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Hanson Letter to Commissioners LIUNA Hearing 3-26-13 March 26, 2013 VIA HAND DELIVERY Honorable Mike Borno, Mayor; and Maria Mark, Carolyn Woods, Mark Beckenbach, Jonathan Daughtery, City Commissioners Re: Recommendation for Resolving Impasse City of Atlantic Beach and Laborers International Union of North America, Local 630 PERC No.: SM-2012-68 Dear Mayor and Commissioners: Please find enclosed, pursuant to Section 447.403, Florida Statutes, a copy of the Report and Recommendation of Special Magistrate, Adrienne Trott, dated February 25, 2013. Although the City has not rejected any aspect of Magistrate Trott’s Recommendation, the Union notified the City on March 12, 2013, that it rejected most aspects of the Recommendation. However, the Union has since notified the City that it has agreed to all items in the Magistrate’s recommendation except Article 20-Pension. With respect to issues, Article 8 – Grievance Procedure, Article 13 – Personal Leave, Article 16 – Bereavement Leave, Article 17 – Hours of Work and Overtime, Article 23 – Uniforms, Article 25 – Career Development, and Article 26 – Wages, both parties have agreed to accept the Magistrate’s recommendations regarding these issues. Therefore, these issues are no longer at impasse. Florida law requires the Union to notify the Public Employees Relations Commission (“PERC”) of its rejection (in whole or in part) of the Special Magistrate’s Recommendation within 20 calendar days from receipt of the Recommendation. It appears that the union failed to so advise PERC in a timely manner. Per the statute, failure to advise PERC within the 20 day period results in the Recommendation being accepted, unless the City agrees to allow the Union to be late in filing its rejection. The City Commission should make a decision on this point before considering any other matters. Pursuant to Florida law, I have set forth below my recommendation for settling the impasse dispute with the Union. The recommendation is based upon a careful review of instructions provided by the Commission during several Shade meetings held over the last 15 months, the City’s financial position, both parties’ positions, as presented during negotiations, during the impasse hearing, and in post-hearing briefs, as well as Magistrate Trott’s Recommendation. Article 20 – Pension. The City has proposed two groups of changes to the pension plan applicable to Union employees. One set of changes would impact vested employees and one set of changes would impact non-vested employees. With respect to vested employees, the City is proposing a 1% increase in the required employee contribution. Under the City’s proposal, employees would be required to contribute at least 6% of their salary to the plan. This is the only proposed change for vested employees – which constitute the majority of employees covered by the plan. With respect to non-vested employees, the City has proposed that those employees be converted to a newly created defined contribution plan. The City would transfer to that new plan employee contributions made to date, including interest credited, and would match the full amount dollar for dollar. In addition, the City would match employee contributions up to 6% for the first ten (10) years of employment. After ten (10) years of employment, the City would contribute an additional 4% into the employee’s plan, with no matching required in order to receive this 4%. Also, the vesting period for the newly created defined contribution plan would be five (5) years and not ten (10) years as previously provided under the defined benefit plan. These changes were proposed in order to address the significant increased costs of the plan, including the growing unfunded liability. As the Magistrate recognized on page three of her Recommendation, like many cities in Florida, the City of Atlantic Beach has experienced declining revenues and increasing costs. As summarized by Magistrate Trott on pages three (3) and four (4) of her Recommendation, since 2007, the City’s contribution has risen from 13.99% of the payroll to 26.34% of the payroll. While the City contributed $1,044,392 to the plan in fiscal year 2012, more than half was attributable to the unfunded liability. Magistrate Trott noted that the Union has not disputed these factors. In assessing the City’s proposals, as described above, the Magistrate concluded on page 18 of the Recommendation that they were “consistent with the interest and welfare of the public as well as the employees.” Magistrate Trott recommended that the City’s pension proposal be adopted in totality. Likewise, I recommend that the City’s proposal be implemented. You should soon be receiving the Union’s submission of its recommendation for settling the impasse dispute. Section 447.403, Florida Statutes, provides that a public hearing shall be held to give the parties an opportunity to explain their positions to the Commission, and that the Commission shall then take action to resolve the impasse dispute, provided the City agrees to allow the Union to proceed with any untimely rejection of the Magistrate’s Recommendation. Sincerely, Jim Hanson Enclosure cc: Mr. Andy Bemis (w/enclosure)