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City Announces Deals with Employee Unions

If approved by the Novato City Council on Tuesday, employees would contribute more toward pensions but receive pay increases that counterbalance most of the pension savings. What do you think of the agreements?

City Announces Deals with Employee Unions

There is a mini-breakthrough on the pension front: Pending the Novato City Council's good graces, city of Novato workers will contribute all of the employee contribution toward their retirement packages, a significant shift from past labor agreemtns. After all the details are hashed out, the changes represent a 2 percent shift in salaries for city workers and a savings of about $400,000 for the city over the next two years.

But some say that's just not enough to put the city in a better long-term fiscal situation, partly because pension concessions came in conjunction with pay increases.

The city paid for most of the employee pension contribution as part of past union deals. With the new deal, employees will pay more into the retirement packages but receive a compensatory pay increase to cover most of the difference.

City Manager Michael Frank announced the resolution with all six employee labor unions Tuesday. The collective bargaining agreements will be on the Novato City Council's agenda Tuesday night for approval.

"We are fortunate to have employees who understand the city’s financial condition and continue to work collaboratively with the city on our journey toward fiscal sustainability and delivering high-quality services to the residents and businesses of Novato,” Frank said in a release.

Tom MacDonald, a member of the Novato Citizens for Pension Reform, said the agreements aren't even close to what his group recommended to the council dating to 2010.

"Progress on pension reform in these agreements is woefully inadequate," MacDonald said. "Our group asked for six areas to be addressed and they really only made progress on one — the amount the employees are contributing into their pensions — and even with that it was watered down because it was offset by pay increases. We wanted to see some considerable structural reform, but this amounts to lipstick on a pig."

Frank said the city has done "absolutely everything legally possible with regard to pension reform, period. There is nothing additional the city could legally implement right now." He noted that employees will be earning at or less the same amount they earned seven years ago by the end of the new two-year agreements. 

Public safety employees will receive a 5.25 percent salary increase and all other employees 3 percent as partial compensation for the shift, the city said. There was no salary adjustment for the 2 percent that was shifted during the previous two years.

With council approval, the two-year contracts are effective retroactively to July 1 and would continue through June 30, 2014. With the 2 percent that was shifted in the past two-year contract, the total employee contributions paid by employees will be 9 percent and 7 percent, respectively, for public safety and miscellaneous employees.

Dan Weakley, the city's human resources manager, said employees repeatedly stepped forward during negotiations and offered to aid the city despite several years of furloughs, no cost-of-living adjustments and increased costs for healthcare.

 “On top (the concessions), they’re giving up a benefit they negotiated many years ago to assist the city with its pension reform efforts," he said.  "On behalf of the city’s bargaining team, we want to express our appreciation for employee’s concessions to help reduce the budget deficit and achieve fiscal sustainability.”

Officer Terry Brown, president of the Novato Police Officers Association for the past five years, said the agreement "keeps the faith going" that the city is moving toward fiscal stability.

"We're not happy with the agreement, but we're OK with it," he said. "We always want things to go in the other direction, but we understand the conditions of the city and we understand pension reform. We're pleased about the adjustment the city gave us to compensate for some of the pension costs. ... We're willing to live with it."

During closed-session negotiations, council members pushed pension reform and concessions that would redraw the city’s five-year financial forecast, Frank said. Included in the $1.6 million in predicted savings from the agreements, an estimated $400,000 in permanent, ongoing annual savings would result from the cutting the city's portion of the Employee Paid Member Contribution component of retirement packages. 

Frank said the city needed to make progress as guided by the council but also attract and retain top-notch workers. He said the agreements create stability and helps with budgeting.

"We are thankful for employees’ recognition of the city’s financial condition and their willingness to assist," the city said it its release. "We believe that collectively we can successfully maneuver our way through the uncharted territory of this continued economic downturn by working together with our employees and residents."

The first cost-of-living adjustment since 2008 was part of the deal — 1.5 percent effective July 1, 2013. It is a half-percent less than the city's tentative budget plans.

The agreement will end three years of unpaid furloughs, which should result in an increase in service levels to the community, Frank said.

The council meeting starts at 6:30 p.m. Tuesday at Novato City Hall.

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