Ann Arbor CFO: New contract with firefighters union will cost city extra $230K next year

That includes low staffing levels in the fire department, which has city officials considering a restructuring plan that would eliminate two fire stations.

"There's certainly a lot of discussion about the fire department in the community and that's a healthy thing," Hieftje said. "I'm hoping to be able to move forward together in addressing the issues certainly that we see with fire service in our city."

The mayor's remarks came Monday night as the Ann Arbor City Council voted 8-0 on a new collective bargaining agreement with the firefighters union.

The city and the union — formally known as Local 693 of the International Association of Fire Fighters — have been operating without a contract for nearly two years. The new contract goes back retroactively to July 1, 2010, and runs through June 30, 2014.

"My thanks go out to the members of the firefighters union for sticking with it and seeing the process through," Hieftje said, calling it "the first time in quite a while" that the city has all of its labor contracts signed.

The negotiated contract is in alignment with other labor agreements recently settled and includes elimination of a retirement plan match, reduction in food allowances, a change in schedule for platoon employees to increase their weekly hours, and changes in health care plans that mirror the city's nonunion plans and meet state-mandated hard cap levels.

Some of the biggest savings for the city will come in future years with changes in pensions and retiree health care for new hires in the fire department.

The agreement also provides an entirely new wage scale for new hires, while current firefighters will see a 1.5 percent raise July 1 and another 1.5 percent raise the following year, bringing wages back to June 2008 levels before they made previous concessions.

Tom Crawford, the city's chief financial officer, shared a detailed overview of the financial implications of the contract with AnnArbor.com, showing the switch to a new health care plan for firefighters is expected to save about $150,000 while the elimination of the city's matching contribution toward a retirement plan will save another $40,000.

Meanwhile, a 40 percent reduction in food allowances for firefighters is expected to save another $38,000.

Partially offsetting those savings is a $105,000 increase in wages in each of the next two years. Crawford pointed out the wage increases reflect the fact that the firefighters union was the first and only bargaining unit to take a 3 percent wage reduction two years ago while the other bargaining units in the city chose to forgo wage adjustments and pay more toward benefits.

Now that the fire department is adopting the same benefit plan as other city employees, the contract calls for a restoration of that 3 percent over the next two years.

Crawford said those changes would have saved the city about $120,000 in the fiscal year starting July 1, and it would have been "almost break-even" the following year.

But the city and union also agreed to a change in work schedule from the existing 50.4-hour work week to a 54-hour work week.

"This schedule change is significant from an operating perspective and will help the fire chief in optimizing deployment of resources," Crawford said.

He estimated the scheduling change will cost the city $350,000 per year, and consequently the net impact of the contract — in relation to what the city had initially planned — is an increase in costs of $230,000 in fiscal year 2012-13 and $335,000 in fiscal year 2013-14.

Even with those increases in costs, council members applauded the changes Monday night and Hieftje said he thinks the city will be able to avoid further reductions in staffing levels in the fire department in the city's budget process over the next few months.

"I very much appreciate this coming forward in this way," said Council Member Christopher Taylor, D-3rd Ward, thanking the city's staff and the firefighters. "It's a pleasure to see this come forward outside the arbitration process. I'm delighted about the operational changes this affords us and look forward to its implementation."

Crawford said the budget implications of the new contract will be incorporated into the city administrator's recommended budget being released in April.

In other action Monday night, the council ratified a new labor agreement with the Command Officers Association of Michigan bargaining unit representing police supervisors. Crawford estimated the savings from that contract will be about $70,000 next year.

The city and COAM have been operating without a contract since the last agreement expired June 30, 2009.

The new contract runs through June 30, 2013, and includes no wage adjustments, an updated health care plan in line with other bargaining units and elimination of a retirement plan match.