San Jose Mercury News

Santa Clara Valley Water District cuts idea for lifetime medical benefits for board members

August 28, 2012

by Paul Rogers

Two months before it plans to ask voters to approve a $548 million parcel tax, Silicon Valley's largest water provider is exploring a proposal to give its part-time board members a new perk: pension benefits and medical coverage for life.

The Santa Clara Valley Water District planned to discuss the idea at its meeting Tuesday, until it hastily pulled the item from the agenda on Monday after a reporter from this newspaper asked about it.

The plan would have allowed the water district's seven board members to receive the same medical benefits as full-time management employees of the agency, adding a new expense at a time governments across the country are under pressure to cut their pension obligations.

Depending on their years of service, board members could also receive paid vision and dental benefits for life -- not only for themselves, but for their spouses and one dependent, too.

"It's a golden parachute for the Golden Spigot," said John Roeder, president of the Silicon Valley Taxpayers' Association, calling the agency by a nickname.

"Medical benefits and pensions are something that are only given to full-time employees. The water district board members have a part-time position."

The proposal, which could saddle the district with millions of dollars in future medical and pension costs, was tucked at the bottom of the agency's Tuesday agenda. It was outlined in a two-page memo that did not include such details the district's current pension obligations, a thorough cost estimate of what the benefits might cost or such facts as whether the district would pay the retroactive contributions for board members.

The district conceded Monday that it had left out critical details.

"We don't have all the cost information that we really needed to have to have an intelligent discussion with the board," said Olga Martin Steele, the district's interim chief administrative officer, who wrote the staff memo on the plan. "And we have a very full agenda tomorrow."

Steele herself benefits significantly from the water district's pension and workplace rules. A retired state employee, she draws a $180,000 state pension. But on top of that, the district hired her on a temporary basis this spring at a rate of $210,000 a year, plus a $1,700 monthly housing allowance, until a permanent replacement is hired next month.

Critics said the issue is the latest example of an agency adrift.

Also looming over the water district, which provides drinking water and flood protection to 1.8 million people, is a high-profile ballot mistake last week. The district turned in language to county elections officials that contained a title and summary of 77 words -- two words longer than the 75-word limit required by law. The district hastily called a new board meeting and cut two words. But the agency did not post an agenda on its website 24 hours ahead of time as required under state open meetings laws, and now the Silicon Valley Taxpayers' Association has threatened a lawsuit that could result in the measure being nullified.

"With all that's gone on in the past few weeks, I'm surprised there aren't more details" in the pension plan, said Roeder, the association's president who also works as CEO of Great Oaks Water Company, a private firm in San Jose that buys water from the water district.

Water district's board members are paid $286 per meeting, up to 10 meetings a month. When asked if they should draw lifetime medical benefits and other perks, Steele said:

"That's a question for the board. They work an awful lot of hours. Whether anybody agrees they should, they do. They represent their constituents very well."

Water district board members sought to distance themselves from the plan on Monday, however.

Board Chairwoman Linda LeZotte said she had not thoroughly read the staff report yet, but raised questions late last week about costs.

"I don't know where this came from," she said. "There's no way I would vote for something like this without knowing all the costs."

Water district CEO Beau Goldie said he recommended Thursday that the item be pulled over similar concerns about costs. He said his staff will provide more details and submit a new plan to the board by the end of the year.

Currently, the district provides medical, dental and vision insurance to its seven board members. In years past, it also provided medical benefits to retired board members, who also participated in CalPERS, the California Public Employees Retirement System. But in 1994, state lawmakers said that board members of special districts who were elected after 1994 could no longer participate in CalPERS.

Last year, water district lawyers issued a memo saying that without a pension plan, the board members could not receive district retiree health benefits. That meant board members Joe Judge and Tony Estremera, along with former board member Sig Sanchez, who had gained their seats under an old system in which some members were appointed by county supervisors -- rather than being elected -- would not get the medical benefits they had been expecting.

Board member Don Gage said he will support rules to provide the benefits to them, but he will not create a costly new benefit for other board members or future board members.

"As far as I'm concerned, they are the only ones who deserve it," he said.

The issue carries significant political risk. Across the state, ballooning pension and benefit costs have crippled local government agencies. In June, voters in San Jose and San Diego overwhelmingly approved measures limiting public employee benefits. And the water district's parcel tax measure in November requires a two-thirds majority to pass.


Paul Rogers covers resources and environmental issues. Contact him at 408-920-5045. Follow him at

(This article is also available at the Web site of the San Jose Mercury News, here.)

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