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4-8-13 Special Called Meeting MINUTES OF THE SPECIAL MEETING HELD IN ATLANTIC BEACH COMMISSION CHAMBER AT 5:30 PM ON MONDAY, APRIL 8, 2013 TO HEAR THE APPEAL OF THE SPECIAL MAGISTRATE'S RECOMMENDATIONS RELATING TO THE LIUNA CONTRACT AND TO CONSIDER BENEFITS FOR NON-UNION GENERAL EMPLOYEES Present: Mike Borno, Mayor Maria Mark, Mayor Pro Tern Mark Beckenbach, Commissioner Jonathan Daugherty, Commissioner Carolyn Woods, Commissioner Also: Jim Hanson, City Manager Alan C. Jensen, City Attorney Donna L. Bartle, City Clerk Nancy Bailey, Recording Secretary Andy Bemis, Business Manager Local 630 Emmanuel Brown, Union Steward Eric Williams, Union Steward Sue Danhauser, Human Resources Director John Dickinson, Partner/Office Head—Constangy, Brooks & Smith 1. Call to Order The Mayor called the meeting to order at 5:30 p.m. and explained this Special Meeting was for the purpose of hearing the Appeal of the Special Magistrate's recommendations relating to the Northeast Florida Public Employees' Local 630,LIUNA,AFL-CIO Blue Collar Union contract and to consider benefits for non-union general employees. He stated there will be public input and encouraged anyone who wants to address the Commission to fill out a blue slip so he will know how much time he will need to allot. 2. LIUNA Appeal A. Opening Statement by City Attorney City Attorney Alan Jensen explained Florida law requires that either party has 20 days from receipt of the Special Magistrate's recommendation to reject the recommendation in whole or in part. He stated the rejection must be filed with Public Employees Relations Commission(PERC)and failure to timely file the rejection results in the Magistrate's recommendation being accepted. He stated, according to PERC, neither party has filed any rejection of the Magistrate's recommendation; therefore,the Special Magistrate's recommendation has been accepted,unless the City Commission agrees to extend the time period for the Laborers Union to reject the Magistrate's recommendation. He stated,therefore,the first question is whether or not the City Commission agrees to waive the 20- day requirement and now allow the Laborers Union to reject in whole or in part the Special Magistrate's recommendation. He stated the Union has indicated that it wishes to reject the 1 recommendation only with respect to Article 20 pertaining to the subject of pension. He asked that the Commission make their determination at this time as to whether they want to accept the rejection of the Union. B. Extension of time for LIUNA to file rejection of Special Magistrate's Recommendation. John Dickinson,Partner/Office Head—Constangy,Brooks&Smith,stated he has been in touch with Andy Bemis about the untimeliness and Mr.Bemis explained to the Commission by phone and to himself that he was not aware of the statutory requirement, which is why it was not done. He stated the law is that the recommended decision of Magistrate has been accepted, unless this Commission decides to waive that 20-day period and allow the LIUNA's rejection,even though out of time to be considered. He stated they do have that discretion if they choose to exercise it but Mr. Bemis may want to express to them what happened. Motion: Allow the Union's rejection and continue through with the process of having the hearing on Article 20. Moved by Woods, Seconded by Borno Andy Bemis,Business Manager and Chief Negotiator for Local 630,explained they received the decision from the Special Magistrate on February 25 and he emailed a rejection to the City on March 12,within the timeframe. He stated he was unaware that he also had to send the rejection to PERC. He stated when he sent the email to the City they rejected the decision in its entirety. He stated he requested another meeting with the City,the City obliged, and they met on March 20. At that time they had several discussions about the recommendation and he believed they had a mutual understanding that Article 20 was the only Article left to be brought before the City Commission. He stated he was not aware of the 20-day requirement to let PERC know. He stated he has been in contact with them and sent PERC a letter today rejecting just Article 20 and today they are asking the Commission to grant them an extension to be able to present their case for Article 20. Commissioner Daugherty asked, if they allow this, would they immediately go into a Special Hearing. Mayor Borno stated they go into a Special Hearing, will have 10 minutes for LIUNA to present their input on Article 20, followed by the City, then discussion and a decision. Commissioner Daugherty stated it seems to him that the employees were poorly represented by their representative and he would like them to have a chance to speak, despite their poor representation. Commissioner Woods agreed,stating she believes it is an important issue and they should be heard. Roll Call Votes: Aye: 5—Daugherty, Mark,Woods, Beckenbach, Borno Nay: 0 MOTION CARRIED City Attorney Jensen explained the hearing will be conducted pursuant to Section 447.403(4)(c)&(d) of the Florida Statutes to resolve an impasse in negotiations between the City of Atlantic Beach and Local 630 Laborers International Union of North America. He stated those sections of the Statute 2 provide that if a recommendation of a Special Magistrate to resolve an impasse in negotiations is rejected in whole or in part, the legislative body(which in this case is the City Commission) shall forthwith conduct a public hearing at which the parties shall be required to explain their positions with respect to the rejected recommendations of the Special Magistrate. Thereafter,the legislative body shall take such action as it deems to be in the public interest, including in the interest of the public employees involved,to resolve all disputed impasse issues. The impasse between the City of Atlantic Beach and the Laborers Union has been assigned PERC case SM2012-068. Each party in this case (that is the impasse between the City and the Laborers Union) will have a total of 10 minutes to present their position on the sole remaining issue at impasse. Because the Laborers Union has now rejected the Special Magistrate's recommendation concerning Article 20 of the party's collective bargaining agreement concerning pensions,the Union will present its position first through its bargaining representative, followed by the position of the City,presented by the City Manager. Following the Commission hearing the positions of the parties to the impasse,the Commission may choose to allow individuals from the audience to address the Commission. Mr.Jensen asked the Mayor if the Commission chooses to allow this and,if so,what time limit will be placed on this portion of the hearing,the total time limit for that portion and any time limit per speaker. The Mayor stated he will allow a maximum of 15 total minutes for speakers,approximately 5 minutes each. Mr. Jensen further stated, following hearing from both parties and any public comments, the Commission is to take formal action to resolve the impasse and such action shall be final. C. LIUNA input on Article 20 Pensions Andy Bemis, Business Manager and Chief Negotiator for Local 630, explained the only contested issue is Article 20. He stated the City's proposal to the pension plan first would impact current vested employees by increasing the required amount of contribution by 1%. He stated this proposed increase would mean that current vested employees'contribution rate would increase from 5%to 6%. He stated the Union is willing to agree to this part of Article 20. He stated the second part of the City's Article 20 proposal is that the current non-vested employees would be converted to a newly created Defined Contribution Plan. He stated the City would transfer the non-vested employees contributions made to date to the new plan and would match the full amount dollar for dollar. He stated,in addition,the City would match employee contributions up to 6%for the first 10 years of employment. He stated after 10 years of employment the City would contribute an additional 4%to the employees'plans,with no match required to receive this 4%. He stated also the vesting period for the newly created Defined Contribution Plan would be 5 years and not the 10 years as was previously under the pension plan. He stated this plan would take affect for new hires. The Union's position is that the current non-vested employees should be allowed to remain in the pension plan and any new hires would be placed into the Defined Contribution Plan rather than the defined benefit plan. He stated the Union recognizes that the City is trying to be fiscally responsible, however,they also believe the City should consider the well being of its employees. He stated when employees accepted positions with the City an understanding of certain things took place; they agreed to a salary and their fringe benefit package,pension being a big part of that. He stated the employees have continued to work hard through this tough fiscal time and have been dedicated to the 3 City, during which they have not received any raises in several years, have had contribution rates increased and have stayed loyal to the City. He stated since 2005 the employees have agreed to several concessions to the pension plan to help the City with the pension costs, including reducing the multiplier from 2.85%to 2.5%in 2005; agreed to a 1%increase to their contribution rate each year from 2005-2007 resulting in an increase from 2% to 5%; in 2008 the employees agreed to increase vesting from 5 years to 10 years for new hires; and again this year the employees are prepared to contribute another 1%to the pension,bringing it up to 6%,which is 3 times what it was in 2005. He further referred to a handout from Foster&Foster which was provided during impasse by the City,pointing out the 30-year projections for City contribution rates. He stated as he reads this,leaving the non-vested employees in the pension plan long-term provides a savings to the City. He stated pension,just like Defined Contribution Plan,is an investment and you have to look long- term. He believes this 30-year projection of leaving the current non-vested employees in the pension would save money and is a good long-term decision. He stated they also believe that once the economy picks up,the changes that have been made will also make a difference so they are asking the Commission to leave all current employees in the pension plan. He stated they agree to the 1% increase to the contribution rate. D. City Position City Manager Jim Hanson presented the City's position, giving the history of the cost increases which he stated started the City down this path quite a while ago. He stated the current process started about two years ago when the Commission decided to get a professional study done to look at the options and they hired Foster & Foster to do a study of pension options for both the general employees and police pension plans,which was completed in August 2011. He stated pension costs for the City have increased pretty dramatically,giving an example that the City's cost for the general employees pension plan went up from $320,000/year in FY 2009 to over $652,000 in the current fiscal year. He stated at the same time the funded ratio has gone down from 74%to 69%over the same period. He further stated the City's revenues also declined during those same years with property tax revenues declining from $4.2 million in FY 2009 to about$3.9 million in the current year. He stated the most recent actuary report was just received and there is another cost increase of $52,000 for the City for the general pension plan next year without doing any changes to the current plan. He stated another issue is risk, explaining whenever the investments or assumptions do not meet the City's projections the risk is on the City's side. He stated if costs go up,the City has to put the difference in the bill. He stated the City set targets for cost reductions in the 15-16%range and have worked on the pension plans to try to achieve those kinds of reductions. He stated they have tried to spread that cost to a broader base of benefits rather than just amending the pension plan. He stated the Foster & Foster study showed that if you try to get those kinds of savings out of the pension plans,you would have a much more dramatic effect on the pensions,particularly for current vested City employees rather than spreading the cost to other benefits. He stated they also have made changes to both the personal leave and longevity programs. He explained they have been negotiating with LIUNA for about a year, have declared an impasse, and went through a hearing process with a magistrate whose opinion has been provided to everyone. He stated this brings us to the item of contention. He stated LIUNA has agreed to accept all the magistrate's recommendations with the exception of Article 20—Pensions. He explained the City's proposal is that current vested employees will keep the pension plan as is but would have an increase in their contribution from 5- 4 6%. He stated the non-vested and future employees would be in a Defined Contribution Plan and the City would match up to 6%of the employee's contribution in the first 10 years of service;thereafter, the City would put in an additional 4%that would not need to be matched. He stated the vesting would be changed to 5 years. He stated the point at issue deals with the conversion of non-vested employees to the Defined Contribution Plan;the City's proposal is to transfer the contributions they have made with interest and the City would double that. He stated basically they would be treated as if they had been in a Defined Contribution Plan all along and the City had been matching their contributions. He stated the Union has not agreed to the conversion of non-vested employees to the Defined Contribution Plan as recommended by the magistrate. He stated the recommendation is to stick with the City's position that has been developed over a year of negotiating sessions and gone through a magistrate process and it is now up to the Commission to determine what to do on this one remaining point. Mayor Borno asked how many total non-vested employees will be affected by the transfer to the Defined Contribution Plan. Mr. Hanson stated there are eight in the Union who are affected with twenty total employees affected. E. Public Input on LIUNA Contract,Article 20 Pensions The Mayor opened the floor to Public Input, explained the procedures and invited comments from the audience. Paul Parsons, 1970 Mipaula Ct., stated he is opposed to any increase in the pension for the employees of the City. He stated the City has some of the best department heads he has ever seen and there is not one time you can call the City and they are not out there as fast as they can be. He stated in 2001 the employees put in 1%and now it has built up to 5%,which has come a long way in 12 years. He stated they needed to catch up but some of these people are only making$10, getting food stamps and just trying to get by. He stated in his opinion they are going to vote on$60,000 for a feasibility study for the police building and$32,000 on the video,which is$100,000 that they are just throwing away. He stated why go up now on the employees. He stated they work very hard,do a better job than any other city around and do it with a smile on their face. He stated he does not think it is right at this time to go up. He stated maybe they could look at it again next year or the year after that,but they have increased it on a pretty regular basis for the past twelve years. He stated he is asking the Commission to not go up on their pensions at this moment. He stated food,insurance and everything else has gone up and he doesn't think it is the right thing to do at this time. He stated the City is doing better according to letters he has received from a couple of the Commission telling him everything that is going on and the City seems to be doing better, so why do it now. He stated let's just wait and see what they have in the bank at the end of the year or the next year and do something about it then. He stated he speaks for a lot of people out there and suggests they not vote to raise their pensions at this time. Bill Mayhew, 1870 N.Sherry Dr., stated he received a letter from a retired employee who said he believed that I thought all government employees were lazy and that he did not like them.He stated this is not true. He admitted he may be a little jealous but stated he doesn't begrudge employees anything they receive through the bargaining process.He stated he wishes he had a lifetime pension. 5 He stated he is frustrated with the management of this City that has not adequately addressed these problems and negotiated fair deals for the taxpayers but stated the steps being proposed now are a good beginning and congratulated them on that. He stated our pension problems are not just isolated cases; all over the U.S., cities and states have come to realize that defined benefit plans haven't worked. He stated he believes the existing plans should be frozen and all employees offered Defined Contribution Plans, or the benefit formulas should be reduced to sustainable levels and the plans coordinated with Social Security. He further urged them to do a study on the feasibility of farming out the police function as has been so successfully done with the fire department,regardless of the pension situation,and they may find they might not need a new police building at all. He stated they should think of the great things that could be done with an extra million dollars or so a year,such as tax rates could even be lowered or they could give raises to the lower paid employees at the City who apparently really need them. Since no one else wished to speak, the Mayor closed the floor to Public Input. F. Commission Discussion and Vote. Motion: Adopt the Magistrate's recommendation in full. Moved by Woods, Seconded by Beckenbach Commissioner Woods stated they have worked at this as a group trying to find a balance between what is right for the City, the taxpayers and employees because the employees are greatly valued. She stated it has been her goal all along that people need more cash in their pocket and she hopes through this restructuring they can do more for the employees today and help them in their financial needs today. She stated in good faith she believes this is the best for all involved. Commissioner Daugherty asked Human Resources Director Sue Danhauser what the median age is for the 20 employees who would be affected. She stated she believes an average is in the 30s. Commissioner Daugherty referred to paragraph 5 on page 2 of the Foster&Foster study distributed by the employee's union,pointing out that it states the member hired at age 30 would have a benefit of greater value by participating in the Defined Contribution Plan,as the magistrate recommended. He stated he did not see why the Union Representative gave the Commission this document,because it goes against his point. He apologized to the employees but stated according to a report distributed by their representative it says the ones affected by this are better off being in the Defined Contribution Plan so he doesn't see why the Commission would vote to not have them in the Defined Contribution Plan. Commissioner Beckenbach stated they have reviewed all the options and he knows there are a number of citizens who would love to see everyone with a change,freezing the defined benefit plan, making everyone go on the Defined Contribution Plan but that wasn't acceptable to the Commission. He stated they decided to put those who were unvested and the new hires on the Defined Contribution Plan. He stated he understands it will affect a number of people but the things that were done in the past did not help their decision. He stated they looked at where the plan is at this time and he doesn't,personally, see a rosy picture in the future as far as funding. He stated the risk goes on to the City and the citizens and though the employees will receive a benefit it might not be 6 the benefit that they would like to have but he is sure the tax rate would not be acceptable to the citizens as well but they tried to compromise as best as they thought they could. He stated they felt this was a good compromise and believes during their sessions that they tried to cover everyone's interests as best they possible could. He stated they do appreciate the employees and the citizens do as well but at the same time there is a certain limit. He stated over a period of years the Commissions of the past have had a number of increases in the amount of contributions that have been made in the employees' favor and they are looking right now at 27%, an increase from 26%. Commissioner Mark stated it has been a very difficult process and they were trying to find a balance that would allow the pension to remain sustainable in the future. She stated for the record, for her personally,she did not want to have any affect for the current employees. She stated the fact that it is affecting the current, they felt like they were trying to strike the fairest deal for that change. She understands that if she was hired under certain conditions and it changed in midstream,she would be very upset about that as well. Looking back at what they have offered and what was recommended and accepted by the magistrate, she believes it is as fair as it can be and is with the intent and hope that they will be able to give the raises needed for use now,as well as offer a pension plan that they will have in the future when they retire. She stated this is not a reflection as far as the services the employees provide for the City, because they are excellent. Mayor Borno stated he has been working on reducing some of the past sins in the benefits that have been given away in great times since 2000 and believes they have reached a plateau. He stated a pay study is in progress and that will be taken into consideration at budget time. He stated there is a possibility of a pay raise but he can't promise anything until they see the results of the pay study and they all have to make a decision. Commissioner Woods stated the employees' interests were very well represented by the City Manager and the Human Resources Director. Roll Call Votes: Aye: 5— Mark,Woods,Beckenbach,Daugherty,Borno Nay: 0 MOTION CARRIED 3. Non-Union General employees Benefits A. Summary of City Positions on Benefit Issues. City Manager Hanson stated the Commission has now dealt with the pensions and benefits for employees represented by both unions and what is left are the benefits for the general non-union employees. He stated this is the final action for the Commission to be taking. He stated they have had the same economic concerns for the general employees as they have had for all employees,i.e. rising pension costs and they have tallied all the information on a basis of all the employees together, with the exception of the police pension which is dealt with under a different State legislation. The same factors relate to the general non-union employees. He stated the changes to the pension 7 benefits have been worked out over a year of negotiations which have led to the City's position. He explained, as related to pension,the current vested employees would continue with the current plan but increase their contribution by 1%, from 5% to 6%. He stated for the current non-vested employees the plan is to convert to a Defined Contribution Plan, as described earlier,with the City transferring the contributions made to date with interest and doubling it to create a DC plan in each of their names. For future employees and those that would be converted to the DC plan, the City would match up to 6%of contributions for the first 10 years and then put in an additional 4%after that. He further explained the changes to the leave policy as follows: 1. Maximum accrual of personal leave of 680 hours with a buy down at 100%for all of those who are over 680 hours to bring them down to that number. The City would end the bi-annual buy- backs and go to a use it or lose it policy with the provision at year end to allow the City Manager to give a waiver on that for those circumstances where the employees could not take their leave through no fault of their own, i.e. a situation where someone is prevented from taking leave due to being short staffed in their department and the supervisor couldn't spare them. In those cases,it would be appropriate for the City to carry over that leave. 2. There is a new leave accrual table,which was amended since the original proposal.He stated it starts with 120 hours/year for new employees and goes up to 248 hours/year for employees with 15+years of service. 2. Sell back at termination,current employees will receive the following:> 10 years of service— 100%of accrued leave;< 10 years of service—50%of accrued leave. He stated employees currently with the City who might not have 10 years of service, but would get to 10 years by the time they terminate employment would get the 100%sell back. New employees will always receive a 50%sell back of accrued leave at termination. Mr. Hanson explained the longevity policy as follows: The City's proposal has been to take the longevity amounts that all City employees with over 5 years of service have received and roll those into the base pay,as well as to prorate for the years of service for each year they have over each five year increment with an extra $5/month for each additional year of service above those five year increments. This will go into the base pay and once done there will be no more longevity and no more longevity raises in the future. He stated the City's plan is to protect the current employees and employees yet to be hired would never receive any longevity pay. He stated that was a summary of the City's positions and he would recommend the Commission authorize making changes to the policies for benefits that relate to non-union employees based on those positions refined to this point over the last year in negotiations. B. Public Input on Benefits for General,Non-Union Employees. The Mayor opened the floor to Public Input,explained the procedures and invited comments from the audience. Patty Drake, employee with the City for 7 V2 years, stated as a non-bargaining employee she 8 believes it was important to put in front of the Commission some of the issues that have occurred over the years. She stated at the time of employment each employee is given an Employee Benefit Summary handout which summarizes the City's benefit plans including insurance,pension, leave accrual,and leave cash-in program. She stated she agreed to be employed with the City based on the benefits. She stated since that information was provided to her the following things have occurred: employee retirement contributions increased by 2%;there were no raises for four consecutive years, the employee out-of-pocket insurance expenses increased,all while cost of living was continuing to rise. She stated today's staff report proposes that the employees should again accept additional reductions in benefits by reducing the total maximum accrual leave by 280 hours, reducing the number of hours accrued per pay period,eliminating the leave cash-in program,reducing the leave cash-in at time of separation by 50% for those with less than 10 years of service, eliminating longevity pay,increasing the employee's retirement contribution by another 1%,and eliminating the pension plan for those hired after September 1,2008. She stated she recognizes some changes may need to occur and everyone is well aware of the economy, but it seems to continue to fall on the current employees. She stated she is here basically to state that she believes changes to benefits should be more for new employees and should not affect the current employees who have accrued time. She stated related to accrued time, the employees did not have long-term or short-term disability prior to January 1,2013 so people accrued their time for this. She stated they were told in January this may go away and were allowed to make a decision in January for a one-time to cash-out, but now the decision may be made before the June cash-out and no one is considering what the employees thought was going to happen, so she believes that is something to be considered. She further stated there are a lot of people who are the only person in their position and with having to hurry up and take their time to not lose it, it will affect the City in how some of the offices and outside operations run. She stated her plea is that things should not affect the current employees,but should go forward with new employees. She stated these decisions they are making now are affecting the livelihood of a lot of current employees and although they have said it is difficult to do, it is also difficult to take. She asked that they think about and reconsider if they would. Since no one else wished to speak the Mayor closed the floor to Public Input. C. Commission Discussion and Vote. Motion:Approve the above recommended changes to the non-bargaining employees'benefits as indicated in the Staff Report and authorize the City Manager to make the related and necessary changes to the Personnel Manual. Moved by Woods,Seconded by Daugherty Mayor Borno stated he has discussed some of these items in the past and knows the position of the Commission related to what they need to do to benefits. He stated his thoughts were to the point to where it would have caused,if considered,us to have too many plans,instead of the two,and would have been an unworkable situation. He stated that is sad because he can see the merit to some thoughts of it. Roll Call Votes: 9 Aye: 5—Woods,Beckenbach,Daugherty,Mark,Borno Nay: 0 MOTION CARRIED Mayor Borno adjourned the meeting at 6:41 p.m. Mike Borno Mayor ATTEST: dott4cie.saAtte Donna L. Bartle, CMC City Clerk 10