At the Thursday, April 29, 2015 City Council meeting, staff will present a recommendation to take the next concrete step towards fixing one of the City’s largest liabilities - Other Post-Employment Benefits (OPEB), also known as lifetime medical benefits for public safety employees. Alameda’s current OPEB liability is $91M. The staff reports to the City Council, with all attachments, are here:
“The OPEB liability problem is not unique to Alameda; most Bay Area Cities are struggling with it as well,” said City Manager John Russo. “The problem has been 60 plus years in the making and it will take 15 to 20 years to truly solve it.”
“One of the most important aspects of staff’s recommendation is to establish, for the first time, that public safety employees must pay to prefund OPEB,” he said. “By 2018, they would contribute 4% of their pay to OPEB, and 15% to their pensions, amounting to an unprecedented 19% of salary going towards benefits.”
In 2012, Russo appointed an OPEB Task Force to study the problem and develop recommendations to the City Council. It included individuals with a wide range of publicly held positions including the City Treasurer and Auditor, several community members, both the Police and Fire Chiefs, the Presidents of the Police and Fire Unions, the Human Resources Director and the Assistant City Manager. The OPEB Task Force Reports are here:
Based on the Task Force’s recommendation, the City created an OPEB Trust Fund in 2013 with an initial $300K deposit. Through 2014 staff worked to develop agreements with the City’s public safety labor groups that would require both the City and the employees to contribute toward the OPEB Trust Fund. These agreements, finally reached in spring 2015, are to be presented to the City Council for approval on April 29th. In sum, the City would contribute $7.5M to the Trust Fund over the next 10 years and, coupled with the employees’ contributions, would garner more than $47M in savings.
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