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Councilmember Wozniak: City of Berkeley is Negotiating with Unions about Future Pensions

Letter from Councilmember Gordon Wozniak
Friday June 08, 2012 - 02:33:00 PM

Editor's Note: This letter from Berkeley City Councilmember Gordon Wozniak was received by a citizen who had asked councilmembers what they were doing about the city's pension obligations:

The City is attempting to reduce its pension obligations by negotiating with its employee unions. Because public pension rights are enshrined in the State Constitution, they are very difficult to modify. Basically, State law says that once you are hired, the public pension system in effect at that time applies. Retroactive changes to public pensions are not allowed, unless they increase benefits to employees. Retroactive decreases to public pensions are not allowed by state law, which is the result of a State Proposition that was voted in by the public. To change public pensions would require a new State Proposition. 

Recently, voters of cities of San Jose and San Diego passed pension reform ballet measures, which were promptly legally challenged in the courts. It will be interesting to see how the measures hold up on the courts. These two cities are different than Berkeley in that they have their own pension system, whereas allows them more flexibility than Berkeley which participates in the State systems CalPers. 

When Vallejo, which also participates in CalPers, went bankrupt several years ago and laid off many of its employee, it never stopped contributing to CalPers. Stockton, which is also undergoing bankruptcy proceedings and is a Calpers member, does not seem able to reduce its pension contributions, 

So what has Berkeley been doing to reduce its pension costs? 

The City has been negotiating for over a year with the Berkeley Police Association (BPA). The City has been asking for: a multi-year salary freeze, reductions in retiree health care costs, employees pay a larger share of their retirement contributions, and reduced pension benefits for new employees. 

The City Manager has scheduled a closed session on Monday, June 11th to discuss the status of these negotiations and presumably to present to the Council a tentative agreement with the BPA. 

Regarding the remainder of the employees, their contracts are all up at the end of June 2012. Labor negotiations have been underway for about six months. Half of SEIU 1020, which represents the largest city union, has agreed to a multi-year salary freeze, increased pension contributions and a two-tier pension system for new employees. However, this contract is contingent on the other unions signing on to a similar agreement. 

Once the Police negotiations have been finalized the City will focus on finalizing a contract with the fire fighters and the remaining non-sworn employees. 

Since the City has been asking for both a salary freeze and increased pension contributions, which would result in decreased take home pay for employees, these negotiations have been difficult.