July 22, 2011

 

REPORT OF THE SPECIAL MEETING OF THE RULES, POLICY
AND INDUSTRIAL RELATIONS COMMITTEE/COMMITTEE OF THE WHOLE

 

Honorable Board of Directors
Golden Gate Bridge, Highway
  and Transportation District

Honorable Members:

A Special Meeting of the Rules, Policy and Industrial Relations Committee/Committee of the Whole (Committee) was held in the Board Room, Administration Building, Toll Plaza, San Francisco, CA, on Friday, July 22, 2011, at 9:30 a.m., Chair Pahre presiding.

Committee Members Present (6): Chair Pahre; Directors Arnold, Elsbernd and Theriault; Vice Chair Chu; President Reilly (Ex Officio)
Committee Members Absent (2): Directors Mar and Snyder
Other Directors Present (6): Directors Boro, Cochran, Eddie, Moylan, Renée and Stroeh

Committee of the Whole Members Present (12): Directors Arnold, Boro, Chu, Cochran, Elsbernd, Moylan, Pahre, Renée, Stroeh and Theriault; First Vice President Eddie; President Reilly
Committee of the Whole Members Absent (7): Directors Brown, Campos, Mar, Rabbitt, Snyder and Sobel; Second Vice President Grosboll

Staff Present: General Manager Denis Mulligan; Auditor-Controller Joseph Wire; District Engineer Ewa Bauer; Attorney Madeline Chun; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Bus Transit Division Teri Mantony; Deputy General Manager/Ferry Transit Division Jim Swindler; Public Affairs Director Mary Currie; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Lona Franklin

Visitors Present: Susan Chiaroni, District Retiree


 
1.
Approve Actions Relative to Benefit Modifications for Non-Represented Employees and Retirees and a Wage Adjustment for Non-Represented Employees with the Exception of District Officers and Deputy General Manager
     
  a.

Staff Report

In a memorandum to Committee, General Manager Denis Mulligan reported on staff’s recommendation to approve actions relative to benefit modifications for non-represented employees and retirees, and a wage adjustment for non-represented employees with the exception of District Officers and Deputy General Managers.

At its Special Meeting of October 30, 2009, the Board approved the Financial Plan for Achieving Long-Term Financial Stability (Plan) to meet the District’s then projected deficit of $132 million. Initiative #24, “Negotiate Increased Cost Sharing for Health Benefit Plans for All Covered Individuals,” was included in Phase II of the Plan, to be proposed for implementation as staff time became available due to the completion of the majority of Phase I Initiatives.

The staff report summarized the guiding principle leading to the recommendation, specifically, that all District employees -- current, future and former -- should contribute more toward the cost of the medical and pension benefits provided by the Golden Gate Bridge, Highway and Transportation District (District). Public sector benefit reforms have been implemented at all levels of government in the state of California and throughout the nation. The staff report also stated that the recommended benefit reforms are consistent with proposals that currently are under negotiation with the unions that represent District bargaining unit employees whose Memoranda of Understanding expired on June 30, 2011. They also are consistent, in various respects, with agreements previously reached with the Amalgamated Transit Union, the bargaining representative for District Bus Operators.

The staff report further stated that a 2% wage increase for all non-bargaining unit employees, with the exception of the District’s Officers and Deputy General Managers, is eminently justifiable at this time, given that this group of employees has had their wages largely frozen, having received a 2% wage increase on July 1, 2008, with no additional salary adjustment through December 31, 2010, and a 1.75% increase on January 1, 2011. The staff report stated that District salaries are not at parity with prevailing market levels, as reflected in the salaries paid by comparable public agencies. The staff report further stated that the District’s current workforce includes a high percentage of individuals who are nearing retirement age and, for the District to compete successfully in the recruitment market for the next generation of talented employees needed to replace prospective retirees, salaries should be established at competitive levels. The staff report concluded by stating that the short-term cost impact of the wage adjustment will be more than offset over time by savings to be derived from the pension and medical benefit reforms being proposed.

A copy of the staff report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, Mr. Mulligan stated that the proposal will affect non-represented employees, retirees and future employees, with future employees becoming eligible to retire at age 60. Addressing the District’s points system of determining retirement benefits, the formula takes into account the prospective retiree’s age and years of service. To receive full retirement benefits, 80 points must have been earned. He noted that current employees are in a plan that allows a benefit factor of 2.5% at retirement age 55, and they contribute 8% of their salaries to the plan. The new plan allows a benefit factor of 2.0% at retirement age 60, with a 7% contribution to the plan. He indicated that the benefits changes are planned to take effect on July 1, 2012. He concluded by stating that meetings with non-represented employees, to explain the changes, have already been held, both in San Rafael and at the Toll Plaza.

He indicated that various modifications to future medical benefits will come forward at a later date.

     
  b.

Public Comment

Susan Chiaroni, Retired Deputy General Manager/Bus Transit Division, spoke in opposition to the proposed benefits changes. She stated that retirees were shocked to hear that their medical benefits would be changed. She stated that the retirement community was not made aware of the possibility that such a proposal would be presented to the Board, and that she had received this information only yesterday. She stated that a letter alerting retirees of the District’s intention would have been appreciated, and requested that retirees be kept well informed, prior to the implementation date of July 1, 2012, as to the effects changes will have on them. She stated that retirees are aware that public agencies must make difficult decisions. She requested that a letter be sent out as soon as possible to all affected retirees and that meetings should be held in the very near future. She indicated that communicating as soon as possible would provide retirees time to digest the information. She concluded by stating that, for retirees in their 80’s who are on a fixed income, the District’s proposal will be a difficult setback.

       
  c.

Discussion by the Board

Discussion ensued, including the following comments and inquiries:

  • Director Theriault inquired as to the proposed coverage for catastrophic illness. In response, Mr. Mulligan stated that the recommendation proposes over $4,000.00 annually, with the balance carrying over year to year when unused. Beyond that, benefits would be reviewed by a committee, and if there are legitimate expenses above the available amount, the added costs would be paid.
  • Director Pahre made the following comments and inquiry:
    • She inquired as to the communications and support plan for retirees. In response, Mr. Mulligan stated that the District will send a letter, similar to the one sent to bus operators, with notification as to the changes being proposed and the dates of meetings where discussion can take place and questions can be answered. He stated that further meetings will be held with non-represented employees as well.
    • She commented that the Labor Relations Advisory Committee (Labor Committee) has reviewed the recommendation and approved it for presentation to the Rules, Policy and Industrial Relations Committee/Committee of the Whole (Rules Committee). She indicated that it is on the Agenda for today’s Rules Committee meeting due to the District’s desire that the recommended wage increase for non-represented employees take effect at the beginning of the next pay period. However, due to the response from retirees, a decision should be delayed.
    • She commented that a process should be put into place for upcoming years with the purpose of keeping retirees informed of impending changes. With such a procedure, Board members can check with staff to ascertain whether retirees have been timely notified.
  • Director Moylan commented that there seems to be confusion among retirees.
  • Director Stroeh stated that, although there is an opportunity to delay action until a later Board meeting, the Labor Committee has agreed that the Rules Committee should review the recommendation and, thereafter, provide its recommendation to the Board.
  • Director Renée inquired as to whether the action could be bifurcated such that the wage increase could be approved, but the changes to retiree benefits could be postponed to a later Board meeting for action at that time. In response, Mr. Mulligan stated that Roberts Rules of Order has a procedure for doing so. Attorney Chun added that bifurcation can be done, procedurally.
  • Director Boro inquired as to the effective date of the changes. In response, Mr. Mulligan stated that the changes would take effect on July 1, 2012, if the Board approves the action.
  • Director Eddie requested that staff report to the Board the results of meetings held with individuals affected by the changes to benefits that will result from approval of the recommended action.

Staff recommended, and the Committee concurred by motion made and seconded by Directors STROEH/EDDIE to forward the following recommendation to the Board of Directors for consideration:

RECOMMENDATION

The Rules, Policy and Industrial Relations Committee/Committee of the Whole recommends that the Board of Directors approve actions relative to benefit modifications for non-represented employees and retirees and a wage adjustment for non-represented employees, with the exception of District Officers and Deputy General Managers, as follows:

    a. Approve implementation of Individual Medicare Plan and Health Reimbursement Accounts for all current and future non-bargaining unit retirees and their eligible dependents who have attained eligibility for Medicare, effective July 1, 2012, except that Medicare eligible retirees may, in the alternative, elect to enroll in the District’s Kaiser Senior Advantage Group Plan as long as Kaiser remains outside the Medicare network available under the Extend Health Exchange;
    b. Establish a policy that non-bargaining unit employees hired on or after August 1, 2011, will not become eligible for retiree medical benefits until they reach age 60, with the understanding that all other applicable retiree medical benefit criteria will remain in full force and effect;
    c. Enunciate its intention to implement additional changes in the employee benefit programs applicable to non-bargaining unit employees, consisting of:
      1. Establish a 2% at age 60 pension benefit for new hires based on the average salary during the employee’s final three years of employment (employees will pay 7 percent of their wages to this plan); and,
      2. Modify the District’s medical benefit policies in the form of employee premium sharing and/or medical plan restructuring;
      with the understanding that the effective date of these changes, together with the specific details of the medical benefit policy modifications, will be determined at a future date; and,
    d. Authorize a 2% wage increase for all non-bargaining unit employees with the exception of District officers and Deputy General Managers, effective July 25, 2011;
   

with the understanding that these changes will result in significant net savings for the District over time.

Action by the Board at its Meeting of July 22, 2011 – Resolution
NON-CONSENT CALENDAR

AYES (10): Directors Arnold, Boro, Chu, Cochran, Elsbernd, Pahre, Stroeh and Theriault; First Vice President Eddie; President Reilly
NOES (2): Directors Moylan and Renée

   
2.

Public Comment

There was no public comment on items not on the Agenda.

   
3.

Adjournment

All business having been concluded, the meeting was adjourned at 9:55 a.m.

   
   

 

Respectfully submitted,

s/ Barbara L. Pahre, Chair

Rules, Policy and Industrial Relations Committee