City of Davis and Police, Professional and Management Employee Groups Reach Agreement

City of Davis and Police, Professional and Management Employee Groups Reach Agreement

City leaders and employees pleased with fair agreement

(December 18, 2012) -- At their meeting on December 18th, the Davis City Council adopted three resolutions approving the employment contracts between the City of Davis and the Davis Police Officer Association (DPOA), the Program, Administrative and Support Employees Association (PASEA) and the Individual Management Employees. These agreements bring an end to negotiations that began in the spring of 2012. With the adoption of these contracts, two-thirds of the City employees will have reached agreement with the City. These employees work as Police Officers, Professionals, Administrative support staff and Management.

The Council gave direction to city negotiators to realign employee contracts to be more comparable with other agencies and more sustainable in the long-term for the City. The process has been difficult for both the employee groups and the City. The City is fortunate to have labor partners who were part of the solution. Over the term of the agreements, the City will save approximately $4.9 million as a result of structural benefit changes ensuring the City's ability to preserve positions, programs and services.

Term of Agreement

These agreements are effective immediately through December 31, 2015.

Retirement Benefits

As with many other California public agencies, the City Council believes employees should pay at least the full portion of the employee share of retirement costs. This will be fully realized in 2014 for miscellaneous employees. Currently miscellaneous employees pay 5 percent and this amount will increase to 7 percent on January 1, 2013 and then to 8 percent on January 1, 2014. There is no change for Police Officers who currently pay 12%.

Two-Tier Retirement Benefit

Another objective was to explore differential compensation packages for future employees. State Law has changed for new hires, effective January 1, 2013. The new benefit for non-sworn employees is a 2% @ 62 formula and sworn employees is 2.7% @ 57. CalPERS estimates that this will save jurisdictions 4.7 percent annually.

Retiree Medical Benefit

Both sides have agreed to a sustainable retiree medical benefit that reduces the long-term liability of retiree medical costs, while still providing a reliable benefit. Currently, retiree health consumes 20 percent of payroll. This proposal brings it down to 17.25 percent for an approximate annual savings of $178,234 for these three groups. Over the term of this contract, this will amount to $534,000 in savings.

The Council has been mindful of the impact of proposed changes on long-term employees who may be retiring in the next several years. As a result, current employees with more than 25 years of service (20 years for sworn) will receive 100 percent of the benefit if they retire prior to December 31, 2025. Employees with less service will receive 75 percent of the benefit and new employees will receive the Medicare Supplemental/Managed Medicare rate for an employee and plus one-dependent which is about a third of the current benefit.

To offset the significant changes made to the retiree medical benefit, the City has provided a modest salary increase of 3% in 2012-13, 2% in 2013-2014 and 1% in 2014-15 for Miscellaneous employees. For Sworn it is 2% in 2012-13, 2% in 2013-2014 and 1% in 2014-15.

Health Benefit

Health costs have risen at an alarming rate and continue to increase. The City Council identified a need to effectively manage health benefit costs while maintaining comprehensive coverage for all employees. The current contract provides a cash payout to any employee not taking the full health insurance allowance. The new contract would cap the cash-out provision for current employees at $500 per month over a three-year phase in process. The average amount for jurisdictions providing a cash-out amount is $400 per month.

To help rein in escalating health benefit costs while maintaining coverage for all employees, the agreement also continues a 50/50 cost sharing provision with future increases to health care costs shared between the City and the employee.

The reduction in the cash-out contribution and the cost-sharing provision will have an approximate cost savings of $816,827 over the contract period.

Next Steps

The City is in the process of negotiating with other employee bargaining units, including Davis Professional Firefighters Association Local 3494 and Davis City Employees Association.


The complete final Memorandums of Understanding are available as part of the December 18, 2012 City Council agenda packet, under Item 4L:
http://city-council.cityofdavis.org/council-meetings/agenda---december-18-2012

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