New city contract freezes salary

Following calls by residents for Menlo Park employees to share in the city’s financial burden, the city has struck a deal with the union that represents 33 city supervisors aimed at doing just that.

The agreement calls for a two-year salary freeze, and for middle-management employees to share in unanticipated increased costs to the city of pensions and health care benefits.

While it does not scale back retirement benefits that the city acknowledges are unsustainable in the long run, it includes concessions that City Manager Glen Rojas said were unprecedented.

“This is the first time where (the union) actually took back something without having to get something in return,” Mr. Rojas said in an interview. “It’s a big step.”

“Balancing our appreciation of the work (managers) do with the budget realities was really the task before us in these negotiations,” said Councilwoman Kelly Fergusson. “The employees really stepped up and showed some leadership in the negotiations.”

The city’s middle managers make an average of $120,860 per year in salary and benefits, according to Personnel Director Glen Kramer. Menlo Park’s costs would be “essentially flat” over the two-year period, with slight increases in health care costs, and some employees moving to a higher salary echelon.

Under the contract, if the city’s scheduled payments to the state pension fund increase above the rate currently projected in 2011, management employees would match the city’s contribution over that threshold rate.

The union has also agreed to pay half of any health premium cost increase in 2011, up to a specified cap.

That could mean that management employees will help to share the burden of rising costs to the city. It could also mean that their contributions to retirement and medical funds won’t change at all.

“I think it was a reasonable compromise in that the city did get some significant concessions from the union, yet at the same time, mostly those concessions provide for a sharing of the pain if things get a lot worse,” said Councilman John Boyle. “And that’s probably appropriate. The reality is that the city is in decent shape right now. It’s not time to panic.”

Of all the council members, Mr. Boyle has perhaps lobbied hardest for the city to address its employee costs. He called the agreement a step in the right direction, but said the city would have to do more in the long-term to address the issue.

“The council’s thinking was that at some point, we want to get (to long-term sustainability), but we want to take care of the direct impacts now,” said Mr. Rojas, the city manager. “They were looking at things that could save us money today, and in the next few years.”

The contract does include one long-term cost-cutting measure: a reduction of medical retirement benefits by $100 per month for all new management employees. Mr. Rojas said the council would seriously consider trying to scale back retirement benefits for all new employees in future negotiations.

Former council member Mickie Winkler, who has pressed the city to address rising employee costs, congratulated the city and the union on the agreement. Though she still has questions about the contract’s details, she said she was “delighted” that the city followed several recommendations related to employee costs in a San Mateo County Civil Grand Jury report Ms. Winkler co-authored.

At its meeting Tuesday, Dec. 15, the council could formally ratify the tentative agreement it already approved in closed session.

The city is still negotiating with Service Employees International, the union that represents its non-management and non-police staff. Both unions have been without a contract since late October.

“The big thing is going to be when the SEIU contract gets negotiated,” Ms. Winkler said. “If this is a harbinger, that’s not bad.”

Click here to view the contract. The city released it a week before it would normally do so.