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Special Magistrate Hearing Minutes 3-31-05MINUTES OF THE SPECIAL MAGISTRATE HEARING, CASE # SM- 2005 -002 TO SETTLE THE IMPASSE IN NEGOTIATIONS BETWEEN CITY OF ATLANTIC BEACH and FRATERNAL ORDER OF POLICE UNION Held in Atlantic Beach Commission Chambers at 10:00 AM on Thursday, March 31, 2005 Present:Thomas K. Goldie, Special Magistrate appointed by FL PERC George Foster, City Negotiator, Human Resources Director Gary Evans, FOP Union Negotiator, Staff Representative Also:Jeanne Shaw, Secretary Thomas Goldie called the meeting to order and explained that the parties were at impasse on the following three issues: 1) Police Officer Pay, 2) Pension Contribution Rates, and 3) Effective Date of Changes. Mr. Goldie described the format agreed upon, as seen in Joint Exhibit 1 and stated that each issue would be addressed one at a time, with the FOP Union proceeding first, due to the fact that it is the instigating party. The City would present first on the second issue and the FOP Union would state its case first on the third issue. Mr. Goldie explained that each issue would involve presentations from each side, a rebuttal, and then the subject would be closed. Issue #1: Police Officer Pay A.Gary Evans presented the FOP's position on the first issue at impasse, as follows: Gave the history of negotiations from this year and from prior negotiations. Stated that the basis for the City's position lies in a study done by Palmer and Cay in 2001. Referred to the Palmer & Cay Study and Pay Schedule information in Joint Exhibits 3 and 4. Discussed the relevance of the previous impasse hearing in 2003 and referred to the minutes of such hearing in Union Exhibit 29. Continued his discussion by pointing out that Union Exhibits 27 and 28, Chief David Thompson's staff report and the revised salary survey, both contained pertinent information to his case. Referred to Joint Exhibit 3 and discussed issues of the salary annual review, public survey data analysis, job classification, pay ranges, and implementation of salary adjustments. Discussed the Union's wage proposal from October 2004 as seen in Joint Exhibit 5 and their final revised pay proposal submitted December 2004 (Joint Exhibit 6). Explained that the Union is requesting pay raises for senior officers with over five years of service be applied to the maximum salary, not the midpoint, of their pay ranges. Proposed a minimal resolution to the impasse and pointed out, in Joint Exhibit 8, the actual difference in cost between the City's proposal and the Union's proposal. Believed that the March 31, 2005 Special Magistrate Hearing Page 2 difference in cost is not prohibitive to the City's budget. Revisited Chief Thompson's report in Union Exhibit 27 and noted various factors that attributed to the turnover rate of City police officers. Noted that a problem has existed with the City losing officers to other agencies in Northeast Florida. Commented that two important reasons for the attrition rate were pay and opportunities for advancement. Addressed the issues affecting long -term employees and their pay plans. Discussed Resolution 04 -02 (Joint Exhibit 9) as the action taken by the Commission following Chief Thompson's report. Referred to the minutes of the Impasse Hearing of November 3, 2003 (Union Exhibit 29) and pointed out arguments for implementing a step plan as opposed to continuing with the City's current pay plan. Provided further information regarding the salary rates listed in Joint Exhibit 8 and explained the different proposals for addressing the discrepancy in senior officers' pay plans. Discussed relevancy of the current salary worksheets presented in Union Exhibit 28. Pointed out the differences in pay for senior officers in the City of Atlantic Beach as compared to officers with similar rank or longevity of service in other agencies. City Exhibit 17 was presented as a letter from the City, requesting a new Classification and Pay study. Mr. Evans stated he was recently informed by Mr. Foster that the City will not be contracting Palmer & Cay to perform the new pay study. Commented that the City has recognized the problems presented by the Union but will spend more money for a new study than it would cost the City to implement the solutions as proposed by the Union. Concluded by restating that the Union's position is a fair way to apply the percentage raise proposed by the City. Noted that the main difference in their proposals is how the raise is applied to the senior officers' pay scales. Stated that the City is not unable to pay, but rather, unwilling to pay for the changes as stated in the Union's proposal. A ten - minute recess was called and the hearing reconvened at 11:15 a.m. B.On behalf of the City of Atlantic Beach, George Foster made the following presentation on Issue #1, Police Officer Pay: First noted an administrative correction to the Index of Exhibits. He stated that the date for Joint Exhibit 7 should read 03/31/04, rather than 03/31/05. Began his presentation by briefly indicating that Joint Exhibit 2 summarizes in writing both the City's and the Union's current positions for pay proposals. Referred to the Palmer & Cay Pay Study in Joint Exhibit 3 and noted the problems that resulted from having no pay plan prior to the date of this study. Noted that the pay study was created as a joint effort and included both City and Union representatives in its creation. Discussed the goals, development, and outcomes of the study. Also referred to Joint Exhibit 4 which documents the pay scale given by Palmer & Cay, and noted that the scale is not a step plan but still includes minimum, maximum and mid - points for each pay range. March 31, 2005 Special Magistrate Hearing Page 3 Commented on Joint Exhibit 28 and used this document to discuss similarities in the methodology of the pay scales used in other local areas. Discussed the complexities and differences between types of pay scales. Referred to City Exhibit 19 to compare City of Atlantic Beach's pay scale with that of St. Augustine. Used the Florida League of Cities' Cooperative Salary Survey (City Exhibit 20) to give a wider geographical comparison of Atlantic Beach with other Florida municipalities of similar population. Discussed City Exhibit 21, which shows a comparison of employees to employees between Neptune Beach and Atlantic Beach. Believed this document did not indicate any significant or consistent differences that needed to be addressed. Also introduced City Exhibit 21B to demonstrate the differing pay philosophies between Neptune Beach and Atlantic Beach. Mr. Goldie officially accepted Exhibit 21B as introduced, as well as all the other exhibits distributed at the start of the meeting. Referenced City Exhibit 22 and commented on the comparisons of the individual pay scales versus the actual individual pay for employees in the three beaches cities. Used City Exhibit 18 to discuss the pay history of the City of Atlantic Beach, from 1998 onward. With Mr. Goldie's permission, introduced City Exhibit 18B to show the actual starting salary for police officers from 1999 and the pay adjustments for police officers from 2001 to 2004. Per Mr. Goldie's request, provided clarification regarding the figures for sergeant pay prior to October 2001. Went back to Union Exhibit 28 in order to further address the comparison of Atlantic Beach actual pay with the pay scales of Neptune Beach, Jacksonville Beach and Jacksonville Sheriff's Office. Introduced Exhibit 28B to show the Atlantic Beach pay plan if put into a step pay plan and compared to the other cities' step plans. Stated that there is no significant difference seen when viewed as such. Commented that the data was derived from the Resolution passed by the City Commissioners, as seen in Joint Exhibit 9. Referred to Joint Exhibit 8 and discussed the City's proposed pay for police officers and sergeants, as compared to their actual pay. Commented on the City's pay plan and the City's opposition to deviating from a valid and correct plan. Stated that the current pay plan is perceived as working well if the City continues to modify it as needed. Expressed that officers leave the City for better job opportunities or professional development, not for reasons based on pay differences. Discussed information from the officers' exit interviews, as seen in Union Exhibit 27. Explained that since the letter from Joint Exhibit 17 had been sent, the City has decided not to contract with Palmer & Cay for the new study, but, rather the City is currently negotiating with a different company to conduct the scope of work requested. C.In the Union's rebuttal for Issue #1, Mr. Evans addressed the following items: March 31, 2005 Special Mazistrate Hearin2 Pate 4 Examined the new Exhibit 28B, recently introduced by the City. Noted that the numbers listed are not in dispute and, thus, parallel the original Union Exhibit 28. However, Mr. Evans explained that the presented pay scale affects only newly -hired employees. Explained how the Union would like to see the new pay plan include all current employees as well as new hires. Regarding City Exhibit 19, Mr. Evans responded that the maximum salary listed has no relevance if the employees do not have a target time frame for reaching that maximum. Discussed issue of City employees' inability to progress towards the maximum salaries presented. Commented that Exhibit 28B, introduced by the City, shows that City of Atlantic Beach officer pay is not equal with that of the other agencies. D.Mr. Foster presented the following rebuttal on behalf of the City for Issue #1 Remarked that that the pay study from 2001was adopted by the City in order to address the issues involved and to have a plan to resolve those issues. Affirmed that the City has had annual review of salaries done every year. Indicated that the formal classification pay study is done every three to five years, as intended. Noted that, due to costs involved, the City never intended to have a formal classification pay study done every year. Stressed that the City's current pay methodology is not out of line with other cities' pay methodology; it is just a different type of pay plan. Pointed out that the City has the ability to adjust pay but is not willing to abandon their pay plan. Believes that pay adjustments should not be done without adjustments to the pay plan. Stated that the City's pay is tied to merit performance, not longevity or other issues used in other cities. Noted that the City's pay increases are in line with the cost of living and other jurisdictions. Reiterated that the City believes it is critical to maintain a pay plan and follow its policies and procedures for long -term guidance and benefits. Commented on the difficulty for strict comparisons between the City and other agencies due to differences in hiring criteria and type of pay plan among the agencies. Mentioned that the City's plans for 2005 include outside consultants to review pay plan. Stressed that the City maintains a proactive position, not a reactive position, to pay changes. A one -hour meal break was called and the hearing reconvened at 1:10 p.m. Issue #2: Pension contribution rates A.George Foster presented the COAB's position on the second issue at impasse. Referred to Joint Exhibit 2 as information that shows the current City and current Union positions regarding pension contribution rates. Discussed Joint Exhibit 10 and explained the police officers' benefit package as presented in March 31, 2005 Special Magistrate Hearing Page 5 the exhibit. Noted that the City officers' benefit package is comparable with those in other areas, complies with Florida mandates, and contributes to Social Security. Discussed Palmer Cay's study of the City's benefit package, as seen in City Exhibit 23. Noted ways in which the City has followed recommendations given by the study. Remarked on the creation and functions of the Pension Committee created by the City. Discussed some of their recommendations, seen in City Exhibit 24, as they applied to police officers. Talked about the Summary Annual Report of the Police Officers' Retirement System in Joint Exhibit 11 and specifically mentioned the cost of the pension plan, summary of benefits, and members' contribution percentages. Noted that Joint Exhibit 12 shows contribution rates since 1998. Reviewed the employee contributions, current and past trends, as seen in the Annual Actuarial Report received by the City (City Exhibit 25). Commented on the Schedule of Funding Progress and its relation to the solvency and liability of the plan (City Exhibit 26). Mentioned that the report indicates that, in regards to overall funding, the plan is going in the wrong direction and is costing the City more money every year. Reviewed the comparison of Atlantic Beach with other beach cities' pension plans, as presented in Joint Exhibit 13. Pointed out that the police officers' contribution rate at Atlantic Beach is less than other cities'. Commented that the City is asking all employees to increase their contribution rates to help offset the salary adjustments made over the last couple years. B.On behalf of the FOP, Gary Evans presented the following position on Issue #2: Referred to Joint Exhibit 2 in order to clarify each side's position regarding the employees' contribution rate for the City's pension plan. Stated that the Union's position is asking for status quo of the 1% contribution rate. Noted that the Union recently made a public records request for any information showing that the issue had been discussed in front of the City Commission. Discussed the Summary Annual Report in City Exhibit 11, specifically noting the complexity of pension calculations and actuarial reports. Commented on the secure nature of investments for pension funds and the interpretation of the actuarial reports over a period of time. Described the spike in the City's contribution rate (seen in City Exhibit 12) as not being a long -term effect. Noted that the increase in cost of living rates and in salaries are not unforeseen increases. Questioned the decision - making process for raising employee contribution rates and whether the City Commission was consulted in the decision. Referred to the Pension Committee Report in City Exhibit 24. Stated uncertainty regarding interpreting the meaning of the Pension Plan Recommendations for the Police Employees (page 3 of City Exhibit 24). Commented on the City proposing a salary increase but then taking 2% of that to go towards March 31, 2005 Special Magistrate Hearing Page 6 pension contribution increases. Referred to Joint Exhibit 8 as an example of this issue. Reiterated Union's proposal to maintain the status quo in regards to employees' pension contributions. C. In the City's rebuttal for Issue #2, Mr. Foster addressed the following items: Discussed Joint Exhibit 2, explaining the pension contribution rate change and the pay adjustment made during the same time period. Responded to Mr. Evans' mention of his public records request, and noted that there is no official agenda item where the Commissioners discussed the contribution increase. Mentioned that shade meetings were held to discuss the issue and the Commission has provided the City's representative with guidance for the negotiations. Discussed investments performed by the City and the Florida statutes regulating the types of investments. Turned to City Exhibit 25, and stated that the increase in pension contribution rates is not a short-term trend, but rather has been the trend since before 1994. Referred to City Exhibit 26 to further discuss the long -term trend of increase in the City's pension plan contributions. Referenced Joint Exhibit 11 and City Exhibit 25 in order to point out changes in the City's contribution rates. Reiterated that in order to make employee salaries comparable with other agencies' salaries, the City also needs to make the benefits package comparable with other cities' benefits. Stressed the need to compare net pay with net pay in other areas. Referred to Joint Exhibit 13 in order to compare benefits with other cities. Commented that the employee's complete compensation package is the combination of salaries and benefits. D.Mr. Evans' rebuttal on behalf of the FOP's position for Issue #2 remarked on the following. Discussed the comparison made during discussion of Joint Exhibit 13 regarding the payroll contribution for employees. Noted that Atlantic Beach police officers pay social security as well as pension contributions. Pointed out that JSO officers do not pay social security to their pension contribution rate. Examined the percentages paid out for different benefits and believed that it adds up almost the same for the two agencies discussed. Discussed philosophy of treating all employees the same within the City and expressed that this violates the right to bargain fairly due to the fact that each union has its own goals and objectives to meet. Responded to Mr. Foster's comments regarding the changes in pension contribution rates, as seen in City Exhibit 26. Questioned what caused the significant changes seen in 2003 and noted there was no explanation found in the information presented. A ten - minute recess was called and the hearing reconvened at 2:15 p.m. March 31, 2005 Special Magistrate Hearing Page 7 Issue #3: Effective date of changes A. Gary Evans presented the FOP's position on the third issue, as follows: Referred to Joint Exhibit 16 for information on the effective date of the agreement and on issues concerning retroactivity back to October 1, 2004. Stated that the Union has bargained in good faith throughout the past year and has tried to resolve the issues with several different modifications of their proposals. Referenced Joint Exhibits 5, 6, and 7 to illustrate the various pay compromises and additions that were presented. Expressed that the Union has attempted to compromise and has never stalled or hindered the negotiation process. Believed that their fair and proper method of bargaining entitles the Union to retroactivity of any pay resolution settlement. B.George Foster presented the City's position on the final issue at impasse. Stated that the City has proposed a reasonable and generous offer throughout the fourteen negotiation sessions that had been scheduled and believes that the issue should have been resolved prior to October 1 Commented that the City has agreed to retroactivity in the past due to the schedule of the City Commission meetings. Stated that even though it is already April and these negotiations are still continuing, the City already needs to begin next year's negotiations. The City believes that offering retroactivity for the effective date gives the Union no incentive to complete negotiations without delay. C.The FOP Union's rebuttal for Issue #3 was then given by Mr. Evans. Mentioned that the hurricanes of 2004 caused some delays in the schedule for negotiations. Commented that agreeing to the retroactive date for the changes would not cost the City any additional money. Asked that the employees not be penalized for the fact that the complexities of the issues at impasse have caused negotiations to extend past their given schedule. D.Mr. Foster deferred City rebuttal for the third issue. Mr. Goldie thanked both parties for their efforts and the manner in which they conducted themselves during the hearing. He declared the hearing adjourned at 2:30 p.m. George F ter, Human Resources Director City of Atlantic Beach Atte • Je e Shaw, Secretary