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PUBLIC HEARING -PBA, FBA, SACEA Acting City Manager Keith WAGE, SALARY & BENEFIT Gow summarized the City's NEGOTIATIONS IMPASSE financial problems as: DETERMINED POLICY 1) Sharply reduced property tax revenues imposed by Proposition 13 (Jarvis), estimated by the County Auditor-Control- ler to be $5,738,000; 2) Increase in PERS (Public Employees Retirement System) costs in the amount of $925,000 to fund the Military Service Credit Option; 3) Pay raises commencing on January 1 and an addition on April 1 pursuant to the last Memor- anda of Understanding amounting to 9% or $865,000 for Police and Fire employees, and raises of 7%, 8% and 9% totalling $82S,000 for miscellaneous employees, for fiscal year 1978-79; 4) An increase on July 1 in the cost of employees, medical benefits of 16% of the City's 90% share of $179,000 for this fiscal year. He stated that the City will share in a portion of the State surplus fund pursuant to Senate Bill 154, but at this date the amount is not certain; and that the Bill contains certain restric- tions which preclude granting municipal salary increases. Mr. Gow pointed out that comparisons with other selected Orange County cities and the County indicate that Santa Ana's police and fire personnel salaries and benefits are higher than the average. He concluded his report with a brief outline of wage salary and fringe benefits negotiations to date, stating that at the time negotiations began the situation was grim, and it appeared that an overall salary reduction would be required; that the first set of calculations based on County estimates enabled Council to change its position to no change in salary, but with the employee absorbing the increased cost of medical insurance (about $11 per month); that when Council recently became aware of a County miscalculation of $1.28 million in the amount of property tax the City would receive it was determined that if the $1.28 million becomes a reality and has no adverse effect on receipt of the State surplus funds, Council has authorized an offer of a one-shot payment of 5% of the gross annual salary to be paid next July 1, 1979; that this last offer was rejected by each of the three associations. John O'Malley, Staff Representative of the Santa Ana City Employees Association, described the issues at impasse that separate the City and SACEA. He stated that SACEA has rejected the City pro- posal in total and has made a counter proposal of 1) a salary increase of 5% effective July 1, 1978, or 5% of employees contri- bution to PERS; 2) City to pick up the 14% increase in health insurance costs for employees and dependents with disability pro- gram which has open enrollment; 3) utilization by employees of up to three days per year sick leave for personal business; 4) one additional floating holiday; 5) employees to be granted option of appealing to the City Manager or an arbitrator as a final step in the grievance procedure; 6) option to convert 1½ hours of overtime to 1½ hours of compensatory time off. Mr. O'Malley requested that these matters be submitted to fact finding or binding arbitration. He then summarized data to support his statement that employee wages or fringe benefits must increase at least 8.5% to maintain the ability to meet the increased cost of living; that cutting salaries is false economy; that the City has traditionally had fewer employees per capita than other cities; that if the City had the average number of employees it would have to add 355 positions at a cost increase of $8.2 mil- lion; and that savings due to attrition with 73 vacant positions amount to $1.69 million. Stephen H. Silver, Attorney at Law, Silver, Wells & Kreisler, 11661 San Vicente Blvd., Suite 1000, Los Angeles, 90049, repre- senting Police Benevolent Association and Fire Benevolent Asso- ciation, stated that each association has reached an impasse in its negotiations with City representatives for improved compensa- tion benefits for the 1978-79 fiscal year; that the City has refused to agree to participate in any of the recognized impasse CITY COUNCIL MINUTES 396 SEPTEMBER 18, 1978