Every Day City’s Move Is Delayed, It Puts City Right Back At Square 1
Mayor Eddie Sundquist’s 2021 budget proposal is making one big bet — that the city can unilaterally save $1.1 million by moving Medicare-eligible retirees to a Medicare supplement or advantage plan.
The city will then pay for the full premium of the members switched to those plans and save money. Those savings and roughly $500,000 in increased revenue from various fines and fees balance the city’s budget and allow Sundquist to hire a handful of new positions while providing a small tax decrease.
It’s not that easy.
We have a hard time believing there was a $1.1 million savings out there that retired Mayor Sam Teresi didn’t use in previous budgets. We have a really hard time believing New York state gave the city $1.5 million to pay for a voluntary buyout program for retired city employees eligible for Medicare if the city could have simply waved a magic wand in the air and moved the employees onto Medicare or Medicaid on its own.
The reason the city didn’t just make the move on its own is the seemingly iron-clad language in the city’s union agreements. Contracts between the city and its employees have, since Jan. 1, 1987, contained very specific language that retirees are eligible for continued participation in the same health and dental insurance plans the city provides for active employees as long as the retirees continue to pay the city the same premiums as active employees pay. The unions and the city agreed that when a retired city employee takes another job that offers health insurance, the employee will take it with the city’s policy becoming a secondary policy that pays out when the primary policy stops paying. When employees are eligible for Medicaid, Medicare or other insurances, those insurances become the primary policy with the city’s policy remaining the secondary policy. But, retirees have to have the city policy available to them as a backstop.
The contractual language seems clear. The same plan has to be offered to retirees. Retirees can choose Medicaid, Medicare or Veterans Administration benefits but aren’t contractually required to move to the other plans.
Set aside for today the issue of retiree health costs and focus instead solely on the 2021 city budget. If the contract language is as iron-clad as it seems, then the city should not expect its unions to simply go along with the mayor’s plan. With a financial incentive available to leave the city’s health care plan, it’s telling that city retirees weren’t comfortable moving to Medicaid or Medicare for the past three years. Evidently, the replacement plans aren’t to their liking.
The unions — particularly the Kendall Club Police Benevolent Association and Jamestown Professional Firefighters Association IAFF Local 137 — have shown they aren’t afraid of challenging the city in court or through arbitration. Those processes can take years to resolve, as is the case with the city’s appeal of an arbitrator’s award with the Kendall Club PBA for the 2016 and 2017 years.
It’s likely the $1 million savings the city is projecting is going to be decided in court, and every day the city’s move is delayed is money the city isn’t saving. That effectively takes the city budget back to square one in our view. It’s time to try again.