Saying Anne Arundel County is "on a path to bankruptcy if it doesn't address this issue," County Executive Laura Neuman told county government employees Monday that significant changes to retiree health care plans must occur to repair a system she described as financially unsustainable.
In a letter to workers, Neuman said the county needs to change how much it contributes to retiree health plans and how long it takes for employees to become eligible.
Government workers and their spouses are eligible for retiree health care after five years of working for the county, or 20 years if they work in public safety branches. County government pays 80 percent of the insurance premium for retired workers.
"The cost of providing that level of benefits is simply unsustainable," Neuman wrote.
In an interview, Neuman said she recently reviewed new projections on retiree health costs and "was alarmed when I understood the actual numbers and the unfunded liabilities."
Those costs are much more than previously estimated, she said, and county government is not putting away enough money to pay the bills.
The county spends about $100 million annually on health care for current and retired employees, Neuman said. Recent projections show the county needs to set aside another $110 million annually for future health care costs.
If changes are not made, she said, retiree health care benefits for existing employees would be underfunded by $1.3 billion over 30 years — an amount she told employees equates to $2,400 for every resident in the county.
Neuman, a Republican, said she's drafting a bill to change the retiree health plan, but declined to offer specifics. She said she's in talks with county unions to get them on board.
County Councilman Jamie Benoit, a Crownsville Democrat, said he has been working on the issue as well, and has a bill that's "98 percent drafted." Benoit has served on a committee of council members, administration officials, union representatives and human resources experts that has looked at the issue for the past two years.
Benoit declined to share details of his proposal, but said for a bill to be successful, it needs to have the support of employees, save the county money and require county government to set aside sufficient money in the future.
"I have long believed the county has made a promise to its employees it can't keep," he said.
Mike Akers, president of AFSCME Local 582, said he and other union representatives have been in discussions with county officials on retiree benefits. The intensity of talks has ratcheted up in recent weeks, he said. He hoped the County Council would address the issue in 2014, but fall is now looking more likely, he said.
Akers, who represents about 750 county employees, said workers understand the financial problem facing county government, but it's tough to give up benefits that were promised.
"It's extremely difficult, especially since the hook to bring new employees in and to retain their services is the benefits package," said Akers, who works for the Department of Public Works. He noted that county workers have dealt with multiple years of no raises and unpaid furlough days.
Akers is hopeful a compromise can be reached that the unions will support, "even though we're not all going to be jumping up and down about it."
Councilman Richard Ladd, a Broadneck Republican who also served on the committee, said he hoped enough common ground will exist among the proposals that just one bill can be introduced to the County Council.
"We need to find a way to pay these obligations," Ladd said.
Benoit said getting everyone behind one bill is possible, but not likely.