After years of relatively flat wages, Palo Alto's police officers, firefighters and the nearly 600 workers represented by the Service Employees International Union (SEIU) will see salaries increases under new terms that the City Council is set to review and approve on Monday night.
The contracts, which will be the subject of a closed session at the beginning of the meeting and of a vote later that night, vary by each labor group. Each, however, has two main objectives: to bring salaries up to the level of the market median and to make sure that each group takes on a greater share of the costs of benefits.
For the SEIU workers, the new contract will bring a 7.5 percent salary increase spread out over the three years of the contract. All employees will receive a 1.5 percent increase after the contract is approved, a 3 percent increase on Dec. 1, 2016, and another 3 percent increase on Dec. 1, 2017.
About 80 percent will receive additional salary bumps to bring them close to the market median, based on the city's recent study of the 151 job classifications that were identified as "under market." These adjustments will range from less than 2 percent up to 10 percent and will be spread out over the three year period of the contract.
"We took a very detailed look at each of the markets for the various positions ... and we are making adjustments over the term of the agreement to get our employees to the middle of their comparable markets," Assistant City Manager Suzanne Mason told the Weekly.
For the two major police and firefighter unions -- the Palo Alto Peace Officers' Association and the International Association of Firefighters (IAFF), Local 1313 -- the new agreement will represent the first new contract since the existing agreement expired in June 30, 2014. And for the Palo Alto Police Management Association, which represents seven managers in the Police Department, the contract will be the group's first agreement since the union's inception in 2009.
Both the Peace Officers' Association, which represents 83 positions, and IAFF, which represents 99 positions, will see their members' salaries rise by 7.5 percent over three years, in three 2.5 percent increments. Each union will also see its salaries brought up to the market standard.
In the case of the firefighters union, the bump will be particularly significant, with employees below the market median receiving an initial 5 percent pay bump and an additional 8 percent increase on July 1, 2017. Police officers whose salaries are below median will get market increase of 3 percent, followed by an additional 2.2 percent on July 1, 2016.
"Providing these market adjustment will allow the City to better recruit and retain employees," a new report from Human Resources Department states. "Due to the strong economy, employees have more opportunities in both the public and private sectors. Ensuring that the City's total compensation packages are consistent with comparable agencies in this market is a very important factor in retaining and attracting quality employees."
The Palo Alto Police Managers Association will also see salary increases in its new contract -- 2.5 percent upon adoption and 2.5 percent in July. The seven police managers will also get a 3 percent market adjustment upon the adoption of the agreement and two additional increases of 0.5 percent in July 2016 and on June 30, 2017, respectively.
Collectively, the four contracts are expected to add about $22 million in costs to the city, even as they reduce the city's risk for rising medical costs and its burden for employees' pensions.
Each of the public-safety unions has agreed to increase its share of the pension contributions by 28 to 33 percent over the term of the agreement, while the SEIU will up its contributions by 12.5 to 16 percent.
Employees will also now have a greater stake in the rising costs of medical care in the new contracts, as the city's contribution will shift from a percentage to a flat rate. The city had already made this change in 2013 with the SEIU contract. Now, it will also apply to police and firefighters. Starting in January 2017, the city's maximum contribution toward a police officer's or a firefighter's health care will be capped at $773 ($1,544 for an employee plus a family member and $2,008 for an employee plus two or more family members). The fixed amount, according to the staff report, "eliminates the city's obligation to automatically pay the cost of premium increases."
For the city, the agreements are a culmination of months -- and in the cases of the police officers and firefighters, years of complex and at times contentious negotiations with its labor unions. Firefighters and police officers had maintained that their salaries are well below the market -- an argument that was confirmed by the city's own studies. SEIU employees made a similar argument over a period of public hearings, with many workers saying that their stagnant wages make it difficult for them to keep up with the rising cost of living in Silicon Valley.
Irwin Gonzalez, a recreation coordinator in the Community Services Department, told the council on March 14 that the SEIU workers have made "substantial concessions" since the 2009 recession, including new cost-sharing arrangements for medical benefits and a greater contribution from workers toward pensions. The union, he said, wants to see its members brought up to the "median market compensation" and to have cost of living adjustments included in the new contract. Lena Perkins, a resource planner at the Utilities Department, concurred that workers have already "given up a great deal."
"To not bring the City of Palo Alto workers up to the median -- it doesn't play well and it doesn't make people feel valued. It looks penny-wise and pound-foolish," Perkins said.
In recent years, the city has pursued market adjustments for managers and highly specialized positions in Public Works and Utilities.