Union votes on contract proposal that cuts county pension costs
Published: Thursday, December 6, 2012 at 7:32 p.m.
Last Modified: Friday, December 7, 2012 at 7:24 a.m.
Long-sought changes to curb Sonoma County's public pension costs are included in a proposed labor contract that covers about half the county workforce and is up for approval by the Board of Supervisors Tuesday.
Proposed labor contract
• 3-year term, covering about 1,700 unionized Sonoma County employees, about half the total county workforce
• Shifts pension contributions equivalent to 2.25 percent of pay to employees
• No cost-of-living pay adjustment
• Accrued leave, including vacation, sick time and holiday-compensatory time, excluded from pension calculations
• Reduction or elimination of pension-eligible wage premiums and shift differentials
• Elimination of pension-eligible payments into deferred compensation retirement accounts
• Lower pension benefit formulas for new employees: 2 percent of salary for each year worked at age 62; and for those with previous government service, 2 percent of salary at age 61.25. Current workers retain 3 percent at age 60.
• Non-pensionable lump sum payments in 2013 of $1,500 and in 2014 of $700, prorated for part-timers
• Additional payments to employee medical coverage through health reimbursement accounts. For family coverage, HRA contribution starts at $3,700 in first year and goes to $5,580 in third year. For an employee with no more than one dependent, it starts at $1,300 and grows to $2,028.
• 196-page document is available at http://www.sonoma-county.org/labor/
SOURCE: County of Sonoma
The proposal could set in motion pension and pay rollbacks for the remainder of the county's 3,400 workers, including unionized and unrepresented workers, managers and elected officials.
But action by the Board of Supervisors depends on the deal's approval by members of the Service Employees International Union Local 1021, the county's largest bargaining group, representing mostly lower-paid line staff.
Final results of an SEIU election that started this Tuesday will not be known until Monday night, hours before the supervisors' next meeting. Sources say approval is far from certain.
The tentative contract is the first for the county's 11 bargaining groups to include both county-proposed and state-mandated changes to pensions, revisions that affect current and future employees.
According to the latest state figures, Sonoma County has the second highest per capita pension debt in California, where mounting pressure from taxpayers who have seen their retirements vanish is forcing the overhaul of a public pension system that many say is no longer sustainable.
A central provision of the contract would shift an additional share of pension premiums, equivalent to 2.25 percent of pay, onto employees.
New employees would be shifted into a new, lower tier of pension benefits expected to cost taxpayers less over the long term.
Other changes affecting current employees would scale back or eliminate types of non-salary pay that can add to pensions. Those include cashouts of accrued vacation and sick leave, which would be exempted from pension calculations, and payments into a controversial deferred compensation retirement program that benefits mostly higher-paid employees. They would be eliminated.
Only a small fraction of SEIU workers get those additional retirement dollars and the union has lobbied heavily to end the benefit.
The proposal maintains what is now a five-year freeze on cost-of-living pay adjustments for employees but does not substantially alter merit pay raises.
The county would plow some of its savings back into non-pensionable lump sum payments to employees, starting at $1,500 next year and dropping to $700 the following year. Other savings would go toward employee health care costs.
Along with other employee concessions in the proposal the county believes it is on track to achieve its overall goal in labor negotiations: to reduce employee compensation costs by 3 percent.
But county officials would not elaborate further on the terms of the three-year deal, saying that if they did they could expose the county to allegations of interfering with the union's vote.
Early this week, County Administrator Veronica Ferguson cast doubt on whether she would make the proposed contract available to the public before the board meeting. The county ultimately did release the 196-page document, but only after the union posted the proposal to its website Tuesday.
Most Board of Supervisors' agenda items are accompanied by staff analyses that are presented days in advance. But an analysis of the labor contract won't be made public until Tuesday, provided the issue advances to a board vote.
Several supervisors said that was a regrettable outcome that couldn't be avoided because of the item's timing and the need to withhold county communications that could be seen to influence the union's election.
“I'm not very happy about it,” said Supervisor Shirlee Zane, who as board chairwoman has pushed for greater county transparency, especially around pay and benefit decisions.
The Tuesday meeting is the board's last of the year. Zane said she could schedule another if the union advances the deal and public input on the contract is extensive.
County officials said a board vote this year is desired in order to lock in a pension change for a small group of future employees with previous government service. Without that vote, those employees could be eligible for the more generous pension formulas owed to current workers.
Ferguson, for her part, said she was “comfortable” that the proposed agreement, full of complex legal language and labor provisions, would be adequate for “the public to discern what it is the board is doing.”
Union officials also were cautious in their statements about the proposal. They framed the deal as an attempt to finesse county cuts while seeking assistance for employees on soaring health care costs.
After a controversial 2008 rollback, the county's contributions towards employee health care are now capped at $500 a month, plus a monthly $600 discretionary cash allowance.
But with hourly wages that start at $13 and top out at just over $48, SEIU-covered workers are facing “incredible hardship” paying for medical insurance, said Andre Bercut, a county child support officer and member of the union's bargaining team.
Under the proposal, the county would put additional money into individual health reimbursement accounts. For family coverage, that contribution would start at $3,700 in the first year and grow to $5,580. For individuals with one dependent, it would go from $1,300 in the first year to $2,028 in the third year of the contract.
The payments along with the lump sum cash would be prorated for part-time employees.
Union officials have acknowledged the county's need to address some of the pay components factoring into pensions. Those include perks that increase retirement payments by an average of more than 12 percent, or more than 14 percent for public safety workers, according to county retirement records.
Along with stock market investment losses and the higher retirement benefits granted by the county in the past decade, the extra perks have factored in the steep rise in taxpayers' costs, up more than 400 percent since 2000. The county's current pension underfunding, set last December, is $353 million.
Still, the contract proposal faces an uphill climb, with a key sticking point being the lack of any cost-of-living adjustment, sources said.
“We have a lot of people in serious financial straits,” said Bercut, the SEIU bargaining team member.
How that financial pressure affects the union's vote — and the fate of pay and pension overhauls proposed for eight other county bargaining groups currently in negotiations — won't be known until Monday night.
“We've had our meeting with members, we explained (the proposal),” Bercut said. “Now it's in their hands to decide if they feel we've done a good enough job or if they want us to go back and negotiate some more.”
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