Is the Proposed IAM Contract A Good Deal for Long Beach Residents?

by Councilman Gary DeLong
From his mass emailing and simultaneous Facebook dispatch

Editor's preface: On Jan. 14, Councilman Gary DeLong sent a mass emailing, simultaneous with Facebook dispatch, in which he cites reasons why it arguably isn't in LB taxpayers' interests for the City Council to approve at its Jan. 15 Council meeting a new agreement with the Int'l Ass'n of Machinists (LB's largest public employee union, rep'ing non-public-safety workers). The terms presumably reflect terms authorized by a Council majority in closed session which IAM has accepted.

The IAM agreement includes pension changes that Mayor Foster has urged for the past two years and have previously been accepted by the associations representing LB's police officers and firefighters. In December 2012, IAM leadership told LBREPORT.com that its new agreement with the City includes a proviso that the Mayor, City Manager and City Council won't initiate putting a pension reform or compensation measure on the ballot; Councilman DeLong's opinion piece mentions such a ballot measure but doesn't mention inclusion of a proviso in the agreement; the exact terms of the agreement weren't made public prior to the Council meeting.)

At its Jan. 15 meeting, the City Council voted 8-1 (DeLong dissenting) to approve the agreement with IAM.

The existing contract went into effect on October 1, 2007 and provided "General Increase" raises of 13%, plus 5% in "Equity" increases for a total of 18%. In addition, new employees would have received 5 Step Increases of 5% each for a total of 25% (27.6% compounded). Therefore, a new employee has received a compensation increase of over 45% in the last five years, and existing employees received raises of 18%. How many Long Beach residents have received raises of 45%, or even 18%, in the last 5 years?

In addition, pension benefits increased in 2002 by approximately 35%.

I voted against this contract because I believed the City could not afford these cost increases, and still maintain service levels. Even back in 2007 the City was not allocating enough funding to fix sidewalks, repave streets and address other infrastructure issues.

As a result of employee raises and pension increases, we have fewer police officers, fewer firefighters, and many streets and sidewalks still in need of repair.

As part of the agreement that will be discussed tomorrow evening, the IAM has agreed to reduce pension benefits FOR NEW EMPLOYEES ONLY to approximately what they were (2.0% per year of service) prior to the generous increase they received in 2002. Existing employees will continue to receive the increased benefit (2.7% per year of service) that was granted in 2002. Accordingly, an employee with 30 years of service will receive an annual pension benefit of 81% of their highest annual salary for the rest of their life.

Additionally, the IAM has agreed to contribute an additional 6% of payroll toward the employee portion (which the City is currently paying) of their pension cost. Currently an IAM employee pays approximately 2% of payroll and the City pays approximately 21% of payroll. In other words, the City currently pays over 90% of an employee's pension cost, and this cost will decline to approximately 65% for new employees under the new agreement.

As a result of these changes, the City will save $3.8 million annually in the General Fund.

Now the bad news. In exchange for the above concessions, the contract will be extended one year to September 30, 2014. And while these concessions are a step in the right direction, they don't solve the long-term structural problem and the City will have to continue to cut services in FY2014 and FY2015.

On September 18, 2012 the City Council approved an item proposed by Councilmember James Johnson to "Request the City Attorney to prepare a potential ballot initiative for Council consideration that would cap total compensation levels for non-public safety employees for Fiscal Year 2014 and Fiscal Year 2015 at those paid in Fiscal Year 2010 . . ."

The benefit of this proposal is that it will roll back raises to an appropriate level and create a long-term solution to the City's financial challenges. The City will save approximately $9.4 million annually in he General Fund and $29 million annually in all funds with this approach.

Additionally, the City Council and City staff should review the existing contract, paragraph by paragraph, and remove items that are overly generous. For example, the City pays overtime in excess of Federal and State guidelines. Also, the Step Increase process should be revisited. It does not make sense to me that new employees receive an automatic 25% increase in salary during their first 5 years of employment (on top of any other raises they may receive) just for showing up.

If the City Council does not approve the proposed agreement, we can begin negotiating with the IAM union immediately, with a goal of having a new agreement in place on October 1, 2013 when the existing contract expires.

If you have an opinion regarding whether or not approving the proposed contract modification is in the best interests of Long Beach residents, please let me know.

I can be reached at 562-570-6300 or at Gary@GaryDeLong.com.

Thank you,

Gary DeLong
Councilmember, 3rd District