The San Diego City Council and the municipal employees union have reached a tentative pact. You can read the Union-Tribune's story here.

For those of you who are interested in all of the details, here's the e-mail sent by the union's negotiating team.

Dear Fellow Professional Members
Tentative Agreement Reached Between City Management Team and MEA

At 12:45 p.m. today, MEAs Negotiating Team reached a tentative agreement with the City for a new 3-year labor agreement. To become final, the terms of this agreement must be approved by the City Council and ratified by MEAs membership in a secret ballot election.

This tentative agreement was reached after difficult negotiations in a hostile political climate fostered by media distortions of the facts and worsened by City Attorney Mike Aguirres off-base pronouncements that negotiated improvements in City employee pension benefits since 1996 are unlawful and must be rolled back.

This agreement contains economic concessions and sacrifices which MEAs Negotiating Team concluded after careful debate, discussion and review of the facts, could not be avoided if the goal of preserving core benefits was to be achieved -- and if we were to achieve the security of having a collective bargaining agreement in effect during these uncertain times.

Your Team made an important decision early on in the process to take control of employees destiny and not let the City unilaterally implement unwelcome economic terms -- as the law would allow if an impasse in negotiations occurs after good faith bargaining. In other words, your Team decided to choose the poison, rather than let someone else choose it for us. And we wanted to assure ourselves that any economic concessions and sacrifices MEA-represented employees make will actually go directly to the pension system and not simply be made available to the City to spend on pet projects.

Considering all the circumstances and your Team left no stone unturned in the process the terms of the tentative agreement represent an appropriate contribution by MEA-represented employees to the fiscal well-being of the City they faithfully serve every day on the job. We await the Citys delivery on its promise to make everyone share the pain, including the residents of San Diego.

Here are the highlights of the tentative agreement with no sugar-coating:

(1) Salary. The 3% general salary increase which was to take effect on the last day of the current labor agreement will take effect as promised. This will insure that employees close to retirement will get the benefit of this increase in the calculation of their "highest one year." It will also benefit employees whose mandatory and voluntary contributions to SPSP including the Citys match will also be increased as a percentage of salary. But your paycheck will be adversely affected on July 2, 2005, despite this increase, because of the change in the retirement contribution "pick-up" explained below.

There will be no further general salary increases until July 1, 2007, when all MEA-represented employees will receive a 4% general salary increase.

(2) "Flex." There will be no increase in Flexible Benefits Plan dollars for the next two fiscal years despite predictable increases in health insurance. The amount will remain frozen at $5,575.

Each MEA-represented employee will receive a $500 increase in "flex" dollars for the June 2007 open enrollment applicable to FY 08, bringing the total "flex" dollars to $6,075.

(3) "Pick-Up" of Employee Retirement Contribution.

In addition to making its own required employer contribution to the retirement system, the City has been paying a portion of your contribution as well: 5.4% if you are a General Member of the system and 7.3% if you are a Lifeguard Safety Member. This payment by the City is called the "pick-up."

Effective on July 2, 2005, every MEA-represented employee will begin to pay MORE of the employees own contribution obligation to the retirement system and the Citys pick-up of that amount will decrease. This will result in a reduction in your take-home pay because these additional employee contributions will be deducted on a pre-tax basis from your taxable earnings. These additional contribution deductions will go directly to the retirement system and will not be used by the City for other purposes. Here is the schedule:

July 2, 2005: 3%
July 1, 2007: 1%

All monies "saved" by the City as a result of these decreases in the City "pick-up" and as a result of the corresponding decreases in the salaries of DROP participants shall be set aside for use only in paying interest on Pension Obligation Bonds or in replacing lost general fund revenues as a result of the capitalization of leases to reduce the UAAL or to fund retiree medical benefits. If the City fails to sell POBs or capitalize leases by the end of this 3-year MOU, then these monies shall be deposited into the SDCERS Employee Contribution Rate Reserve and used to defray the pension contribution obligation of MEA-represented employees.

[Please remember that you will also see a reduction in your paychecks when the Employee Contribution Rate Reserve in the Retirement System is exhausted in October or November of this year. This reserve fund has been paying a portion of your employee contribution to the retirement system -- 2.25% for General Members and 3.35% for Safety Members. This is the result of prior negotiations in 1998, 2000, and 2002, when your retirement benefits were improved, and has nothing to do with this years negotiations. But it will mean a further reduction to your net take-home pay -- so plan your budget accordingly! DROP participants will not be affected by this. See MEAs May PUL for further details.]

(4) Pay Cut for DROP Participants

DROP participants no longer contribute to the retirement system but instead contribute 3.05% of salary to their DROP account which the City matches. These contributions, together with their monthly retirement checks, accumulate in their DROP account and interest at the rate of 8% has been credited to the whole amount. Since DROP participants have retired for purposes of finalizing the amount of their monthly retirement benefit, they no longer make contributions to the retirement system and there is no pick-up in effect for them.

The Team agreed that DROP participants should nevertheless "share" in the overall economic sacrifices being made by MEA-represented employees by taking a pay cut in the same amounts of the above-described reductions in "pick-up" and on the same dates. This means that DROP participants will receive the scheduled 3% general salary increase on June 30, 2005, but will take a 3% pay cut two days later on July 2, 2005; then they will take another 1% pay cut on July 1, 2007 on the same date when the 4% general salary increase takes effect. The practical consequence of each of these events will essentially be that DROP participants will experience a delay in the enjoyment of the upcoming 3% salary increase until July 1, 2007, but their current paycheck will not be reduced.

(5) Pension Benefits, DROP, & Retiree Health

Current Employees

The pension benefits for all current employees will remain the same.

All current employees will have the opportunity to participate in DROP.

No prior purchase of service credit will be adversely affected.

There will be no change in the City-paid lifetime retiree medical benefit for all current employees on the same terms and conditions as approved by a vote of employees in 2002. But the definition of Health Eligible Retiree will be amended to clarify that employees who receive a pension benefit from the City under a reciprocity agreement with another public agency must have 10 years of service with the City of San Diego to receive 100% of the retiree health benefit or 5 years of service with the City to receive 50% of the retiree health benefit.

The City and MEA will engage in a joint, data-intensive study effort for the purpose of identifying additional appropriate cost containment measures related to the retiree medical benefit for current employees consistent with the Citys promise to provide this benefit at no cost to the employee. This effort will also include identifying and recommending potential sources of revenue for funding this benefit in the future, including but not limited to re-directing the contingent 13th check into the Retiree Medical Trust. This joint study effort, however, will not result in any change to this MOU unless there is a mutual agreement to make the change.

New Hires On or After July 2, 2005

The 2.5% @ age 55 formula for General Members and the 3% @ age 50 formula for Safety Members will remain the same. There will be no Tier II formula implemented.

The DROP program will be eliminated as an alternative form of pension benefit accrual.
The option to purchase up to five (5) years of air time will be eliminated.
The opportunity to receive a 13th check from so-called Surplus Undistributed Earnings will be eliminated.
A new defined contribution Retiree Medical Trust will be established with contributions from the employee and from the City which will be made available to the employee upon retirement to help pay the cost of Retiree Medical insurance. These employees will not enjoy the benefit of guaranteed City-paid retiree health insurance which current employees enjoy.

(6) Re-Opener Protections

There will be re-opener rights related to the results of the Citys bargaining with other labor organizations, as well as re-opener rights in the event of any successful litigation affecting any pension benefits.

(7) Other Issues

(A) Agency Shop

An agency shop will be implemented in the Professional and Supervisory Bargaining Units effective July 2, 2005. [An agency shop is already in effect in the Technical and Administrative Support and Field Service Bargaining Units.] This means that all MEA-represented employees will finally pay a fair share of the costs of the collective bargaining/contract administration process, as well as the legal costs incurred to protect the fruits of the collective bargaining against attack. When each employee pays a fair share, the financial burden on each individual employee is lessened. The Team agreed that this had to be our goal in a time when salaries will be frozen yet the costly challenges will continue.

(B) Bereavement Leave

After nearly 20 years of failed attempts to establish a Bereavement Leave benefit, we have succeeded. Effective on July 2, 2005, three (3) days of paid leave will be available to an employee due to the death of a qualifying immediate family member (FMLA definition: spouse, father, mother, son, daughter, including step, foster and adopted), with a limit of only one eligible death per fiscal year.

(C) Mileage

Rising gas prices at the pump have placed tremendous pressure on employees who are required to use their personal vehicles and fill the gas tank to perform services for the residents of this City.

The "C" mileage reimbursement rate will increase to 47 cents per mile on July 2, 2005; to 48 cents per mile on July 1, 2006, and to 49 cents per mile on July 1, 2007.

The "D" mileage reimbursement rate will increase by 3 cents on each step of the schedule on July 2, 2005, by another 3 cents on July 1, 2006, and by another 3 cents on July 1, 2007.

If, during the term of this MOU, the prevailing price for regular unleaded gasoline (87 octane) in the local community reaches $3.00/gallon and remains at or above this level for 30 days, the City agrees to meet and confer with MEA regarding an additional increase to the D mileage reimbursement amounts.

(D) Tuition Reimbursement

Effective July 2, 2005, the Tuition Reimbursement amount will increase by $100 from $900 to $1000.

(E) Miscellaneous

Special salary adjustments recommended by the Civil Service Commission will be included in the recommended final agreement.

Uniform issues have been resolved to the Teams satisfaction.

A handful of other inequities have been resolved.