Mayor Jerry Sanders has negotiated an important new contract with city police officers -- one that's good for the city, police officers and taxpayers.
The new contract comes at a critical time: Concern over crime has grown in San Diego, while residents are worried about the city's ability to retain members of its police force. Providing a competitive compensation package to city police officers is key to retaining an experienced and effective force fighting crime.
The new contract provides a boost in pay to keep compensation competitive with other law enforcement agencies, while taking into account the obviously unique challenges police officers face compared with any other line of work.
While more take-home pay is important, the real benefit for taxpayers is how the contract restructures the health benefits police officers receive, providing critical forward momentum for broader reform of the benefits the city provides to its work force.
Under the old system, police officers could receive a credit of more than $5,000 to purchase various insurance products and other benefits. Employees could take any unused credit as additional compensation. For example, employees could get several thousand dollars more in salary if they opted out of the city's health care plan because they were covered by a spouse's insurance or purchased a health care plan on their own.
This created a powerful incentive for the healthiest of employees to find a way out of the program since they are most likely to see a difference between what insurance outside the city's system would cost and the extra compensation they could receive. With younger and healthier workers having incentives to opt out, the city's risk-profile suffered, premiums pressed upward and healthier employees found themselves with an even greater reason to find other options than the city's plan. Such an insurance death-spiral is cause for great concern.
Under the new plan negotiated by the mayor, employees can still opt out, but the credit they receive is significantly reduced. Moreover, the city is now covering one dependent and a significant amount of the cost to insure officer's children, further reducing the incentive to opt out. As a result, the new contract should not only help with police recruitment and retention, but also significantly improve the city's insurance-risk profile and decrease the upward pressure on health care premiums.
The new contract with city police provides a good framework for future progress as other financial issues are addressed. Further cost savings could be realized as the same common sense reforms are sought during city labor negotiations with other unions.
Taxpayers will understand and appreciate the city running its health benefit plans in the same way most good private-sector employers do, instead of a benefits system that looks like a massive political compromise in which taxpayers pick up the tab.
For instance, the city offers an HMO and a PPO plan to its employees who can opt in or out, and there is no incentive, such as a cash payout, if employees do not avail themselves of the benefits.
Also looming large in future labor negotiations will be the pension benefits -- the proverbial $1.2 billion elephant in the room.
Taking the same businesslike approach to pensions would mean reforming the city's plan from its current structure to one that better resembles the same kind of 401(k) plan in which many San Diegans participate. Later this year, SDI will release an extensive study providing a blueprint for how the city can do just that.
It is encouraging that the signs coming out of the mayor's office indicate an interest in taking on this tricky subject. Taxpayers can help move the process forward by insisting on continued reform.
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