New city employees hired after Sept. 1, 2008, will have different retirement health insurance benefits than current city retirees.

The Slidell City Council, trying to lower its growing unfunded liability, unanimously, albeit reluctantly, passed the changes Tuesday night.

“We are headed down a path where the city may not have the money to pay for the benefits, and then it may face the possibility of letting employees go,” Councilman Joe Fraught said. The new ordinance does not affect current city employees or any one who is retired.

The city contributes 75 percent to the employees’ health plan and pays 100 percent for retired employees.

Councilman Bill Borchert said this will not change under the new changes.

The ordinance states that anyone hired by the city after Sept. 1, 2008, will still get health insurance. However, the city will contribute to the insurance premium at a rate of 3 percent for every year of continuous employment with the city up to 75 percent.

The employee must participate in the health plan for at least five years before retirement.

The employee’s spouse and dependents can still be covered, but their cost is the responsibility of the employee. Currently, the city pays 100 percent of the health costs for the retired employee and spouse and dependents.

Finally, after the retiree reaches the age of 65 and is eligible for Medicare, the city will stop paying for the health insurance.

If the employee does not qualify for Medicare, he or she may stay with the city plan but will still have to pay part of the cost.

According to finance director Sharon Howes, this is necessary so the city does not run out of money.

She said 11 years ago Slidell had 27 retirees, and the city’s cost for health insurance was $104,000 a year. Today, there are 96 retirees, and the city’s cost has gone up to $1million.

“Not only has the number of employees increased, but insurance costs have increased tenfold,” Howes said.

Under new federal accounting standards, the city has to survey and report on its unfunded liability, which are the employees who have not retired but will retire and get health insurance benefits. The unfunded liability for Slidell is currently $40 million, according to Howes.

“That is almost the entire annual city budget,” she said.

Even though the new rules do not affect them, several city employees voiced concern about the ordinance Tuesday night.

Chris Collata, a Slidell police officer, said it was the insurance and retirement benefits that attracted him to his current job.

A former New Orleans police officer, Collata told the council he had taken a cut in pay to come to Slidell because of the benefits. Even though he is not affected by the new rules, he wonders about future employees.

“I don’t think you will attract good employees if you do this,” Collata said.

But Councilman Raymond Canada said the council can undo the ordinance if finances improve for the city.

“A hope for more revenues from the complex (Summit Fremaux). That could help,” Canada said. “We have to see. It is only speculation now.”

Fraught was not happy with the ordinance, but he said it was something that had to be done.

He said changing things now was almost too late.

“Had we done this years ago, we could have saved millions of dollars, and kept the same benefits,” Fraught said.