The Signal Hill City Council voted unanimously last week to stay with the “status quo” and allow future city councilmembers and elected city officials to reap medical coverage and retiree health benefits.
The motion passed during the Council meeting on July 16, after city staff proposed an ordinance last year to exclude future councilmembers and elected city officials from receiving medical benefits while in office and from enrolling in CalPERS (California Public Employees’ Retirement System).
The ordinance was initially proposed as a way to save the City money and put a dent in rising employee costs.
According to city staff, based on current costs, future savings would have been as much as $11,600 per year, per new councilmember (for medical and dental coverage) and as much as $10,620 per year for every new councilmember eligible for CalPERS benefits.
The ordinance would not have affected current councilmembers who already receive medical benefits and have already opted into the CalPERS program. City staff said councilmembers are only eligible for retiree health benefits if they serve for at least five years.
The results of a study presented by Deputy City Manager Charlie Honeycutt during last week’s meeting concluded that only two cities (Seal Beach and Downey) out of 13 surveyed cities surrounding Signal Hill don’t provide their elected city officials with pension plans. The two cities, along with La Palma, also don’t provide elected city officials with medical benefits.
Signal Hill City Treasurer Emerson Fersch said he was unable to attend the Nov. 20 meeting in which the initial ordinance was proposed, but he added that he believes providing elected city officials with medical benefits even though they are no longer in office raises ethical questions.
“I just personally think that, for me, there’s an ethical issue with that, and, this is just my opinion, but once the service ends, the liability should end,” he said. “I think, generally, these positions aren’t meant to be a primary source of one’s financial security. Quite honestly, anybody who comes here seeking that probably isn’t a person who should be making decisions on how to spend millions of dollars on taxpayer’s money in the first place.”
Fersch suggested merely bumping up councilmember stipends, such as in Seal Beach, which he said is the “closest in size to Signal Hill in the area.” He proposed increasing stipends up to $1,000 a month, which Fersch said would be able to cover any health-insurance premiums. “To me, that would make more sense,” he said.
City Attorney David Aleshire said such a proposal would require a change to the City Charter and would need majority voter approval in an election. The Council, however, gave no support to the proposal.
Vice Mayor Ed Wilson objected to Fersch’s comments, adding that the practice of providing councilmembers and elected city officials with retirement benefits is commonplace in California and in many other states. Wilson said continuing benefits for councilmembers might be perceived as unethical if the City were running a deficit, but he said that is not the case.
“I think this is a policy issue; I do not think it’s unethical in any sense of the matter,” Wilson said. “I think in our case it may be symbolic. If you want to do something symbolic, that’s one thing, but to claim it to be unethical is not, in my opinion, an appropriate statement.”
At the time the ordinance was proposed last year, the Signal Tribune reported that the recommendation to eliminate benefits for future councilmembers and elected city officials had the support of at least two councilmembers– Mayor Michael Noll and former Councilmember Ellen Ward, who was already on another retirement plan after retiring from the City of Santa Ana.
Wilson had indicated that taking away benefits for future elected city officials may discourage “good people to run” for office and would require a councilmember to be independently wealthy.
During last week’s Council meeting, Councilmember Tina Hansen agreed with Wilson, adding that she has been on-call 24 hours a day throughout her nearly 20-year career on the Council. “This is a job, and I believe that, as an employee in this job, I have a right to compensation, and this is how our City has chosen to give it,” she said.
Councilmember Larry Forester noted that he has been off the City’s medical-benefits plan for the past 15 years because he receives Social Security disability benefits. Forester added, however, that he sees, “no reason to change it for future councilmembers.”
City staff concluded that retirement plans offered by most local cities are “equal to or more generous than” plans offered by Signal Hill. In addition, five of the 11 cities that offer pension plans in the area require an employee contribution.
Currently, Signal Hill requires its employees to contribute four percent to six percent of their salaries toward their pension costs, depending on when they were hired or took office, according to a city staff report.
As for health benefits, the amount most local cities contribute to medical premiums ranges from approximately $600 per month to nearly $2,600 per month, city staff said. Signal Hill provides up to $900 per month for medical benefits.
The survey also concluded that, on a statewide basis, 31 of 42 cities in California that responded to the City’s survey indicated that they provide pension programs to their councilmembers, while 33 surveyed cities provide medical benefits.
City staff noted that newly elected councilmembers and city officials have a right to opt out of the CalPERS plan but, once a councilmember is enrolled in CalPERS, the councilmember must remain enrolled.