May 4 2012

New Employee Contracts Go 50/50 on Escalating Benefit Costs

New 2-tier retirement plans and employee contributions to benefit costs; City’s benefit costs inch upwards –

Proposed new employee contracts for various Piedmont non-safety city workers will hold salaries steady and create a 2-tier retirement plan, but run counter to 2011 Municipal Tax Return Committee (MRTC) recommendations to cap the city’s escalating benefit costs.  No specific cost impacts from this contract are provided by the staff report, nor an analysis in respect to the MTRC recommendation.

The 2011 MTRC recommended “significant immediate action with regard to employee pension and other benefits to freeze these costs and to ultimately make changes that reduce the costs as a percent of salaries.”   (Emphasis added.)   It was recommended that the city negotiate its employee contracts with “the goal of capping employee benefit costs at the current level of $5.18 million per year . . .

The proposed new contracts provide the city will share 50% of increased pension contribution costs if they rise above a certain level.  The City will bear 100% of increased health insurance and other benefit costs.  Medical costs are anticipated to rise 7% per year in the future, dental 2.6%, and vision 1%.  See Staff Report on Employment Contracts with 4 Employee Groups

The agreements provide for a new 2-tier retirement plan:  2% at 60 for new hires; 3% at 60 for existing employees.  This will save the City money eventually as new hires occur.

Employees will begin contributing $100 per month to their medical retiree benefit.  If all employees contribute, this will result in a total contribution of approximately $120,000 per year by employees.  The City had indicated it anticipated a contribution of $250,000 or more from employees to fully fund the medical retiree benefit.  (See prior article:  Piedmont’s New $16 Million Problem.)

The City also agreed to new workplace changes and restrictions on management authority.  Confidential & Professional, Technical & Supervisory Units employees will now have the ability to work a 9/75 flexible schedule with management agreement.  Layoffs will be based on seniority, rather than a management decision.

This will be the second set of employee contracts since the Municipal Tax Review Committee (MTRC) report was issued.   The proposed contracts have been the subject of multiple closed sessions and will be presented for City Council for final approval on May 7 at the regular City Council meeting.

The contracts are retroactive, covering the 2 year period from January 1, 2011 through December, 2012.  They include the Service Employees International Union Local 1021 (General Unit), Confidential Unit, Recreation/Childcare Group, and the Professional, Technical & Supervisory Unit.  The contracts do not include police or fire.

General Provisions

  • No salary increase
  • 5% pay increase for PACP certification for Professional Technical & Supervisory Unit
  • COLA:   “Me Too” on any COLA offered any other bargaining group during the term of the contracts
  • 2 Tier Retirement Plan:  new hires at 2% @ 60; existing employees remain at 3% @ 60
  • The ability to work a 9/75  flexible schedule as long as it is a benefit to the department, and approved by the Department Head & City Administrator. (Confidential & Professional, Technical & Supervisory Units only)
  • Retirement contributions:  City and employee share retirement contribution costs 50%-50% above 24.42%; employees pay 100% of costs between 22.089% and 24.42%.
  • $100 per month employee contribution to lifetime Retiree medical insurance
  • Tuition reimbursement program extended to Adult School (Confidential Unit only)

Other provisions (all groups):

  • Christmas Eve as an entire day off (currently: half day off)
  • Jury Duty – Time off with full pay for the duration of the trial (currently limited to 30 days)

Other provision (by group):

  • • SEIU General Unit: lay offs in inverse order of seniority
  • • SEIU General Unit: Probationary period for Animal Control Officer, decreased from 9-months to 6-months, however, can be extended for one additional three month period.
  • SEIU General & Confidential Units:  Employees can voluntarily donate banked vacation or sick leave to another employee who suffers a catastrophic illness or injury (or if their spouse, domestic partner, child or parent living in the household suffers one).
  • Recreation/Childcare Group: Increase the compensatory time maximum accumulation from 220 hours to 290 hours
  • Recreation/Childcare Group: Full-time Schoolmates employees, located at the Havens site, are eligible for city parking passes.
  • All groups (excluding Recreation/Childcare): A side letter for furlough during the term of the agreement. City Administrator must decide whether to furlough by December 1st.


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