Anne Arundel County is poised to drastically change the health benefits it offers county workers when they retire, a move designed to keep the government on sound financial footing.
After months of debate, the County Council plans to vote Monday on a new package of retiree health benefits, even as employee unions already are considering challenging the bill in court.
County Executive Laura Neuman said curtailing retiree health benefits is a necessary step to keep the county government financially healthy.
"We're trying to solve the problem to save county government," said Neuman, a Republican who introduced her own bill but withdrew it in favor of the one under consideration, drafted by Councilman Jamie Benoit, a Crownsville Democrat.
Though Benoit sponsored the bill, after dozens of amendments, it now bears fingerprints from multiple council members, the county executive and the unions. Under the measure, most current workers and all future hires would have to work longer to earn health insurance after retirement, and many will have less of that cost paid for by the county government.
"I think we've done it in a thoughtful and conscientious way … In the end, I'm pretty confident that as far as the employees and retirees are concerned, this is a very fair bill," Benoit said.
Employee unions are OK with some of the changes aimed at saving money. But they're concerned that the bill strips future rights to negotiate retiree health costs, a provision they may challenge in court, said Officer O'Brien Atkinson, president of FOP Lodge 70.
"This bill, as written, takes a lot of bargaining ability away from the employees," Atkinson said. "Traditionally, the county will take away whatever it can to maintain its position as one of the lowest-taxed counties in the state."
Though a decision whether to challenge the bill hasn't yet been made, Atkinson predicted it would eventually wind up in court.
The reason for changing benefits comes down to money. Under the county's current plan, most employees only have to work five years and can get 80 percent of their health care costs in retirement paid for by the county, as well as for their spouses and dependents.
For years, the county has known that it may not be able to afford to pay that level for employees — all told, it will cost more than a billion dollars to provide those benefits for current retirees and current employees. At the same time, new reporting requirements require local governments to tally those long-term costs, which can affect the governments' credit ratings, and thus the rates they pay when they borrow money.
All local governments are dealing with this issue, said Andrea Mansfield, legislative director for the Maryland Association of Counties.
"All of them are struggling now that the liabilities are being reported differently," Mansfield said.
Annapolis changed its retiree health plans when it renegotiated union contracts in the fall. Future hires won't get health insurance in retirement. Instead, they'll be given money in a special account that they can use to pay for health care in retirement.
In 2008, Anne Arundel started putting away money toward retiree health insurance, but the fund was drained in 2010 during the recession.
In 2011, the County Council set up a committee to study the issue, and a year ago former County Executive John R. Leopold's administration was drafting a bill to revise the retiree health insurance. That effort was derailed by Leopold's trial on charges of misconduct that led to his resignation.
Once Neuman replaced Leopold, she picked the issue up and warned county employees in September that changes would be necessary. Neuman introduced her bill but later withdrew it in favor of Benoit's, saying it would be better for the council to consider just one bill.
"The intention was never to have competing bills," Neuman said.
Another proposal was offered by council members Richard Ladd, Derek Fink and John Grasso, but it was defeated in December.
As it stands now, the cost of paying for retiree health care for current retirees and current employees stands at $1.2 billion, according to John Hammond, the county's budget officer. If the county started putting away money to pay for retiree health benefits, $104 million per year would be needed, he said. The county government now spends $24 million per year.
By trimming the benefits offered, the bill would cut the overall cost from $1.2 billion to about $900 million. Or, on a year-by-year basis, the cost would go from $104 million per year to about $75 million per year, Hammond said.
Under the bill, the county executive would have to submit a plan for how to start coming up with that $75 million per year.
"Obviously, we're not going to dump $75 million in this plan right away," Hammond said. "We're just going to have to grow our way into it."
Neuman won't say whether she'll sign the bill if it passes, sticking to a policy of not making a decision on a bill until the County Council presents it to her. But she did say of the bill: "It looks promising."
For Neuman, delving into retiree health benefits has been her biggest policy issue since she was appointed county executive in February. She describes the $1.2 billion price tag as a "future deficit" for the county and says it jeopardizes the county's bond ratings.
Neuman said she has been counseled by several people that the retiree health insurance issue would be dicey to tackle during an election year, but said, "It's in front of me now, I had to deal with it now. It's not about politics. For me, it's about solving problems."
Neuman said she's tried to be open and work collaboratively with the unions and council members on the bill.
Joanna Conti, a Democrat running for county executive, said she worries the changes in health benefits will drive county workers to find jobs elsewhere.
Conti said if employees leave, it will be expensive for the government to hire and train replacements, especially police officers, paramedics and firefighters. Also, it would be harder to lure people to work for the county if the benefits are not as good, she said.
"It's going to be very, very difficult to recruit the top-quality people we need to provide good services to our residents," she said.
The county's 13 employee unions are so concerned about the issue that they hired a benefits specialist, a lawyer and a lobbyist who sat through multiple council meetings and frequently testified on Benoit's bill and the many amendments.
Atkinson, from the police union, said the employees have worked hard on the issue but didn't succeed on their key point about being able to negotiate in the future on health benefits. He said the council doesn't seem to be willing to bend.
"Short of them addressing the collective bargaining piece again — which I don't think they're willing to do — it seems almost inevitable that we're going to have to go to court," he said.
Retiree health care bill
The Anne Arundel County Council is poised to pass a bill Monday designed to rein in the cost of providing health insurance to retired county workers in a variety of ways:
•Unions would be able negotiate the percentage government pays toward health insurance through collective bargaining but not the actual health plans.
•County employees who retire in 2017 or later must work at least 10 years to qualify for retiree health insurance, instead of the current five years.
•The county will pay more toward retiree health insurance the longer an employee has worked, with different scales for current employees and those hired in 2015 and later. Currently, all retirees have 80 percent of their insurance paid for by the county.
•New employees will no longer be able to count years worked for the state or other local governments in qualifying for their retiree health care. They also must retire directly from Anne Arundel County government to qualify.
•For retirees age 65 and older who have Medicare, an alternative supplemental insurance program may be adopted.