City Unveils Guiding Principles for Employee Negotiations

Last Tuesday, the Davis City Council passed and read these principles into the record.  One thing that has become clear is that the Davis City Council is now under a tremendous amount of pressure to appropriately deal with the ongoing labor negotiations.

Commentary:

These basic principles are a good start though they mark a very generic approach—which is of necessity given the nature of negotiations.

In a moment I will discuss some of the particulars, however, the first glaring omission that presents itself is the lack of mention of transparency and openness of the process.  On Wednesday night we discussed ways to involve the public in the budget process.  In the past we have discussed ways in which to make the entire process more transparent.

I fully understand the absolute need for closed door negotiations.  That said, I would have liked to have seen the principle stated or the manner laid out about how these negotiations and the final bargaining agreement will be laid out to the public.  I would like to see an explanation of how the public will see, the process in which the public will have input, how long the period of time will be between the completion of the process and council’s vote, how the contract will scrutinized, what steps will be taken to prevent the final contract from simply being rubber-stamped by the council.  Hopefully this process will be laid out in the near future.

The principles state: “while providing an increased degree of stability/certainty relative to city personnel costs.”  They then later continue: “ensure fiscal stability and sustainability.”

The question is what does this means exactly.  It seems that most people are willing to admit that the current rate in contract growth is not sustainable.  However, there also seems to be a general defense of the city’s policy to remain competitive in part through a comparison to other cities.  These principles attempt to avoid that pitfall by suggesting that the city “avoid contract language that binds the City to decisions made by other agencies.”

But we are still left to wonder to what degree the council and city believe that we actually need to reduce the size of compensation packages.  And what happens if the bargaining units steadfastly refuse to accept cuts to their compensation?

Despite assertions by some to the contrary, the city has a limited ability to force employee groups to take a pay cut.  Employee groups can tell the city, cut positions if you have to, but we will not take a cut in our compensation.  Given the current fiscal outlook, the city may ultimately lack the stick of massive employee layoffs that would force groups to take a pay cut.

That would be a particularly dangerous outcome—simply renewing the current terms of the contract and cutting a few positions that would obviously be restored when the economy improves—if revenues increase.

This is not meant as a criticism of the city but rather an acknowledgment of the realities of labor negotiations.  This issue along with the issue of transparency which I think go hand-in-hand are my chief concerns not necessarily with this document but with the process that will unfold.

In terms of the issues of health benefits, retirement, retiree medical, and even a mention of overtime, this document is outstanding and addresses key concerns.

The first, is to find a way to provide good health benefits while finding ways to contain costs.  This is a key area of concern for all agencies that is largely out of their control.  It is reasonable to believe that at some point health rates will not continue at their current rate of growth.  Nevertheless, this has been a key expense that has continued to compound upon itself.

Second, is looking for employees to contribute more to the cost of their retirement benefits and at the same time sharing in the risk inherent in the defined benefit retirement plan.  This is the heart of the issue facing us with PERS right now.  Elsewhere the city also discusses the possibility of exploring “differential compensation packages for future employees.”  There are pitfalls with a two-tiered approach including a basic fairness issue.  However, at some point we just might have to acknowledge that guaranteeing 3% of an employee’s final wage times every year they worked beginning at the age of 50 is too much to sustain itself. 

Third, we as a community as well as city management and the city council have in the past really not talked enough about nor acknowledged the severity of the unfunded liability issue and the fact that the city of Davis is facing $42 million in obligations in retiree medical benefits that city management and the city council have yet to fund in future years.  Like most issues, we need to balance the need to provide good benefits with the need to find ways to reduce our long term liability.  Moreover, they discuss the possibility of a vesting period that would enable the city to avoid lifelong obligations for short-term employees.

As mentioned, the city finally nails these issues right dead on point.  The first step toward solving a problem is to acknowledge it—and for the first time, it appears that the council has unanimously acknowledged in vague terms the genesis of these problems.  Now, the key will be to for the first time actually implement solutions to these problems through collective bargaining.  That will prove much more difficult in concrete terms, especially if the solution is to roll back some of these salaries and benefits.

There will be a key budget workshop this week and we roll out with the budget.  It is vitally important on Tuesday, that we keep the pressure on the council to do the right thing.

—David M. Greenwald reporting