14 Dec 2010

City, Non-Safety Employee Associations Reach Tentative Agreements

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City, Non-Safety Employee Associations Reach Tentative Agreements Posted Date: 12/14/2010

The City of Newport Beach has reached tentative agreements with three employee bargaining units that will result in savings of about $1.42 million in known retirement costs between now and June 2012 and potentially millions of dollars more in longer-term retirement costs to the City.

The agreements bring employee pension contributions up to the standard authorized by CalPERS and freeze salaries for 2010 and 2011. As a result, employees in these bargaining units will go 30 months at the same salary levels.

Mayor Keith Curry said, “Once again, our employees have negotiated in a cooperative spirit to help us address some of our current and future budget challenges, particularly those related to the City’s pension costs. The bargaining units’ support of our long-term, fiscal sustainability plan is essential to keeping Newport Beach financially stable. I truly appreciate the willingness shown here to negotiate in good faith and their work in helping to keep this a strong, service-oriented organization.”

Tonight, the City Council will review memoranda of understanding between the City of Newport Beach and the Newport Beach Employees League, City Employees Association and the Professional and Technical Association. The bargaining units represent “miscellaneous” groups, which are non-sworn and non-safety employees that do not hold management positions.

The City has met and conferred with the associations and each has ratified its respective agreement. The terms of the tentative agreements include:

– Current employees will pay more for their retirement costs: 1.5% more in January 2011, 1.5% more in July 2011, and 1.58% more January 2012. Miscellaneous employees already pay 3.42% toward the current “2.5% at 55” defined benefit plan. That will bring non-safety employees to a full 8% contribution toward the PERS plan. – The City will move to implement a “2% @ 60” retirement formula for all miscellaneous new employees (non-safety personnel), with a “highest 36 month” rule to determine the retirement benefit. This should be accomplished in early 2012. Future new employees would also pay their full share of pension costs to PERS upon date of hire. – No salary adjustments in 2010 or 2011. – A salary adjustment in January 2012 based upon the CPI LA/OC Urban Wage Earners November 2010-2011 (minimum 1.5%, maximum 3.0%). – The City will increase the cafeteria plan contribution by $100 per month effective January 2011 and January 2012. – The agreement is for the two-year term of July 1, 2010 – June 30, 2012.

The additional 4.5% PERS contribution will result in pension-related cost savings to the City of at least $1.42 million. The net savings to the City, including increased health care contribution and the 2012 CPI adjustment, are less – about $149,000 over the term of the 24-month agreement. The savings associated with adopting a new retirement formula for new hires would be small at first but over time, would likely equate to millions of dollars.

As a result of the changes and increased health care costs to the employee, an employee making about $60,000 today with family health coverage will see a net change in take home pay of about -4.4% (from December 2010 levels) in 2011 and about -8.8% by 2012 (even assuming a 1.5% increase in salary in Jan 2012).

City Manager Dave Kiff said, “The private sector saw great impacts in the recession, and so now has the public sector. We still have more to do at the City, but I appreciate the represented employees’ stepping up here.”

In accordance with state law that governs collective bargaining, the agreements are not effective until approved by the Newport Beach City Council. For more information about the tentative agreements, please contact Human Resources Director Terri Cassidy at 949-644-3256.

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