Mayor Nutter held a press conference this morning to discuss the contract awarded to the city's police officers by the arbitration panel that makes that decision. Ben will have more later about the event and any questions that Nutter took following his statement.
The arbitration panel definitely zigged when most thought it would zag by actually decreasing the amount that the city has to pay into the health care fund for the city's police union. The usual dance has been for the arbitrators to award a contract that the city considers too generous. The city appeals. Eventually the appeal is denied and PICA releases a report about how the award will make it really tough to balance the budget in future years.
Not so this time. The city is happy with the decision so they won't appeal. And it's unlikely that the cops will appeal since the awarded contract is only for one year anyway.
That's the important part. As you'll see from Mayor Nutter's statement, reprinted in its entirety below, the administration is happy to use the extra year because it gives them "the time we need to develop a comprehensive, cooperative approach that will preserve the city’s fiscal health and the ability to deliver services for many years to come" and "an historic opportunity to the FOP and city administration by providing a framework for both parties to work in partnership to identify long-term solutions to the skyrocketing health care costs for union employees."
So we're not out of the woods yet. The real test will come over the next year when its time to work out a new contract. There is also the matter of the contracts for the city's white and blue collar non-uniformed employees. The new deadline for those negotiations will be on us in 5 days.
One thing is for sure. Today's decision will have a major impact on those negotiations.
Nutter's full statement is below.
MAYOR NUTTER’S STATEMENT REGARDING FOP CONTRACT AWARD
Philadelphia, July 10, 2008 –
Good Morning.
After a lengthy hearing process involving detailed testimony from city representatives and officials of the Fraternal Order of Police, the arbitration panel has made an Award providing for a one-year contract.
This administration has decided to accept the terms of Award and we will not appeal it.
This Award is a triple win – a win for the residents of Philadelphia, a win for the union and a win for the city administration. It’s real, unprecedented progress toward a set of goals that have eluded past administrations. This contract is not the status quo. It delivers real change.
We are particularly gratified that the arbitration panel balanced the needs of the taxpayers, the union and the City by issuing an Award that creates meaningful opportunities for change and fits within the City’s financial parameters. The total cost of the award is $8.8 million for this fiscal year.
The City of Philadelphia faces broad structural problems in the area of health care that could not have been resolved in a few weeks or a few months. This one-year contract gives us two significantly important benefits -- the time we need to develop a comprehensive, cooperative approach that will preserve the city’s fiscal health and the ability to deliver services for many years to come. These benefits are invaluable, and the immediate cost savings on our healthcare payments are real dollars saved for our taxpayers.
The Award provides an historic opportunity to the FOP and city administration by providing a framework for both parties to work in partnership to identify long-term solutions to the skyrocketing health care costs for union employees.
The framework is a new Joint Labor-Management Healthcare Evaluation Committee, which we hope that the City’s other unions will also join. And of course, we will invite them. The Committee will meet through the summer and fall and will explore ways to provide high quality health benefits for City employees at a reasonable cost in advance of the next contract negotiation.
The Award provides for a salary increase, which is offset through an historic reduction in the per capita healthcare payment the city makes to the union healthcare fund -- the first such cost reduction in more than 10 years. The Award also requires other benefit improvements for a group of city employees who risk their lives every day in order to protect all of us. These benefit improvements are good for our employees and good for the City.
And, this administration also believes that the terms of this Award can serve as a model for the other three municipal unions that are in the midst of negotiating contracts.
During the campaign and in the months since I’ve been in office, I promised three things about our contract negotiations:
I said that the city must negotiate contracts that are fair and reasonable for our public employees and the city’s taxpayers.
I said this administration has a high level of respect for the hard work done by city employees and that I would partner with them to work on solutions to our City’s challenges, and
I promised reform.
Today, this Award delivers on all three of these promises.
At the heart of this administration’s decision not to appeal the Award is a fundamental desire to break with the city’s past history of bitter, rancorous battles over each contractual tree in the forest without anyone paying attention to the raging fiscal fire that is upon us, if not already at our door.
This Award will set the groundwork for a new, more mature, more cooperative relationship with one and possibly all of the city’s unions. These values are also key to carrying out the comprehensive Crime Fighting Strategy.
We reject the idea that labor negotiations must be a zero-sum battle, where a new mayor must beat up on union members to “give up” long fought-for gains in order to create a “reformed” benefit structure. Such an approach will simply lead to more years of mutual distrust, disdain and disinterest in real change and reform. These are OUR city employees and they deserve to be treated with dignity and respect, while we negotiate or arbitrate firmly but fairly.
Instead, in the spirit of transparency and respect, our administration put in writing in an open and forthright way what funds were available for the next contract cycle with our unions.
In addition, rather than reflexively demanding cuts in important benefits, the City sought cuts in benefit costs and was awarded a new process for open and forthright dialogue to explore meaningful benefit changes. We’re all in this together.
The Joint Labor-Management Healthcare Evaluation Committee will explore ways to maximize the quality and competitiveness of benefits at an affordable price; it will examine national best practices and it will be open to rethinking the entire benefit funding and delivery system.
We have shared our fiscal information with the unions. The facts are very clear: in FY98 we were spending about $370 million on health care and pensions. It was 15 percent of the budget. In FY08, this city spent more than $850 million, a 130 percent increase. Those costs rose to almost 22 percent of our city budget.
We cannot continue down this same path without serious changes. We must make the necessary reforms to ensure a healthy future for our city and our workers.
The wage increase is in two parts in the fiscal year, providing two percent as of July 1 and two percent on Jan. 1, 2009. Eligible employees will also get a one-percent longevity increase on Jan. 1, 2009. The effective raise for the fiscal year is 3.5 percent.
This wage increase is offset by a significant 10.6 percent reduction in the per capita payment the city makes to the Union healthcare fund. The monthly payment would drop from $1,303 per member per month to $1,165. And I want to emphasize very clearly and directly that this cost decrease will have no impact on the benefits that police officers receive. This is a cost cut, not a benefit cut.
There are a host of other issues in this Award that are important to the rank-and-file union members or to supervisors trying to put the best educated and trained officers on the street to combat crime. For example:
There is a tuition reimbursement program similar to the firefighters’ program that will enable the city to deploy a better educated police officer.
The award also allows the city to reform our prisoner transfer process by using deputy sheriffs to bring down prison inmates for court appearances, a change that will free up 40 police officers for police patrol work.
The uniform allowance and clothing maintenance for officers is increased for the first time since 1998.
An additional reform allows the Police Commissioner to adjust by three hours with no overtime expense the hours of work for officers in the Highway and Narcotics Strike Force units for better deployment and responsiveness to shifting crime activities.
And a new committee will work on a very sensitive issue, non-disciplinary transfers, including transfers of officers out of special units and the authority of the Police Commissioner to transfer officers at the rank of lieutenant and above. The Commissioner needs flexibility to run the Police Department, but we respect that officers have careers to plan as well.
Although neither the City nor the Union received everything that either of us wanted, we believe that both the economics and the nitty-gritty issues in the Award show the careful balance that the arbitration panel struck in addressing the following issues:
the needs of the individual officers for fair compensation,
the needs of the City for flexibility to fight crime,
the need for real reform in the area of health benefits and
the City’s need to live within our budget.
It’s our hope that this Award and the cooperation that will come out of it will establish a new level of trust upon which the City and the union can build a reform agenda that meets the needs of the union, city residents and our administration.
We also hope that the other unions will look carefully at the cooperation agreement included in this Award and its recognition of the City’s financial constraints and join us in making meaningful solutions to the many fiscal challenges facing our great city.
This Award today will help us in our fight against crime and our efforts to control and contain spiraling healthcare costs, leading to a safer more fiscally stable Philadelphia.
This one-year contract will immediately improve efficiency in service delivery and will not break the taxpayers’ bank. However, the real significance of this one-year contract is that it gives us what no other administration in the last 20 years has had – the time that’s needed to fully focus on the most critical issues that drive the two biggest cost factors in out city budget -- healthcare and our pensions.
With the anticipated cooperation from the FOP, and hopefully all of our other unions, we will reform these systems and make the tough choices and smart investments that will sustain the future of this great city.