October 13, 2011

LACERS Pension Plan Trustees Consider Plan That Would Create Additional Budget Deficit for City of LA

After Listening to Testimony of Coalition Leaders, Trustees Delay Action Until Impact of Decision on City Workforce Can Be Determined

At their Oct. 11, 2011 meeting, LACERS pension trustees considered a plan recommended by the plan's actuarial consultant to reduce the annual investment performance assumptions used to determine contributions from the plan sponsor, the City of Los Angeles. The proposed move would, if adopted, increase the City's contribution to LACERS by $40-50 million a year, a potentially disastrous scenario considering the fact that the City is already facing a deficit of more than $200 million for next fiscal year.

The Coalition of LA City Unions turned out in force at today's LACERS meeting to urge the trustees to delay any change until the City's budget is stabilized.

"We know that you have options and we ask that you exercise those options," said Cheryl Parisi, Chair of the Coalition and Executive Director of AFSCME Council 36.

"We urge you to consider the consequences of your actions and wait at least until the City's budget is stable before making any changes," testified Mark Klein, SEIU Local 721's Political Coordinator for Secure Retirement. "It is crucial that you not exacerbate the City's fiscal crisis at this time."

Representatives from the CAO's and Mayor's offices also testified in support of labor's position to delay implementing any changes that would result in layoffs. Please see attached letter from Mayor Villaraigosa, Council President Eric Garcetti, and Council Members Koretz, Parks, and Perry, which was sent to Roberta Conroy, the President of the LACERS Board of Trustees moments before the start of the LACERS meeting.

Click here to read the letter.

After more than an hour of passionate testimony followed by a detailed discussion with the plan's actuarial consultant, finished up by a briefing by the plan's legal counsel on the legality of delaying implementation, the LACERS trustees voted unanimously to postpone the decision for two weeks pending an analysis from the CAO on the impact to City employees of making the proposed change.

Critically, LACERS' actuary told the trustees that neither the two-week delay, nor possibly deferring implementation of a lowered earnings assumption rate, would cause harm to the plan or jeopardize pension benefits for current or future retirees.

What does the annual investment performance assumption mean?

LACERS currently needs to make a minimum of 8% a year on pension investments in order to break even. This is known as the "annual investment performance assumption," or the "assumption rate."

Many plans, including the LA Fire & Police Pension Plan, the LA County pension plan (LACERA), and many others have recently lowered their performance assumption to 7.75%, while some have even been lowered to 7.5%.

"Since the financial crisis, at least 19 state and local pension plans have cut their return targets, while more than 100 others have held rates steady, according to a survey of large funds by the National Association of State Retirement Administrators." Wall Street Journal, Oct. 10, 2011.

CAO Santana's 3-Year Plan to Fiscal Sustainability

Wondering what the CAO's privatization, outsourcing, and downscaling plans are for the City of LA? Read his words in this snapshot of his 3-Year Plan to Fiscal Sustainability!

Click here for excerpts from Santana’s report.

October 13, 2011

State of the Economy and Economic Forecast for the U.S. and California

Recently, the Coalition’s consultant created a report that includes a wealth of economic data that was released in September 2011. The report was created as a resource for leaders and activists and includes data from the following sources:

• U.S. Census Bureau
• California Budget Project
• L.A. Economic Roundtable
• Kaiser Family Foundation
• UCLA Anderson Quarterly Forecast

The information included in the report is not the opinion, and does not represent the research, of the Coalition of LA City Unions, affiliated unions, or consulting staff.

Click here to read a copy of the report.

September 28, 2011

LA Times Reports on Retiree Medical Issue

Today's Los Angeles Times has a story about the potential legal battle regarding the vesting of the City's subsidy for two-party retiree medical benefits. The dueling legal positions are not news; we reported this issue to members on Sept. 15 and it has just now been made public by the LA Times.

Click here to read the LA Times story.

The Coalition has always maintained that the law is murky on this subject, and - in the current political and legal environment - we believe that it was prudent to lock in the guaranteed two-party retiree health care benefit so people can retire with certainty. That's why we negotiated it into our agreement with the City last spring. Without that agreement, the City's retiree medical subsidy would have been frozen at the current level. The only way for it to increase would be if a court ruled against the City. If that happened, the City would appeal, meaning that this case would take years to settle.

Coalition bargaining teams believe that this level of uncertainty was not in the best interest of current and future retirees, and the vast majority of members agreed. People simply cannot make life plans based on long term legal decisions that they hope will go their way. Retirees need certainty and security that they can count on. That is the definition of retirement security.

So what happens now? City workers in Coalition bargaining units that ratified the contract are protected either way. If the City's attorney is correct - that the retiree medical subsidy is NOT vested - then the two-party subsidy will continue for those who agreed to increase their contributions to LACERS. If the City's outside attorney is not correct, then clearly the contract will have to be amended. But in either case, your two-party retiree health care benefit is protected by law.

We will continue to update you on this topic as we learn more. In the meantime, we encourage you to talk to your union representative if you have questions.

September 16, 2011

Vesting of Retiree Medical May be Taken Up in Courts

Outside Attorney for LA Police & Fire Pension Plan Issues Opinion Stating that Retiree Medical Benefits are Vested; City’s Outside Attorney Disputes Opinion

Click here to read Sept.15, 2011 letter to members

Retiree Health Subsidy FAQs

I’ve heard that something’s going on with my retiree health care. What happened?

An outside attorney hired by the LA Fire & Police Pension Plan (LAFPP) has written an opinion stating that the cost of two-party retiree medical benefits has always been a vested right of all City employees.

But didn't we negotiate that last spring?

Yes. Most City employees approved changes to their contracts last spring. In those changes, we agreed to contribute more to our retirements in exchange for a guarantee that the City would continue to pay the cost of two-party retiree health care. We also received a guarantee of no furloughs during the term of our contract (through 2014).

But now the attorney says we didn’t have to make that change?

This particular attorney’s opinion is that the City could not legally freeze the amount it contributes to retiree health care.

What does the City say?

The City’s lawyer has issued an opinion stating that the City is at liberty to freeze its contribution to retiree health plans and that the subsidy is not vested.

What do our lawyers say?

During negotiations last spring, our legal counsel, Anthony R. Segall, advised us that the law was not clear on this issue and that the California Supreme Court is scheduled to rule on the vesting issue soon.

So why not challenge the City of LA in court?

If we challenged the City in court, we risked getting a decision against our interests. It also would have cost members a lot of money in legal fees and, during the lengthy trial and appeals process – which can take many years – retirees would have had great uncertainty about their benefits. (People who follow the courts closely know that most recent judges’ decisions have ruled against labor and in favor of management.)

What did negotiating a vested right provide for members?

We decided that rather than let judges decide our fates, we would take control of the issue and negotiate a vested right to two-party retiree health care in our contracts. With this, we achieved immediate certainty and limited legal fees.

Could this lawyer’s opinion change what we negotiated?

No. This is simply one lawyer’s opinion. But now that the vested right is written into our contracts, no matter what any court rules, the City must pay the full cost of health care for both retirees and their spouses.

So what happens now?

Given the differing legal opinions, the Fire & Police Pension Plan and LACERS may ask the courts to rule on this issue. But the legal process is long and these issues might hang in the air until after this contract expires.

What happens if the courts rule that retiree medical is vested?

We will examine our legal options and – with the input of members – choose a course of action. If the retiree medical benefits were in fact vested when the contract was negotiated, then we will have the option to take action to amend the contract.

What about people who are considering retiring in the next few years?

Members working in bargaining units that agreed to increase their LACERS contributions can rest assured that the City is contractually required to pay the full cost of health care for both retirees and their spouses.

What does the City say?

The City agrees 100% that it must fully fund two-party retiree health care for all workers who approved the contract changes last spring.

Where can I get more information?

Keep an eye on your union’s website, as well as the Coalition website. You should always feel free to contact a union representative with questions.

August 19, 2011

Council Presidnet Eric Garcetti
Los Angeles City Council

RE: Support for Assembly Bills 646 and 195

Dear Council President Eric Garcetti, members of the Council

On behalf of AFSCME District Council 36, representing nearly 50 affiliated Local Unions and 25,000 members throughout Southern California, I urge you to reject CAO Miguel Santana's recommendation to oppose Assembly Bills 646 and 195. Contrary to the assertions of the CAO, these bills make minor modifications to collective bargaining laws for local represented employees, enabling a more responsible, transparent, and effective process.

AB 646 adds one additional step to ensure the integrity of the bargaining process and to provide additional recourse for a settlement. The bill would enable an employee organization to request that the matter be referred to a fact-finding panel. The fact-finding panel would be tasked with making findings and recommending terms of settlement, for advisory purposes only.

Rather, AB 646 requires that the findings and recommendations be first issued to the parties, but also that the public agency makes them publicly available within 10 days after their receipt – thus providing the greater public transparency to the bargaining process that your constituents demand. The mutual gains bargaining process, and the transparency that has been the keystone of that process, has radically improved labor-management relations in the City of Los Angeles. But this experience is not the norm. Abuses of the collective bargaining process in many of the small cities where we represent employees are common.

The CAO's recommendation to you regarding AB 646 is not correct. THIS BILL DOES NOT REQUIRE BINDING ARBITRATION. Nor does it take away the ability of a local government to impose contract terms and conditions. Rather, it provides one additional step to ensure the more effective, transparent, and open bargaining process that taxpayers deserve.

AB 195 would expand one aspect of PERB, giving employee organinzations the right to demand truthfulness from the employer in the bargaining process. Specifically, if an employer knowingly provides false financial information during the course of bargaining to an employee organization, they would be subject to an unfair labor practice charge. If, for example, public employees in Wisconsin had this remedy at their disposal when Gov. Scott Walker misstated the facts about the Wisconsin state budget, the outcome of negotiations may well have been transformatively different. A vote in opposition to AB 195 is a vote in support of deceptive collective bargaining.

Thank youyou in advance for your support of collective bargaining. Though I am on vacation this week, Adam Acosta, Deputy Director of AFSCME Council 36, will be available to answer any questions you may have. He can be reached at (213) 675-2614 or via email at adam@afscme36.org.

Sincerely,

July 12, 2011

City Payroll Errors Made; Corrections to Be Made on Next Paycheck

The following is a statement from the Office of the City Administrative Officer:

Deductions for the ERIP contribution and additional retirement contributions were erroneously made for the entirety of payperiod 1 (June 19, 2011 through July 2, 2011).  The necessary corrections will be made to effect a July 1, 2011 implementation date.  These corrections will be reflected in payperiod 2 ("pay day" July 27, 2011).

Mayor Villaraigosa Signs Budget for FY 2011-12
For Units that Approval LOA, No Furloughs & City to Fund Retiree Healthcare Increases

June 10, 2011

Mayor Antonio Villaraigosa has approved a spending plan for Fiscal Year 2011-12 that preserves core city services and implements negotiated contract changes, putting nearly all City employees back to work without furloughs.

“Critical city services would have been reduced due to furloughs if not for the significant sacrifices made by our hardworking employees,” declared Mayor Villaraigosa when signing the budget. “Their willingness to come to the negotiating table to help the City preserved jobs, maintained services, and put thousands of city employees back to work full-time in service of the residents of Los Angeles.”

Additionally, the City Council has approved a freeze in retiree medical premiums for those units that did not agree to contribute an additional 4% to LACERS for post-employment health care benefits.

AFSCME Local 3090 and SEIU 721’s MOU 18 –traffic guards, detention officers, and other sworn civilian officers – two units that initially failed to ratify the Coalition Agreement, subsequently voted to approve the Letter of Agreement.

“Clerical and Support Services Employees, many of whom are among the lowest paid workers in the city, have stepped up once again to assist the city in the restoration of services, including being available to answer emergency 911 calls more timely,” said Alice Goff, President of AFSCME Local 3090..

Among those who watched the vote at SEIU Local 721 was Detention Officer Connie Randle. After the final count was announced and certified, she said, “This is a big step forward for the members of this unit. Furloughs are over and now I have peace of mind knowing that I'll be able to pay my mortgage and that my retirement medical benefits are secure. Way to go!”

LA City Council Approves Amendments to 14 MOUs
Freezes retiree medical subsidy & implements furloughs for those who rejected amended Letter of Agreement

May 4, 2011

The LA City Council has approved the negotiated amendments for 14 bargaining units affiliated with the Coalition of LA City Unions. This action implements negotiated changes for employees in these 14 bargaining units, including:

• No furloughs through June 2014.
• Members - future retirees - now have a vested right to the increase in the maximum medical plan subsidy, now legally tied to the Kaiser two-party insurance premium. Click here for a copy of the Ordinance vesting retiree medical.
• This vested right is in exchange for an additional 4% contribution to LACERS. These contributions are pre-tax and are refundable if a member decides to leave City service. 

On April 27, the City Council instructed CAO Miguel Santana to produce a report on the impact of retiree healthcare costs and the 36 budgeted furlough days on City workers in bargaining units that rejected the negotiated Letter of Agreement. Click here for a full copy of the CAO's report.

Retiree Healthcare
The City Council has voted to freeze, at the 2011-12 rate of $1,140/month, the City's retiree medical subsidy to LACERS for those bargaining units that have not agreed to increase employee contributions to LACERS.

"As premium costs escalate and the subsidy remains constant over time, the LACERS member will be obligated to cover the difference," wrote CAO Santana in an April 28 memo to Council. "After the first year of implementation, the annual difference is $1,321. After the fifth year of implementation, the annual difference is $6,944. In Fiscal Year 2020-21, the annual difference [between the cost of two-party retiree medical insurance and the subsidy provided by the City] is projected at $12,513."

Furloughs
CAO Santana has advised the Council as follows: "Bargaining units that did not ratify the agreement will be subject to at least 36 furlough days during Fiscal Year 2011-12 and beyond. This represents an approximate 14% salary decrease for affected unit members. With an average salary of $66,184," continued Santana. "Coalition members subject to furlough days would receive an approximate $9,265 salary decrease, or $356 per pay period."

Click here for a full copy of the CAO's report.

Most Los Angeles City Workers Approve Contract Changes
Agreement Will End Furloughs and Preserve City Services

April 28, 2011

Facing a $457 million budget deficit for fiscal year 2011-12, a majority of Los Angeles City workers approved changes to their contracts that will preserve frontline City services for residents in the face of Citywide budget cuts. 14 out of 18 (78%) bargaining units approved the agreement.

City workers who approved the changes agreed to modifications to their contracts that include deferring certain pay raises and increasing employee contributions to their retirement plans. In return, the City agreed to vest retiree health care, which means it guarantees full retiree medical care coverage, including all future premium increases.

"The agreement by 14 of the 18 bargaining units in the Coalition of City Unions is expected to save upwards of $200 million in the 2011-12 budget and a guarantee that workers who approved the pact they will not face additional furloughs this year."
- Daily News, April 27, 2011 

"We came together in the best interest of both workers and Los Angeles residents," said Tim Butcher, a Heavy Duty Truck Operator with the Bureau of Street Services. "The changes to our contracts will end furloughs immediately, and that means we can get back to work for the people of this City."

Mayor Villaraigosa has ordered department heads to immediately implement 42 furlough days (6 between now and June 30, and 36 in fiscal year 2011-12).

42 furlough days ordered for L.A. workers who rejected labor deal
Mayor Antonio Villaraigosa orders his managers to impose the unpaid days off on 6,300 employees in four union groups who voted against a plan to help cut the city's budget shortfall.

"Without concessions from those four groups, and the city facing a $457-million shortfall, Villaraigosa said he would demand eight and a half weeks of unpaid days off from those workers between now and June 2012. "Employees who failed to ratify the agreement are once again subject to furloughs, and those furloughs start today," he said.
- Los Angeles Times, April 28, 2011

IT'S OFFICIAL

April 21, 2011

Mayor’s budget released yesterday; includes up to 36 furlough days for civilians

Council moves to freeze retiree medical subsidy

On Wednesday, the LA City Council voted unanimously to have the City Attorney draft an ordinance to freeze the retiree medical subsidy at the 2011 level. This would apply to future retirees in bargaining units that do not agree to increase their contribution to LACERS as tentatively agreed to by the Coalition of LA City Unions.

In advance of Tuesday’s vote, the Daily News printed the following editorial:

“Council President Eric Garcetti [has] repeatedly reminded his colleagues that the city has every right to freeze the subsidy for future retirees – without or without the unions' support... The freeze will also have a potential impact on retirees. This change will force retired city employees to pay out of pocket for their medical coverage. With the rising cost of health care, they may have to fork over as much as $1,000 a month by 2020.” Daily News, April 19, 2011.

City Budget
Also on Wednesday, Mayor Villaraigosa released his proposed spending plan for fiscal year 2011-12. As expected, the proposal includes 36 furlough days – a 14% pay cut – for workers in Coalition-represented units that do not ratify the proposed Letter of Agreement.

“Employees allied with the Coalition of L.A. City Unions have been pushing their members to approve such an agreement before Tuesday, the deadline to vote. "If we can put the furloughs behind us and keep people working, that's a good thing," said Tim Butcher, a shop steward for Service Employees International Union Local 721.” Los Angeles Times, April 21, 2011

The Coalition issued the following statement to the news media:

"The Mayor's proposed budget contains drastic impacts to employees and services. Members are now voting on alternatives that will maintain critical services and reform pensions in a manner that ensures retirement security." Statement by the Coalition of LA City Unions

The choice is now before you.