Palo Alto, police union agree to new contract

After nine months of difficult negotiations, Palo Alto and its police union have finally agreed to a new labor contract that will ultimately dial back short- and long-term costs for the city.

The city expects to save nearly $150,000 this fiscal year, which ends June 30, and $1.37 million annually going forward. The terms of a "memorandum of agreement" were ratified by the police union Friday and approved by the city council early Tuesday morning.

The contract, which expires June 30, 2014, is similar to others the city has hammered out with Service Employees International Union Local 521, unrepresented management and professional workers, International Association of Fire Fighters Local 1319, and the Fire Chiefs' Association.

"The City has consistently sought fairness and mutual sacrifice by all employee groups to solve our ongoing budget gap by seeking structural changes to employee pension and medical plans," City Manager James Keene said in a statement. "With this agreement, PAPOA has made an important step in assisting the City's efforts to reduce expenditures."

The lion's share of next fiscal year's savings, slightly more than $822,000, will come through a shift in pension contributions. Historically, the city has paid both the employer and employee shares, both of which are 9 percent, but responsibility for the latter will shift to union members.

The agreement also calls for the elimination of three paid holidays for a savings

of roughly $182,500, and union members will lose a tuition and training benefit worth about $82,000.

Lastly, base wages for every classification of employee represented by the union will fall by 1.33 percent for a savings of $180,000.

The agreement includes changes that are expected to lower costs for the city over the long-term. Namely, it bumps the retirement age from 50 to 55 and introduces a less generous pension formula for new hires. Existing employees will not be affected by the change.

The union's last contract expired on June 30, 2011. Negotiations began the following month, but it took 16 meetings over nine months to reach the agreement approved by the city council Tuesday. In February, the city declared an impasse, but continued talks with the union.

While the two sides reached consensus on terms for a new contract, they remain deadlocked over a provision that would see union members contribute to medical premiums of future employees. The city and union are going through legal channels to resolve the impasse.

The city was counting on savings in its contracts with public safety groups to help close a $4.3 million gap in the current fiscal year budget.

In a statement, the city said, "This new agreement provides short and long term structural savings that will assist the City in managing benefit costs and reducing the budget gap this year and in future years."

Email Jason Green at jgreen@dailynewsgroup.com.

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