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Home My WebLink About03-06-2012 c6 moaintern assoc fire fighterscounci lj aGenaa aepont CITY OF SAN LUIS OBISP O FROM : Monica Irons, Human Resources Directo r Prepared By :Greg Zocher, Human Resources Manage r SUBJECT : MEMORANDUM OF AGREEMENT BETWEEN THE CITY OF SAN LUI S OBISPO AND THE INTERNATIONAL ASSOCIATION O F FIREFIGHTERS, LOCAL 3523 FOR THE PERIOD OF JANUARY 1, 201 2 THROUGH DECEMBER 31, 201 5 RECOMMENDATION 1.Adopt a resolution adopting and ratifying the Memorandum of Agreement with a four-yea r term between the City of San Luis Obispo and the International Association of Firefighters , Local 3523 . 2.Adopt a resolution ceasing to pay and report the value of the employer paid membe r contribution (EPMC) to the California Public Employees Retirement System (CaIPERS) fo r members of the International Association of Firefighters, Local 3523 . DISCUSSION Backgroun d The International Association of Firefighters, Local 3523 (Fire Union) represents approximately 4 3 employees in the ranks of Firefighter, Fire Engineer, Fire Captain, Fire Inspector, and Hazardou s Materials Coordinator . Compensation and benefits for this group of employees is established by a memorandum of agreement (MOA) and amendments that expired on December 31, 2011 . Negotiations with the Fire Union commenced in October 2011 following a notice to the union from the City in September . That notice outlined the Council's labor relations objectives as follows : 1.Implement sustainable actions to reduce total employee compensation costs by 6 .8% or a total of $3 .1 million annually for all funds ($2 .6 million in the General Fund only) as se t forth in the 2011-13 Financial Plan ; and , 2.Achieve "significant progress" in the area of long-term systemic pension cost containmen t and reduction, including : o a shift to employees paying the full member contribution required by Ca1PER S (eight percent for Miscellaneous employees and nine percent for Safety employees), thus moving away from EPMC for current and future employees ; and, o implementation of a second tier retirement benefit, or , o other actions that meet this objective . Representatives from the Fire Union and the City met on four occasions and reached a tentativ e agreement on the terms of a successor MOA . The negotiation sessions were very productive an d constructive, including an exchange of information and ideas, guided by the Council's labo r relations objectives . The tentative agreement was ratified by the Fire Union's membership o n February 6, 2012. C6-1 Meeting Date 03/06/1 2 Item Number C6 MOA Firefighters Local 3523 Paget The following summarizes the key terms of the agreement : 1.A four-year MOA term (January 1, 2012 through December 31, 2015). a . Effective the first full payroll period in July 2012, Fire Union employees pay 7 .5 % of the Member contribution to CaIPER S 2.Effective the first full payroll period in July 2013, Fire Union employees pay the ful l Member contribution to Ca1PERS (nine percent for Safety employees and eight percent fo r Non-Safety employees). 3.No across the board (e .g . cost of living adjustments) salary increases for the term of th e agreement . 4.No increase in the City contribution to health insurance until December 2015 . At that tim e the City contribution to health insurance will be modified based on an amount equal to on e half of the average percentage change for family coverage in the CaIPERS health plan s available in San Luis Obispo County . 5, A second tier formula for Safety Fire employees under the PERS Safety 3% at 55 formul a and a second tier for Non-Safety Fire employees consistent with the formula that will b e applicable to the San Luis Obispo City Employees Association (SLOCEA). The Safet y second tier will be implemented for new employees hired after July 1, 2012,or as soon a s practical in accordance with Ca1PERS and other State regulations . Other changes to th e second tier include final compensation calculated using the average of the three highes t years and the employees paying the full member contribution to PERS (nine percent for th e Safety plan). 6.Minor wording changes to the MOA to more accurately reflect classification titles, curren t practices, incorporation of prior amendments, etc . 7.Change to Article 39, Entry Level Firefighters that allows the Fire Chief in consultation wit h the President of Local 3523 to determine the type of recruitment (entry, lateral, paramedic , etc .) based on the operational needs of the department . 8.All other terms and conditions of the MOA remain unchanged for the term of the agreement . The City currently pays the Member contribution to Ca1PERS for Fire Union employees . Unlike what happened several years ago with the San Luis Obispo Police Officers Association (POA), the San Luis Obispo Police Staff Officers Association (SLOPSOA), and the Battalion Chiefs whe n these groups reached agreement with the City to pay the member contribution but also received a n equivalent salary increases the Fire Union will not receive any offsetting or across the board salar y increases during the term of this agreement, through December 31, 2015 . Further, the City currently reports the value of the member contribution to Ca1PERS as additional compensation . By adopting the two proposed resolutions, this practice will cease and the member contribution will n o longer be reported to Ca1PERS as additional compensation . In addition to the substantial reductions to take-home-pay, long term pension reform is a key component of this agreement . The compensation reductions are realized by the City because th e firefighters have agreed to "pick-up" certain costs associated with their pensions that are currentl y paid by the City . This reduces the cost to the City now and in the future . In addition, the firefighter s have agreed to a "second tier" pension formula, 3% at 55, three year average .earnings for calculation of final compensation . This second tier formula applies to new employees and increases MOA Firefighters Local 3523 Page 3 the normal retirement age by five years . Actuarial analysis estimates retirement costs will b e reduced by approximately $161,000 in about ten years . At the end of this agreement, city employees represented by Local 3523 will have gone without a cost of living adjustment for five years (the last adjustment was a two percent increase received i n December 2010 and had been deferred from 2009 to assist the City in achieving savings necessar y to balance the 2009-11 Financial Plan). Further, Safety employees will pay nine percent and No n Safety employees will pay eight percent of retirement costs that were previously paid for by th e City. FISCAL IMPACT Effective the first full pay period in July 2012, the total compensation cost reductions will result i n savings of $434,000 for 2012-13 which is a 6 .4% reduction for this employee group . Effective the first full payroll in July 2013, the reductions will result in an ongoing annual savings of $520,00 0 which exceeds the financial target of $463,000 by $57,000 per year and results in an ongoing 7 .6% reduction in total compensation costs for this employee group . The 2011-13 Financial Plan included a projection for reductions in personnel compensation costs in 2011-12 and 2012-13 . Use of one-time General Fund savings from the prior year will be required to cover the current rate o f compensation until the terms of this contract are phased-in . One-time savings of $229,000 will b e utilized in 2011-12 and $29,000 in fiscal year 2012-13 to cover employee compensation reductions budgeted in the 2011-13 Financial Plan . Combined with actions taken by the unrepresented management group in January, which includ e payment of the full 8% member contribution to Ca1PERS in January 2012, this agreement helps th e City achieve a cumulative total of approximately 40% of the targeted $3 .1 million in annual personnel cost reductions . ALTERNATIVE S Do not approve the resolutions and contract amendments .This alternative is not recommended, a s the resolutions and contract amendments are consistent with the Council's labor relations objective s and the City's employer-employee relations policies . ATTACHMENT S 1.Resolution adopting and ratifying the F aire Union MOA . 2.Resolutionceasing to pay and reportthevalueof F FMC to Cal PER S forthe l `ire Union . AVAILABLE FOR REVIEW IN THE COUNCIL OFFIC E MOA between the City of San Luis Obispo and the International Association of Firefighters, Loca l 3523, January 1, 2012 through December 31, 2015 . wgcr; i s repan tempiates\e-w .,v,i agenaa rep': oc ATTACHMENT 1 Page 1of 2 RESOLUTION NO.(2012 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISP O ADOPTING AND RATIFYING THE MEMORANDUM OF AGREEMENT BETWEE N THE CITY OF SAN LUIS OBISPO AND THE INTERNATIONAL ASSOCIATION O F FIREFIGHTERS,LOCAL 3523 FOR THE PERIOD OF JANUARY 1, 2012 THROUG H DECEMBER 31, 201 5 WHEREAS, representatives of the International Association of Firefighters, Local 352 3 met multiple times with City representatives to identify sustainable reductions in tota l compensation costs, achieving Council's labor relations objectives to reduce total compensation costs and implement sustainable pension cost containment and reductions ; and WHEREAS,the International Association of Firefighters, Local 3523 employees acknowledge the fiscal challenges facing the City of San Luis Obispo and is committed to working with the City to help achieve long-term sustainable solutions ; NOW, THEREFORE, BE IT RESOLVED,by the City Council of the City of San Luis Obisp o as follows : SECTION 1 . The Memorandum of Agreement between the City of San Luis Obispo an d the International Associations of Firefighters, Local 3523, attached hereto as Exhibit "A" an d incorporated herein by this reference, is hereby adopted and ratified . SECTION 2 . The Director of Finance and Information Technology shall adjust th e appropriate accounts to reflect the compensation changes . SECTION 3 . The City Clerk shall furnish a copy of this resolution and a copy of th e executed Memorandum of Agreement approved by it to : Erik Baskin, International Association o f Firefighters, Local 3523, and Monica Irons, Director of Human Resources . Upon motion of , seconded b y , and on the following vote : AYES : NOES : ABSENT : The foregoing resolution was adopted this 6th day of March, 2012 . T :\Council Agenda Reports \2012\2012-03-06\MOA Firefighters,Local 3523 (Irons)\ATTACHMENT 1 .doc C6-4 ATTACHMENT 1 Page 2 of 2 Mayor Jan Mar x ATTEST : Elaina Can o City Clerk APPROVED AS . TO . FORM : /s/ J . Christine Dietrick J . Christine Dietric k City Attorney T :\Council Agenda Reports 12012\2012-03-06\MOA Firefighters, Local 3523 (1rons)1ATTACHMENT 1 :doc C6-5 EXHIBIT A A copy of the MOA is in the Council Reading File an d available for public review . At the time of this repor t deadline, appropriate signatures were being obtained . C6 = 6 ATTACHMENT 2 Page 1 of 2 RESOLUTION NO. (2012 Series ) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO CEASIN G TO PAY AND REPORT THE VALUE OF EMPLOYER PAID MEMBE R CONTRIBUTIONS FOR INTERNATIONAL ASSOCIATION OF FIREFIGHTERS , LOCAL 3523 AND SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLIC T WHEREAS,the Council of the City of San Luis Obispo has the authority to implemen t Government Code Section 20636(c) (4) pursuant to Section 20691 ; an d WHEREAS,the Council of the City of San Luis Obispo has ratified a Memorandum o f Agreement with the International Association of Firefighters, Local 3523 which reduces the Employer Paid Member Contribution (EPMC) effective July 26, 2012 and which no longer provides for the normal member contributions to be paid by the employer and reported as additiona l compensation effective July 25, 2013 ;and WHEREAS,one of the steps in the procedures to implement Section 20691 is the adoptio n by the Council of the City of San Luis Obispo of a Resolution to cease payment and reporting the value of said EPMC ; and NOW, THEREFORE, BE IT RESOLVED,that the Council of the City of San Lui s Obispo hereby : SECTION 1 .Elects to cease payment of EPMC on the following conditions : a.Effective July 26, 2012, one and a half percent of the normal contributions will b e paid as EPMC, and the same one and a half percent (value) of compensatio n earnable {excluding Government Code Section 20636(c)(4)} will be reported a s additional compensation for Fire Safety Employees . b.Effective July 26, 2012, a half percent of the normal contributions will be paid a s EPMC, and the same half percent (value) of compensation earnable {excluding Government Code Section 20636(c)(4)} will be reported as additional compensatio n for Fire Non-Safety Employees . c.Effective July 25, 2013 this benefit shall no longer apply to all employees of th e International Association of Firefighters, Local 3523 . d.Effective July 25, 2013, zero percent of the normal contributions will be paid a s EPMC, and the same zero percent (value) of compensation earnable {excludin g Government Code Section 20636(c)(4)}will be reported as additiona l compensation . SECTION 2 . Elects to reduce the EPMC as set forth above, effective July 26, 2012 and , effective July 25, 2013, elects to cease payment of the member contribution and, therefore, ceas e reporting EPMC as additional compensation . T :1Council Agenda Reports\2012\2012-03-06UMIOA Firefighters, Local 3523 (Irons)\ATTACHMENT 2 .doc C6-7 ATTACHMENT 2 Page 2 of 2 SECTION 2 . Directs that prior resolutions relating to International Association o f Firefighters, Local 3523 compensation and benefits are hereby superseded to the exten t inconsistent with this resolution . Upon motion of , seconded by , and on the following vote : AYES : NOES : ABSENT : The foregoing resolution was adopted thi 6th day of March, 2012 . Mayor Jan Mar x ATTEST : Elaina Can o City Clerk APPROVED AS TO FORM : _/s/ J . Christine Dietrick J . Christine Dietric k City Attorney T :\Council Agenda Reports\2012\2012-03-06\MOA Firefight-rs, Local 3523 (Irons)\ATTACHMENT 2 .doc C6