By Nick Diamantides
During its Tuesday night meeting, after an approximately 90-minute discussion that included detailed explanations on the causes of the city’s shrinking budget, the Signal Hill City Council unanimously voted to require Signal Hill police officers to contribute to their retirement pension costs and retiree healthcare insurance costs. The decision was strongly opposed by the Signal Hill Police Officers Association (POA).
“The city has experienced a $3.1-million decline in General Fund revenues that fund operations such as public safety, street and park maintenance, and library and recreation programs due to the ongoing economic downturn,” said City Manager Ken Farfsing. “The loss of revenue has resulted in a structural budget deficit of $1.1 million.” He added that economists predict that the nation’s economic recovery could take five years or more, resulting in long-term high unemployment rates. That, he explained, means many people will not be making as many purchases as they used to, which translates into several more years of sales-tax revenues being significantly lower than revenues collected by the City two or three years ago.
“Compounding the loss of revenue is the projected cost increase in employee pension and retiree healthcare benefits,” Farfsing warned. “PERS (the California Public Employee Retirement System) has notified the City to expect annual pension costs to increase by $351,000 by Fiscal Year 2014-15, raising pension costs from $1,300,000 to approximately $1,651,000 per year.”
Farfsing also noted that a recent actuarial study concluded that the city has an approximately $5.5 million unfunded financial obligation to provide healthcare coverage to future retired police officers.
Farfsing explained that POA members have not been required to pay into their pension or retiree healthcare coverage benefits, but because of the present economic realties, the City needs them to do so.
Deputy City Manager Charlie Honeycutt told the Council that city administrators began negotiations on a successor memorandum of understanding (MOU) with the POA in November 2009 and 18 negotiation meetings took place. “I really appreciate the professional conduct they (POA representatives) had during the negotiations,” Honeycutt said. He added, however, that, in spite of the many meetings and state mediation, the POA rejected the City’s final offer.
Honeycutt also explained that, according to state law, in such cases a city council has the authority to declare an impasse and impose an MOU on an employee union, which Farfsing and Honeycutt recommended the Council do.
POA President Nick Davenport strongly disagreed with that recommendation. He noted that the POA had expressed its willingness to forego pay raises for its members instead of forcing them to pay into their retirement pension and retirement healthcare plans.
Davenport also noted that the POA had asked the City to terminate the $61,000-per-year contract with the private security company that patrols some city parks at night and allow SHPD officers to perform that function. He explained that the cost savings of that action would amount to about $5,000 less than the amount that will be collected by the City through police officer contributions to PERS and retirement healthcare plans. Davenport stressed that several SHPD officers are already seeking employment with other law-enforcement agencies that offer better salary/benefits packages, and more officers will do so if they are required to contribute part of their salaries to retirement and healthcare plans. Davenport asked the Council, “Are you willing to lose additional police officers from your city for approximately $5,000 a year?”
After Davenport’s presentation, four residents took the microphone. Two were against imposing the MOU, and two were in favor of it.
Then Councilmember Tina Hansen gave an approximately 10-minute speech praising the good work done by SHPD officers but explaining that the present decline in City revenues was forcing the City’s hand. “In order to remain fiscally responsible and viable as a city, we have decided to require contribution by employees to PERS,” she said. She explained that the Council took that action with regard to civilian employees several months ago, and now police officers have to make similar contributions.
Mayor Ed Wilson agreed with Hansen. He said the SHPD was one of the best police departments in the state, but the City can no longer afford to pay the PERS and retirement healthcare premiums without officer contributions. “As a council, we have to look at the whole city, and we have to look at it in the long term,” he said.
Honeycutt noted that by state law the City cannot use the money it was able to save on the construction of the new police headquarters for salaries or pensions. (See related article on page 3.)
The Council voted 4-0 to impose the MOU (Councilmember Ellen Ward was absent) requiring each POA member to contribute 3 percent of his or her salary toward the increased cost of their pension and retirement healthcare benefits. The MOU will be in effect until Dec. 31, 2010. Honeycutt said that negotiations will soon begin for a new possible one-year contract with the POA.