City of Solana Beach, employees come to terms on wages, pension cuts
The Solana Beach City Council on May 26 announced a 3-year memorandum of understanding with its employee association that calls for salary freezes, increased employee-made pension contributions and reduced retirement benefits for those hired on or after July 1.
Up to 65 percent of the city’s workforce will contribute their full employee portion to the California Public Employees Retirement System, CalPERS, beginning fiscal year 2012-2013. Employee contributions will increase roughly 2.5 percent each fiscal year beginning July 2010 until it reaches 8 percent, the entire employee contribution amount, starting July 2012.
City Manager David Ott said the deal would ultimately save the city $240,000 per year once these employees begin paying their full share of pension contributions. That could increase to $380,000 annually if Solana Beach can come to pension contribution terms with the other 35 percent of its employees. The savings will begin with roughly $85,000 in fiscal year 2010-2011 based on the deal struck on May 26.
Councilman Dave Roberts said the agreement would be highly beneficial to the city and all future councils. While the MOU only lasts for three years, Roberts said it would most likely permanently get the city out of its obligation of paying its employee’s pension contributions.
“I doubt that a future council would ever head back in that direction,” he said, noting the importance of pension reform. “By making this compromise, we’re able to not have to lay off any employees and we’re able to continue to provide employment and offer benefits.”
Employees hired on or after July 1, 2010, will receive pension benefits under the money-saving “two percent at 60″ formula, calculated on the average of their highest three salaries. This means a 60-year-old retiree would receive two percent of that average multiplied by the number of years as an employee when ending his or her career.
In addition, salaries are frozen through the end of fiscal year 2010-2011, which ends June 30, 2011. Wages do become negotiable at that time, but can either increase or decrease. Employee association members will receive one additional floating holiday, and will have the option to convert unused sick days to vacation days if they use less than 40 hours in a year.
“We truly do appreciate (the employees) cooperation and their understanding of the financial matters that have been facing the city. I think this shows true leadership not only on behalf of the impacted employees but the city of Solana Beach acknowledging the fact that the public employees sector needs to start paying their fair share of pension costs,” Mayor Tom Campbell said. “We really do truly appreciate their efforts that they put forward and I just want to applaud them all.”
Here is the agreement, as read at the council meeting by City Attorney Johanna Canlas:
“As to item one on the closed session agenda, pursuant to government code section 54957.1a6, the city council unanimously approved an agreement with Solana Beach Employee Association, Miscellaneous Unit with the following terms: They have entered into a three-year MOU beginning July 1, 2010 to June 30, 2013. A salary freeze for fiscal year 2010-2011 is in place with a re-opener by either party the years two and/or three for potential salary adjustments, whether increases, and/or decreases.
“Association members receive one additional floating holiday for July 1. Association members that use less than 40 hours, five days of sick leave annually, may convert that to vacation week. The association members agreed to pay their entire employee portion of the CalPERS retirement contribution of 8 percent over the three year term of the MOU as follows: Effective July 1, 2010, employees pay an additional 2.242 percent for a total of 3.515 percent. Effective July 1, 2011, employees will pay an additional 2.242 percent for a total of 5.757 percent, and effective July 1, 2012, employees pay an additional 2.243 percent for a total of 8 percent.
“Parties agreed to add a second-tier, establishing a new pension formula of 2 percent at 60 for employees hired on or after July 1, 2010, with the use of the employee’s highest three year salary average. Copies of the agreement are available at the city clerk’s office upon request.
“In addition, the management and unrepresented employees will also receive one floating holiday, they will also pickup their full employee share of the CalPERS retirement contribution over a 3-year period, and a second tier with a new pension formula of 2 percent at 60 for employees hired on or after July 1, 2010.
“With the city council’s unanimous decision at the last meeting, to pick up its full employees share beginning July 1, 2010, 65 percent of the city’s workforce have agreed to pay their full employee portion of the CalPERS retirement contribution over the next three years.”
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