DEPARTMENT: City Manager’s Office
DEPARTMENT HEAD: Sheryl Sculley
COUNCIL DISTRICTS IMPACTED: Citywide
SUBJECT:
San Antonio Police Officers’ Association (SAPOA) Collective Bargaining Agreement
SUMMARY:
This ordinance authorizes the execution of a Collective Bargaining Agreement with the San Antonio Police Officers’ Association (SAPOA) for the period September 1, 2016, to September 30, 2021.
BACKGROUND INFORMATION:
The 2009 collective bargaining agreement between the City of San Antonio and the San Antonio Police Officers’ Association (SAPOA) expired on September 30, 2014. City staff began preparing for negotiations of a new agreement in early 2013 with a financial and management analysis of all aspects of the contract. In the Fall of 2013, Mayor Castro and City Council appointed a Healthcare/Retirement Benefits Task Force. The Task Force, made up of business leaders and civilian, union, and public safety pension fund representatives and myself met for more than five months. The Task Force was charged with reviewing the cost of healthcare and pension expenses for uniform, civilian and retired City employees. The Task Force was asked to develop short-term and long-term recommendations on management of future healthcare and pension costs for the City of San Antonio.
The Task Force met a total of eight times beginning in October 2013 and concluding in February 2014, and received presentations from City Staff, San Antonio Fire and Police Pension Board, San Antonio Fire and Police Retiree Healthcare Fund Board, and independent pension and healthcare consultants. The Task Force presented recommendations to the City Council on February 19, 2014. The Task Force recommendations included the establishment of policies to manage the escalating costs of public safety expenses within the general fund and to more closely align the police and fire uniform healthcare plans with COSA civilian healthcare plans, those of other Texas peer cities, and public and private employers in San Antonio.
In May of 2014, the City Council approved three guiding principles to direct staff in collective bargaining negotiations: 1) Public Safety expenditures should remain below 66% of the General Fund budget; 2) Police/Fire uniform employees should contribute to the cost of healthcare by paying premiums similar to civilian employees and other peer cities in Texas; 3) The City will maintain financial policies and practices to support a “AAA” general obligation bond rating. In addition to the guiding principles, City Council also instructed staff that no retroactive pay would be made when the unions agree to new collective bargaining contracts if after contract expiration.
Mayor Castro resigned in July 2014 and Mayor Taylor was selected Interim Mayor by a majority of the City council.
With the adoption of the FY 2015 Operating Budget on September 18, 2014, the City Council adopted financial policies that included maintaining public safety spending under 66% of the General Fund budget and reflecting a lower cost of healthcare for police uniform employees, with the commitment made by the Police Union that a new contract would be negotiated by October 2014. The SAPOA labor union contract expired September 30, 2014. The City’s FY 2015 began October 1, 2014.
By November 2014, no new agreement with SAPOA had been reached. Without the new agreement, the cost for public safety healthcare benefits exceeded the adopted FY 2015 Budget by approximately $1.6 million per month and consumed more than 66% of the total General Fund. On November 18, 2014, the City Council amended the City’s FY 2015 General Fund Adopted Budget by deferring street maintenance projects, maintaining a minimum of 70 vacant police officer positions for one year, and delaying an EMS class in the Fire Department.
Additionally, in November of 2014, the City filed a lawsuit against the Police and Fire Unions challenging the constitutionality of the ten-year evergreen clauses of the collective bargaining agreements. In the evergreen period, the City continues to be responsible for the rapidly escalating cost of healthcare, while officers continue to receive longevity pay increases and step pay adjustments. Basically, all terms and conditions of the 2009 contract continued during the evergreen period.
Negotiations between SAPOA and the City resumed in February 2015 but with no progress. The Police Union announced that they would stop negotiations and resume after the May 2015 election and June run-off election. Negotiations were started again in July 2015, and by September significant progress was made toward reaching a new collective bargaining agreement. However, on September 30, 2015, SAPOA ceased contract negotiations. As a result, Mayor Taylor requested that the amendments to the FY 2016 General Fund budget, deferred in September, move forward to the City Council for consideration and approval. On October 15, 2015, City Council approved budget amendments to the FY 2016 General Fund and reallocated the funds set aside for wage increases and lump sum payments in order to pay for the legacy healthcare plan of uniform employees and their dependents. In December of 2015, the Bexar County District Court ruled in favor of the Union’s evergreen clause. The City immediately appealed to the Fourth Circuit Court.
After six months of inactivity in negotiations, in April 2016, and at the City’s request, the City and SAPOA received a court order from the Fourth Court to enter into mediated settlement talks over the evergreen lawsuit on appeal. After four mediation sessions in May and June, on June 14, 2016, the City and SAPOA settled on the terms for a new collective bargaining agreement including revisions to the evergreen clause. On August 11, 2016, the SAPOA membership ratified the proposed collective bargaining agreement.
While not included in the mediated settlement, City staff proposed extensive and comprehensive changes to the Police disciplinary process with proposals to SAPOA in 2014 and in 2015. In preparation for the 2016 settlement discussions, the City again attempted to negotiate amendments to the disciplinary process. The Police Union was unwilling to accept any of the proposals. There are no changes to the disciplinary process in the final mediated settlement agreement.
ISSUE:
This council action approves a new collective bargaining agreement with the San Antonio Police Officers Association for the period September 1, 2016, to September 30, 2021. The terms of the five-year agreement are summarized as follows:
• All officers would receive a 17% wage increase over five years. With 3% Lump sum payment effective October 1, 2016; and 14% over four years beginning in Fiscal Year 2018, 2019, 2020, and 2021. The 14% is rolled into base pay each year and each annual increase is on top of the previous year.
• Officers would pay no monthly healthcare premiums for themselves, but would pay premiums for their dependents under one of the two healthcare plans offered. If officers choose the High Deductible Consumer Driven Healthcare Plan, they will pay no premiums for themselves or their dependents.
• The $1.5 million legal fund would be eliminated when it is negotiated out of the fire union’s collective bargaining agreement.
• The total cost of the contract would keep public safety spending at less than 66% of the City’s General Fund budget for at least the first three years of the contract. Under current projections, public safety expenditures would be 66.3% of the General Fund budget in year four and 67.6% in year five.
• The Evergreen Clause of the contract would be reduced from 10 years to eight, with a condition that healthcare premiums would continue to increase 10% during the five year contract and for each year that the contract remain in evergreen after expiration.
• All officers would receive an $800 increase in their annual clothing allowance over the life of the contract. The annual clothing allowance would increase from $1,440 today to $2,240 in FY 2021.
• The lawsuit over the constitutionality of the police union evergreen clause goes away with the ratification of the union contract and approval of the contract by City Council.
The cumulative cost of the wages and clothing allowance over the term of the contract is $93 million and the avoided cost or savings of the changes in healthcare is $87.5 million. Combined, the net cost of the settlement agreement to San Antonio taxpayers is $5.5 million over five years.
The new collective bargaining agreement supports the recommendations of the Healthcare/Retirement Benefits Task Force through the modification of the healthcare plan design to increase out of pocket costs, the introduction of employee contributions toward the cost of dependent healthcare, and the negotiation of overall financial contract terms that maintain a reasonable balance between public safety expenditures and general fund revenue growth.
ALTERNATIVES:
If City Council chose to not approve the tentative agreement, staff would return to the negotiating table and continue to bargain on all issues.
FISCAL IMPACT:
It is estimated that the cumulative cost of the proposed agreement from October 1, 2016 through September 30, 2021 will be $93 million.
The cumulative cost of the wages and clothing allowance over the term of the contract is $93 million, and the avoided cost or savings of the changes in healthcare is $87.5 million. Combined, the net cost of the settlement agreement to San Antonio taxpayers is $5.5 million over five years of the contract.
Funds in the amount of $ 8,062,000 to cover the 3% lump sum payment for police officers effective October 1, 2016, and the $400 increase to clothing allowance in FY 2016 are included in the FY 2017 Proposed General Fund budget for the Police Department.
Future wage increases and clothing allowance increases as reflected in the collective bargaining agreement for FY 2018, FY 2019, FY 2020, and FY 2021 are subject to city council appropriation as part of the City’s annual operating budget process.