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2010-27461 Reso2010-27461 RESOLUTION NO.i A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA RATIFYING ATHREE YEAR LABOR AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND THE FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS LODGE NO. 8 (FOP), FOR THE PERIOD FROM OCTOBER 1, 2009 THROUGH SEPTEMBER 30, 2012; AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE THE AGREEMENT. WHEREAS, the City is hereby submitting to the Mayor and City Commission the attached tentative Labor Agreement, recently negotiated between the City and the Fraternal Order of Police, William Nichols Lodge No. 8 (FOP), for the employees covered by said Agreement for the period covering October 1, 2009 through September 30, 2012; and WHEREAS, the previous Labor Agreement was for a three year period from October 1, 2006, through September 30, 2009; and WHEREAS, the attached summary sheet accurately reflects the pension and other economic issues tentatively agreed to between the City and the FOP; and WHEREAS, the approval of the attached summary sheet is contingent upon completion of the full text of the collective bargaining agreement as drafted by the City and subsequent ratification of such agreement by the FOP and the City Commission; WHEREAS, the full text of the collective bargaining agreement has not yet been completed; and WHEREAS, the FOP membership has not scheduled the ratification vote among its members for the proposed Labor Agreement attached. Since the outcome 'of the ratification vote will not be made available in time, the results will be provided to .the City Commission under a supplemental memorandum; and NOW, THEREFORE, BE IT DULY RESOLVED BYTHE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, hereby approving and authorizing the Administration to amend the three (3) year labor Agreement with the FOP, Williams Nichol Lodge No. 8 bargaining unit for the time period covering October 1, 2009 through September 30, 2012. PASSED AND ADOPTED this ~ day of Jk~ , 2010. ATTEST: ~L~ CITY CLERK MA OR T:\AGENDA\20101Ju1y 14\Regutar\FOP 2009-2012 Labor Agreement Reso.doc APPRt,VE~ AS TO FORM & LANGUAGE & FpR EXECUTION ~~j~ CftY Attorney Date COMMISSION ITEM SUMMARY Condensed Title: A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Ratifying A Three Year Labor Agreement Between The City Of Miami Beach And The Fraternal Order Of Police, William Nichols Lodge No 8 (FOP) For The Period From October 1, 2009 Through September 30, 2012; Authorizing The Mayor And City Clerk To Execute The Agreement. Ke Intended Outcome Su orted: Control costs of payroll including salary and fringes/ minimize taxes/ ensure expenditure trends are sustainable over the Ion term. Supporting Data (Surveys, Environmental Scan, etc N/A I, Issue: Should the City Commission adopt the resolution to ratify a three (3) year successor labor Agreement between the City and the FOP bargaining unit? Item 5ummar !Recommendation: On September 30, 2009 the Collective Bargaining Agreement (Agreement) for the FOP expired. After 15 negotiation sessions, the City and FOP successfully concluded negotiations and reached a tentative three (3) year labor Agreement covering the time period of October 1, 2009 through September 30, 2012. To help address the challenges being faced during the FY2009/10 and the FY2010/11 budget years, the City Commission requested the Administration to budget for specific employee givebacks that would effectuate a cost savings of approximately $15.3 million over the two fiscal years, which was to be divided up proportionately amongst each of the seven (7) salary groups. FOP's target for their portion of employee givebacks for the two fiscal years was approximately $3.95 million. Based on the terms and conditions tentatively agreed to between the City and FOP, the City estimates the value of FOP's portion of employee givebacks to be $3,627,522 for FY 2009/2010 and FY 2010/2011 combined. In addition, the value for the proposed successor Agreement is estimated to generate a savings of over $4.60 million through FY 2011 /2012. In addition, there were several adjustments/changes made to the pension plan for current and future employees that will yield additional, Ion -term, recurrin savin sin future fiscal_years. Board Recom Financial Information Source of Amount Account Funds: ~ Year 1 5%° additional health contribution (for an 18 month ($551,251) rolling period), additional take-home vehicle stipend, Pension chan es/Off-du Zero COLA 2 Year 2 ($3,076,271) , 5% additional health contribution (for an 18 month rolling period), take-home vehicle stipend, hiring certified officers, Pension chan es/Off-du ,Zero COLA 3 Year 3 ($981,153) 5% additional health contribution (for an 18 month Plus additional savings for rolling period), take-home vehicle stipend, pension pension changes for future changes/off-duty, Zero COLA, 3% COLA effective April . em to ees 1, 2012; Pension chan es for Future Em to ees. OBPI Total $4,608,675 Financial Impact Summary: The savings for FY 2009/2010 and FY 2010/2011 total $3.6 M. This represents a per person impact of $10,104.51 to each member of the FOP bargaining unit. The total savings for the three (3) year agreement total $4,608,675. In addition, these concessions will field additional, Ion -term, recurrin savin sin future fiscal ears. Cit Clerk's Office Le islative Trackin Ramiro Inguanzo, Human Resources Director Sign-Offs: Department:Director A sistant City'.Manager City::Manager miro Inguanzo ild Fern ez orge Go e er_cNDA\2010W I 4 R T! u y \ egular\IAF 009-2012 L or Agreement Summary.doc m MIAMIBEACH AGENDA ITEM ` O DATE 7 ~y ~ m MIAMIBEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: M or M tti Herrera Bower and Members of the City Commission ~.2 FROM: J rge M. Gonzalez, City M Eger DATE: July 14, 2010 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA RATIFYING A THREE YEAR LABOR AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND THE FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS LODGE NO. 8 (FOP), FOR THE PERIOD FROM OCTOBER 1, 2009 THROUGH SEPTEMBER 30, 2012; AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE THE AGREEMENT. ADMINISTRATION RECOMMENDATION Adopt the Resolution. BACKGROUND During the July 2009 Finance and Citywide Projects Committee (Committee) budget preparation meetings for the FY2009/2010 Budget, the Committee requested that all City of Miami Beach employees make certain financial concessions to help address the challenges being faced during the FY2009/2010 budget cycle and beyond. The Committee requested the Administration to budget for specific employee givebacks for FY2009/2010, which would in turn effectuate a cost savings of approximately $4.3 million (approximately $3.5 million savings attributed to the General Fund and $800,000 from various enterprise funds). The employee givebacks that were directed by the Committee in 2009 included: (1) no cost of living adjustment (COLA) for all City employees; (2) a freeze on merits and steps for all City employees; (3) a two percent (2%) increase to the employees' contribution to the pension system; and (4) implementation of revised Condrey and Associates recommendations from the Classification and Compensation Study that was performed for the City. Furthermore, in 2010 the City Commission directed the Administration to secure and budget for an additional $11 million in savings attributed to employee givebacks for FY2010/2011. Therefore, the total amount of employee givebacks for both the FY2009/2010 and FY2010/2011 is $15.3 million. The City currently has a total of seven (7) salary groups who represent employees: (1) the American Federation of State, County and Municipal Employees, Local 1554 (AFSCME); (2) the Communications Workers of America, Local 3178 (CWA); (3) the Government Supervisors Association of Florida/OPEIU, Local 100 (GSA); (4) the Fraternal Order of Police, William Nichols Lodge No. 8 (FOP); (5) the International Association of Fire Fighters, Local 1510 (IAFF) (6) Unclassified and (7) OTHERS (Classified employees not represented by a bargaining unit). Based upon the direction received from the City Commission, the $15.3 million savings in employee concessions for FY2009/2010 and FY2010/2011 combined was to be divided up proportionately amongst each of the seven (7) salary groups based on total budgeted payroll and a proportionate share of the preliminary FY2010/2011 City's Annual Required Contributions to both of the City's pension plans. In addition, the City Commission also directed the Administration to negotiate with the respective unions for pension reform to both of the City's pension plans (the Miami Beach Fire Fighters and Police Officers (Fire and Police) Pension Plan and the Miami Beach Employees' Retirement Plan (MBERP)), in orderto obtain recurring savings forfuture years in each of the pension plans. City Commission Memorandum July 14, 2010 FOP 2009-2012 Collective Bargaining Agreement Page 2 of 5 On September 30, 2009, the previous three (3) year Collective Bargaining Agreement (Agreement) forthe FOP (covering the period of October 1, 2006 through September 30, 2009) expired. In anticipation of the Agreement expiring, negotiators for the City and FOP began negotiating for a successor three (3) year Agreement in August 2009. After fifteen (15) formal negotiation sessions and severa( separate discussions, the City and FOP successfully concluded negotiations on July 8, 2010 and reached a tentative three (3) year labor agreement covering the time period of October 1, 2009 through September 30, 2012. Upon the direction from the City Commission, FOP's portion of the FY 2009/2010 and FY 2010/2011 employee givebacks totaled approximately $3.985 million. Based on the terms and conditions tentatively agreed to between the City and FOP, the City estimates the value of FOP's portion of employee givebacks totals to be $3,642,523 for FY 2009/2010 and FY 2010/2011 combined. This represents a per person impact of $10,451 to each member of the FOP bargaining unit. In addition, the value for the proposed three (3) year Agreement is estimated to generate a total savings of over $4.63 million through FY 2011/2012, plus an additional savings that will occur in the future from pension changes for future employees. The FOP membership is in the process of scheduling a ratification vote among its members for the proposed Agreement. Should the City Commission approve the proposed resolution to ratify a three (3) year successor Agreement covering the time period of October 1, 2009 through September 30, 2012, the Agreement would be ratified by the City Commission pending the outcome of the ratification vote of the FOP membership. Since the results of the ratification vote will not be available for the July 14, 2010 City Commission meeting, the results will be provided to the City Commission as soon as the City receives the certified results. ANALYSIS The following is a summary of the Agreement with the FOP: Wages Effective October 1, 2009 through September 30, 2010; October 1, 2010 through September 30, 2011; and October 1, 2011 through March 30, 2012, there will be noacross-the-board wage increases (COLA) for this period for any FOP bargaining unit members. It was initially estimated that the impact to the City's Annual Required Contribution (ARC) for the Fire and Police Pension Plan due on October 1, 2010 would be a reduction of approximately $1.4 million if no Cost of Living increases were provided to any active plan participants for FY 2009/2010 and FY 2010/2011 (both Fire and Police). The savings from no COLA in year one have already been reflected in the calculation provided to the City for the City's ARC due on October 1, 2010. Due to subsequent assumption revisions, it is estimated that the savings from COLA in year two will be approximately $400,000. Effective with the first full pay period ending in April 2012 (six (6) months into the FY 2011 /2012), all active FOP Bargaining Unit members will receive anacross-the-board cost of living adjustment (COLA) of three percent (3%). In addition, effective with the three percent (3%) COLA, the minimum and maximum pay rates of the salary ranges for all job classifications covered by the FOP bargaining unit will be adjusted accordingly. Due to this COLA for the FOP, the City estimates a wage impact of $586,486 to be applied against the City's FY 2011/2012 operating budget. Additional Economic Impacts The new Agreement with the FOP provides for several provisions that have economic impacts. The following provides details of the additional terms and conditions agreed upon by the City and FOP: City Commission Memorandum July 14, 2010 FOP 2009-2012 Collective Bargaining Agreement Page 3 of 5 Police Vehicle Take Home User Fees - To defray operating expenses (fuel, maintenance, etc.) incurred by the City as a result of the non-official use of take-home vehicles, Police Officers are assessed a user fee for each biweekly period in which they have a car assigned to them. This reimbursement is based on the location of the Officers' primary residence as indicated below: • For Officers living in Miami Beach there is no fee • For Officers living in Miami-Dade County there is a $25 bi-weekly fee paid to the City • For Officers living in Broward County there is a $30 bi-weekly fee paid to the City • For Officers living in Palm Beach County there is a $45 or $75 bi-weekly fee paid to the City FOP has agreed to increase the police vehicle take-home user fee for an eighteen (18) month period. Effective upon ratification of the FOP Agreement and continuing for an eighteen month period, all FOP bargaining unit members will begin contributing an additional $7.00 per pay period towards their take- homevehicle user fee. This additional $7.00 will be added to each Officer's current bi-weekly stipend. The City estimates that this employee giveback (additional $7.00 per pay period for 18 months) will generate a savings to the City of approximately $80,192 towards FY2009/2010 and FY2010/2011 combined. In addition, the City will realize an additional estimated savings of $16,038 towards FY2011 /2012, for at total estimated savings of approximately $96,230 for the three (3) year term of the Agreement. Supplemental Assignment Incentive Pav -Based on the terms and conditions of the FOP Agreement, qualifying FOP members may receive supplemental assignment pay for various assignments within the Police Department. The previous 2006-2009 Agreement provided for certain supplemental pays for a number of assignment pay provisions which ceased (sunsetted) upon the expiration of the 2006-2009 Agreement. These supplemental benefits included: Field Training Officer (FTO) Assignment; Criminal Justice Standards and Training Council (CJSTC) Police Instructor Incentive Pay; and Special Event Voluntary Response Team (SEVRT) Assignment. In addition, qualifying FOP bargaining unit members are currently receiving a Quality of Life Supplement. As part of the terms and conditions of the proposed successor Agreement, the City and the FOP have agreed not to reinstate the SEVRT program, but agreed to reinstate the three (3) other supplemental assignment incentive pays (the FTO assignment pay supplement; the CJSTC Police Instructor pay supplement; and the Quality of Life pay supplement increased from the current rate of $57.60 per pay period to a rate of $65.00 per pay period).The estimated value to reinstate each of the sunsetted provisions are as follows: • FTO Assignment Pay Supplement (at $114.94 per pay period) _ $ 30,000 • CJSTC Police Instructor Pay Supplement at two and one half percent (2.5%) of the employee's base rate) _ $ 95,000 • Quality of Life Pay Supplement (increase from $57.60 to $65) _ $339,265 The total cost of reinstating these sunsetted provisions is approximately $464,265 per year. In order to reinstate the sunsetted provisions, the City and the FOP agreed that the FOP would "buy" these provisions back in order to offset the costs by contributing an additional five percent (5%) employee contribution for fifteen (15) months, calculated against any earnings received from the reinstated sunset provisions during that time period. Therefore, effective October 1, 2010, all FOP bargaining unit members wilt contribute an additional five percent (5%) employee contribution toward the Health Trust on any reinstated incentive pay earnings received during that time period. Health Trust In lieu of the two percent (2%) additional employee contributions to pension requested by the City Commission, effective July 1, 2010, or upon ratification of the Agreement, whichever is later, and continuing for an eighteen (18) month period thereafter, all FOP employees shall contribute five percent (5%) of their gross pensionable compensation to offset the City's contributions to the Miami Beach City Commission Memorandum July 14, 2010 FOP 2009-2012 Collective Bargaining Agreement Page 4 of 5 Fraternal Order of Police Insurance Trust Fund. This concession made by the Union will generate approximately $1.45 million in savings. In addition to the above health trust contribution, employees hired after the ratification of~the Agreement who elect to have retiree health insurance provided by the Miami Beach Fraternal Order of Police Insurance Trust Fund will receive a retiree healthcare stipend instead of the current formula- based contribution. The stipend shall be a monthly payment equal totwenty-five dollars ($25) per month for each year of service tied to a Consumer Price Index (CPI). The City has a similar provision in place for general employees (those in the AFSCME, CWA, GSA, "Others" and Unclassified salary groups) hired after March 18, 2006. Gallagher Benefits Service, Inc. (Gallagher), the City's consultant for health care issues, has indicated that there will be no immediate savings by revising the City's contribution for retiree health for only future employees. However, there will belong-term savings with a fixed rate instead of a fluctuating contribution methodology. Gallagher has estimated that the City's long-term liability due to the stipend for new employees could be reduced by as much as 70%. Pension Adjustments/Changes The new Agreement with the FOP provides for several pension adjustments and changes for current and future employees including the following: Deferred Retirement O tion Plan DROP -The current DROP period is three (3) years. However, with the new Agreement, employees who enter the DROP on or after September 30, 2012, will be eligible to participate in the DROP for a period not to exceed five (5) years. For those employees who enter the DROP after September 30, 2012, they will receive a zero percent (0%) cost of living adjustment for the third and fourth annual adjustment dates while in the DROP. If the employee leaves the DROP at any point after six (6) months they will still be subject to a zero percent (0%) COLA for the third and fourth annual adjustment dates. By not having a DROP COLA in the third and fourth years, there will be a substantial recurring savings in the City's Annual Required Contribution (ARC) towards the Fire Fighters and Police Pension Plan estimated at $700,000 per year. In addition, the DROP COLA will be granted on the anniversary of the employee entering the DROP, as opposed to the current method ofpro-rating it to occur on October 1 St of each year. The retiree COLA will be earned/granted on that same anniversary date. Additional Creditable Service -Currently, employees can purchase additional creditable service of up to two (2) years of full-time public safety service as a firefighter prior to City employment, and up to an additional six percent (6%) multiplier on the additional creditable service years being purchased, upon completion of 20 years of creditable service with the City. Most employees in the IAFF and FOP take advantage of these two provisions. With the new Agreement, any current or future employee that retires on or after 9/30/10 can make these purchases upon completion of ten (10) years of creditable service (when they vest). Since most employees take advantage of these provisions, there is a benefit to the pension plan to change the eligibility for these buy-backs. As the pension plan will receive the funds earlier and thus be able to invest the funds sooner. It is anticipated that the investment earnings on the funds will be larger since the collection of the funds will be earlier. The Fire and Police pension actuary estimates the savings to the ARC with this change to be approximately $33,000 next year, with a recurring savings year after year. Overtime Caa -The Fire and Police Pension Plan currently has provisions in place regarding how overtime is to be used in the calculation of a member's retirement benefits. The current calculation is that overtime earned is added to the retirement benefit with a cap of "70% of the next highest rank". With this Agreement, the City and the Union have agreed to replace the "70% of the next highest rank" calculation City Commission Memorandum July 14, 2010 FOP 2009-2012 Collective Bargaining Agreement Page 5 of 5 with an easier formula of overtime not exceeding eleven percent (11 %) of the next highest rank. In addition to the change in the overtime calculation, FOP and IAFF employees will be able to reach the eleven (11 %) cap mentioned above by using the following two (2) alternatives: o Employees will be able to apply unused sick and/or vacation time for inclusion in the member's salary for pension purposes as follows: for each one hundred dollars ($100) of unused sick and/or vacation time (at the member's hourly rate), ninety dollars ($90) shall be applied toward the members final average monthly salary and ten ($10) shall be contributed to the pension fund. However, in no event will the value of unused sick and/or vacation time applied to a member's salary for pension purposes, when added to any overtime pay and/or off-duty pay, exceed the cap of eleven percent (11 %). This should encourage members to not use sick and/or vacation time, which drives overtime costs for the City. As such, savings in overtime expenses are expected. o Off-duty services will also be pensionable as another means to reach the eleven percent (11 %) cap. Currently, the City receives no employee contribution for off-duty, as it is not pensionable. Once it becomes pensionable, the employee will be required to make a ten percent (10%) pension contribution on all off-duty worked. This will provide additional revenue into the pension system for investment. However, in no event will the value ofoff-duty pay applied to a member's salary for pension purposes, when added to any overtime pay and/or unused sick and/or vacation, exceed the cap of eleven percent (11 %). Based on current off-duty amounts paid, it is estimated that the City will collect approximately $330,000 per yearfrom the FOP and IAFF toward the pension. While this is not anticipated to reduce the City's annual required contribution in the short term, it will assist in reducing the City's unfunded liability in future years. Future Ema/ovees -For future employees, there are additional pension changes, including: • Retiree COLA (including while in the DROP) will change from 2.5% to 1.5%; • Rule of 70 retirement eligibility will change from having no minimum age to having a minimum age of 48; • Final Average Monthly Earnings (FAME) changing from two (2) to three (3) years; and • Benefit Multiplier will change from three percent (3%) for each year of creditable service forthe first 15 years of service and four percent (4%) thereafter to three percent (3%) for each year of creditable service for the first 20 years of service and four percent (4%) thereafter. Buck Consultants, the actuary for the Fire and Police Pension Plan, has stated that the implementation of the pension changes for any employee hired after the amendment to the City's pension ordinance will not generate any immediate savings. However, future savings will be realized in future fiscal years resulting in savings towards the City's ARC. CONCLUSION The terms and conditions of the proposed three (3) year labor Agreement include FOP employee concessions that total $3,627,522 for FY2009/FY2010 and FY2010/2011. The total three (3) year agreement yields a savings of $4.6 million, in addition to savings that will be realized from changes to the pension system for new employees. These concessions result in additional long-term, recurring savings in future fiscal years. The Administration recommends adopting the Resolution to ratify the three (3) year labor Agreement with the FOP bargaining unit for the time period covering October 1, 2009 through September 30, 2012. JMG/HMF/RI/cg T:\AGENDA\2010\July 14\Regular\FOP 2009-2012 Labor Agreement Memo.doc ®MIAMI~EAC CITY OF MIAMI BEACH PROPOSAL FOR FOP, William Nichols Lodge No. 8 Waaes FY 2009/2010 FY 2010/2011 FY 201 1 /2012 Wage Adjustment (COLA) 0% 0% 3% Effective 4/ 1 /2012 Additional Employee Contribution for 5% 18 months based on all pensionable (Rollingl8 months) - - wa es - Effective Jul 1, 2010 Pension Current Employees 5 Year DROP with a "Guaranteed" 0% Retiree COLA for 2 years (effective September 30, 2012) 0 6 month window to rescind and retire without 2 year 0% Retiree COLA o Retiree COLA after completion of one year of DROP or retirement, and each year thereafter o Retiree COLA on anniversary date each year ~• Buy Back at 10 Ysars • Off Duty Pensionable • Sick and Vacation exchange of time toward fixed cap a roximatel 11 %) Future Employees Retiree COLA -Change from 2.5% to 1.5% • Rule of 70 with minimum age of 48 • FAME change from 2 to 3 years • "Guaranteed" 0% Retiree COLA for 2 years (consistent with DROP language for current employees) • Multi tier 3% for first 20 ears and 4% thereafter Additonal Economic Items Retiree Health for New Hires: $25 Monthly Stipend per year of service tied to CPI Index-Effective July 1, 2010 Field Training Officer (FTO) Pay: $1 14.94 Per Pay Period -Reinstatement effective October 1, 2010. Special Event Voluntary Response Team (SEVRT) - DO NOT REINSTATE Instructor Incentive Pay (CJSTC): 2.5% of base per pay period -Max 50 Participants Reinstatement effective October 1, 2010. Quality of Life - $65.00 Per Pay Period for all FOP members -Effective October 1, 2010. Take Home Vehicles -Additional $7.00 per pay period for 18 months rolling period. Effective upon ratification of 2009- 2012 CBA. Additional $7.00 fee will cease after 18 month period and Take Home Car User Fee will revert back to the amounts established rior to the $7.00 increase. Other non-economic contract language as discussed This Package Proposal is subject to the approval of the City Commission. The City of Miami Beach reserves the right to withdraw, amend, revise, add or supplement the above proposals at any time before a tentative agreement is reached and signed. 7 / ~ 7 ~ ~~~ A andro Bello ate J e M. o al at President, William Nichols Lodge No. 8 i Ma