Almanac

News - April 14, 2010

Union challenges efforts to alter pension benefits

by Sean Howell

A union that represents the city of Menlo Park's middle management employees is challenging the city and a group of residents, in the press and in the courts, over efforts to scale back pension plans for city employees.

The union, the American Federation of State, County & Municipal Employees (AFSCME), announced on April 6 that it plans to sue the city over its certification of a "pension reform" initiative that a group of residents is trying to qualify for the November ballot.

Sharon McAleavey, the union's representative in its negotiations with the city, said in an interview that the City Council alone should be able to negotiate pay and other benefits for city employees, and that the law backs her up.

"They're the ones who have the full information, who read the details of the budget, who think about the economy as a whole," she said. "This is something we want to nip in the bud, so to speak. We want to make sure it gets dealt with earlier, rather than later, because this could catch fire and pop up in other cities, and we want to say, 'let's put this back where it belongs.'

"This is a bigger issue than just Menlo Park."

Ms. McAleavey is also questioning the City Council's apparent change in direction on the pension issue. The city is reportedly asking Services Employees International (SEIU), the union representing line-level city employees, to accept a two-tier pension system that would greatly decrease retirement benefits for new city employees.

But Ms. McAleavey said the issue never came up when her union was negotiating with the city. When AFSCME agreed to its contract, City Manager Glen Rojas said the City Council didn't see an immediate need for the city to go to a two-tier pension system.

Contract talks with SEIU were ongoing when a group of residents launched a ballot initiative drive. Those talks have been stalled ever since, with SEIU representatives now saying that the central sticking point is the city's push to scale back pension benefits for new employees.

The city negotiates with unions in private, and city officials typically don't discuss those negotiations.

"It does feel to me that there's some other reason behind (the city's push for a two-tier pension system), other than that they really want to save money," Ms. McAleavey said. "This may save money in the long term, but it doesn't appear that anyone's done that actual analysis; I have yet to actually see that that's true."

Glen Kramer, the city's personnel director, said the city had not run the analysis, and that it's possible that going to a two-tier system would not save any money, even in 10 or 20 years.

If the city were to impose a two-tier pension system on SEIU, AFSCME employees would not be able to put up much of a fight, because the union represents only about one-fifth as many employees as its counterpart, Ms. McAleavey said. Because of the way the state pension fund calculates the city's payments, the city would eventually have to adopt the same system for members of both unions.

The union plans to challenge the resident-led pension initiative in the courts, arguing that two California laws — the Public Employees' Retirement Law and the Meyers Milas Brown Act — prohibit public pension contracts from being changed through a voter initiative.

Under the terms of the initiative, pensions for new employees would revert to their level before the City Council in 2007 approved a 35 percent increase in those benefits. The initiative would also require a vote of the people to approve any future increase in pension benefits negotiated by the council.

"People in the community seem to think this is the way to go, without having any facts behind their assertions," Ms. McAleavey said.

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