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Rancho Santa Fe water board cuts its own benefits in run-up to rate study, labor talks

For the second year in a row, directors of the Santa Fe Irrigation District have cut their own health benefits.

On a 3-2 vote at their March 19 meeting, directors cut health benefits by $7,500 per year. Although all five members of the board are eligible for health benefits, only two opt to take them. Before Thursday’s action, the district anticipated spending about $29,000 on director medical benefits during the current fiscal year.

The directors are elected to the board, which oversees a public utility district that provides drinking and irrigation water to Rancho Santa Fe, Solana Beach and Fairbanks Ranch. This year’s total district budget is $37.4 million, including $23.1 million for operations and $13 million for capital projects.

The board took up the proposed benefit cuts at the urging of director Greg Gruzdowich, who joined the panel in 2012.

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Last year, the board limited directors to health coverage for themselves and one dependent; previously they had been eligible for coverage for their entire family. Thursday’s action was to cut benefits to coverage for only the director, with reimbursement equal to the lowest-cost plan offered to district employees.

Also last year, the board cut per diem payments, which directors receive for attending meetings, to $150 from $200.

Gruzdowich — who has not accepted health benefits or per diem payments during his time on the board — said it is important to set an example in a year when the district will be negotiating a new labor agreement with employees. In addition, the district is conducting a cost-of-service study, which could result in a rate increase for customers in 2016.

“We have an opportunity to be a leader in San Diego,” said Gruzdowich.

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Gruzdowich was joined in voting for the reduction in health benefits — which will take effect in 2016 — by board president Michael Hogan and director Marlene King. Directors Alan Smerican and Augie Daddi opposed the motion.

“This is not a political issue. It has to do with getting the five best people to be directors in our district,” said Daddi.

Smerican, who receives health coverage for himself and his wife, said directors are elected officials, and entitled to compensation for their service. Over the past two years, he said, his health benefits and per diem payments have amounted to about $12.50 per hour.

“I think I’m worth $12.50 an hour, and I don’t see any reason to change anything,” he said.

The cost of director health benefits is “insignificant,” said Smerican, and has no effect on rates.

Board compensation and benefits have totaled about $85,000 a year over the past three years, according to a district staff report.

In his contacts with constituents, “Nobody cares about the compensation. No one ever brings it up,” Smerican said.

Hogan, who also serves on the boards of the San Diego County Water Authority and Southern California’s Metropolitan Water District, balked at Gruzdowich’s original proposal to limit director health benefits to 80 percent of the cost of the lowest plan offered to district employees. Hogan receives coverage for himself through the Santa Fe district.

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“I spend a lot of time — it’s a full-time job,” Hogan said.

Gruzdowich said the issue is one of fairness, and also setting the tone for upcoming labor negotiations.

“If I were an employee, I’d get the signal you’re going to cut my pay,” Daddi said.

In an interview after the meeting, Gruzdowich said the total of pension, health care and salary offered to district employees is “richer than it needs to be,” and he will advocate cutting labor costs during upcoming negotiations.

“Yes, the signal is, I think that (compensation) package needs to be reduced,” Gruzdowich said.

The cuts to director compensation and benefits, he said, are consistent with his position on employee compensation levels.

“I look at this as symbolic leadership of how we are going to fiscally manage our district,” Gruzdowich said.

During the board’s discussion of director health benefits, Smerican countered, “I don’t think we’re in the business of symbolism, and you get what you pay for.”

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