Publication Date: Friday, October 04, 2002
City gives employees '2.7% at 55' retirement
City gives employees '2.7% at 55' retirement
(October 04, 2002) Increased rate good for staff; eight-year term benefits city
by Dolores Fox Ciardelli
The City Council on Tuesday night approved 4-1 an amended eight-year contract with employees with a 2.7 percent at 55 retirement benefit formula, an increase from 2 percent at 55.
"In August, after six months of negotiations, we reached these agreements," said City Manager Deborah Acosta McKeehan. "The eight-year agreement is unprecedented. It provides stability for long-range planning."
The agreement is with the Pleasanton City Employees Association, which represents about 266 non-sworn employees. These include librarians, maintenance crews, police dispatchers, community service officers, engineers, planners, inspectors and other professional, technical and clerical personnel.
This new agreement amends the city's contract with the California Public Employees' Retirement System (CalPERS). Acosta McKeehan said that a "3 percent at 50" retirement formula is now standard statewide for police and firefighters, who are sworn personnel.
"Nine out of 10 agencies have this benefit," she said. "If we chose not to do this today we would be at a serious disadvantage at retaining employees."
Acosta McKeehan also said it is only fair to treat the non-sworn employees the same as police and firefighters. Historically, the city's pay and benefits have been competitive but neither the highest nor the lowest in the area, she noted.
"City staff looked at the past as well as the future," she reported. "We concluded that we will continue to have a strong financial position. We are beginning to see an increase in property taxes."
The compensation agreement provides increases at an average of just over 4 percent over the next eight years, adding approximately 0.6 percent to the city's operating budget. This will be partially offset by other changes in efficiency. Over the next eight years, the plan will cost $13 million; over the next 20 years, $20 million, said Acosta McKeehan.
"Like any self-funded program, the cost is based on age when they retire, age when they die, earnings of the plan, and what option the employee picks," she said.
To be eligible for retirement, employees must be at least 50 and have five years of service, although most wait for 55 to have higher retirement pay. This contract lets them retire at age 55 with 2.7 percent of their highest pay, multiplied by the number of years they have worked for Pleasanton.
With 2.7 percent, an employee who retires at 55 with 25 years of service would receive 68 percent of his pay, rather than 50 percent under the 2 percent plan. With 10 years of service, it would be 27 percent as opposed to 20 percent.
"It is important to note that city employees do not accrue Social Security, 401(k)s or stock options, although every one of us believes we own stock in Pleasanton," said Acosta McKeehan. "In most cases, CalPERS retirement represents the bulk or all of their retirement."
Councilwoman Kay Ayala, the lone No vote, kept reiterating Tuesday that it is the taxpayers' money and it was important for the public to know how it is being spent. Negotiations were held in private but the agreement and its details were scheduled for a public hearing at the Sept. 17 council meeting. Ayala postponed the item because it would have come after a lengthy hearing on the Happy Valley golf course.
Acosta McKeehan explained that salary sessions were closed to the public to allow privacy for negotiations. "Positive labor relations don't come easy. We work very hard at it," she said.
"I have concerns for other cities in the Tri-Valley," said Ayala. "We are taking another group of public employees and pushing it to another level."
Acosta McKeehan responded that in the Tri-Valley only Livermore and Pleasanton are full-service cities. Dublin and San Ramon contract out police and fire services.
Ayala wanted the decision on the contract postponed until after the state election to know what cuts will come down from the state level. Mayor Tom Pico pointed out that it might be another year before the state completes its next budget, regardless of the election.
Ayala also questioned the rationale of negotiating now when the contract had another year until it expired.
"The dynamics are really different if we have a contract that has expired," said Acosta McKeehan. "It creates a lot of anxiety."
"We're making a long-term investment in the employees of our city," said Pico. "We have gone through months of analysis. Kay has raised almost all of these issues in closed sessions."
"This is prudent and fiscally responsible, especially when compared with what's happening in the private sector," he added. He also noted that a survey showed the public is extremely satisfied with city services. "We expect high standards and they expect high compensation and to be treated fairly."