After months of informal discussions, the Chula Vista city council approved an agreement Tuesday with the Chula Vista Police Officer’s Association, sealing the last of five contracts with labor unions to achieve comprehensive pension reform.
The 226-member union agreed to contribute 3 percent toward their CalPERS retirement plan immediately, which will incrementally increase to 9 percent by July 2012 and generate more than $3 million in savings annually.
Police union spokesman Lt. Phil Collum said the agreement brought closure to a long process.
“This is an important step to better secure the fiscal health of the city while simultaneously saving jobs and protecting public safety in our community,” he said.
At least seven positions were saved in negotiations. The police department originally issued 33 layoff notices and an additional 12 demotion notices in October. Several positions were saved through funding from agreements with the Sweetwater Union High School and the Chula Vista Elementary School District, as well as grant funding.
With all city employees participating, contributions total an estimated $6.8 million in taxpayer savings each year.
In addition, all labor unions have agreed to create a second-tier retirement and health plan for new hires.
City officials said that layoffs citywide have been reduced to 98, 50 of which are directly related to the loss of revenues associated with the defeat of Prop. H, the city’s Telecommunications User’s Tax initiative.
Members of the police union said that Assistant City Manager Scott Tulloch’s leadership provided a cooperative atmosphere that helped bring on-going negotiations to a successful conclusion.
“Scott was extremely professional. Things weren’t politicized with him, he was very open,” said police union treasurer Rusty Rea.
Between 10 and 15 layoff notices will be delayed until at least May 9, pending the amount of officers who take advantage of an early retirement incentive offered by the city.
Beginning Feb. 9, officers who are eligible and choose to participate, will receive two years of additional service credit if they retire by May 9. The city council asked police to decide within a 90-day period in order to achieve savings in a timely manner.
According to Director of Human Resources Kelley Bacon, 18 officers qualify for early retirement while the union anticipates 11 employees will take advantage of the offer.
In 2009, the city offered the early retirement incentive to municipal employees and police and 10 employees citywide took advantage it.
“It’s very optimistic to anticipate that all 11 will retire, considering nine of them are below age 55,” Bacon said.
If 11 officers retired by May 9 the city would save $1,320,000 and the annual increase in employer contribution would be approximately $61,660 paid over 20 years.
Collum said this is an opportunity for those nearing retirement to create attrition in the organization and avoid layoffs.
“If some members agree to take an early retirement, it will save the city a lot of money,” he said.
Bacon said that if no one participates there is only one option left for the city to save money: layoffs.
“If we get to the end of the window period (May 9) and no one takes it then we go back to layoffs,” she said.
Since Oct. 5, Chula Vista City Manager Jim Sandoval has said pension reform is necessary for all city employees, including unions, in order to balance the city’s $18.5 million budget deficit for the 2011-2012 fiscal year. “There is no other way around it,” he said.
Last month Collum said the union would not agree to pension reform if they found it was not necessary and was disappointed that Sandoval used pension reform as leverage.
In December the union hired Peter Donohue, a financial expert who, after completing a financial audit, found there was $154 million in unrestricted net assets at the end of 2009 that could be used to save positions and public services.
Finance Director Maria Kachadoorian and Sandoval said the findings were invalid and that the city has no funds to use to avoid layoffs or cuts to public services.
According to the city’s financial report, there is 7.3 percent of general fund reserves, which equals $10.2 million.
The union paid Donohue $20,000 for the study, which he will complete after reviewing the 2010 financial report, submitted by the city.
