New Washtenaw County Labor Deals Approved

Board of commissioners OKs 10-year contracts with most unions

Groundbreaking contracts with 15 of Washtenaw County’s 17 bargaining units were authorized by the county board of commissioners at its March 20, 2013 meeting. The deals, which take effect March 21, come a week before Michigan’s right-to-work law takes effect, and guarantee that employees will not be subject to the law until the contracts expire. The board also voted to approve comparable compensation and benefits for its non-union workers.

Caryette Fenner, AFSCME 2733, Washtenaw County board of commissioners, The Ann Arbor Chronicle

Caryette Fenner, president of AFSCME 2733, the county’s largest bargaining unit, at the Washtenaw County board’s March 7, 2013 budget retreat. Her union had reached a tentative agreement with administration earlier that day, which was ratified by union members on March 13 and approved by the county board on March 20.

The majority of contracts run through Dec. 31, 2023 and are the longest-term labor agreements ever authorized by the Washtenaw County government, which employs about 1,300 workers. One of the unions agreed to a shorter-term contract: The contract for AFSCME 3052 lasts five years, through Dec. 31, 2017.

Typically, such agreements last two to five years. About 85% of county workers belong to a union.

In broad strokes, the agreements provide for annual wage increases, a cap on employee healthcare contributions, and the elimination of “banked leave” days. Banked leave days have been used in recent years to help balance the budget by cutting labor costs. The days are unpaid, but don’t affect retirement calculations.

Some of the major changes relate to benefits for employees hired after Jan. 1, 2014. Those employees will participate in a defined contribution retirement plan, compared to the current defined benefit plan – the Washtenaw County Employees’ Retirement System (WCERS). In defined benefit plans, retirees receive a set amount per month during their retirement. In defined contribution plans, employers pay a set amount into the retirement plan while a person is employed. The most common of these defined contribution plans is the 401(k).

Many of the details in the contracts match the agreement reached with AFSCME 2733, the county’s largest bargaining unit, with about 650 members. Highlights from the AFSCME 2733 agreement include:

  • Restoring 3.85% to an employee’s annual salary in 2014 by eliminating banked leave days. In addition, employees will receive a 2% non-structural salary increase.
  • In 2015, there will be a 1% salary increase if county property tax revenues do not rise. However, if tax revenues do increase, employees will receive a salary increase of either 2% (if revenues increase by up to 4%) or 3% (if revenues increase by 5% or more).
  • Employees will receive 2% salary increases in 2016 and 2017. The 2016 increase will be structural; the increase in 2017 will be non-structural.
  • The remaining years through 2023 alternate in this same three-year pattern of (1) formula increases tied to tax revenues, followed by (2) a 2% structural increase and (3) a 2% non-structural increase.
  • Current employees will remain in the county’s defined benefit retirement plan, unless they choose to transfer into a defined contribution plan.
  • Employees hired after Jan. 1, 2014 will participate in a defined contribution retirement plan, with each employee providing 6% pre-tax contributions that are matched by 6% from the county. Contributions will increase to 7% in 2016 and 2017, and to 7.5% in 2018 through 2023. Vesting for employer contributions will occur over several years, with workers becoming fully vested after 10 years of employment.
  • For current employees, contributions to the Washtenaw County Employees’ Retirement System (WCERS) – the defined benefit plan – will be capped at 10% in 2014 and 2015. That cap will be lowered to 9% in 2016 and 2017, 8.5% in 2018 and 2019, and 8% in 2020 through 2023.
  • The county will adopt state-mandated “hard caps” on health care contributions by public employers. Current workers will pay $75 per month in medical premium-sharing.
  • Workers hired after Jan. 1, 2014 will have negotiated health care benefits. Their retirement health care will be handled through retiree health reimbursement accounts (RHRAs), with staggered contributions by the county based on years of employment.

The March 20 vote by commissioners came after about 90 minutes in closed session near the start of the board’s ways & means committee meeting, for the purpose of discussing labor negotiations. The vote to go into closed session was 8-1, with dissent by Rolland Sizemore Jr. (D-District 5), who did not state any reason for his no vote.

It was the fourth consecutive meeting that included a lengthy closed session on this topic, as the administration has been conducting accelerated negotiations with its union to reach a new contract before March 28. That’s the date when Michigan’s right-to-work legislation – enacted late last year – takes effect. The law will make it illegal to require employees to support unions financially as a condition of their employment. Labor agreements in place prior to March 28 will not be affected by the law. Most of the previous contracts with the county’s labor unions were set to expire on Dec. 31, 2013.

At the board’s Feb. 20, 2013 meeting, commissioners had given final approval to a resolution opposing the legislation, with a clause that directed the county administration to renegotiate union contracts. The resolution stated a “goal of reaching four (4) year agreements to protect and extend each bargaining unit’s union security provisions, as well as enter into a letter of understanding separate from the existing collective bargaining agreements for a period of ten (10) years.”

That was an approach taken by other institutions statewide, including the Ann Arbor Transportation Authority. [See Chronicle coverage: "AATA OKs Labor, Agency Fee Accords"] However, the county administration and union leaders ultimately felt that the strategy of a separate letter of understanding would be more vulnerable to legal challenges. They opted instead for a longer-term labor agreement and no separate letter of understanding.

The administration and AFSCME Local 2733 reached a tentative agreement on March 7, which union members ratified on March 13. Other union bargaining units subsequently ratified similar agreements. However, the ratified agreements differed slightly from the version that had been shown to commissioners at their most recent closed session on March 6, so another closed session was held on March 20 to go over those changes.

Commissioner Ronnie Peterson (D-District 6) abstained on voting for two contracts – AFSCME Local 2733 and AFSCME Local 3052 – citing a relationship with the parent organization of these local units. The vote on those two contracts was 7-1, with Dan Smith (R-District 2) dissenting. The vote covering the other four union contracts was 8-1, also with dissent by Dan Smith.

The bargaining units that struck new deals are:

A similar agreement was approved for the county’s non-union employees. [.pdf of non-union agreement] The vote on that agreement was unanimous. The two bargaining units that did not negotiate new contracts – the Police Officers Association of Michigan (POAM) and Command Officers Association of Michigan (COAM) – are exempt from the right-to-work law.

Several commissioners highlighted various aspects of the new contracts, most prominently the shift to a defined contribution system as a way to eliminate legacy costs for future employees. Conan Smith (D-District 9) said he supported the contracts, but expressed disappointment at the move to a defined contribution approach and the impact it would have on employees. Dan Smith objected to the length of the contract, saying it severely constrains future boards and their flexibility to deal with whatever events might occur down the road.

These new agreements will be a factor in the budget that’s being developed for 2014 and 2015. The county administration has projected a $24.64 million general fund deficit over a four-year period from 2014 through 2017. A much smaller general fund deficit of $3.93 million is projected for 2014, but county administrator Verna McDaniel hopes to identify $6.88 million in structural changes for that year – a combination of new revenues and cuts in expenditures – in order to eliminate the cumulative deficit going forward. When McDaniel briefed commissioners on budget preparations at their Jan. 16, 2013 meeting, she indicated a desire to find $2.62 million in reductions to employee compensation and benefits.

For background on the county’s unions, see Chronicle coverage: “County Board Briefed on Labor Issues.” Most of the current contracts were authorized in September of 2011.

This report was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. More detailed coverage will follow.

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  1. March 21, 2013 at 6:11 am | permalink

    It looks to me as though these are fair to both labor and management, giving the employees some certainty for the future while also removing future liability for the County. It is my understanding that the GASB requirements will make municipalities account for future retirement costs in their present accounting, and changing back to a defined contribution plan will help.

    I say “back” because this appears to be identical to the MPPP plan that current employees were participating in at the time I was on the BOC. The plan became very unpopular because the stock market went through a number of upsets and some people had subscribed to riskier stock plans as part or all of their portfolios. Nothing like seeing your retirement fund go down instead of up. But I was frankly shocked when the BOC moved all employees to a defined payment plan. Never did figure out how they paid for that.

    I hope and expect that the County will offer some reliably safe funds for future employees.

  2. By John D.
    March 21, 2013 at 12:26 pm | permalink

    Commissioner Dan Smith should just move to Livingston county already. He’s always out of step with the mores and values of Washtenaw County. I’m in his District, unfortunately, and he will never get my vote. Heck, I might run against him someday.

  3. By Mary K
    March 21, 2013 at 12:30 pm | permalink

    It is not the same defined contribution plan as previously – that had immediate vesting and this does not. The whole thing seems like a decently fair deal all around.

  4. March 21, 2013 at 2:14 pm | permalink

    Yikes, no immediate vesting? I assume employees can take their own contributions out if they leave. The portability was a big feature.

  5. By Mary K
    March 21, 2013 at 3:38 pm | permalink

    I should say – it’s the Employer contributions I was talking about as far as vesting is concerned – employees can take their contributions as always.

    The new schedule is asfollows: Vesting for Employer contributions: 0-3 years: 0%, 4-5 years: 25%, 6-7 years: 50%, 8-9 years: 75%, 10+ years 100%