After lengthy negotiations, the City of Berkeley and the Berkeley Police Association (BPA) have reached agreement on a new three-year contract that forgoes cost of living increases, creates a second tier CalPERS pension formula for new employees, mandates cost sharing by employees in the employer’s contribution to CalPERS, and significantly changes retiree health benefits.
The new agreement was approved by the BPA at a July meeting by 107-21. It will be considered by the City Council at its September 11 meeting.
“I think it’s a fair agreement,” said Tim Kaplan, president of the BPA. “It was a long process, but it really was the true sense of collective bargaining. There was a lot of work done by the Police Association negotiating team to come up with creative solutions to the problems the city was facing. The state of the economy is not lost on our members at all. We’re helping in a number of ways through concessions.”
According to calculations by city staff, the implementation of a second tier pension formula will result in savings of about 1.8% of covered payroll and roughly $1 million over 10 years. The cost sharing on the employer’s contribution is estimated to save $1.5 million over the life of the contract. The agreements on retiree health benefits reduces the actuarial liability by $2.8 million, and should result in savings of $14.5 million over the existing plan over 30 years.
“The Police Association is to be congratulated on a really excellent agreement,” said Mayor Tom Bates. “It’s an important statement by the police of their willingness to help the city.”
“We’ve had a good relationship with the city,” said the BPA’s Kaplan. “The negotiations were tense at times and long, but our relationship with the city remained good. We appreciate that. It really helps.
We feel part of the Berkeley community and we feel we were treated that way.”
City staff who negotiated the agreement were not available for comment.
The CalPERS second tier for new employees will be 3% at age 55, compared to the current arrangement of 3% at 50. On cost sharing, the agreement proposes that employees pay 1.5% of the city’s CalPERS contribution for the year from July, 2012. Employees will pay 3% of the contribution for the year from July, 2013. The cost sharing applies to all employees represented by the BPA regardless of the date of hiring.
One of the major breakthroughs in the agreement was over the Supplemental Police Retirement Plan. Since 1989, the BPA’s supplemental plan provides direct payment to the retiree and/or surviving spouse or domestic partner a dollar amount equivalent to the active two-party Kaiser monthly medical premium. There is no annual limit on the payments, and they have been subject to the large increases in Kaiser premiums over the last decade. The city had tried to change the arrangement in negotiations for the past 17 years, conscious of the cost and the unfunded liability the scheme presented. Those negotiations always failed, until the new agreement.
The new contract prospectively eliminates the Supplemental Police Retirement Plan and implements a Police Retiree Health Premium Assistance plan with a limit of the city’s future annual contribution to the lesser of the Kaiser annual premium increase or 6%. The city and the BPA also agreed to allow existing retirees to cease receiving the existing cash benefit and enroll in the new Police Retiree Health Premium Assistance Plan within six months of execution of the new labor contract.
The police represent the largest single cost in the city’s budget, but Mayor Bates said he did not think the agreement necessarily sets a benchmark for other negotiations conducted by the city.
“All of the negotiations are going to rise and fall with their individual circumstances,” he said.