Dexter Village will save about $200,000 in a three-year contract with Teamsters employees approved Monday night by the village council.

The deal for the 10 Teamsters Union 214 employees was ratified Thursday and includes a 1 percent salary increase in 2013, the third year of the contract, but no salary increases in the first two years, Village Manager Donna Dettling said. Plus, a lower wage scale goes into effect for new employees, which amounts to about a 15 percent decrease from the previous contract.

The Teamsters Local 214 members include two administrative employees in addition to employees in the Department of Public Works and the Water and Wastewater Department.

“I’m very pleased with the concessions that our bargaining unit employees agreed to over the three-year period," said Councilman Jim Carson, a member of the village's negotiating team.

"Looking to the future, however, the village will have to ask the union for concessions in the area of health care benefits," he said.

Kurt Augustine, a Teamsters union representative, said of the six-month negotiation process: “I’m happy it’s over.”

The contract has several other changes from the previous deal that will save the village an average of $67,000 per year in employee costs, Carson said. Among them:

• Vacation cash outs: With the new contract, employees can only “cash out” 40 hours of vacation per year. Previously they could cash out 80 hours. Now employees must use the second week of vacation or lose it.

• Promotions: The wage concession includes about a 15 percent reduction in raises for current employees who are promoted, and longevity was eliminated.

• Health care: Village employees will pay nothing toward their health care costs and new employees will realize the same benefits. However, under the new contract, retiree health care is eliminated for new employees.

• Retirement costs: Currently, village employees contribute nothing toward their retirement. With the new contract, the village’s retirement costs will decrease because the formula that determines employee retirement benefits was reduced from a 2.25 percent multiplier to 2.0 multiplier. This change will go into effect in July, and is expected to save the village about $41,500 per year, according to the contract.

Current employees will contribute 4 percent of their wages to their retirement beginning July 1. In the second year, that amount will increase by 1 percent to 5 percent and the contribution will remain constant at 5 percent in the third year of the contract. This employee contribution will save the village about $29,000 per year in retirement costs, according to the contract.

In addition, new village union employees will not be included in the village’s current defined benefit plan through the Municipal Employees Retirement System. Instead, they will be included in a defined contribution plan and must contribute 5 percent of their wages toward their retirement. The village will contribute 2.5 percent.

Language was also added to the contract that states the village will keep the MERS defined benefit program at 80-percent funded.

Lisa Allmendinger is a reporter with AnnArbor.com. She can be reached at lisaallmendinger@annarbor.com. For more Dexter stories, visit our Dexter page.