With hefty long-term costs looming, leaders with the Groveland Community Services District are looking to cut retirement, pension and health benefits for employees.
During a contentious meeting Thursday at which words like “litigation” and “bankruptcy” were bandied about, the GCSD Board of Directors discussed the district’s unfunded long-term liabilities and how to deal with them.
New Director Virgil McVicker caused a bit of a stir when he suggested cutting health-care and pension benefits immediately without negotiating with the union. And while the board eventually opted for a more deliberate approach, multiple board and staff members, as well as residents, said the district must make significant cuts in those areas for its long-term viability.
“If you do not take steps in this general direction, you’re heading for a crash,” said Craig Maxwell, a district resident and business owner who frequents meetings.
According to calculations compiled by McVicker, a retired accountant, GCSD is looking at an annual obligation of about a half million dollars for post-retirement health benefits. His analysis also says the district is currently looking at an approximately $2.2 million unfunded liability long-term for those benefits.
The director also analyzed the obligations for pension costs to the district, with an estimated annual pension costs of about $392,384 between the state public pension system and Social Security.
“We have to deal with this problem immediately,” he said, adding that failing to deal with the issue may lead to “a future bankruptcy for GCSD.”
McVicker proposed the district make significant cuts immediately to both healthcare and pension benefits for employees. However, GCSD employees are currently working under a contract that won’t expire until June and changing the terms of that agreement before it’s up could spell legal trouble for the district.
“We have a legal agreement with the district until June 30,” said Mike Eggener, business representative for Operating Engineers Local No. 3, which represents district workers.
“Who are you going to hire as employees if you start doing all these cuts? … These are just crazy,” Eggener said. “Please don’t accept this proposal. … This will cause you legal costs.”
A special committee will use McVicker’s reports and suggestions to develop positions for the upcoming contract negotiations. District General Manager Gary Mello also suggested that GCSD and union representatives begin negotiating “in earnest” at the beginning of the year.
GCSD is among several local public agencies trying to rework employee benefits to chip into long-term liabilities.
The Tuolumne County Board of Supervisors has held multiple workshops this year on pension and health care costs, and this month voted to update the board’s goals to deal with the issue. Tuolumne Utilities District also earlier this year moved a package forward that cuts into future employee compensation.
GCSD also this year took a major step at dealing with long-term pension obligations within the district’s Fire Department by contracting the department personnel out to Cal Fire.
In other news, Scott Wemmer was sworn in as the district’s newest director. He will replace Herman Schaap, who did not seek another term in the last election.