City reaches agreement with one union, two more to go

Press Release: The City of Pensacola and American Federation of State, County and Municipal Employees (AFSCME) Local 3253 have reached an agreement on a new three-year contract, which includes a number of pension reforms expected to cut the City’s unfunded pension liability by nearly $5 million and reduce annual pension costs.

The agreement would cover the City’s 145 general service employees represented by AFSCME. Union members ratified the contract Tuesday, and Mayor Ashton Hayward plans to submit the agreement to the City Council for consideration at their July meeting.

“I want to thank Local 3253 president Kimberly Aguiar and her team for negotiating in good faith,” said Mayor Hayward. “With our unfunded pension liability and annual pension costs threatening the City’s long-term fiscal stability, I appreciate AFSCME’s engagement and willingness to help us take action on these critical issues.”

In exchange for wage considerations, the union agreed to several changes in how pension benefits are calculated, as well as to changes in the Deferred Retirement Option Program (DROP) and survivor benefits to conform to those offered by the Florida Retirement System (FRS). The pension changes will help reduce the City’s annual pension costs and unfunded pension liability, which in recent years has ballooned to more than $116 million.

In return, the City will provide a 10% wage increase for AFSCME-represented employees, to be distributed over the next three years. “When we ask our employees to accept changes to their retirement benefits, it’s only fair that we use a portion of the savings to adjust compensation packages for those affected,” said Mayor Hayward.

“Credit for this agreement goes to our disciplined, focused and tireless negotiating team,” said AFSCME Local 3253 president Kimberly Aguiar. “AFSCME is fully aware of these hard economic times and what it means to the taxpayers and citizens of Pensacola. It was our intention to shoulder most of the burden of the wage increase. This process, while challenging, allowed us to address many important issues. The agreement holds significant impact for employees and yet we believe that the choices made were in the best interest of the City of Pensacola and its citizens.”

Addressing the City’s pension situation has been a top priority for Mayor Hayward, who formed a Pension Advisory Committee last year to analyze the City’s three pension funds and make recommendations for reforms. The General Pension Plan was closed in 2007, and all new employees go into FRS, but its unfunded liability still contributes to rising pension costs. “These changes will make a visible dent in our unfunded liability and annual pension costs, and this is a great step toward long-term fiscal responsibility,” said Hayward.

The agreement also eliminates references to the former Civil Service system, as the union agreed to adopt the Personnel Administration Policy developed by Mayor Hayward. If approved by the City Council, the new collective bargaining agreement will take effect October 1.