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Shores debates benefit cuts for retiring employees

STORY BY MEG LAUGHLIN, (Week of August 30, 2012)

Indian River Shores Councilman Richard Haverland has suggested cutting the medical insurance subsidy offered to retiring town employees, saying that workers are well paid and should cover the cost of health care themselves.

Currently, the town pays up to $3,200 a year to provide health care for employees who have worked there for at least seven years and who retire before their Medicare kicks in. The amount provided is 51 percent of a Blue Cross premium. The former employee pays 49 percent.

“I think we should eliminate the subsidy,” said Haverland. “We’ve been dilly-dallying around for three months about this and it’s time we acted.”

Usually, no more than a few employees retire every few years.

“You mean not give employees something that was part of the terms of their employment?” asked Vice Mayor Gerry Weick. 

Haverland insisted it was “a bad deal for taxpayers” because the “can keeps getting kicked down the road.”

Weick countered that the can doesn’t get kicked down the road because the Shores pays eligible retirees on time every year in a pay-as-we-go system, and Haverland’s characterization of  having to come up with delayed payments didn’t make sense.

“Take it away,” demanded Haverland. “If Vero Beach can cut salaries by 4.7 percent, we can do this.”

“That’s different,” insisted Weick. “People get much more upset when you take their promised benefits away.”

“The hell it’s different,” shot back Haverland. “Money is money.”

Councilman Mike Ochsner said he didn’t disagree with Haverland but thought comparisons needed to be made first. “Let’s look at towns with the same population or median income and then decide how we slice it.”

In a written comparison he put together on the issue, Haverland wrote that Sebastian only subsidizes medical insurance for two years when employees retire. Fellsmere offers no pension plan or insurance subsidy but contributes 10 percent of salary to a 401-K.

Further numbers, compiled by Haverland, comparing department head salaries showed that in Indian River Shores, population 3,908, the city manager makes $145,138 a year, the clerk $64,796. In Sebastian, population 21,995, the city manager makes $110,000 a year, the clerk $85,000. In Fellsmere, population 5,220, the city manager makes $121,000 a year, the clerk, $67,000.

Other municipality comparisons along with those, Haviland said, make his point that Indian River Shores administrators earn more than those in surrounding areas and don’t need their medical insurance subsidized when they retire.

“I believe that our administrative personnel and safety officers' total compensation levels substantially exceed that of their peer groups,” wrote Haverland.  In other words: Dump the Blue Cross subsidy.  Haverland suggested the cuts start Jan. 1, 2015.

After the meeting, Shores attorney Chester Clem said that employees had a “vested right” to expect that what they were told upon being hired would occur.

But in a right-to-work state, which Florida is, those terms can be renegotiated as Haverland suggested, said Clem.

“Cut, cut, cut, that’s what Dick Haverland always wants – to cut everything all of the time,” said Town Manager Richard Jefferson.

Also, at the meeting, Haverland wanted to cut proclamations, including the one proposed at last week's meeting, acknowledging September as National (Substance Abuse) Recovery Month.  “Why is this on the agenda,” asked Haverland. “It’s a complete waste of time.”

"This might help in some small way," said David Cavell, coordinator for the county's Substance Prevention Coalition.

Ochsner supported Haverland, and they both abstained from voting for the proclamation. Still, it passed.

“It’s always national something,“ said Ochsner after the meeting.