Ann Arbor officials announce new labor contract with AFSCME that includes major concessions

Council Member Stephen Rapundalo, D-2nd Ward and chair of the council's labor committee, called the agreement noteworthy.

He said it's projected to provide savings over not only the life of the agreement, but also into the future through structural pension and retiree healthcare reforms for new hires. The union also agreed to major concessions on health care for active employees.

"I think it really sets a fine example for how these kinds of negotiations and discussions should be done," he said. "We've been working pretty hard on trying to get these labor agreements to be more uniform across the board, where everybody's paying more fairly and equitably, and moving away from agreements from the '90s where they were rather generous."

Tom Crawford, the city's chief financial officer, said the concessions are expected to save the city about $660,000 annually, including $140,000 in the general fund.

"It's pretty significant," Rapundalo said. "It really sets a solid foundation for the future and how we want to deal with new hires — that was a big thing. We were very pleased."

The contract runs through Dec. 31, 2013 and includes the following highlights:

• No across-the-board pay increases for the duration of the agreement.
• Employees will pay an additional 1 percent into their pension plan to equal 6 percent of pay.
• Effective Jan. 1, 2012, all AFSCME employees will be on the updated city health care plan, which has a significantly higher employee cost share than their current plan.
• For fiscal year 2012-13, which begins next July, the projected savings from the agreement is equal to about 3 percent of total compensation for AFSCME employees.
• All new AFSCME hires will become vested in the city pension plan after 10 years (up from 5 years) and have an access-only style plan for retiree health care benefits in accordance with a resolution recently passed by City Council.

Rapundalo said he thinks the agreement was reached quickly in part because of a new state law setting hard caps on public employee health care coverage.

The union ratified the contract on Tuesday, one day before the Legislature approved the new legislation limiting the amount a public employer can pay toward workers' health coverage at $5,500 annually for individual employees and $15,000 for family plans.

The legislation gives schools and local municipalities the alternate option of paying 80 percent of employee health care costs, while employees would pay 20 percent.

An analysis by AnnArbor.com last year showed the average Ann Arbor city employee paid only 6 percent of the $11,772 annual cost of his or her health benefits.

AFSCME Local 369 President Gary Wilson acknowledged the fact that a new state mandate on health care was coming down was an incentive to reach a deal with the city quickly.

"In all honesty, we are very pleased with what we've gotten on behalf of the negotiating team," Wilson said, noting that the union membership's vote of support was overwhelming.

"I really appreciate the bargaining team that sat at the table and the struggles and the fight that they went through," he said. "The city understood what our position was and I think that's why we came to the agreement that we did, because both sides were wiling to work to get it done."

Rapundalo said he had to give a lot of credit to AFSCME's leadership, including Wilson, for coming to the table with a willingness to negotiate in good faith. He said the city was pleased to offer a health care package that's better than what AFSCME would have gotten if it waited until after the new state law took effect to finalize the contract.

"To go from what they were used to getting, to go to the state-imposed requirements, really would have been a drastic change," Rapundalo said.

Rapundalo noted the city still hasn't been able to strike a deal on health care concessions with the city's police and fire unions and there's a real likelihood now that they may have to accept the consequences of the state's mandate on health care in their next contracts.