San Jose Firefighters Make Concessions

NOTE: The original version of this piece contained an error, which has been corrected below in the paragraph marked with an asterisk. -Editor

Union-busting may be all the rage in some places, but in San Jose the Firefighters Union Local 230 and the city are on the verge of reaching an agreement that would not only help cover the municipal deficit. It could also help laid off firefighters their jobs back, though the plan also cuts the number of firefighters on trucks from five to four.

According to the agreement being hammered out, firefighters would agree to a 10 percent wage cut, “inclusive of health care concessions,” for two fiscal years: 2011-2012 and 2012-2013. The aforementioned “health care concessions” are a significant component of the document, and include a rise in co-pay costs. The plan also states that “the city shall pay 85% of the full premium cost of the lowest priced plan,” with the employee paying the remaining 15%. The additional cost of higher priced plans is to be covered entirely by the employee.

The biggest concession, however, involves the introduction of a two-tiered retirement plan, and distinguishes between employees hired before and after the agreement is signed. Union President Jeff Welch says that this will be the first such plan for public employees in the entire country. The change is being hailed as a breakthrough.

*In a letter to his constituents prior to the recent offer by the firefighters union, City Councilmember Sam Liccardo had questioned whether the two-tiered pension plan would be enough “to curb the exploding trajectory of retiree costs.” But following the offer, Liccardo praised the union’s proposal as “a historic step forward, and one that demonstrated courage and leadership from union head Jeff Welch and his executive team, as well as a strong statement of the need for shared sacrifice.”

Welch has already initialed the documents, so it now remains for City Council to decide whether it accepts the Union’s proposal. If they agree to it, the union members will still have to ratify it in a vote. Mayor Chuck Reed seems willing to consider it. After all, it could save San Jose $6 million.

Read More at NBC Bay Area.
Read More at ABC 7.

Read the full San Jose Firefighters IAFF Proposal here.

41 Comments

  1. ” Willie Brown, a staunch union supporter and former California legislative leader and San Francisco mayor, recently wrote in the San Francisco Chronicle:

      People constantly ask how we wound up in this mess. The answer is, we are all to blame.

    There was no way we [political leaders] should have agreed to guaranteed fixed-amount pensions and health care packages without takebacks that would have triggered if the economy went bad.

    And the public also needs to shoulder some of the blame for voting repeatedly to expand retirement benefits, especially health benefits for government workers and their families, which are turning out to be an even more expensive problem than pensions.”

    ” The other backdrop to today’s benefit crisis relates to the relative performances of the stock market during two key periods. In the later half of the 1990s, the markets outperformed, and many pension and benefit plans modified their contribution regimens based on projected annual stock market growth rates of 8%—forever. But the market has underperformed since the 2000 peak, and after a decade of those weak returns, it’s no surprise that pension funds are facing shortfalls.”

    Adjusted for inflation, stock returns since 2000 have been negative, even counting dividends. The S&P 500 index has declined from over 1,500 in 2000 to around 1,300 in 2011—a 13% decline that must be added to a reduction in purchasing power (inflation) of another 28%. Not counting dividends of around 2% a year, that’s a decline of 41%. Just to stay even with inflation, the S&P 500 would have to be above 1,900 now.

    A 2% annual dividend yield compounded since 2000 turns $100 into $124.34. So buy-and-hold pension funds have experienced a 24% gain based on dividends since 2000, but a 41% loss in equity value, resulting in a net 17% loss. A 2% (inflation-adjusted) growth rate in the real economy compounds to a 24% increase over 11 years—but that 11% annual increase in employee health care costs discussed earlier compounds into a 315% increase.

    And there, where those two macroeconomic forces collide, lies the heart of the debate over public workers’ benefits: Not in “greedy” unions or “heartless” union-busters, but in the stock market’s underperformance (plus some absurdly optimistic planning assumptions) and the rapid growth of health care costs.

    If we as a nation can’t trim the growth rate of health care costs to match the growth rate of the economy, we’ll face a structural financial problem that won’t go away.”

    See full article from DailyFinance: http://srph.it/hX6Tdq

    .

    San Jose Pension Boards still use very high and unrealistic stock market return rates which is 1 of many reasons

    – 3% automatic retirement increase,
    – sick leave buyouts,
    – low city tax revenues
    – high business costs driving business out of San Jose
    – decades of wasteful, political payback and ego Council spending
    – not telling taxpayers where taxes are actually spent
    – etc

    which is why San Jose Council has not and will not fix in short run it’s structural financial problems until takebacks, layoffs and wasteful occur and wasteful spending stops.

  2. Councilmember Liccardo should read the offer, it would allow current employees to opt-in to the lower tier retirement plan.  This would save money for the employee and the city and would curb the trajectory of retirement costs, right now.

    This is a significant, no strings attached offer.  Time will tell as to whether or not the current city leadership wants to settle for what they asked for or to continue to fight.

    • You’re right, and I agree: this is a significant offer, and a very good step.
      Unfortunately, as I’ve described in my response to Ernest’s comment, this reporter, Mr. Wool, used a quotation of mine that was NEVER uttered or written by me in response to anything the firefighters did—it was pulled from a newsletter I wrote a week before we ever received any offer from the firefighters.  I’ve never even spoken to Mr. Wool before.  Fair to say that I was thrown under the bus by a blatantly unethical journalistic tactic. 
      Sam

      • Sam is absolutely correct that his comment was taken completely out of context. The original version of this post described Sam’s quote as a response, when in fact it’s from a letter he wrote a week prior to the firefighter’s offer. I must point out that this was not an unethical tactic, however, but an old-fashioned mistake. I recognize the sensitivity of the situation and sincerely regret the error.

  3. Are we supposed to applaud the firefighters? Last year during contract negotiations they decided not to ratify a contract and went to binding arbitration. This action by the firefighters forced the city to lay off 49 firefighters to make up for the lack of contributions.

    This was just the opposite of what the police officers did. They agreed to a contract with cuts to save 72 police officers.

    So over the last year while the firefighters have had no impact to their pay the rest of the unions have had a decrease in pay and benefits. So this year they are first to agree on a contract and hope that the rest of the unions jump on board, but isn’t this the contract that should have been done last year? They look the heroes when they have not contributed like the rest of the unions over the last year. Way to go firefighters way to step up to the plate.

    • Dear Sgt.,
      As a point of fact, the Firefighters did not decide to not ratify a “contract”. There was no contract on the table as is the usual process. What the city did, was ask the Union to ask the membership if in concept they would support a 10% total compensation cut but provided no specifics on structure. Considering the PD took about 5-6% in cuts the FD was asking for the same deal but the city refused. That is why we voted as we did on the questions posed but it was not ever a formal proposal and never had any specifics.

    • Last time I checked, last year the POA agreed to about a 4% total comp reduction and even with that the council reduced by over 80 the number of police officers on the force.  POA did not do what other unions did because the other unions gave a 10% total comp cut not 4%.

      Last year the SJFF offered the exact, word for word, concession as the POA and it was rejected by the city.
       
      This current offer would eliminate the need for arbitration.

      • I love the fact that you firefighters have just boarded the train of giving back money to the city and are pointing at other riders for not giving as much as you are. The fact is that the POA is looking at its third year of givebacks to the city and we were the first union to give back into our medical. You are right we have not given 10% back, but we also do not run arbitration every time we do not like the contract. The facts speak for themselves; you people have run to an arbitrator twice as many times as the police department. You people apparently have forgotten how to do a contract in good faith. By the way, the scene is always safe for firefighters to enter, because we make it.

        • Are you sure your a SJPD officer and not a rent a cop at Eastridge Mall because you just don’t have your facts straight.

          The city gave you a raise so that you could use that money to pay into your retiree medical, hardly a pay cut.

          Two years ago you received a raise…did you not?

          We have been to arbitration 3 times and POA 2 times…

          So are you going to do a 10% total comp pay cut or not?  And if not, why not?

          Oh, and your comment that the scene is always safe for firefighters to enter is silly.  Uh, when we enter a burning building looking for survivors, what is it that the police have done to make it safe, maybe you tossed a couple of jelly donuts at the fire to put it out, but you ain’t making it safe for us.

        • Hardy Har Har
          no, we didn’t throw in our jelly donuts, we threw in your lazyboy lounge chairs you guys sit on all day while watching your big screen T.V…..by the way, next time you go to a medical call with a combative 90 year old, you dont have to call police for assistance. theres no reason to fear a 90 year old with health problems. Just my idea of freeing up patrol time.

        • The union busters have won already. It appears they have managed to pit your unions against each other. Nice solidarity guys.

    • Sergeant,
      The union leadership has changed which may be why we are seeing some change.  You are right that last year they made no concessions and let 49 of their brothers and sisters walk, shame on them.  However when you say they had no impact on their pay that’s not true, they had several assessments;  to fund a legal defend fund (which pays an attorney office where the ex union presidents daughter in law works), were assessed to fight the measure V and W, funding a negotiations/ arbitration fund, contribute to a building fund, payed to fight to defend a fired Union Official (fired for fraud which was upheld by the arbitrator), a PAC fund and the highest union dues of any Fire Department in the Country.  The Firefighters union under the previous President has been the most contentious and mislead group and is one of the main reasons there is so much disrespect and animosity towards the unions.  Even the other City Unions did not like them under the previous president.  Let’s hope the new union leader will work more cooperatively with their fellow unions, the City and lower their dues.

      • Somebody’s bitter….  I challenge your point about the Local “letting” anyone walk.  The money was offered to the city in the exact amount of cost to retain those 49 firefighters and the city said NO, they wanted firefighters to pay for the apparatus as well…..

        Then the offer was exactly the same as the POA and the city said YES to the cops and NO to the firefighters on the same day….. 

        So shame on you for not being informed, maybe you should attend more union meetings instead of forming your own “facts” and waiting to get spoon fed the information….

        • WTF ??? Blog 101 Darryl, your above statements have absolutely nothing to do with the topic being discussed in this thread and do not fall into any context of what my above post states.  Please repost this where appropriate if you want to have a discussion and I will be happy to set you straight on your “facts”.

          Try to keep it straight and on point here….. I know this is a confusing issue for you but If you weren’t blogging from your Maserati while driving then maybe this wouldn’t be a problem…..

        • Anonymous Ernest,
          Let me just correct a couple of your gross miss statements.  The 2008 staffing and apparatus levels were the highest in the history of the San Jose Fire Department.  That is where I hope the Department can get back to as I stated.  You can go back and review the budget documents or just look at the minimum staffing levels on telestaff.  Fire Administration fought hard for the funds to hire the personnel in the 08 / 09 budget for Station 34.

          Second, the SAFER grant has been awarded and hopefully will be able to be accepted by the City.  There are many restrictions on accepting the funds and I hope that the details can be worked through.  The Department has made great strides in obtaining grants over the past couple of years thanks to the work of some very dedicated people.  I understand there was one additional grant recently received for a burn trailer we applied for last year and the new SCBA’s are in the process of being purchased with grant funding.
          Third, if the 8.9% concession was accepted last year, the Department would still have all the stations and personnel, not just the 49 but all 80 plus.  That does not mean that this year would not possibly result in some service level reductions, but it may have been different than what occurred last budget cycle.
          As for the vote of confidence and the censure it was a well orchestrated attack by the union president and you don’t need to respond as I am sure you disagree as you could even be him.  I have a response to the censure which is being processed.
          Again, as I have stated in my posts if you can dispute the facts with real information, please do.  As for my dedication to the Department that you question and marginalize, it is obvious you do not know my career path and the work I did in each rank and if you would like to compare contributions rank for rank I would gladly put my work history against yours.
          This column is about the proposal moved forward by Local 230 and I applaud their new leadership for having the courage to move the proposal forward, I know it is not an easy decision.  I hope the best for the men and women of the Department as I always have.

        • This response was reposted under “City Council to Discuss Team San Jose, Labor Negotiations, Employee Layoffs”.  My apologies, it was late and I clicked two articles above where this response belongs.

    • Maybe the leadership (Fire) is much more political savy than the current police organization.  My understanding is the Police are already down to 1240.  Didn’t they used to have 1400? You guys not only lost more you paid for them to go away. Good Ol Kenny said it best “Know when to hold em know when to fold em”
          Wow I have a horse to sell you.  Goes by the name “Lucky”

  4. Gee, thanks Sam Liccardo….  Thanks for noticing all the effort that the firefighters union put into this and the substantial concessions on the table so that we can keep firefighters on the street.  (The previous statement should be verbally dripping with sarcasm)

    This is what was asked for by council and all Sam can say is ““Reducing benefits for new hires will do nothing to cut the city’s mammoth $3.5 billion unfunded retirement liabilities” ??

    I would rather have a simple “thank you”…..  but I guess that’s not news worthy.

    • Ernest, you’re absolutely right.  A “thank you” would be absolutely appropriate in this case.

      If I was asked my opinion about the firefighters’ proposed concessions, I would have praised the union’s proposal as a historic step forward, and one that demonstrated courage and leadership from union head Jeff Welch and his executive team, as well as a strong statement of the need for shared sacrifice. 

      Unfortunately, I wasn’t asked.  In fact, the writer of this entry never called me, or contacted me in any way.

      You see, the writer of this piece never spoke with me.  He took a statement that I wrote last week for a newsletter that I wrote to my constituents, written several days before the council was ever presented with the firefighters’ offer.  SJI picked up the newsletter, and and re-ran it on their blog.  The writer of this entry then extracted a quotation of mine as if I had uttered it in response to the firefighters’ offer.  In fact, I hadn’t.

      So, if you’re wondering why I wasn’t quoted praising the efforts of Welch and his team, it was because I wasn’t asked. 

      Nonetheless, I stand by the factual accuracy of the statements in my newsletter (here recycled for this blog): second-tier savings are a necessary and important step forward, but won’t alone save us from the crushing costs of paying down that $3.5 billion bill.  This is all sobering news, to be sure, and doesn’t nothing to minimize the important and praiseworthy step that the firefighters have taken.  It does lend important context, though: we’ve got a very big problem to tackle, and one that will require even more sacrifice and pain ahead.

      Sam

  5. Looks like Sam didn’t get the memo from his daddy Chuck that he is supposed to thank the firefighters in order to set a positive tone in the hopes that other unions follow the firefighters lead.

    Sam looks petty. Chuck looks like a responsible leader. Who would’ve thought the latter was possible?

    • You’re right—the statement of mine would sound “petty”—if I’d actually said it in this context.  I didn’t.  In fact, I’ve never spoken to Mr. Wool, the author, about this or any other issue.
      Please see my response to Ernest’s comment, above. this reporter, Mr. Wool, used a quotation of mine that was NEVER uttered or written by me in response to anything the firefighters did—it was pulled from a newsletter I wrote a week before we ever received any offer from the firefighters.
      As I’ve said above, I’m very grateful that the firefighters have stepped forward; it’s a courageous and very positive move for the entire city.
      Sam

  6. Though I’m pleased that an agreement has been reached I don’t think the union can be credited for operating any differently than they always have. In the negotiations the City ‘negotiator’ asks, “how much do you want?” and the union rep replies, “How much ya’ got?”
    The only difference between this year and past years is that this time “how much we’ve got” is LESS than it used to be. But rest assured, Local 230 took every penny of it.
    But they deserve it. After all, they’re heroes. That’s what they keep telling us anyway.

    • A Philosopher King you are not.  Local 230 has not received a raise since 2008 and if this agreement is ratified, they will not receive a raise through the term of June 30,2013. 

      What planet are you on?  In 2013 Local 230 would begin negotiations 10% total comp down from where they are today and may not receive a raise at that time either, so your “How much ya’ got?” sounds silly in the face of facts.

      • I don’t see any logical inconsistency between my contention and your facts.
        Explain to me (or try anyway) just how these facts of yours disprove my point.

        • of course you don’t… your just one of those guys who hates firefighters and cops and thinks that it’ll never be enough…  Ok, message received loud and clear.

          So that begs to questions Mr. Reed, I mean John, what in your mind is enough…??

      • Why would you possibly deserve a payraise for the little amount of work you do? When a “Truck Driver” makes $116,000 a year, gets paternity leave after knocking up his girlfriend, works two days a week and takes his collegues to the grocery store because they would die of boredom if left at the station house?
        When your union negotiates with the city, there is no give and take, you are not dealing with any competition. One firefighter I know wants to be paid language pay, he is German.
        I have no respect for firefighters whatsoever, most of you are bullies and an embarassment. Yes I know, the Sheriffs Department watches your back.

        • What kind of garbage comment is this? This sounds totally personal.  San Jose Fire Fighters have just given up 10% TOTAL compensation, which is actually more like a 12-14% pay cut.  That is not chump change.  The question has already been asked, “What in your mind is enough?”  What do you think is reasonable compensation for your police and fire fighters in this city?  Please indulge the rest of us tax payers.  I happen to enjoy our top notch public safety personnel.  And if a person speaks another language, why should they not get bilingual pay? Just curious.  I know west San Jose has a huge russian population.  Is russian recognized by San Jose?  Just wondering.  Police and Fire make the same compensation as other bay area units. Or at least they used to.  Careful what you wish for.  Keep on hating.  I hope things turn around for you.

  7. Lets learn our lesson.

    No contract should be entered into that has guarantees going out 30-50 years.  Defined benefit plans need to be eliminated.

    Pay our police and firefighters what they currently make, in cash.  They’ll save for retirment and acquire health insurance in a manner that personally suits them best.

    No more guarantees for life from taxpayers.

  8. > No contract should be entered into that has guarantees going out 30-50 years.

    Even though it’s from Joe Average, and therefore, it’s an “Average” suggestion, I think it’s also an above average suggestion, too.

    In fact, I think that governments should not be able to enter into contracts that extend beyond the longest remaining term of any current legislator.

    Basically, they should be prohibited from incurring obligations that will be borne by future governments after the current legislators are gone.

  9. Lets wait and see if Chuckles and his Teabag Party of Hale Bop followers accept the Concessions from Local 230. Its a kick in the stomach to see this SCAB Union Busting Council who cannot run a City nor fix the problems of the last politicians. Good Ol Boys McHenry and his kid brother Chuck just want good season Tix to see the junior varsity Oakland A’s play in SJ.

  10. Get the facts correct.  First, the Union President’s name is Jeff Welch.  Second, the contract would save the city much more than 6 million.  Cutting the 5th man off of the trucks would save almost 6 million alone.  Please, get your facts strait.

  11. Interesting development.  I’d like to know some more specifics of the second-tier pension benefit in the firefighter contract. 

    BTW – to look at the federal second-tier public safety pension plan rolled out in 1984 go to:

    http://www.fbijobs.gov/333.asp

    The federal public safety benefit is interesting in that it has three parts, a defined benefit pension accrued at 1.7 % per year for 20 years + social security + Thrift Savings Plan (fed speak for a 401k).  After 20 years, the pension only increases at 1% per additional year worked.  Public safety can retire as early as 50, but pension is then calculated on the highest annual wage after looking for 36 highest months of the career.

    A little math and it looks like someone could start at 22, work until 65 and max their defined benefit pension at 57% of the high 3 average, and start drawing social security in full at 67 (another couple of thousand a month?) and also start drawing on the interest, principal or both from the Thrift Savings Plan (5 percent a year put in and matched for 43 years would probably be a decent nest egg).

    But if you only live to 69 and go into the hospital for heart surgery and it doesn’t go well and the last couple of years are in a nursing home with very limited ability to perform basic life functions (ie – low quality of life, not much fun)….it begs the question of what’s the point of working so long and so hard for an awesome retirement.  I suspect a retirement in the 55-60 range is more likely and reasonable, which means a smaller pension and less 401k money, but more time to enjoy it. 

    I’m not sure if there’s special rules that allow fed public safety workers to draw social security before the 67 age that most of us post baby-boomers are told to expect (or is it 68-70 now to draw the full benefit?)  I actually don’t know as much as I should about Social Security because I sorta have the notion it’ll be gone when I get around to applying for it, or totally devalued and less than a subsistence allowance no matter how much I pay in.

    • Government employees who previously worked in the private sector and paid into social security, lose all of that money. We do not get to collect social security, so all of the money WE government workers (when in the private sector) paid into the social security system, to pay YOUR social security benefits, is lost. We don’t get to collect it and we don’t get that money back. I paid thousands and thousands into social security and it’s just gone. The government says that since we work for the government and are given decent salaries, then we cannot collect social security, too, so they take our payments. Now it looks like they are going to take our decent salaries, too. Public workers can’t win for losing.

      • As long as you paid 40 quarters into soc. security; we do get it when we retire but it is at a reduced rate due to our city retirment.  Don’t think it being reduced is fair but we do get something.

        • You may want to look into it a little closer. Everybody is not going to get something. Most will not. They calculate it at a 66% reduction of your gov retirement pension. So…if your gov retirement monthly pension is, say $4,000 and 66% of $4,000 is $2,640, then they would give you a SS check for any amount of your SS pension that was over the $2640. If your SS pension would have been $2645, you would get a $5/mo SS pension check. If your SS payment was going to be $2,000/mo, you would get zilch, zero, nada, because the $2640 would be greater than the $2,000. So, all of that money would be lost to you. SS even states that gov employees may be reduced to “zero”. That is the way I understood it. If I’m wrong, I will be happy.

  12. Carl Guardino, Silicon Valley Leadership Group defended Liccardo is today’s March 24th Letters to Editor by criticized 2 unions who exercised their free speech rights in publishing a Mercury News op-ed piece critical of Liccardo’s proposal that City Council not accept firefighters 10% 2 year giveback they asked for and ask for more givebacks

    http://www.mercurynews.com/letters

    Guess that Liccardo has lined up Guardino’s Silicon Valley Leadership Group support for his Mayor’s campaign.

    It was expected since SVLG and Liccardo supports more San Jose low income housing that benefits primarily non San Jose cities and employers while making our city budget deficit larger and staff small for years.

    San Jose needs Mayor and Council members loyal to and working primarily for San Jose’s benefit not ambitious politicians selling their votes for future campaign contributions.

    San Jose should not be where ambitious out of town politicians move as next political stepping stone to higher office as we saw with Sunnyvale’s ex Mayor Gonzales 2 disastrous San Jose Mayor terms.