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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?

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.

Al Dugan July 17, 2012 at 11:59 PM
Bravely stated and well spoken. I have not completed mt review but will do so an post on this critical issue.
Mark Schoenbaum July 18, 2012 at 01:57 AM
obviously co-crafted with the unions. benefits are so far out of line with the private sector and the unions refuse to give anything back - instead both sides agree to absurdity; city: gee, we have to tell them the unions made a concession - union: employees will pay their potion of their pension provided that you give them more monet to pay it with - city: We like it! Win-Win!
Lloyd July 18, 2012 at 05:22 PM
No problem is what I say. With the ground breaking on a building we can't afford and the negotiations for pensions we can't sustain I say let them have whatever they want. It might take a year or two but eventually the weight of all this spending without income to offset will just leave the City broke and filing for bankruptcy. Then unfortunately all the negativists can say I told you so. Frankly, no pun intended, it makes me very sad to see one group of city workers being used by the politicians and upper management as the scapegoats for their own failures to deal with the real fiscal issues.
Dave Robertson July 18, 2012 at 08:04 PM
Lloyd: You've got it right. The City employees can say what they want, but the City's administrators are clearly amateurs when it comes to making tough decisions regarding spending. Yes, it seems that Novato will end up in bankruptcy. Why? Because our City Council and other administrators cannot address the fiscal issues before them. In another story today it is announced how the City is "breaking ground" on their new offices. This is yet another fiscally unsound move that will move Novato closer to bankruptcy. Is anyone else in Marin building a commercial building like this - for any sector? No! Is any of the neighboring (more wealthy) cities in Marin spending money like this? No! Only in Novato. It keeps coming back to that. Well it may be news to the people running this city - but there is not free money in California or anywhere else to bail Novato out when the time comes. When residents slowly start to move away - you won't know it because you are too busy fighting off creditors. The crazy thing is that our City Council and administrators don't think that these things can happen here - or at least they act like they can't. They are wrong!
Jim Finn July 19, 2012 at 01:25 AM
This is just an end run around the serious issue of pension reform.

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