The PCEA contract addresses pension reform by requiring unionized employees to contribute 2% of their salaries toward their pension fund, which is handled by CalPERS, the California Public Employees Retirement System. CalPERS market investments soured over the last few years in the recession and are continuing to lag in the weak recovery, placing a greater financial burden on public agencies such as the city of Pleasanton to increase their contributions to pay the pension commitments. To start closing the gap, the PCEA contract would have its members contributing a total of $722,000 annually. That's not enough given the financial perils facing CalPERS, which both Fialho and the community activists recognize.
Fialho's approach is to address the pension contribution shortfall as contracts are negotiated through the collective bargaining process, with three strategies: implement salary freezes for at least two-years (if not more) as contracts expire and/or until the economy substantially improves; implement a two-tier retiree medical system for new hires that eliminates this entitlement after age 65, which essentially stabilizes the city's future long-term liability; and, implement contributions from existing employees starting with an immediate 2% contribution initially and growing to the maximum 8% or 9% employee contribution through future bargaining efforts.
We think Fialho and the City Council are on the right track. The PCEA contract represents a good faith effort by both management and the union and a 2% contribution at the start makes sense. PCEA, unlike the firefighters and police unions, represents the lowest paid city employees who will now have two years with no increased income to handle the additional 2% deduction from the paychecks. Fialho, by the way, recently voluntarily agreed to an 8% contribution; his management teams followed by agreeing to contribute 4%. Within two to three years, everyone should be at the 8% contribution level, where they should be. The PCEA contract as negotiated is a good one and we urge the council to approve it Tuesday night.