Gary Johnson’s Presentation to the VCCCD Board of Trustees, 9/10/19

TO:   Chancellor Greg Gillespie, and Board Trustee members Dianne McKay, Larry Kennedy, Bernardo Perez, Gabriela Torres, and Josh Chancer.

Speaker:   Gary Johnson, VCCCD Retiree Association Benefits Chair (and past President)  (Ventura College, 37 ½ years, American History teacher, and Dean, Social Sciences and Humanities, 25 years)

Retiree Health Benefits:

What I have to say is for the Chancellor, Board members, and AFT and SEIU leadership and membership.  You are all responsible to retirees for what happens to District retiree benefits.

The Chancellor has taken a hard line in articulating to AFT, SEIU and retirees his intent to contract with CalPERS as the new administrator for District health care benefits.  Three times he has told retiree leadership that the district’s attorney has told him he can move forward with a CalPERS benefits contract despite long standing negotiated contract and settlement agreement language which we believe stands firmly in his way.

We are deeply concerned about the content of health benefit coverages and especially the policies and practices of how they are applied by providers. The content of CalPERS’ benefits plans was not more than superficially the focus of last academic year’s investigation of possible money saving options for providing benefits.  A detailed study and understanding of the plans – by all affected parties – must be an integral part of the decision making process regarding choosing or not choosing CalPERS.

However, first the primary and more basic question has to do with what negotiated contract and settlement agreement language commits the District to concerning retiree benefits and how CalPERS governing policies make it impossible for CalPERS to deliver the District commitment to retirees.

Since 1977, when contracts were first negotiated under California law, there have been thirteen contracts negotiated between the District and faculty and the District and classified staff.  During this forty three year period every contract contains the same mutually agreed to commitment to retiree benefits for faculty hired before July 1, 1990 and classified hired before July 24, 1990.  The same retiree benefit language rolls over and over again through the thirteen subsequent contracts.  When all employees were provided the same benefits plan the language stated contract faculty/ classified members who are employed by the District at the time of retirement shall be retained on the District’s existing group plans (initially medical and dental with vision added in 1979) with premiums paid by the District.  When separate plans were provided for each employee union it followed that retirees would receive the same plan coverage as their respective employment group at the time of retirement.  The retirees employed before the designated dates in 1990 have come to be labeled Tier I retirees.  In every contract Tier I retirees are promised the same benefit as their respective active employee counterparts.  Nowhere in association with Tier I retirees is there contract language that mentions Medicare or a Medicare supplemental plan or the word “comparable” in connection to District negotiated and agreed to Tier I contract language.  Tier I retirees are to receive the same plan coverages as active employees.

On December 10, 1991 the District adopted a Managers Policy and Operations Manual following much of the format of the union negotiated contracts and authorizing the formation of a District wide managers association which did not have negotiating authorization but did have significant influence through collective persuasion.  The Manual under Article VI “Health and Welfare Benefits” reiterated the commitment provided faculty and classified retirees that they would receive the same benefits in retirement as active employees:

     “The District will provide health and welfare benefits coverage for management personnel and their dependents under existing plans…”

      (B)  “Managers retiring from the District shall be maintained on the District’s existing group medical, dental, and vision policies with premiums paid by the District…”

Commitment to Tier I retirees receiving the same benefits as active employees– without debate and with mutual understanding as it being an established agreement – is again reiterated in the 2010 Settlement agreement between 455 retirees and the District. When specifically referencing fundamental elements of the District plan expected to be included in retiree plans, Settlement language describes them in relationship to “offered by the District to active employees”, “The District provides active employees”, and “provided to active employees”.

Under the section heading “Enrollment in the same medical benefit plan as active employees”  language could not be more explicitly clear:

 “Each eligible person in the settlement class shall be entitled to enroll in any one medical benefit plan, and any one dental plan, and any one vision plan provided by the District to active employees…”

In the 1980’s the State Community College Chancellor’s Office cautioned college districts about the long term financial consequences of unfunded retiree benefit promises.  With the July 1990 contracts the District and the unions negotiated a second tier of retiree benefit provisions (Tier II).  All parties agreed that Tier I benefit promises were locked in and the language in every subsequent contract rolls over the commitment in the same language over to the present.  Tier I retirees will receive the same health benefits as active employees.

To save money in the future, Tier II retirees are not offered the same benefits as active employees, but “shall receive District provided coverage to the age sixty-five (65) at which time the retiree’s medical care plan shall be replaced by Medicare and a Medicare supplemental plan which provides comparable benefits and is provided and paid for by the District.  Dental and vision will continue to be provided.”  This represents a distinct departure from the commitment made to Tier I retirees.

Again, to save further money into the future the District and the unions agreed to close the door on the Tier II retirement commitment in 2001 and add a third tier retirement commitment.  Tier III retirees will continue to be covered by the active employee plan until age 65, and at that time they are on their own with the provision that they can buy into the District plan if they choose.

CalPERS:

With the above three tiered commitments established, now to CalPERS.  CalPERS is authorized to provide public employees health care benefits under the authority of the “Public Employees’ Medical and Hospital Care Act Regulations”:

1. CalPERS is forbidden to offer the same health benefits to active employees and retirees.  Active employees are offered a “Basic” plan of the sort of the current District Anthem Blue Cross Plan, but all Medicare eligible retirees must be enrolled in a decidedly different kind of benefit package:  Medicare and a CalPERS Medicare supplement.  In broad terms, the CalPERS retiree coverage is compatible with Tier II contract provisions as long as coverage is “comparable” with the active “Basic” plan. Tier I retirees cannot have the same plan as actives under the CalPERS plan.  District contract language does not require retirees to have Medicare to be eligible for District retiree benefits.
2. CalPERS requires all retirees eligible for Medicare to have Medicare A and B and be enrolled in CalPERS Medicare supplemental plan before the end of the first year District contract with CalPERS in order for the District to be eligible to contract with CalPERS.  Tier I retirees are not contractually required to subscribe to Medicare A and B or if they choose to do so, they are not required to accept Medicare and a supplement as their District benefit as a substitute for the active employee plan.
3. CalPERS is also not permitted to recognize two members of a household, each earning and receiving separate District coverage.  CalPERS cannot continue to provide them separate coverage.  CalPERS cannot provide the dual coverage such District couples now receive and cannot provide the coordination of coverage benefits they now receive.  Instead, CalPERS forces a couple, each entitled to lifetime healthcare benefits, to decide which of them will have primary coverage and force the other to absorb nullification of a fundamentally important retiree benefit they have a contractual right to.
4. District Tier I contractual commitments are not compatible with CalPERS contractual requirements.

As an aside, there is some irony in the District using the absence of any Tier I Medicare requirements to fend off the Anthem Blue Cross recent effort to require Tier I retirees to sign up for Medicare Part B or lose 80% of their District Anthem coverage, and at the same time say that by June 30, 2020 Tier I retirees will be required to have Medicare Part B so the District can contract with CalPERS.  “No Medicare requirement” means “No Medicare requirement”.

Finally, in the interest of mutual transparency the Retiree Association requests the Board of Trustees to have the Chancellor share with the retirees and both unions what logic and legal arguments it intends to employ to abrogate all previous contract and settlement language and

(l) force Tier I retirees to enroll in Medicare, and

(2) force Tier I retirees to settle for Medicare and a Medicare supplement instead of the benefit plans active employees receive