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Menlo Park impasse with union may be over
• Pension reform progresses, but work remains, advocates say.

by Sandy Brundage

An unresolved wrinkle in Menlo Park's efforts to curb city employee pension and benefit costs may finally be ironed out: At its March 27 meeting, the City Council is expected to vote on a new proposed agreement with a union after negotiations stalled in an impasse in 2010.

The proposed contract affects 140 members of Service Employees Union International (SEIU). It incorporates terms the city had earlier imposed: The retirement age for new non-police city employees was raised from 55 to 60, and pension benefits decreased from a maximum of four-fifths of annual salary to three-fifths; no raises; no awards for not using sick leave; and fixed contributions rather than automatic increases to health plans, according to a staff report released March 14.

Other sections give the city permission to implement up to 21 hours in unpaid furlough each fiscal year and to release salary and benefit information as public records.

SEIU employees would each receive $100 to $200 more per month for health and dental coverage. The contract would run from March 25, 2012, through Oct. 31, 2013.

The agreement comes with a price tag. According to the staff report, the operating budget for fiscal year 2012-13 will absorb the associated $336,600 increase.

The council approved a similar two-year contract with the American Federation of State, County and Municipal Employees (AFSCME) last year.

Menlo Park has been working to implement Measure L, the pension reform initiative passed by 72 percent of voters in 2010 that raised the minimum retirement age for new non-police city employees by five years to 60, and also decreased maximum pension benefits by 0.7 percentage points to 2 percent of their highest annual salary averaged over three years.

However, the initiative remains under fire in the court system, because of a clause requiring voter approval for all benefit increases, a decision that used to rest with the City Council.

That policy is the foundation of the lawsuit filed by Olson, Hagel & Fishburn, the firm representing SEIU and AFSCME.

The leaders behind the Measure L initiative seem pleased by the progress Menlo Park has made during the past two years. "It appears the Council, the negotiators for the City and the Union have gotten the message that the citizens sent in the 2010 election with the passage of Measure L. It appears we can be proud of all the participants, including the voters, who now have a quasi-seat at the table," pension reform advocate Ned Moritz commented in an email to the Almanac.

But he pointed out that the fight isn't over. "All that said, the most important thing will be the decision of Judge (George) Miram regarding the lawsuit by the SEIU and AFSCME challenging the validity of Measure L. What happens next is dependent on the judge's decision."

Colleague Henry Riggs described the SEIU contract as "what we could reasonably hope for" and gave credit to the union and city for working it out. "No, it does not by itself make our labor costs sustainable, but this shows mutual understanding of a real, deep problem," he said.

He outlined a future that includes lurking budgetary traps, however. "CalPERS announced Wednesday that in effect city payments on the employees' retirement must go up next year and again in 2014; this is just the beginning as CalPERS haltingly admits it doesn't have the funds to pay its commitments, as several studies have made all too clear," Mr. Riggs said.

"We'll have another budget crisis or two because we, and other cities, still budget optimistically and are 'surprised' when the real numbers hit. This will be hard — we're putting off a community-wide decision on how to handle unsustainable costs. Our services, e.g. library hours, will stay skimpy at best for some time."