay’s ratepayers:

Otay officials also argue that the changes will actually save money because the deal given to managers requires them to pay more toward their pensions and to forgo future cost-of-living pay increases. But under the deal, managers will see no reduction in take-home pay because their wages are increased by the same amount as their increased pension contribution.

Beyond that, an analysis by the San Diego County Taxpayers Association raises all sorts of red flags. It found that the benefit changes would require the district to spend $290,000 more starting in fiscal 2012 and would result in a 3,416 percent increase in the district’s unfunded retiree health care liability. The old liability? $49,000. The new sum? $1.72 million.


From a column by Lani Lutar, president and CEO of the San Diego County Taxpayers Association, also in the Union-Tribune, whose Watchdog group broke this story.

At the Otay Water District, customer water rates have increased by more than 40 percent over the past two years, and are scheduled to increase again in January by 7.7 percent. Yet, instead of making their own sacrifices alongside ratepayers, the general manager of the Otay Water District recently led the charge to enhance retirement benefits for management with extraordinary lifetime health care and dental benefits for the managers and their dependents. Board members voted 4-1 to approve these lavish new benefits. . . .

This egregious giveaway of ratepayer money highlights a bigger, more troubling issue. The proposal was not requested by a labor union; management proposed the deal for themselves. Now a similar deal is being considered for represented employees with a vote expected Aug. 10.

Here’s Otay Water District’s defense:

Here are the pertinent facts:
1.    There is no additional cost to the District for this amendment. In fact, it results in a cost savings of $34,000 per year.
2.    The employee agreement is an amendment to a multi-year agreement with unrepresented employees for cost of living increases. These employees have chosen to divert their cost of living adjustments directly into a health benefits plan.
3.    The District relies upon reports from an independent actuary, whereby trends, forecasts, and data analysis are extensively studied to determine the fiscal soundness of this action. No information was brought forward that would indicate that this benefits amendment is not of sound practice.
4.    The employees covered by this action will be paying the full 8% employee share of the pension cost, up from paying 1% presently.
To characterize this benefits amendment as a “giveaway” is simply not true and it’s irresponsible to paint such a picture without properly disseminating the facts. There is no giveaway. On the contrary, many of our dedicated employees are trading cost of living increases to pay for each of their individual healthcare costs during their retirement years. They should be congratulated, not vilified.
Earth to Otay Water District board: A lot of your ratepayers are also dedicated employees.  In the real world that the rest of us inhabit, we don’t get benefits just because we think we should.
(DISCLAIMER: This is my opinion, not necessarily that of my employer, the North County Times.)

Comments 4

  1. The increase in the payment for the employees’ share of the PENSION cost (up to the 8% standard from the previous absurdly low 1%) is somehow viewed as a cost balancing factor that justifies the health care giveaway. But just about every other government agency that used to subsidize the employee pension contribution get this employee concession WITHOUT providing lifetime retiree health coverage.

    Hence the employees got something for nothing — while the ratepayers can rest assured that further water price increases are in the — uhhh — pipeline.

  2. This overcompensation problem has been almost universal among local governments. All that varies is the MAGNITUDE of the unfunded pension and (too often) retiree health care obligation. Admittedly, Otay is likely among the worst, but that’s small solace for taxpayers/ratepayers in other districts.

    How does this happen? The ultimate responsibility rests with dufus officeholders (often part-timers) relying on staff to tell them what the govt can afford. Staff rationalizes (first to themselves — then to the politicians) that big benefits are cost effective and entail no risk. Why on earth would politicians ask the very folks who will profit most from such benefits if these giveaways are prudent — let alone mindlessly believe staff’s conclusions?

    Okay, then there’s an actuary. The hired actuary is picked by staff, and naturally staff shops for the candidate most likely to justify the giveaway. Stated differently, if an actuary suggested that there was big risk in committing to such windfall payouts, that actuary likely would never get another contract from that district — and soon from ANY government agency.

    Finally, the politicians themselves stand to gain from such a Pollyanniash mentality, which allows them to justify their own excessive benefit packages.

    BOTTOM LINE: Everyone in the decision making process is on the same side of the bargaining table. NO ONE represents the taxpayer/ratepayer — with a few maverick politician exceptions.

  3. What’s not mentioned in Rob Davis’ story is while employees are paying an increased share into their pension, they will also receive a two-step, 7% pay increase (3.5% this year, 3.5% next year). Not only does this completely offset the increased pension payments, it also increases the total salary upon which the pension will be calculated! Truly crazy making stuff. With apologies to Prince, Otay’s board is partying like it’s 1995. This afternoon’s meeting should be a humdinger, and I hope we will have plenty of news media present to shine a spotlight on this irresponsible behavior. I promise you that Lani Lutar and other community leaders plus good old garden variety ratepayers will be on hand to make their displease known.

    BTW, when is the last time you read that 300 people called any organization to register their objections to a proposal? Only American Idol and Dancing with the Stars get those sort of numbers.

  4. Trying to slip some crafty figures past the Lass,
    is like trying to slip a sunrise past a Rooster.

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