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Home My WebLink About5L-Teamsters Labor Contract 2015-2017 O� PRI0+P 'J,iV 4646 Dakota Street SE Prior Lake, MN 55372 �Imvsso'��` CITY COUNCIL AGENDA REPORT MEETING DATE: MARCH 23, 2015 AGENDA#: 5L PREPARED BY: FRANK BOYLES, CITY MANAGER PRESENTED BY: FRANK BOYLES AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION RATIFYING THE 2015-2017 COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY OF PRIOR LAKE AND TEAMSTERS PUBLIC AND LAW ENFORCEMENT EMPLOYEES' UNION, LOCAL NO. 320 REPRESENTING POLICE SERGEANTS DISCUSSION: Introduction The purpose of this agenda item is to request city council approval of a labor agreement with Teamsters Local 320 representing police sergeants for 2015 to 2017 in accordance with guidelines previously directed by the city council. History The Teamsters Local 320 bargaining unit representing 4 employees (Police Sergeants) has been in existence at the City for decades. The existing labor agreement was a three-year contract expiring December 31, 2014. The negotiation process for 2015 began with a proposal from the sergeants dated September 30, 2014. The bargaining team representing the sergeants included Sergeants Kahlert, Stanger, Zollner and Cragoe together with Business Agent Terry Neuberger. Negotiating on behalf of the City was Asst. City Manager Kelly Meyer with the direction from the City Council and City Manager. Multiple negotiation sessions were conducted and a mediation was scheduled and subsequently cancelled as the parties were able to agree to the terms explained herein. 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 Phone 952.447.9800/Fax 952.447.4245/www.cityofpriorlak-e.com Minneapolis/St. Paul metro area. The current contract for Teamsters provided a 6.5% increase over the three years of 2012-2014. (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. I 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: Lonq-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. 2 Conclusion Staff believes that Teamsters 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 review. Duration: Three year term(Jan. 1,2015-Dec. 31,2017). Wage 2015-2.5%adjustment to base salary range effective 1/1/2015. Adjustments: 2016-3%adjustment to base salary range effective 1/1/2016. 2017-0.5%adjustment to base salary range effective 1/1/2017. Health Insurance 2015 - Zero increase in City contribution for EE+1 or Family coverage. Eliminate incentive language. 2016 - Zero increase in City contribution for EE+1 and Family coverage. No incentives. 2017-$40 increase to$830 contribution toward family coverage Probationary Language was amended in the contract to allow probationary Employees employees to use accrued vacation at the discretion of the supervisor. Language was eliminated that permitted employees in the first three years of service to carry over 2x their vacation accrual.Rather the rate will now be 1.5x. Sick Leave Reduced the amount of sick leave that can be accrued from 960 hours Accrual to 720 hours. Housekeeping 1. Clarified some language related to overtime provisions that are Changes no longer alicable. 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 LELS contract provided for 6.5% increase over its 3 year term. The increase proposed for the 2015-2017 contract period is 6%. Although the increases for 2015 and 2016 may exceed the projected CPI-L1 for the Minneapolis-St. Paul metro region for 2014, the difference should be recovered in the 3rd year of the contract (2017) when the increase proposed will likely be under the CPI-U. The City does use the CPI-U as a gauge to remain consistent with the market over time. 3 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, we have not experienced an inability to hire qualified candidates. 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 to the City 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 $7062/yr. 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 $40 per month increase for 2017. This rate is consistent with the settlement with AFSCME. The agreement also eliminates incentives. The City has a long history of maintaining the same contribution across all employee groups. Sick Leave Accrual: Currently Teamster 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 would pay 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. 4 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. FINANCIAL The terms of this agreement are almost identical to that of the police officers. IMPACT: The 2015 adopted budget has adequate funds to administer the labor agreement. We believe that the proposed agreement is within the guidelines set forth by the city council earlier this year. We will budget for future years consistent with the adopted agreement. ALTERNATIVES: 1. Approve the Resolution ratifying the Labor Agreement for January 1, 2015— December 31, 2017 as part of the consent agenda. 2. Deny the Resolution 3. Adjourn into closed session. RECOMMENDED Alternative#1 MOTION: 5 tiO� P U 4646 Dakota Street SE ` INtvESo�P Prior Lake,MN 55372 RESOLUTION 15-XXX A RESOLUTION RATIFYING THE 2015-2017 LABOR AGREEMENT WITH TEAMSTERS PUBLIC AND LAW ENFORCEMENT EMPLOYEE'S UNION, LOCAL NO.320. 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 Teamsters union represents the Prior Lake sergeants; 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 Minnesota Teamsters Public and Law Enforcement Employee's Union, Local No. 320 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 23TH DAY OF MARCH, 2015. VOTE Hedberg Keeney McGuire Morton Thompson Aye ❑ ❑ ❑ ❑ ❑ Nay ❑ ❑ ❑ ❑ ❑ Abstain ❑ ❑ ❑ ❑ ❑ Absent ❑ ❑ ❑ ❑ ❑ Frank Boyles, City Manager