A three-year contract extension amending four articles of the Memorandum of Understanding originally reached with El Dorado Irrigation District Employees Association in 2010 will save the district $3.1 million over the next three years, according to EID Human Resources Director Vicki Hoffman.
As a result of the Public Employees Pension Reform Act employees will have to pay 50 percent of pension costs, which will be the 8 percent that is the employee’s portion of pension contributions. The employer also has an 8 percent match, but it is the employee’s share that is used first upon retirement. The employer’s match is only consumed if the employee outlives his portion of the pension.
The Letter of Understanding employees agreed to Feb. 15 means the district will no longer pay 100 percent of the employees’ 8 percent. In March the employees will pick up 2 percentage points of the 8 percent. Another 2 percentage points will be shifted to the employees in November. The employees had been paying 4 percentage points of their CalPERs costs since Jan. 1, 2012.
The EID board approved the LOU 4-1 in a public meeting Feb. 25.
New employees will have to pay the full 8 percent immediately, the LOU stated. New employees will also have to wait to age 62 instead of 55 to retire. The pension calculation for new employees is 2 percent, the same as county employees. Older employees at EID are on the 2.7 percent at 55 formula.
Additional savings come from increasing the share of health benefit costs for employees. Using the Kaiser plan as a benchmark, the Letter of Understanding states that if Kaiser premiums increase 10 percent for dependants of employees and retirees the cost sharing will go “up to a maximum of 85 percent-15 percent split. That cost sharing split becomes permanent in 2016.
And, “Plans that exceed the cost of the benchmark plan require a greater employees/retiree contribution.”
The sweetener that helped the employees agree to take-backs was cost of living increases in 2014, 2015 and 2016 based on the Consumer Price Index but not to exceed 2 percent.
Additionally 50 percent of the employees in 2014 will be eligible for a 5 percent merit step increase. For water treatment plant and sewer plant operators that means additional education is required to advance a step. The top step is Step 5. By 2016 only 10 percent of employees will be eligible for merit increases, Hoffman told the board.
In an email followup Hoffman told the Mountain Democrat that this year 46 percent are not eligible for merit increases because they are at the top step. in 2014 67 percent are not eligible, in 2015 the figure not eligible is 79 percent and in 2016 it will be 90 percent.
Between cost of living increases, merit pay and pension reform the cumulative savings of the three-year life of the LOU is $822,000, according to Hoffman’s PowerPoint presentation.
“I’m disappointed we’re still giving out raises,’ said Director Alan Day, who voted against approving the LOU.
“You pay for experience,” said Board President George Osborne, adding that employees, especially certificated ones will go to higher paying districts.
“The health care (plan) had a little more, but it’s nibbling around the edges,” Day said.
“We don’t yet know what the impact of Obamacare,” Osborne said.
“I am surprised that the vote was not unanimous because of the significant savings realized for EID’s ratepayers,” Osborne said after the vote. “All board members participated in several months of closed session meetings on this LOU, and the final product reflected all board members’ priorities.”
“I am very pleased that the employees recognized the importance of implementing these pension reforms early. It will generate substantial savings for our district and its ratepayers — which include most of our employees,” said EID General Manager Jim Abercrombie in a statement released after the meeting. “We acknowledge the collaborative effort to reach this agreement, and I truly believe it fairly balances employee and ratepayer interests.”
“The employees recognize the fiscal strain the district has been under for the last few years. Most of us are ratepayers as well as employees and we feel the crunch of rising utility and living costs,” said Employee Association President Doug Venable in a statement released after the meeting. “The association and management were able to reach an agreement that satisfies the priorities of budget reduction and long-term stability. Although this contract is an overall loss for our employees, we voted overwhelmingly to ratify the new terms of the MOU. We want to thank management and the district Board of Directors for working with us through this process.”
“I thank the staff for their cooperative firmness but fairness, said Joe Rose, attorney for the Employees Association. “It’s a reasonable compensation package to retain employees. It’s difficult to attract and retain water and sewer workers.”
“Go back to the table. To give half the employees 7 percent is unacceptable, said Sherrie Petersen of El Dorado Hills.
“Our doubling of water rates have a very short-term effect on the cost of living,” Day said.
Greg Prada of Cameron Park noted the water rate increases had been 102 percent. “Two percent and 5 percent on top of that is not fair and equitable to the ratepayers.”
“Sixty-five percent of the operating budget is employee costs.,” Prada said. “You’re locking in rates. This world will not end if this is not approved today.”
Day made a motion to delay the vote for one month to allow the public more time to comment, but failed to get a second. The other four directors voted to approve the deal with the employees union.