With fiscal deficits looming on Palo Alto's horizon, pay freezes have become the new normal for the city's largest workers union.
The City Council voted Monday night to extend its current agreement with the Service Employees International Union, Local 521, which represents 582 city employees. The contract, which the council approved 8-0 with Greg Schmid absent, extends the city's current agreement with the SEIU until June 30, 2012.
The council's vote took place after a brief discussion and no public opposition from the union, which includes police dispatchers, utility workers, building inspectors, city planners, library clerks and representatives from just about every department in City Hall. It extends what has now been the council's three-year trend of reducing benefits and containing salaries of some of the city's lowest-paid employees.
The council and the union clashed over the benefit reductions in 2009, at which time the union staged a one-day strike (members called it a "self-imposed furlough") and a protest at City Hall. In October 2009, after negotiations between management and the union had hit an impasse, the council imposed the new conditions on SEIU members.
Since then, tempers have cooled. The council and SEIU agreed on a contract last year and in May the union voted to ratify a one-year extension of the contract. The new agreement includes a pay freeze; an employee contribution of 5.75 percent toward pensions; a second tier for pension calculations that would be applied to new employees; elimination of two floating holidays; elimination of tuition reimbursement and a requirement for employees to pitch in for their medical costs.
Marcie Scott, assistant director in the Human Resources Department, told the council Monday that these conditions would save the city about $3.4 million in the current fiscal year.
"Staff recognizes the continuing contributions the group has made in assisting the city through the Great Recession and its aftermath," Scott said.
The workers, she said, aren't just facing the second consecutive year of frozen salaries and reduced benefits. They are also "adjusting to changes in the working environment as a result of position elimination and staff turnover."
Palo Alto had eliminated close to 10 percent of its full-time positions in the General Fund over the past three years to close a sequence of budget deficits.
Members of the council on Monday expressed appreciation and gratitude to the SEIU workers, who have been in the vanguard of the city's cost-reduction efforts. Councilwoman Nancy Shepherd said she had recently met with union officials, who she said were "very accommodating with this contract."
"They understand the city is under a lot of stress," Shepherd said. "These guys are the ones that generally don't make as much money as others in city staff. I'm sorry they have to continue to roll over their contract when others haven't gotten started on theirs."
Vice Mayor Yiaway Yeh and Councilwoman Karen Holman also said they were grateful to the union for agreeing to extend the terms of their contract.
Meanwhile, the city continues to square off with its main firefighters union. The two sides began their contract negotiations in May 2010 and could not reach an agreement. The dispute is scheduled to go to arbitration this fall. The council also agreed last week to place on the November ballot a measure that would eliminate binding-arbitration from the City Charter.
Palo Alto officials are expecting budget deficits of close to $7 million in each of the next two fiscal years, largely because of sharp increases in pension and health-care costs. The city's current budget, which the council approved last month, assumes $4.3 million in concessions from the police and firefighter unions.