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C,TY.OF SAN BER~DINO - REQUEST WR COUNCIL ACTION
From:
Barbara Dillon
Subject: Police Negotiations -
Impasse Hearing
Dept: Per sonne 1
Date: January 24. 1992
Synopsis of Previous Council action:
7/1/91 - Hayor and Common Council
8/19/91 - Mayor and Common Council (Workshop)
11/4191 - r.layor and Common Council (Closed Session)
11/14/91 - Council Personnel Committee (Closed Session)
11118/91 - l1ayor and Common Council (Closed Session)
12/16/91 - Hayor and Common Council (Closed Session)
Recommended motion:
~..6h?..P~) ..A//.h7Y7)
Signature
Contact person:
Barbara Di 11 on
Phone:
304-5161
Supporting data attached:
Yes
Ward:
FUNDING REQUIREMENTS:
Amount:
rllA
Source: (Acct. No.)
(Acct. DescriPtion)
Finance:
:ouncil Notes:
'5-0262
Agenda Item No.
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CITY OF SAN BERN.DINO - REQUEST ~ COUNCIL ACTION
STAFF REPORT
Introduction
On November 30, 1991, the contract with the Police Safety Employees
expired. Their previous contract was for a three (3) year period,
1988-1991. Under that contract, the Police Safety Employees
receive compensation and benefits, including, but not limited to:
o 8% city-paid retirement contribution;
o Employees' retirement plan allowing members to retire
"
at age 50, using "highest l2-month" retirement formula;
o Salary adjustments effective each August 1st, per
the city Charter, Article X, Section 186;
o city-paid medical insurance of $300/month for employee
plus one or more dependents, and $185/month for
employee only, with no dependents; and,
o Additional monthly base pay for completing P.O.S.T.
intermediate and advanced certificates.
The Police Safety Employees received salary increases of 4.8% -
5.6%, retroactive to August 1, 1991, for a total of $842,278.
status of Negotiations
After 12 negotiating sessions, the Police Officers' Association
(POA) declared impasse in a letter dated December 13, 1991.
Impasse meetings were held on January 10 and January 14, 1992.
Both the POA and the City Team members agreed to option (B) of the
impasse procedures, from Resolution 10584:
(B) A DETERMINATION BY THE MAYOR AND COMMON COUNCIL,
after a hearing on the merits of the dispute.
The Mayor and Council set 10:00 AM, Monday, February 3, 1992, as
the time for an impasse hearing.
Highlights of city Team Proposal
Attachment 1 summarizes Economic Items offered to the POA as of
January 14, 1992.
Attachment 2 summarizes Features of the City Team Proposal over and
above the terms of the current contract.
Page 1 of 28
).0264
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POLICE NEGOTIATIONS - STAFF REPORT
Impasse
Key Issues
Of the 23 areas of disagreement listed by the POA, there remain
approximately half a dozen issues over which the City Team and the
POA have not reached agreement. The two (2) major areas of
disagreement are:
1. Increases in medical benefits; and,
2. Increase in the city's retirement contribution.
The POA's proposals for these two items are approximately
$1 million over and above the city Team's proposals for a
three (3) year contract period.
1. Medical Benefits
The citv Team is proposing full payment for each employee and one
dependent, based on the cost of the Kaiser premium. In addition,
the City would provide full payment of the Mission Dental High
Option Plan, for the employee and one dependent.
The RQA is proposing full payment for each employee, plus familv,
based on the cost of the Kaiser premium:
75% of employees' premium, Year 1
90% of employees' premium, Year 2
100% of employees' premium, Year 3
Additionally, POA requests full payment of the Mission Dental High
Option Plan, for the employee, plus familY.
Please see enclosed article (Attachment 3) reI health benefits. As
noted in the article, "Once a benefit is given, it is very
difficult for an employer to withraw or reduce it. The open
commitment becomes a permanent commitment."
summary (3-Year contract):
POA proposal:
City Team Proposal:
$914,369
150,886
Variance:
$763,483
Page 2 of 28
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POLICE NEGOTIATIONS - STAFF REPORT
Impasse
2. Retirement contri~ution
Currently, the City pays 8% of the members' retirement
contribution. The POA has requested that the City pay ~ of the
members' retirement contribution.
This is a vested benefit. Once it is provided to members of a
bargaining unit, we cannot take it away. We would be able to limit
the benefit only for new employees hired as of a certain date.
summary 13-Year Contract):
POA proposal:
city Team proposal:
Variance:
$300,000
-0-
$300,000
Previous Council Action
Previous Council action of July 1, 1991 provided direction to the
City Team members for negotiations with the POA. Specifically:
"Council Member Pope-Ludlam made a motion, seconded by Council
Member Estrada, to instruct the negotiators to come up with a
benefit package, formulated on a percentage of the assessment
collected through property taxes, primarily for retention and
attraction of new officers, and that this benefit would not become
a vested right beyond the sunset clause in the assessment
district."
The City Team proposal fits within the parameters provided by the
Mayor and council, and provides a substantial increase in benefits
for Police Safety Employees.
Attachments:
#1 City Team Proposal - Economic Items
#2 Features of City Team Proposal
#3 Article, "comparison of State and Local Employee Benefits
and Private Employee Benefits"
#4 city Team Response - Areas of Disagreement (POA), 1/14/92
Page 3 of 28
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CITY TBAIl PROPOSAL
BooNOIUC l:TBIfS
AS 01" 1/U/'2
IlIn:_TION , AftllAC'1'ION 01" OFPl:CBJl8
BILINGUAL PAY
WBLL1lBSS PROGRAMS
POft-CBll'lII"ICA'l'B IlICRBASB
UBUSBD SICK LEAVB
(UP TO THRBB DAYS' ANNUAL BUY-BACK)
O..uuU ALLODlfCB
($500/YEAR)
IlBALTB , DBftAL INSlJRABCB
KAISBR PRBKIUM , KISSION
DENTAL HIGH OPTION PLAN,
I"OR EKPLOYEE + ONE DEPENDENT
SUB-'.rO'fAL
186 saT.Jt.IIIBS
(*)HEALTH & DENTAL INSURANCE
ESTIMATED INCREASE OF 15%
EACH YEAR, FOR YEARS TWO & THREE
$49,410/YEAR TWO
$59,665/YEAR THREE
POLICE NEGOTIATION
1-14-92.ECONOMIC ITEMS
. ATTAC1DIENT 1
$28,246
13,992
$42,238
71,6U
104,580
164,116
41,811(*)
$424,35'
YBU OD
842,278
$1,266,637
$431,'58
YEAR TWO
PLUS 186 SALARIES
$442,213
YEAR THREB
PLUS 186 SALARIES
Page 4 of 28
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ATTACHMENT 2
FEATURES 01'
CITY TEAK PROPOSAL
These items are above and beyond the terms of the current
MemorandUIII of Understanding (MOU).
oBI-LINGUAL PAY OF $50/MONTH FOR ELIGIBLE EMPLOYEES
o UNIFORM ALLOWANCE, BEGINNING AT $500/MEMBER PER YEAR
o FUNERAL EXPENSES OF $10,000 FOR OFFICER KILLED IN LINE OF DUTY
o CITY-PAID HEALTH AND DENTAL INSURANCE FOR EMPLOYEE, PLUS
ONE DEPENDENT:
KAISER PREMIUM
MISSION DENTAL HIGH OPTION PLAN
o INCREASE IN OVERTIME ACCRUAL FROM 240 TO 300 HOURS/MEMBER
o INCREASE IN MONTHLY P.O. S. T. REIMBURSEMENT
o SICK-LEAVE BUY-BACK (ANNUAL)
o VACATION & HOLIDAY SELL-BACK (ANNUAL)
o 4/10 PLAN FOR INVESTIGATIVE UNIT, ON 6-MONTH TRIAL BASIS
o RE-OPENER ON MEDICAL TRUST
o SIDE LETTER ON INDEMNIFICATION OF EMPLOYEES
o THREE (3) YEAR CONTRACT
Page 5 of 28
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ATTACHI1ENT 3
Comparison of State and
Local Employee Benefits and
Private Employee Benefits
/'
". popor CGIIJlOI8 the ..... oIhonolIII oIfeJecIlO _ ond ...... empIo ,_III the UnIIod
Sloleo wIIh ...... pmvldecllO privaIe employes 01 mecIIam ond .... fir-. no pulllk:
ealJ>Io1- enjoy - poid __ _ ~jl6061ve heoIth honolIII ancI_,..-. no
ClOIll:!_ painto 10 the oddiIionoI public: ............ ..........ted by .... odvanlopl ond
~ the role 01 ......111 the ~ .....ponoatim pocIcap. It ?I0o urps Ihot .-J
.....ponoatim COIIIponhlIi1t (poy ancI bonollts) be _ wIcIeJy ploLticed by public: jwlodic-
--
By
Peny M_
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...tIillAial AnI.........
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UJIIIa MIa. ........
""""""...IlIJooio,......
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*
As the cost of benefits have continued to escalate, and as they exceed
30 percent of tota1 compensation costs in ~y jurisdictions, there is
increasing concern about the level of benefits offered to public employees.
For example, in a 1988 artic1e in Public Administrlltion Reoifto, William
Woska lamented the amount of pay expended in the public sector for time
not worked. t He also noted that paid leave was considerably higher in the
public sector than in the private sector. Slmilarly, health care costs are again
escalating much faster than the cost of living with the increases exceeding
10" annually over the last several years.' As a result, private companies
have been pursuing numerous efforts to control health care expenditures
and/or shift more of them to employees in the form of higher deductibles
and co-insurance. Yet, in a 1989 article in Public Pmormel Mantlgemmt,
Perry Moore found that cities were considerably behind private companies
in controlling their employees' health care costs.' likewise, a 1989 survey of
state employee health benefit plans revealed that their costs had increased
an average of 20" in 1988." Others have been increasingly concerned about
the rapidly esca1atingcosts of pensions in the public sector. In a 1987 artic1e
in the Reoifto o/Public Pmonnelltdnrinistnlfion, James Ferris emphasizes the
often overlooked role of pensions in the development of total compensation
packages for local public employees.'
These fringe benefits (paid leave, health care, and pensions) are
cerlainly part of the attractiveness of a job to potential and current public
employees. Given the favorable lax treatment of such benefits, they may
at times be more attractive than a wage increase. Moreover, benefit in-
aeases may be more attractive than wage inaeases because of the politics
ofpublicempioymenl Public: emp10yee unions maybe more Ii1ceIy to press
for benefit increases during collective bargaining because they are much
less visJ'b1e than wage increases to the general public:. This is espedally true
fora pension benefit whose paymentcan be deferred to future years. Thus,
Public Parsonnel ManagalMnt Vol. 20 NoA (Wintar 1991)
429
Page 6 of 28
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public ~.... may be more Ilkely to agree to benefit demands iather
than wap 4Iemands.
WhIlII......n.f-ing benefit versus wage ilia e I J el, local pemmenIs
mayac:t.pablicunions. Indeed they may encouraguudlbehavior.'If 1
bene6tI__uvisJbIe uwages, then increasing benefilll will not_
umudlpallblopposillolluincreasingwages. Llkewile,mevenpater
lrv::entiw _tile public employer to agree to benefit inc:n!ase is the poesi-
bility 01 DlliDapension coslllto future generations through underfunding
01 the pensiIID system. Hence, local offidaIs could ....tisfy prere.etlOao of
public ~_ without inflicting sacrifices on their constituenlll either
in the lona 01 higher ~ 01' service cutbaclcs. III
Given these incentives to increase benefilll u c:ompareclto wages in
the public aector, it can be predicted. that public sector benefits will exceecI
those in the private sector where the incentives to expand benefits are not
u powedaI. Therefore, this paper investigates the levels of benefits offered
to stale aIld local employees with those offered to private employees in
medium 1Illl1arge firms. If the prediction of significantly better benefits in
the public IedDr is true, governments must give more attention to the total
compensalian paclcage (pay and benefits) in all of their personnel polides
(recruitmIIlI,meril, etc.). LiIcewise, total compensation comparability (pay
and benefiIs) must be practiced by public employers.
This piper examines the most expensive benefits inducting paid
leaves (vDJions, holidays, rest periods, personal leave), disability protec-
tion (paidlic.t leave, long-tenn and short-tenn disability insll1'lUlCe), health
care (majcr IIIl!dical ins1uance, dental and mental insurance, elCleIldecl and
home healIh care, etc.), and cIefinecl pension plans.
This tamparison is made pos&1'ble by the first comprehensive survey
of be1le6t pilat in stale ancllocal governments by the Bureau of Labor
S1atistial (IlS).'n.e surveywu concluctecl in 1987 (pub1isheclin 1988) and
rep._a a pobability sample of all state ancl10cal government entities
with 50 Clr __ employeel ('mclucting regular employeell, teachm, fire-
fighIeJI, IIIlI poIil:e) in III states except Alaska and Hawaii This article
~Ibe~ofthissurveywith the BLSs 1988 survey of the benefit
plaM in....A .... and 1arge private firms (employing 100 01' more employ-
eel) in tIleUllileclSlates.t (This surveywu concluctecl in 1988 and publish-
eel in 19lI!lt- IyClllllparing tI&e surveys, we can better _ if public benefit
pIarw__ pneroua and if so what ahoulcl be clone.
~
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430
Public Personnel Managarnent Vol. 20 No.A (Wintar 1991)
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Page 7 of 28
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T..... 1
PeIunt d Employ.s Covered by Paid LHw a.MIIts and the
AIM" Annu8I Nurnb8r d D8ys of Paid LHV8 for th8 ..MIhs
State ..... loc3I
Employees
Plivalie
EmpIa;ees
. .
FIranl
r~
PWclInt
r_
Aver. Days
Prnwidod
Iwenige Days
........w
IlMriI
Vlcallilns
~ one yew 1~ 12 9~ 9
of seMce
At 20 years 1~ 21 9K 20.1
of seMce
Holidays 99% 11 96% 9.4
Rest Period 72% 14.3 72% 13.5
(Cumulative am 1 yea,)
PMonaI LN~ 38'llo 2.7 25% 33
MiimIy~ 80% II 55% .1l.5
Total Paid Leaw 61 49.9
(using vacaticn days with one year of service)
T...II
CompIrison d DiAbIIity "n8fits In the Public and PrivlIt. s.ctors
State and
~fm. I tv"211 FmnlnwoM
Private
F",,~
Long-term lisabiIily 31% of employees
insurance whch provides are covered.
5G6ll% cI earnings
Short-term sicIcness 14% of employees
and acDdenl i1slnnce are covered
42% of
employees
are covered.
46% of
employees are awered.
69% of
employees are cxwered.
49'l1.
Paid sicIc !me 9~ of employees
are covered
I'erat.tage aIIowecIlII 9K
aaundale sicIc!me
-years
Paid Leaves
Both public: md private employees nceive time off with pay in a
variety of ways u shown in Table L RoushIY the same percentage of
employees in both eectors receive IIlO8t of the benefits. The state and local
Comparison of St8ta and Local Employ" ..naftts
431
Page 8 of 28
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c:omp.rison of HHhh Can IefllIfhs In the Public and Privata Sacton
IIeneIit
DeductilIes
Stoptoss Umil
Dental G1~
VISion ~
Mental G1~
Extended ~
Home Health c.~
Drug Ab.se
T~.tment
ErnpIoyee
Contributions
to Plan
Retiroes HeaJth
St.IIeInll Private
lDaI~ ~
....
sso.SlllO b 60% of emp/c7Jees S5().loob5O%of~ ,t
SI01-SI5Gb 15~ofem~ S101-S15O for 13%01 empb,ees
S2000r _for 17% of em~ S200 or more for 27% of ~es
Awnges S800 per ~ Averages S 1,055 per )'Ur f
62% aI~ covered 60% of ~ covered
37% aI employees covered 33% of employees covered I
97% aI empIc;.ecs covered 99% of employees covered I
I
MoI~ covered 68% of employees covered
78% aI employees covered Avan.ble to 74% of employees j
Available to 88% of employees AvaUable to 74% of employees
35% had to pay monthly 49% had to pay monthly
prernUns (S16 ._.ge); premiums (S 19 ......ge);
71% 01 aI employees had 68% of .11 employees had to
to pay monthly premiums pay monthly premiums for
for depellde.ots' insur.nce dependents' insur.nce
(average sn per month) (_rage S60 per month)
50% 01 e~5 in plans 24% of employees in plans
where the health insur.nce where the health insur.nce
ofretnesisfully of retireeS is fully financed
fiNncod by the employer by the employer
empJciye.... more Iilcely to receive personal leave and milila1y leave but
... Jes IiIcelyto receive funeral leave, In terms of totaI paid leave, however,
lltate and JocaI employees receive over 22" more time oH with pay than do
private eznployees. Public employees are parljcuIarly more Iike1y to have
- paid VBaltion time. For example, at one year of service, the average
IItate andJocalempIoyee has 33" _ VlIaltion time. However,_1ength
of eerviI:e iDa/it .IS, this difference diminishes.
Al9'16l11ticle inPublicAdministnltitm RlrIino by Jerome ROllCowfound
that "pay far time not worked is coeting the fecIeral government 15 pen:ent
of Jl8YIllIlCllllllpBred with 9.5 percent in the private sector..... 'l1iis atudy .
revealsalimilaraituationcontinues at the lltate and loca1leve1. Since public
employees average 22" more paid leave than do private employees, the
pub1ic eznp10yer must pay considerably more for labor.
432
PubUc P-..ne1 Management Vol. 20 NoA (WInter 1991) Page 9 of 28
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In his analysis of public sector pay for time not worked in San Jose,
William WosJca found that the number of public emp~_ and overtime
pay increased directly u a result of more paid leave.' Since employees
spend more time away from their job and lIinl:e the worlc1oad does not
decrease in proportion. more employees mlllt be hired or the service level
reduced.
Disability
It is unclear whether public employees or private employees have the
better disability benefits. As Table n notes, more state and local employees
receive paid sick leave than do private employees (9'7" venus 69").
Perhaps more importantly, many more public employ_ ue permitted to
accwnulate siclc leave over multiple years (98" versus 49"). On the other
hand, more private employees IeCeive short-term disability insurance (46"
venus 14") and long-term disability insurance (42" versus 31") which
ue fully financed by their employers. Also, priVateemplo~ who are not
aJIowed to accumulate 8UCh leave over multiple years genera1Iy receive
significantly more sick days per year and these increase u seniority in-
creases. Thus, both groups IeCeive disability benefits, but come in different
forms.
Health Care
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!
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Health care benefits in both sectors ue very similar. Nearly all public
and private employees IeCeive insurance for hospital room and board,
physician and surgeon charges, x-ray and Jaboratoly services, presaiption
cIrup and mental care. Ukewise, a1coho1 and drug abuse treatment, and
extended home health care ue available to nearly all employ_ in both
seeton. Approximately equal pen:entaps of empl~ in both groups
receive dentaJ care and vision care. (See Table m).
While the benefits IeCeived by both groups ue generally quite similar,
private employees tend to pay more for them. The deductibles tend to be
higher in the private sector. For example, 27" of the private employees
pay deductibles of$200 or more. Incontrast, llIIIy 1'" of public employees
pay cleducb'bles over $200, Similarly, the maximum amount of health
expenses (deductible and co-payments) per year that an employee must
pay (stop-bs limits) ue considerab1y lower for state and local employees
(S8OO per individual) than for private employee l$1,oss per individual).
Thus the private employee is generally required to pay more out-of-pocket
expenses for health care.
CllmpIrison 01 State and Local Employ.. aeMfits
Page 10 of 28
433
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In additian to paying higher dedw:tib1es, private employees tend to
pay higher pmniums. While approximately two-thirds of the public"em-
ployees pay IlD premium for their health insurance, about half of all private
employees pay a premium. Moreover, the individual monthly premium
lor the private employee tends to be higher ($19 venus $16).
HelIIth care costa are again esc:aJating dnmatica1ly and now average
lM!r$2,300 annually {orevay employee. U Given these expenses and rapid
CllIlt Ina II T!I\ the fad that public employee genera1Iy pay considerably
less than private employees {or the same health benefits produces larger
public labor alIta. The lower dedw:tib1es, co-payments, and premiums in
the public sector mean that public employ_ are less wiDing than private
employers to shift some heilth care costs to employees. Consequently, not
only are public employers' health care costs higher, there is also less
incentive for public employees to 6e more frugal in their utilization of
heaJth resources.
*
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This wiDingness ofloca1 and slate public emploYeJS to assume a larger
shareofheaJthcarecosts is even more apparent {orretirees. Approximately
SO" of public employees are in plans where the retirees health insurance is
entire1y financed by the employer. However, this is the case for only 24"
of private employees. Given the increased health expenditures for retirees
(over 11" higher than {or the average employee), and the early retirement
provisions common in the public sector, the much greater prevalence of
emp1oyer-financed retiree health insurance in the public sector is truly
significant. Public employ_ will be paying higher than average health
costs for early retirees for many years.
1
Defined Pension Plans
Defined pension plans use pre-detennined formulas to ca1cuIate re-
li&_...llpensions and a1soob1igate the employer to provide such pensions.
While these p1ans are widely available in both the public and private secton
(_ Table IV), they are significantly more widespread in the public sector.
Over 93" 01 the stste and loca1 employees are covered by such plans
~ only S" of the private employees are covered.
Pension plans that bIIse benefits on the highest years 01 earnings are
_ JiJIely to provide larger pensions. VlrtuaDy an of the pab1ic employ-
_inclefined pension plans have benefitformu1as bllsedon thetopeaming
,.... On the other hand.. only 55" of the private empWr- in defined
pensioI\ p1ans have benefit formulas based on the top years 01 high earn-
inp. Moaaoo..., the top three years are generally used to calculate final .
awsase IIIa1y in the public sector, whereas the top five years are used in
the private sector. Thus. since the average for the top three years is more
04
Public P.rson.... Management Vol. 20 NoA (WInter 1991)
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likely to be higher than the average for the top five years, pensions for state
and local employees are, other thinss being equaJ.like1y to be higher.
Defined pension plans generally base pensions on the saWy average
of the top three or Jive years multiplied by a given pen:ent per year of
service. For state and local employees, this peI~..laverages 1.89~ peryear
of service. In the private sedor, it averages L61~. Thus, 30 years of service
in the public sedor would provide57~ (1~ x 30) of the average eaminp
over the top threeyears; while in the privatesector, thesameyears ofservice
would provide 48~ (1.62~ x 30) of the average saWy lICI'088 the top Jive
years. Thus, the state and local employee is again 1ike1y to have a higher
pension.
In addition to the advantages already noted for public pension plans,
state and local employees can generally retire earlier. For example, 38" of
state and local employees are in pension plans which allow them to retire
at any age with 30 years of service. However, only 19~ of all private
employees have this option. SimiIar1y, 22" of state and local employees
are in plans that allow retin!ment at age 55 with 20-30 years of service. In
contrast, only 2~ of private employees enjoy this option.
Pensions are devalued by inflation when they are not adjusted to
reflect increases in the cost of living. State and local employees' pensions
are more Iike1y to be adjusted periodically than are private pensions. As
Table IV notes, 75~ ofstate and local employees are in plans which adjusted
pensions at least once between 1982 and 1986. In contrast, only 26~ of
private employees are in plans which made at least one inflation adjust.
ment between 1983 and 1987.
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Rep1acement rates refer to the percent of the JinaI saWy replaced by
the pension. Replacement rates are generally higher in the public sector.
For example, a state and local employee who retires maIcing $25,000 per
year after 30 years of service could combine both social security and his or
hergovemment pension and replace on the average85~ of theemployee's
top saWy. A simi1ar case in the private sector would provide only 64~
replacement. Even the 27~ of the state and local employees who are not
in the social security system have replacu.e.d rates comparable to those of
private employees who have both private pensions and social security.
Using the _case noted above (retirement at$25,ooo saWy with30years
of service) the average state or Ioca1 employee without social security
wou1d obtain a 65~ replacen~.t pension. This is a1most equal to the
replacement rate of a simi1ar private employee with both a pension and
social security.
These significantly more generous provisions of public pensions may
best illustrate the alluring temptation to trade benefit increases for wage
increases. The true costs of pensions may be deferred for many years while
.
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Comparison of stat. and Local Employee Benefits
os
Page 12 of 28
-------.--- ---_..----"---~- _.
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the costs and visibility of wage increases are much more apparent and
immediate. Hence, public employees may opt for pension increases over
wage men III As a result, generous pension plans which are under.
funded may cIevelop because the true costa are not reflected in the annual
contnbutians to the system. "It is the separation of the benefit and the
financing ~ under defined benefit plans that aeates the potential
for underlunding.....
On the other hand. defined contnbution plans specify a contribution
rate by the employer and/or employee. Under such plans, benefits are
baaed not on pre-determined formulas as found in defined pension plans,
but rather llI\ the aa:umulated contributions of emp10yera and employees
plus investment earnings. There is no guaranteed benefit leveL "In effect,
the benefits and financing of defined contn'bution plans are determined
simultaneously..M Nearly half of aD the private employees participate in
defined contnbution plans, but only 9" of public employees are in such
plans. Obviously, the more conservative defined contn'bution plans are not
very popular in the public sector.
Tabla IV
Comparison aI Diffarent Variables d o.lined Pension Plans in the Public and Privata Sectors
V'ui.1lhlloc
t;t;lt,. linn I nral Fmnl~ PriVAt,. Fmpl~
A percent of employees in
a pension plan
Percent of employees in plans
with benefit formula based on
final years earnings
93% 63%
10ll'll0 55%
Percent 01 final earnings used ID
caIcuIatI! pensions for HCh)Ul'
of seMct .
1.89% 1.61%
Percent who could retire:
/>dint age with 30 ~ of seMce 38%
At 55 with 20-30 ~ of seMce 22%
Percent in plans provicing at INst
one ~eli.~....ot increa5l! between
1982 and 1986 (Public) and
1983-1987 (Private) ~
~
2%
26%
Condusion
*
This mmpariaon 01 public and private benefits reveeIa that state and
Ioca1 pub1ic employees have more generous paid 1eaVl!l, health insurance
and pensions. Since these benefits are generally the most expensive bene-
43&
Public Personna! Managemant Vol. 20 No.4 (Wintar 1991)
.,
. '"".. . .. ~ '
......,:':.......
.'.
. .~'..
,
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,
Page 13 of 28
'..:. ',J
....-:.."~':.:. ._;..,~. ,.~....:.. 'Of- -?.......
.
. .: .,.. :.. .,......- ..-' ...... .."..-<...' :.~....-,... .... ~.:';..... '.-.. .-,!~.,., .~.
1.i..~,.:"...Ii.,..~.::.~_"'.::.n:i..;;.u,'..~...,~.:Ii~"'..'-..'"..,.;:.;..::.' ,~,-"~......~~..:..."-<....~'t!t<~ "".<._.
*
fits, the public employer is paying considerably highertolallaborcosts than
would be the case if the benefits were more near1y equal to thoae in the
private sector. Given the limitations 01 the BlSllUVey 01 medium and large
finns, the benefit advantages 01 alate and Ioca1 empIoy.s are probably
even more dramatic than is apparent from this analysis. The BlS 1988
survey covers 0II!y companies with 100 or more employee. In contrast,
the 1987 alate and local employee 81UVey included employen with SO or
more employees. Employen with more empIoy.s tend to have more
generous benefits. Thus, we can sale1y assume that if the smaller private
finns had been included in thecomparison, the public8eCtor benefits would
have appeared even more generous.
r
I
!
I
These more generous benefits for state and Ioca1 empIoy.s may not
necessarily indicate that governments should attempt to curtail them. If
labor markets for public employees are competitive, the higher benefits
may have been purchased, in a sense, with lower wages. What is more
aitical is to recognize the importance of benefits in the design 01 a total
compensation package. Most of the costs oIloca1 and state governments
are for labor; and benefits are more than 30" of labor costs in many
jurisdictions. Moreover, benefits are escalating at a pace considerably
faster than wages (6" veJSuS 4,,).15 Thus, it is absolutely aitical that more
governments and public managers understand the impact of different
levels and combinations of benefits and pay on the recruitment, motivation
and behavior of public employees, and on future costs of present compen-
sation increases.
.
j
I
I
f
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I
For example, public managers need to Icnow more about what kinds
of individuals are most attracted to better benefits versus higher wages.
There is some evidence to suggest that thoae who are more afraid of risk
have a greater desire for fringe benefits." Are these the people govern_
ments wish to attract? Are such people more appropriate for some posi-
tions but not others?
Public managers need to keep in mind that more paid leave in
whatever form (vacation. rest periods, sick leave, holidays, etc.) will affect
the maintenance and continuity of services, staffing levels, overtime pay,
supervisory time devotecI tocon....tingtheimpactof ab6entemployees,and
training costs for new empIoy.s needed to take the place of empIoy.s
who are on paid leave. In other words, few improvements in employee
benefits are achieved without costs, which are not always obvious.
When considering health care benefits, public managers should re-
member that costs are a result 01 the charps for health services and the
nwnberofservices used byemployees. Hence, the leve10f dedUCb'b1es and
co-payments paid by employees can have a direct impact on the frivolous
use of expensive medica1 resources and thus increase tota1 medica1 costs.
Moreover, public managers should always remember that the provision of
*
Comparison of State and Local Employ.. aaMlits
437
Page 14 of 28
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a new health C8Il! benefit is an open commitment whOle future costs (as
compared to a pay increase) may be very difficult to predict. Also, once a
benefit is given. it is very difficult for an employer to withdraw or reduce
iL The open COIIlII1itment becomes a pennanent commitmenL
*
The advantaaes of public benefits noted in this atudy accentuate the
need for tota1 compensation comparability (pay and benefits) in public
compensationamveya. While it is relatively easy to compare pay -aaingle
quantity per wlit of tinw - moat benefits are much more complex. A
benefit SIICb a health insurance, for example, has different eligibility provi-
aions, dedudibles, coverage options and co-insurance formula. The c0m-
plexity extends to other benefits aa well. Total compensation
comparability, while a very legitimate and reasonable goal in the public
aec:tor, wiD demand much more information and sophisticated anaIyais
than is applied in many pay surveys. Yet, the growing importance of
benefits dic:tates that auc:h analysis oc:c:ur.
*
FmalIy,inc:reasing the percentage of total compensation costs devoted
to benefits poses two major dangers. FU'St, governments may be tempted
to buy employee support by increasing fringe benefits but deferring the
costs of the benefits to the future. Although this strategy is politic:aIly
appealing. it is financ:iaIly unsound.
The second danger is that benefits are system rewards. System re-
wards differfrom individual rewards, such as pay, in that they are allocated
to everyone in the organization despite differences in eHort and perform-
8Jlc:e. The major basis for the differential allocation of system rewards is
seniority in the system. Since system rewards are either given equally to
all employees or differentially in terms of seniority, employees may not be
motivated to do more than meet the minimum atandards for remaining in
the S)"tem. Although system rewards may generate more positive em-
ployee attitudes about the organization. the Iinlcagea between system re-
wards, more positive attitudes and greater produc:tivity are unclear.
Employees may seek to remain in an organization with system rewards,
but they may not nec:essarily express their gratitude by working harder. Is
it wise for governments to pay huge sums of money as rewards that may
have relatively little impact on produc:tivil)1 Or ahould governments
attempt to maintain or increase the perc:entage of their total compensation
c:osta that c:m have a more direct effect on the employee behavior needed
fororganizalionaleffec:tiveneaa? These are the buic: q1I5tions that g0vern-
ments and public: managers must addJeu.
438
Publk Personnel Management Vol. 20 No.4 (Winter 1"1)
.... . -. ..",!~ '":,":,\. ::".-' ",::- ."
'- '. . ',' .." .."
"_,_",~,~.,_-"",.,,,"'_... ~..i.... '__. .....~..._.~_...._.~ .,",w'..
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Notes
.
.
1
I
I
I
}
I
.
_ 1__
..
~ .', . .-
- -,
. .' ".
" ~".:.:: ....~...t.....:. _
..L.:.~ ~,~.~._..,:.~
. ... ~ .
~' .~t..J...:':";_I'
"';--r".,4~_.~ -...i.,~':'~~" _ ." ~; ~", ~.-_.~;i.
'wiw.m WClIb. "Pay far ,_ Not WarirecI: A Public SodM Budpt ~. Pulllic
Almilllmwlion Inino, vol tll (Jonuory/Nnwy Il1l18). pp. 551-556.
Lon.. Rioinc ,ode of EIIIp. MedicoII'Ion Caolo: Molial '-/III, Jomwy 30, 1989, p. 10.
'1>eny M-. "HaIth c- Call ~ In !.up AmerIcon Otioo," PuIIlic ,......"
~ vol 1. (Sprina 1989). PI'- 87-100.
~E.Sep1Co., 1919 SrmIryofSW.&rp/qy<<1WIIr '-/II "'- (New Yorlr.l!189).
':lames Ferris, "LocoJ Ccwernment I'msiono ond Their Fundinl' Policy....... ond 0ptlaN."
-ofhlllic P.......... A4mi._, YOI.l (SwNner Il187). pp. 2!44.
~1W4. p. 30
"lJJi4.
~us. ~t of Lobar, Bumau of Lobar Statistia, &rp/qy<< Ber.Jill ill Sill,. "'" I.-'
Goomunm,., 1917 (Washingtoll. D.c.: GovemmenI Printins Qffia,.1988).
''Us. ~l of Lobar, Bumau of Lobar Statislics, &rpl_ a...jIts ill MIdi.....4 u.,.
Fi_ 1981 (Was/Ungtor\. D.C.: Government Printing Qffia,. 1989).
"'Jerome M. ~. "PubUc SodM Pay ond Bene/ill.. Pulllic A4mi.iIlNlUm _, .01. 36
(September/October 19161 p. 538.
"Wosb, "Pay for'lDle Not Worked." pp. 552 ond 553.
\2.poster Higgins ond Co.. HaIth c... Ber.Jits SU""Y.19lll1 (New York, 1989). p. 11.
u.Ferris, "LocoJ Government I'eNions ond Their Fundine." p. 32-
"'lJJi4.,p.33.
~pIoyment Call Index." MMIiaJl Ber.Jits, November 30. 1989, p.S;
"'D. BellantundA. LInk. "AftPubllc:SedorWorbnMoftRialtA.....thonPriva..SodM
Worbn?: lmWIrW "'" Ubor lltIaIi<Iru RaMo, vol 36 (AprD 1981), pp. 408-(12.
Comparison d Stat. end I.oc8I Employe. Benefits
439
Page 16 of 28
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ATTACHl-IENT 4
CITV OF
San Bernardino
'...IOIINIL DI'.II'.INT
January 17, 1992
Mr. Robert Krause
Attorney at Law
Castle I< Krause
28991 Front street
Suite 201
Temecula, CA 92590
Dear Bob:
Enclosed is an update on the "Areas of Disagreement" between the
City Team and the POA, based on our January 14, 1992, meeting.
on January 10 and January 14, 1992, we tentatively agreed on ten
(10) of the original 23 areas of disagreement and on two (2) new
proposal modifications. We are very close to agreement on another
seven (7) items.
Of the remaining six (6) items, we agree on portions of some items.
Tbe key areas to be resolved are health insurance and PERS.
You have requested that I present the POA proposal in closed
session to the Mayor and Council, Drior to proceeding to the next
step in the iIlpasse procedure. You are aware that the City Teaa
does not support the POA proposal in the areas of health insurance
aDd the PERS increase.
3 ." t. C ~ 'l' '"'
o
: '!' J:I E E
SAN BE=....:.R::..O
11. 314-$1'3
Page 17 of 28
PRIDE ./
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LE'l"l'ER TO ROBERT KRAUSE
January 17, 1992
paqe 2
Both aides have aqreed to option (B) of the impasse procedures:
A DETERMINATION BY THE MAYOR AND COMMON COUNCIL,
after a hearinq on the merits of the dispute.
Thank you for your assistance in this matter.
(B)
Sincerely,
~U:IJ~kt~
Barbara Dillon
Director of Personnel
Enclosure
IMPASSE. Lron'ER
cc: Shauna Clark, City Administrator
Steve Filson, President/POA
City Team Members
Page 18 of 28
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I'BATURBS 01'
CITY TBU PROPOSAL
These it81118 are above and beyond the terms of the current
MeaorandUII of Under.tanding (MOU).
OBI-LINGUAL PAY OF $50/MONTH FOR ELIGIBLE EMPLOYEES
o UNIFORM ALLOWANCE, BEGINNING AT $500/MEMBER PER YEAR
o FUNERAL EXPENSES OF $10,000 FOR OFFICER KILLED IN LINE OF DUTY
o CITY-PAID HEALTH AND DENTAL INSURANCE FOR EMPLOYEE, PLUS
ONE DEPENDENT:
KAISER PREMIUM
MISSION DENTAL HIGH OPTION PLAN
o INCREASE IN OVERTIME ACCRUAL FROM 240 TO 300 HOURS/MEMBER
o INCREASE IN MONTHLY P.O. S. T. REIMBURSEMENT
o SICK-LEAVE BUY-BACK (ANNUAL)
o VACATION' HOLIDAY SELL-BACK (ANNUAL)
o 4/10 PLAN FOR INVESTIGATIVE UNIT, ON 6-MONTB T1UAL BASIS
o RE-OPENER ON MEDICAL TRUST
o
SIDE w;~-""~,QILINDEMNIFICATIONm()F EMPLOYBES~_
----~.- --,.--:
o THREE (3) YEAR CONTRACT
Page 19 of 28
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CITY TBAJI OSPONSB
ARBU 01' DISAGRBBllBIlT
IOLICB OI'I'ICBU' A8SOCIATIO.
.~a~u. .. of 1/1CJ9Z
1. Classified Service: The City Team did respond to this issue
via city Legal Opinion No. 88-19, in a 9/4/91 letter to the
POI.. POl. wit1a4rn without prejudice, 1/10/'2.
2. WorkinG Dav: The City Team disaqreed with the POl. proposal
to change this term. The City Team prefers the languaqe in
current MOU. lOA withdrew, 1/10/12.
3. Use of citv Resources: The POI. proposed additional languaqe
in Article II. Employer-Employee Relations, Section 13. Use
of city Resources: "...denial of approval shall not be
arbitrary or capricious or discriminatory."
City Teaa tentatively agree. to this languaqe, 1/10/'2.
4. New EmDlovees: The POI. had proposed that, "upon completion
of the probationary period, each new employee shall be
required to compensate the POI. Medical Trust the amount of
$2,200. Said payment shall be made by payroll deduction
over a period of 24 months."
As noted in the City Team's 10/29/91 proposal, the City
Teaa needed"a response" from the..POA on rules,
requlations and "by-laws "for the " Medica-l1Retirement "Proqram,
before it would consider the POA's new proposal.
At the 11/5/91 neqotiatinq session, the POI. said it would
brinq Trust Fund information to the next meetinq. On
11/13/91, the POA stated that this information miqht not
be available for several months.
on 1/10/'2, City te_ tentatively a9reed to the followin9 re-
opener, baae4 OIl no agenCJ .hop I
nwit1lin one (1) _nth of completion ud ratification of rule.,
regalatioH, &D4 ~-laws for the Trust I'uDd, u a9reed-upon
date will be Nt to .eet and confer OD ..... _loyee. - POA
Tl'1ISt I'mld.- "
5. Holidav pav: current City practice for a 4/10 Work Week
is to pay 8 hours for Holiday Pay and have the employee
request 2 hours from accrued leave, e.q., vacation.
Page 20 of 28
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POA OO1Ult.r-propo.a1 of 1/U/t21 Allow POA aU\l)er. to
acon. 3. llouaiD 1'10atiDq 8011elay. for _ploy... workiDq
OD the e/l. .1u.. .(lrot.. CUrreDt IIOU allow. three (3)
1'10atilllJ bli4ays.) . ID _chaDqe, will with4raw propo.a1
OD Iaj1ll'J l.eay. (II).
City ftu oo1llltar-propo.a11 Allow POA a8Jl!)er. to accrue
30 hoar. la noatiDq 8011elay. for -.ploye.. workiDq OD the
e/l0 .lu, rutricteel to _Dlo".e. iD 'atro1 aDel the
IIlY.Riaatlcs hit 'DrODG..el for 01/10). ID _chaDq., ..k
POA to witWraw propo..l. OD IDjUry Lea"e (II) u.A
iDcnuilllJ VacatioD Accrual (112. B. )
6. Iniurv Leave: The City Team is opposed to waivinq the
vacation llJId holiday time accrual cap, while a unit member
is absent on 4850 pay status. The city is already severely
constrained by: (a) inability to fill a position when a
unit I1811ber is out on 4850 pay; and, (b) cost of overtime
needed, because unit member is out on disability. POA
proposal would further increase costs to City.
7. Militarv bave: This is a City-wide issue.
City ~e.. t..tati".ly aqreeel to the followiDq couter-
proposal, 1/1e/'2:
"ID the evat of circUIIstaDces which require res.rv.
call-up, tlle City vi11 a.et aDel confer vith the POA ov.r
the lapact of the call-up OD uit 118mber.."
8. Shift Schedules: The Mayor and Council have authorized
the Director of Personnel to meet and confer with various
barqaining units on a 9/80 Work Plan. CUrrently, we are.
surveyinq all City Departments. We will beqin the meet
and confer process in January, 1992.
OD 1/10/'2, the City te.. t.Dtatively aliJree4 to a 01/10 p1aD
OD a .iz (I) _Dth trial basis, for the IDve.tiliJativ. UDit
(Detectiv. Bureau), for P-2'. aDel P-3'.. CODtinuatioD of the
01/10 will lie JIu.el OD .. evaluatioD of factor., .uch _
.icJt leave, injurie., ..el cleuaDcerat...
9. MUtUl.l Release: The POA proposed deletinq this section from
the existing JIOU.
city ~_ tutativ.ly .liJr... to POA propo.al, 1/l0/n.
10. EBBl: POA proposed that City pay a total of 9' of the
employees' contribution to the Public Employees Retirement
Systea. currently, the City pays 8\. The increase would
result in an additional cost of S100.000 Der vear. This is a
vested benefit.
11. Health/Dental Insurance: CUrrently, the POA receives $300/ao.
Page 21 of 28
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per unit member towards health insurance. The city Team is
offerinq that the city contribute full payment for each
employee and one dependent-, based on the cost oftne Kaiser
premium. In addition, the city would provide full payment
of the Mission Dental Hiqh Option Plan, for the employee and
one dependent. The city's contribution will increase to cover
the increase in the Kaiser premium and the Mission Dental Plan
durlnq the tera of the MOU.
Value of city Team PrQDosal:
initially, $44,849 - Year 1.
Year 2; $64,000 - Year 3.
$321.22/month per unit member
Subsequent years: $53,000-
cost of POA Pronosal: $143,643 - Year 1; $583,033 - Year 2;
$1,064,290 - Year 3.
City Team researched data on medical plans, by member,
per discussion on 1/10/92. The City team presented the
followinq data on 1/14/92:
cateqory of Health Benefit
. Employees Bnro11ed
o Employee Only 84
o BIIp10yee + ODe Dependent 34
o Faai1y PIa 114
TOTAL
234 MEMBBRS
fte City Te.. also revised its costinq at the POA's
request, to reflect a 15\ increase in health benefits/year,
versus a 20\ increase per year. (Attached)
12. Vacations and Holidavs: (A) In its 11/15/91 proposal, the POA
withdrew its proposal to increase Holiday time to 120 hours.
(B) City Te.. rejected proposal on increased Vacation accrual,
because of cost: S12S.496/vear.
13. Unused sick Leave: (A) In its 11/15/91 proposal, the POA
tentatively agree4 to city proposal for Sick Leave Buy-BaCk
(annual buy-down). (8) At issue for POA is total buy-back
at tI.e of separation. Value of Benefit: S104. 5S0/vear
14. Release Time: 'rile City Teaa discussed th1a item in its
12/4/91 proposal, notlnq the POA's modification of its
initial proposal, and mentioninq the followinq items:
Use of."acation-'and--holiday time for reInse.-time bank;
Advance notice to/approval from the Police Chief; and,
A percentaqe of release time (vs. 100\ time).
.
.
.
OIl 1/10/12, the City Team stated that this proposal was
inappropriate, because of pendinq layoffs. POA counter-
proposal was for same release time as in Fire MOU.
Page 22 of 28
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On l/14/tI, the City T.lUII rej.ot.d tb. 288 bour. r.l....
tille bold" ill tbe I'ir. HOU, IUld pr.s.nt.d a oount.r-
propo.al of 100 bours for all union Bo.rd ..-bar. in the
.qqreq.te, eaoIlyear, with prior. approval by tbe Polioe Chief.
Tbe lOA reapoa4e4 witb a oounter-propo.al. of aoo hour.,
city "ea tat.t1vely offered 125 hour..
If the two teaaI tentativelY .gree on tbi. proposal, lOA
will also .gr.. on city T...,. VJlifora A11ow..oe (115.)
15. Uniforll Allowance: In its 12/4/91 proposal, City Team
offered Cas corrected 1/10/92):
Amount
Value of Benefit
$500 - Year 1
$500 - Year 2
$500 - Year 3
Total
$164, 116/year
$164, 116/year
$164, 116/year
$492,341
POI. requests $400 - Year 1, $500 - Year 2, $600 - Year 3.
City Team does not wish to start next round of negotiations
with $600/year as the base cost for a uniform allowance.
16. Definition of OVertime: In its 10/29/91 proposal, the
City Team proposed interpreting overtime to exclude holiday
leave, sick leave, and vacation leave for purposes of
computing overtime compensation.
City "e.. ri~b4r.w. tbis propos.l; 1/10/92.- _h q-
18. Inde~ificat1on of EmDlovees: Please reference attached
aellO of n--l.er 17, 1991 from City Attorney.
OIl 1/10/t2, lOA tentativ.ly agr.ed to use this ...0 a. IUl
attacba.at to . s14. l.tter.
Page 23 of 28
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19. ModifIed .Golden Handshake": (A) The City Team has costed the
follovinq portion of the POA proposal:
Additionally, the employees, during their final year't- 1IlaY
elect to sell back prospective holiday and/or vacation time.
This final year .sell-back., shall also be converted to
salary and reported to PERS as such. Cost: Por average
of 3 persons/year. Approxi1llately $9, 780/year. Vested benefit
On 1/14/11, CltJ'1'e.. said it would ezplore b.ue with It...
a. to allowUlllty of final yeu conversion.
(B) 101 haa tlDtativelJ agreed to city 'Ie.. proposal for
aDIlual Vacatioll , Holiday Sell-Back.
20. Term of Memorandum of Understandina: The city Team proposed
a three (3) year term. The POA counter-proposed a 30-month
contract (2 1/2 years). City Team prefers an ending date
that will not conflict with the budget preparation process,
I.e., November or December is preferable to June or July.
21. Athletic Club MembershiD: City Team reduced this part
of the package from $17,188 to $8,750, via recommendation
on corporate membership.
city '1'... withdraws this proposal, 1/10/92.
22. Wellness ProarllllS: (A) City Team tentatively agreed to delete
Weight Watchers' component from Wellness Programs. (8)
Remaining proqrlUlls include quarterly Cholesterol Checks and a
Stop Smoking Program. Value of programs: $13,992.
23. Assessment District Funds: The City Team has distributed to
the POA an excerpt from the minutes of the 7/1/91 meeting of
the Mayor and Common Council:
....instruct the neqotiatiors to come up with a benefit
package, foraulated on a percentage of the assessment
collected throuqh property taxes, primarily for retention and
attraction of DeW police officers, and that this benefit would
not becOlle a vested riaht beyond the sunset clause in the
asse....nt district..
MorE: It... 3.,9., and 16. were contingent upon acceptance of the
following City 'l'eaa proposal regarding Tuition Reilllbursement:
.Por the period January 1 - June 30, 1992, the POA will waive City-
paid reimlursement for tuition and books under the City'S TuitionÙReiJlburS8llellt Proqraa..
On 1/10/92, 101 tentatively agreed to City 'Ie.. proposal
.otification on tuition reimburs_ent.
Page 24 of 28
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NOTE: In an effort to settle the contract, the City Team
tentatively offered the following proposal on 1/14/'21
"Once each. year, by September 1st, the Finance Director will
prepare an analysis of Assessment District monies collected for the
period July 1st to June 30th of the prior:FiscalYear.
Also, by the same date, the Finance Director will prepare an
analysis of the POA benefit program as authorized in the Memorandum
of Understanding and funded through the Assessment District.
Any funds remaining will be distributed equally among members of
the POA (to include P-1's, P-2's, and P-3's), via an increase in
the members' uniform allowance.
Payment will be made no later than the first pay period of October,
less the amount the City must pay to the Public Employees'
Retirement System (PERS)."
The POA tentatively agreed to this proposal, on 1/14/92.
Attachments: December 17, 1991, Memo from City Attorney
Comparison of Health/Dental Proposals - 1/14/92
Page 25 of 28
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-':-=':". :' . .,:.:. l~ ~d-\=-.:.~L.i
~:JJ, o. '''' SAN B ERN A R DIN 0 _..
.:.~;;.~ .' 'Interoffice Memorandum .~;l ['cC 20 ;:; 1/' 0/
"'~--
'1'0 :
Barbara Dillon, Personnel Director
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FROM:
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J.... .P. Penman, City A.ttoxney___. _. _'
SUBJEC'I': INDBMNIFICATION OF POLICE OFFICERS FOR
PUNI'l'IVI DAMAGES SOUGH'!' IN LAWSUITS
DATB:
Der--ber 17, 1991
~~t;y. Ada1n1strator. .Chief .ofPol1~ P.O.A..
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California GOvernMllt Code Section '82Sraf'does~ not authorize ,a:.
publiC entiti to pay punitive' damages unless :certalri specific
findings arei .ade on a case by case basis. This must be done
before punitive damages may be assumed and before an individual
employee I18Y be indemnified for such an award [Government Code
5825(a) and (b). (1), (b) (2) and (b) (3)~. . h. ____ _....,..
Since June 1, 1987, when I became City Attorney, many police
officers and other City employees have been indemnified by the City
Council for punitive damages. During this period of time, we have
recommended indeltn1fication and the' Council has . approved the same
in every case subadtted. For a variety of reasons, some decisions
vere not .ade as quickly as all would have preferred, but most were
routinely approved and all wer~ u~timate~y,apProved.
While state law, as cited above, ,requires us to ..ake case by case
findings, thus preventing an agreement to automatically indemnify
any group as a uttar of policy, the establishment of a procedure
t:o evaluate and report 1:0 the employee on the status of his/her
request for ir'tll \1fication also on a case by case basis, i.
appropriate.
Being served witb 8Df lawsuit i. a frightening ezperience for ..-t
people. "A laWllU1t ..8k1nsJ punitive cte.ag.. froa 8ft individual 18
even .we threa-t"'!r. Even if the .-plOJM MrV8d beU.... i:bat
t:bere 1s DO legal beei. for the lluit. that .-pl~ i. likely to
worry that tbroug1a ... legal nuke be or 8be lligbt and up with .
judgment _tencJ egainet that ellplOJee, lou of hi./har ~.
attac'-nt of wages, etc. '1'h1. bas never happened .ince I have
been C1t)'.A~Mz encl.-I find no record in the l..t 1:'11'0 decads.
(which 18'..' fir back .. our in-house records go) of any Cit)'
.-ploye. being "'n8sed punitive damages in a job-related lawsuit.
Nonetheless, the threat is still there and the thought that
-there's always a first time- can be a constant worry to an
employee/defendant in a civil lawsuit.
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BARBARA DILLON
PERSONNEL DIRECTOR
Page 2
December 17, 1991
I believ. it is in the best interest of the City, as .e11 a. the
employ.e, to investigate lawsuit. filed as expediently as po..ible
to deterlllne if the .-ployee/defendant was acting in the cour.e and
scope of her/hls 8IIploYJIent at the time the alleged incident ( .)
complained of occurred, if they occurred at all. If the
investigation deteralnes that an employee was acting in her/hi.
official capacity and there are no highly unusual circumstance.
involved, the case should be presented to the Mayor and Council for
indemnification. An example of a -highly unusual circumstance-
would be where an employee came in on his/her day off, while
intoxicated, took a City vehicle, after being told not to, and ran
over a personal enemy with the vehicle. I would not recommend
indemnification in such a case. However, I've never seen a case
like this or any other case, to date, where the circumstances would
cause me not to recommend indemnification.
Indemnification serves the City's interest as well as the
employee's because it takes a burden off the employee's shoulders
that is likely to illpact her/his job performance, removes much of
the "personal" element from the lawsuit thus enabling the employee
to conduct herself/himself in a more prOfessional manner throughout
the pre-trial and trial periods of the case, and minimizes the
potential for conflict, legal or otherwise, between different
employee/defendants and between employees and the City.
The overall result is a more efficient and effective defense of
lawsuits filed against the City. The employee who is indemnified
still has an iIIportent "stake" in the outcome of the litigation
because h1s/her professional and personal reputation .ay well be
impacted if a plaintiff prevaUs in the lawsuit.
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It is the policy of the City Attorney's office to encourage an
early decision OIl t~.-ufication for the reasons stated herein.
I will be pleased to .eet personally with any employee or any
employee bargalning group representatlve(s) to explain, d1acuss and
formalize a procedure for this important factor in the attorney-
client nlattQft8hlp and in the employer-employee relationship.
d;;1.~" "-
ames P. "'-'D
City AttOJ:D8J
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COMPARISON OF HEALTH/DENTAL
PROPOSAIS
1/14/92
iQA CITY TEAM NET tnl:'I' VARIANCE
YEAR 1 $52,280 $41,811 $10,469
YEAR 2 296,234 49,410 246,824
YEAR 3 565.855 59.665 506.190
$914,369 $150,886 $763,483
THE ABOVE FIGURES COMPARE THE POA' S AND THE CITY TEAM'S HEALTH AND
DENTAL PLAN PROPOSALS, BASED ON AN ASSUMPTION OF A 15' INCREASE IN
HEALTH COSTS EACH YEAR.
POLICE NEGOTIATION
COMP .HLTH/DEHT. PROP
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