The new contract represents significant savings for the town, according to City Manager George Rodericks, primarily because of a provision that requires current employees to pay their own share of their pension costs.
The contract also eliminates the requirement in previous contracts that the town pay its police department employees based on a survey of area police agencies. The new contract says the town will continue to make the annual survey but will no longer be required to pay employees at the 70th percentile of surveyed agencies.
The expense to employees because of the new pension contribution requirement — which represents about 7.6 percent of their salaries — will be partially offset by a 5 percent salary increase given incrementally over the three-year contract. The contribution requirement will also be phased in over the duration of the contract, Mr. Rodericks said.
The town and the Atherton Police Officers' Association (APOA) will return to the table to try to resolve the post-retirement health-care benefit question, Mr. Rodericks said. The issue centers on the number of years an officer must work for the town before being eligible for the benefit — lifetime coverage of health insurance.
A provision in the contract that expired on Sept. 30, and that the town wants to retain in the new agreement, requires an officer to work for Atherton for 20 years before the benefit applies. The union noted, however, that the provision hasn't been adhered to in at least three instances, and is arguing for a five-year vesting period instead, Mr. Rodericks said.
The contract also creates a two-tier pension plan for new hires. Pensions for officers hired under the new contract will be figured at a rate that starts at 2.7 percent (times the number of years served) of their highest salary over a three-year period, with retirement eligibility at age 57. Previously, pensions were figured on a formula that gave 3 percent (times number of years served) of the highest one-year salary, with officers eligible to retire at age 50.
New civilian police employees will receive 2 percent (times number of years served) of salary at age 62 instead of the previous 2 percent at age 55.
In a written statement issued Oct. 9 after the APOA agreed to the contract terms, Mr. Rodericks said: "In addition to short-term savings, the Town will realize cost savings and fiscal sustainability in the long term through reduced pension obligations, reduced post-employment obligations, reduced active employee heath-care costs, and controlled salary costs."
A key factor in controlling those costs is elimination of the 70th percentile clause that had been in prior contracts. That provision resulted in an automatic ratcheting up of salaries when other police agencies gave raises to their employees, Mr. Rodericks noted at the council meeting.
"We wanted to get out of that ballgame," he said, adding that the town wants to pay employees what it believes is reasonable.
The APOA represents 22 police department employees, 17 of whom are sworn officers.