Coalition of LA City Unions

City Employee Unions Reach Tentative Agreement to Implement Early Retirement Program that Preserves City Services and Saves Jobs

No Layoffs or Furloughs for Workers Represented by Coalition Member Unions

What just happened? What does it mean for me?

City Council voted unanimously (13-0) for an agreement with the Coalition of LA City Unions that implements the early retirement plan and honors the terms that members of Unions affiliated with the Coalition approved in July, including:

• No furloughs or layoffs for 22,000 Coalition of LA City Union members
• An early retirement plan that could benefit up to 2,400 employees
• Wage deferrals and a two-year extension of the Coalition contract

In the face of the worst City budget crisis in memory, this tentative agreement creates at least $78 million in savings for the City and averts layoffs and furloughs for Coalition members. The Coalition estimates that savings from this agreement could reach $140 million, all of which will go to benefit City workers.

Through the kinds of creative solutions that City workers have generated throughout this budget crisis – and for years – this agreement will keep everybody working. It takes a thoughtful, forward-looking approach to the budget crisis, rather than the slash-and-burn tactic of layoffs and furloughs.

What is the difference between this agreement and the one approved in July?

Earlier this week, the City was prepared to order 22,000 LA City employees to take 26 furlough days and implement more than 900 layoffs. Compared to that, this agreement might sting, but it won’t inflict the lasting pain of layoffs and massive pay cuts through furlough days.

It implements early retirement and avoids layoffs and furloughs by doing the following – and with the exception of the first three bullet points – all of these are temporary, only for this fiscal year:

• Members will contribute an extra 0.25% of their paychecks toward the City’s pension fund.
• This is a clarification of the original early retirement agreement, due to a mistake of the actuary, who failed to account workers who will not retire from the City, but will leave for other jobs before retirement. When they leave, they take their retirement with them, with interest.
• This 1.0% will be paid for no more than 15 years, and maybe less. It will cease as soon as it fully pays for Early Retirement Incentive Program (ERIP).

• Immediate elimination of the pre-1983 defrayal.
• That means if you were hired before 1983 and contribute less than 6% toward retirement, your retirement contribution will now be the same 6% all City employees are making.
• All pre-1983 hires will be eligible for ERIP.

• Retirees who take ERIP will make an ongoing contribution of 1% toward the retirement fund. Most of them will have their pensions increased by 6-8%, so ERIP will still mean an increased pension for the rest of their lives.
• 79 hour pay period—one hour unpaid per pay period for the rest of the 2009-10 fiscal year.
• 8-hour paid holidays become 4-hour paid holidays for the rest of the 2009-10 fiscal year. Workers will be able to use comp time or vacation time for the other four hours pay if they wish.
• Annual sick time payout deferred from January until August—in the next fiscal year.
• The first ERIP cash payout for participants will come next fiscal year, on July 2, 2010. The second payment will come on July 2, 2011.
• Overtime will be compensated in time credited, not in cash.
• Removal of obstacles to extending a 72-hour (9/80) Alternative Work Schedule to any City worker who wants it. Currently workers who request a 9/80 often encounter resistance from managers. Management will now back extension of this option to everyone.
• Transfer the savings generated by ERIP and the COLA deferrals in Special Fund and Proprietary Departments to the General Fund. The Coalition and management will work together to move as much money, resources, and workers as possible. This will be done in several ways.

• All hiring in Special Fund and Proprietary Departments will be through transfers and internal promotions. General Fund departments have a hiring freeze that the other departments don’t.
• Contracting work between City departments. As an example, the DWP Board recently contracted trash, recycling and composting services from Sanitation for $1.5 million. The Coalition believes there are many more opportunities like this.

• Eliminate bonus compounding. This fixes an accident of accounting that was never a contractual benefit. Workers receiving more than one bonus, e.g., bilingual pay and shift differential, have had one bonus compounded on top of the other, rather than both calculated on top of base pay. This minor change will save the City $600,000.
• Deferral of reimbursement to City Attorneys for their dues to the California Bar. The reimbursement normally paid in February will be paid in August.
• Expansion of Gains-Sharing from the current MOU. Money saved over $78 million will be credited to the Gains-Sharing Joint-Labor Management Committee. On October 1, 2009 the parties agree to mutually develop the implementation of this committee and process. This will also be the forum for implementing City worker ideas for efficiency, savings and new revenues, as called for in the existing MOU.

Why should I pay more just so long-time employees can retire?

We’re facing the worst City budget crisis in memory. We’re going to retire 2,400 of the longest-serving highest-paid employees to keep everybody working and protect the City services everyone relies on. Those City employees who voluntarily decide to retire are going to pay an additional 1% into retirement, after they retire. This is a down payment on the future. We need to make sure our retirement is fully funded for the future and this is a way to make it happen.

Will City employees get a chance to approve this agreement?

Yes. By unanimous voice vote, Council approved this as a tentative agreement, pending ratification by members, after which it goes back to Council for the final vote required by law 30 days after the first vote on a change made to retirement.

The City has also committed to moving quickly to implement the terms of the agreement.

A large meeting for all Coalition of LA City Unions members will take place, possibly at the LA Convention Center, in the coming weeks so members can officially vote to ratify the agreement. The specific meeting time and location will be announced early next week.

I want to take advantage of the early retirement program. What are the next steps with early retirement? Can I retire now?

You can retire now. City Council is required by law to read the ordinance implementing the program one more time, in 30 days, but Council has already passed a motion saying City employees can take advantage of this program.

Click on links for more updates.

Implementation of the Coalition's Binding Contract

Persistence Pays Off Big

Questions about the Early Retirement Incentive Program

Download the Ratification Letter

Update for LACERS Members

Coalition of LA City Unions

Better Way Plan

Coalition Agreement Up for Ratification Vote

City Council Votes Unanimously

EAA Opposes Retirement Plan

Coalition Bargaining Teams Vote "Yes!"