Light rain early...then remaining cloudy with showers overnight. Low 49F. W winds at 10 to 20 mph, decreasing to less than 5 mph. Chance of rain 60%..
Light rain early...then remaining cloudy with showers overnight. Low 49F. W winds at 10 to 20 mph, decreasing to less than 5 mph. Chance of rain 60%.
Updated: April 12, 2026 @ 3:30 pm
In an effort to cut costs, the Redwood City Council on Monday will consider a reduction in health benefits for retired city employees hired after Sept. 1 of this year.
If all of the city’s employee groups agree to a second tier with fewer benefits for new hires, the city could save $2.4 million over the lifetime of current active employees, according to a staff report. Savings for all employee groups for fiscal year 2018-19 are estimated to be $262,000 and would increase over time.
Employees in the second tier will receive a stipend that won’t exceed 90 percent of the California Public Employees’ Retirement System Bay Area Kaiser Premium for employee-only coverage, according to the report.
Employees hired before September of this year will remain in the first tier and collect the premium for employee-only coverage.
Retiree health benefits are provided to employees who have worked for the city for 10 years or more.
The city currently has $58 million of debt for retiree health benefits and has to date funded about 32 percent of its total liability, according to the report.
“The city is working to fully fund its retiree health obligations by increasing annual payments to its retiree health fund and by working with bargaining groups to address the existing shortfall,” the report reads.
To date, only the Redwood City Police Supervisors Association has tentatively agreed to the proposed changes. If adopted, the city is expected to save $69,000 over the lifetime of current active PSA employees. Savings in fiscal year 2018-19 would total $8,000 for those employees and would grow over time, according to the report.
No changes will be made until the city has satisfied its meet-and-confer obligations.
Redwood City’s budget problems can largely be attributed to unfunded employer obligations. Employer contribution rates have been driven upward since CalPERS lowered the amortization period from 30 years to 20 years. As a result, the city’s annual pension costs are expected to double by 2030.
The council has already approved several budget cuts, including one salaried position and several city programs, to balance the budget for the current fiscal year.
To address the city’s pension challenges, a past council established a two-tiered system that required employees to contribute more of their salaries into their retirement plans. The city is also pursuing a half-cent sales tax to bring in about $8 million annually that will help address a forecasted budget deficit.
Redwood City’s financial situation is by no means unique. Numerous cities and public agencies across the state are increasingly struggling to balance budgets because of retirement costs.
In other business, the council will decide whether to complete a grade separation study for the Whipple Avenue crossing. Whipple Avenue has a daily traffic volume of over 16,000 vehicles and is often congested around the railroad tracks and El Camino Real during commute times.
In 2009, the San Mateo Transportation Authority completed a Grade Separation Program Footprint Study for Redwood City that evaluated existing grade crossings and options for grade separation.
A grade separation project could range from $150 million to $500 million, according to a staff report.
(650) 344-5200 ext. 102
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