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CITY COUNCIL AGENDA REPORT
MEETING DATE: December 22, 2015
AGENDA#: 5K
PREPARED BY: Kelly Meyer, Assistant City Manager
PRESENTED BY: Kelly Meyer
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION RATIFYING THE 2015-2017
COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY OF PRIOR
LAKE AND AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL
EMPLOYEES (AFSCME), COUNCIL #5, LOCAL NO. 3884 REPRESENTING
MAINTENANCE, PROFESSIONAL AND SUPPORT EMPLOYEES.
INTRODUCTION: The purpose of this agenda item is to request city council approval of this
collective bargaining agreement.
DISCUSSION: History: The American Federation of State, County and Municipal Employees,
Council #5, Local 3884 (AFSCME) bargaining unit representing 44 employees
(technical, maintenance, clerical) has been in existence at the City for many
years. AFSCME represents approximately half of the City's regular employees.
The current labor agreement is a three-year contract expiring December 31,
2014. The negotiation process for 2015 began in December of this year when
AFSCME submitted their Intent to Negotiate. The bargaining team representing
AFSCME included Kevin Kleist, Tom Schroers, Dale Stefanisko, and Business
Agent Loretta Meinke. Kelly Meyer negotiated on behalf of the City with the
direction from the City Council and City Manager. We held two meetings to
outline demands and negotiate the proposed collective bargaining agreement that
addresses wages and conditions of employment in accordance with the Public
Employee Labor Relations Act (PELRA).
Current Circumstances: From the City's perspective, the primary objectives in
the negotiations were to (1) provide reasonable cost,of living adjustments
consistent with a recovering economy and rate of inflation over a 3 year period;
(2) eliminate health insurance incentives to achieve the projected savings by
converting to a high-deductible health plan that helps to manage, as much as
possible, long-term health care costs, (3) achieve a 3 year period of labor peace;
(4) eliminate long-term liability where possible; and (5) implement retention tools
where reasonable.
(1) Objective 1: Reasonable cost of living adjustments: This is a primary
objective in every negotiation. The City strives to recognize employees with
reasonable cost of living adjustments annually, and considers market
comparisons as well as the Consumer Price Index for All Users in the
Minneapolis/St. Paul metro area. The current contract for AFSCME provided
a 6.5% increase over the three years of 2012-2014.
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(2) Objective 2: Eliminate health insurance incentives: As all businesses are
aware, the costs for providing health insurance coverage continue to rise, and
is even more complex with the implementation of the Affordable Health Care
Act. Like the private sector, the public sector must address the challenges of
how to manage health insurance and other benefit costs from both the
employer and employee perspective. The City's goal is to give employees as
many options as possible, but more importantly, to assure that the employer
and employee are getting the best value for their dollar, and that the benefit
packages provided by the City are consistent with other public and private
sector employers.
The City currently offers two insurance plans — traditional 80/20 co-pay plan
(Passport 300), and a high-deductible health reimbursement plan with a
health savings account (Passport 5250). The City offers three rate plans —
Family, Employee +1, and Employee Only. The majority of the City's
employees elect the Passport 5250 plan.
The Passport 5250 insurance plan was implemented through Blue Cross Blue
Shield in 2012 as a "pilot" program. In 2013, the City converted to the
Passport 5250 high-deductible plan as its primary health insurance plan,
basing the City's contribution to family health premiums off of the new plan
rates and offering incentives for employees to convert. The overall objectives
were to put the City in a position to better control the rate of premium
increases, make insurance more affordable for the employee, and assure the
City's health plans were in compliance with the Affordable Health Care Act.
(3) Objective 3: Labor Peace. With few exceptions, the City consistently settles
contracts for the maximum term of 3 years. Such settlements provide
predictability for budgeting purposes, as well as allow staff time to be focused
on services to the residents rather than negotiations.
(4) Objective 4: Lona-term liability_: Where possible, the City looks to minimize
the long-term liability it must carry on the books in the form of earned but
unused leave time.
(5) Objective 5: Implement retention tools where reasonable: Establishing wage
and benefit packages that are competitive or better than the market helps the
City to retain valuable experience in its work force, as well as recruit new
employees when needed. This will be particularly important as baby-boomers
retire from public service. At the same time, the cost of retention tools also
must be considered.
Lastly, staff reviews any legislative changes and housekeeping items that may
affect contract language, and identifies where existing provisions may need
clarification, or where additional language is needed in anticipation of future
trends or programs.
Conclusion: Staff believes that AFSCME and the City have negotiated the terms
of this contract in good faith, and that the proposed labor agreement meets the
primary objectives listed above.
ISSUES: Shown below is a summary of the tentative agreement reached between the
parties and the proposed contract amendments. A complete copy of the Labor
Agreement is available in my office for your review.
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Proposed Amendments to the Agreement:
Duration: Three year term (Jan. 1, 2015 - Dec. 31, 2017).
Wage 2015 — 2.5% adjustment to base salary range effective 1/1/2015.
Adjustments: Reduction of pay range from 9 steps to 8 steps by eliminating
Step 1.
2016 —3% adjustment to base salary range effective 1/1/2016.
2017—0.5% adjustment to base salary range effective 1/1/2017.
Health 2015 — Zero increase in City contribution for EE+1 or Family
Insurance coverage. Eliminate incentive language.
2016 — Zero increase in City contribution for EE+1 and Family
coverage. No incentives.
2017 -- +$40/mo. increase to Family premium contribution.
$830/mo. . No incentives.
Probationary The probationary period for new employees was increased from 6
Periods months to 1 year.
Standby Pay Language related to any pay for assigned "standby" status was
eliminated.
On Call /Call- Overtime pay for being assigned on-call or for call-ins on the actual
Ins holidays of Thanksgiving Day, Christmas Day and New Year's Day
was increased from 1.5x to 2x.
Floating Added 1 floating holiday.
Holiday
Sick Leave Reduced the amount of sick leave that can be accrued from 960
Accrual hours to 720 hours.
Boot Provide up to $75/yr. per employee for employees required by the
Allowance City to wear City approved safety-toe boots.
Housekeeping 1. Clarified some language with how vacation leave is accrued
Changes consistent with practice.
2. Updated language on licenses required and currently paid for by
the City.
3. Formatting, numbering and reference updates.
Duration: A three year duration is proposed. A three year agreement gives the
City a longer period of labor peace, as well as the ability to budget for actual
costs rather than estimates.
Wages: The current AFSCME contract provided for 6.5% increase over its 3
year term. The increase proposed for 2015-2017 is 6%.
Although the increases for 2015 and 2016 may exceed the projected CPI-U for
the Minneapolis-St. Paul metro region for 2014, the difference should be
recovered in the 3rd year of the contract when the increase proposed will likely be
under the CPI-U for 2016. The City does use the CPI-U as a gauge to remain
consistent with the market over time.
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Year Unrepresented AFSCME LELS Teamsters CPI-U
(Managers) (Maint., (Patrol) (Sgts) (Mpls/StP)
Prof., Annual
Clerical
2007 3.0 3.0 3.0 3.0 2.6
2008 3.0 3.0 3.0 3.0 3.8
2009 2.5 2.5 3.0 3.0 -0.5
2010 0 2.5 0 0 1.8
2011 2.0 0 2.5 2.5 3.6
2012 2.0 2.0 2.0 2.0 2.3
2013 2.0 2.0 2.0 2.0 1.9
2014 2.5 2.5 2.5 2.5
Average 2.125 2.1875 2.25 2.25 2.2
The City of Prior Lake's pay philosophy is to have wage ranges within +/- 5% of
the market for similar positions. The City reviewed positions in January of this
year for the purpose of pay equity reporting. The pay equity report was found in
compliance. Staff also reviewed position market comparisons for each position
as part of the budget process. Positions appear within the +/- 5% target. Further,
based upon the recruitments we've conducted within the past year, the wage
rates appear competitive. We have not experienced an inability to hire qualified
candidates. The union did not propose any market adjustments to the pay ranges
for 2015-2017.
One adjustment that was proposed for 2015 is to reduce the Step pay plan from 9
steps to 8 steps by eliminating the first step in the range. The Union sees this as
a retention tool, allowing new hires to reach the top of the range more quickly. As
a practical matter, more often than not, it is necessary to start new hires above
the current step 1 in order to be competitive and based upon their previous
experience. The City last modified its pay plan from 12 steps to 9 steps in 2008.
On average, 20 metro area cities with step pay plans reported having between 4
and 11 steps, with the average being 6.85 steps.
Health Insurance:
Although we only have two years of experience to draw from, the high-deductible
health plan has met our overall objectives.
• Premium rates have been flat since January of 2013 and will remain
unchanged through December 2015.
• In 2012, the City's contribution per employee enrolled in family insurance
was $11,280/yr. There were increased costs in 2013 and 2014 due to
incentives, but in 2015, absent incentives, the City's contribution per
employee enrolled in family insurance will go down to $10,660/yr. The City
and employee will pay less for health insurance in 2015 than they did in
2012
• The employee's contribution for family health premiums has gone from
$70621yr. in 2012, to $1902/yr. in 2014/2015.
The contract proposed no increases for City contribution to family health
insurance premiums for 2015 or 2016, and a modest increase of $40/mo. for
2017. The agreement also eliminates incentives. In 2015 across all employee
groups there are 24 employees enrolled in family health insurance. Based upon
this enrollment, and applying the increase across all groups, the projected
increase in cost in 2017 would be $11,520.
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Probationary Periods: The probationary period for new employees as of
January 1, 2015 will be 1 year rather than six months. This allows the supervisor
to evaluate employee performance over four seasons. This is important because
work can be significantly different from summer to winter. A 1 year probationary
period is now consistent for all employee groups.
On Call / Call In Pay: The overtime rate for the actual holidays of Christmas
Day, New Year's Day and Thanksgiving Day was increased from 1.5x to 2x. This
is in recognition of time away during significant family holidays.
Sick Leave Accrual: Currently AFSCME employees who have reached 720
hours of accrued sick leave may elected to either be paid out annually for hours
unused over 720, or continue to accrue up to 960. The City pays 50% of the 960
hours at the employee's rate of pay at separation of employment. By reducing
the max accrual from 960 to 720, the City reduces the liability it will carry long-
term for this benefit.
Boot Allowance: OSHA has recommended that the City consider safety-toe
boots for certain positions. The City intends to implement this requirement in
2015 for maintenance employees. The contract provides that the City will
reimburse employees up to $75/yr. for the cost of the equipment. AFSCME
employees receive no other clothing allowance.
CONCLUSION: Labor agreements typically do not provide complete satisfaction to either party.
There were additional provisions proposed by both parties where we did not
reach agreement. This agreement represents an equitable conclusion of
bargaining to meet the needs of both parties. Perhaps, most significant, the
settlement allows both parties to focus on delivering services to our customers
rather than on labor negotiations.
AFSCME Local 3884 voted to ratify the proposed agreement last Monday, and it
is now presented for Council action. We believe the agreement conforms to the
negotiating guidelines the city council previously directed.
FISCAL IMPACT: The 2015 adopted budget has adequate funds to administer all aspects of the
agreement set forth above. We will budget for future years consistent with the
adopted contract.
ALTERNATIVES: The City Council has the following alternatives:
1. Approve the Resolution ratifying the Labor Agreement for January 1, 2015—
December 31, 2017 as part of the consent agenda.
2. Remove the item from the consent agenda for discussion.
3. Adjourn into closed session to provide staff further direction.
RECOMMENDED
MOTION: Alternative #1
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4646 Dakota Street SE
Prior Lake,MN 55372
RESOLUTION 14-XXX
A RESOLUTION RATIFYING THE 2015.2017 LABOR AGREEMENT WITH
AFSCME COUNCIL 5, LOCAL 3884
Motion By: Second By:
WHEREAS, the Public Employees Labor Relations Act as amended requires that the City negotiate
with the exclusive bargaining representative for groups of essential and non-essential
employees; and
WHEREAS, the American Federation of State, County and Municipal Employees Council 5 Union
represents the Prior Lake maintenance, office and technical employees; and
WHEREAS, negotiations have taken place which have resulted in wage and benefit settlements for
January 1, 2015 through December 31, 2017; and
WHEREAS, the employees who make up the this bargaining unit have ratified said Agreement; and
WHEREAS, the Agreement becomes effective January 1, 2015 upon approval and acceptance by the
City Council.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The Agreement between the City of Prior Lake and American Federation of State, County and
Municipal Employees Council 5, Local 3884 effective January 1, 2015 through December 31, 2017 is
hereby ratified.
3. The Mayor and City Manager are hereby authorized to execute the above referenced Agreement.
PASSED AND ADOPTED THIS 22ND DAY OF DECEMBER, 2014.
VOTE Hedberg Keeney McGuire Morton Soukup
Aye ❑ ❑ ❑ ❑ ❑
Nay ❑ ❑ ❑ ❑ ❑
Abstain ❑ ❑ ❑ ❑ ❑
Absent ❑ ❑ ❑ ❑ ❑
Frank Boyles, City Manager