AFSCME / COALITION OF DETROIT UNIONS BARGAINING WITH CITY OF DETROIT Miller Cohen, PLC 600 West Lafayette, 4 th Flr Justice for Working People

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1 AFSCME / COALITION OF DETROIT UNIONS BARGAINING WITH CITY OF DETROIT 2014 Atty. Richard G. Mack, Jr. Miller Cohen, PLC Miller Cohen, PLC 600 West Lafayette, 4 th Flr Detroit, MI 48226

2 Historical Perspective March 2011, Governor Snyder passed Emergency Manager Law (2011 Public Act 4). Interpreted as stripping unionized workers from right to bargain employment terms, with consent agreement or emergency management. Applies to union workers in cities/school districts with emergency manager or consent agreement.

3 Historical Perspective In November 2011, Mayor Bing announces the City will run out of money in April 2012, and needs further employee concessions. The Coalition of Detroit Unions is formed, thirty-three (33) of Detroit s unions. The Unions demand that the City implement efficiencies and cost savings measures. This language is put in the Coalition TA. A new CBA is TA d February 2012, ratified March 2012.

4 Historical Perspective Governor Snyder threatens City Council with emergency management if it ratifies the Coalition CBA which locked in CBA benefits for 3 years. The City Council backs down, and signs a Consent Agreement instead. Refuses to ratify Coalition TA. With the consent agreement, the EM law kicks in, stripping union workers of bargaining rights. City waits until current CBAs end, to impose new terms.

5 Historical Perspective Miller Cohen, PLC AFSCME sued in state and federal court, seeking injunction. AFSCME, the Coalition and other unions also press legal challenges at MERC (state labor board) still pending. 7/18/12, the City imposes CET. Union presidents given no notice at all, let alone bargaining. City Council rejected CET, yet Mayor still imposed. Unions file more charges. City imposes 10% wage cuts, healthcare cuts amounting to 7-10% of compensation, cut in sick, vacation, longevity, etc, benefits.

6 Historical Perspective AFSCME and other Michigan unions lead effort to defeat EM law the Unions WIN. Yet, Governor Snyder ignores voters, passes new EM law with same powers to remove elected leaders and deny bargaining to workers. February 2013, City imposes additional 10% cut in furlough. Thousands of employees now losing 20% of pay, plus healthcare and other benefit cuts. And City workers without a contract, but under CET, which the City could change AT ANY TIME. Miller Cohen, PLC

7 Historical Perspective July 18, 2013, City files for bankruptcy. At the time, most City unions under CET. AFSCME and UAW unions file lawsuit to block petition. In bankruptcy mediation, Coalition reconstituted: AFSCME s 18 locals, Assn of Municipal Insptr (AMI), Assn Prof and Technl E.es (APTE), Assn of City of Det Supvsrs (ACODS), Assn of Det Engineers (ADE), Assn Municipal Engineers (AME), Det Income Tax Invstgr Asn (DITIA), Det Police Detention Offr Assn, Field Engineers Assn, Forestry and Landscape Foremen, Senior Accountant Analyst and Appraisers (SAAA), SEIU Local 517M, UAW Locals 212, 412, 2211.

8 Coalition Achieves New CBA AFSCME, UAW and Coalition unions push for improved benefits for retirees on Retiree Committee, GRS Board and other places. Unions also insisted on the security of 5 year CBA for actives. Unions achieved and ratified CBA 6/26/14, lasting until 12/31/18. First CBA in 2 years. No more threat of CET. Major differences between CBA and the CET:

9 CET VERSUS CBA WAGES CET * Employees work with a 10% pay cut * The City may reinstitute furlough days, beyond the 10% pay cut, at its discretion. * No merit or step increases. WAGES AGREEMENT * Added benefits - - 7/1/14-5% pay increase FY - 2.5% bonus. - 7/1/16-2.5% pay increase. - 7/1/17-2.5% pay increase. - 7/1/18-2.5% pay increase. - Furlough days not reserved. - Step increases returned (for minimum perf standard met)

10 CET VERSUS CBA HEALTHCARE CET * City could change all aspects of healthcare (coverage, e.e cost, benefits) at will. * State law (2011 Public Act 152) limits City payments to 20% HEALTHCARE AGREEMENT * Added benefit the City plan design and benefit package cannot be changed without Union agreement. Union can grieve changes. PA 152 still law. * Added benefit - The Union may suggest an alternate plan (i.e., cheaper for its members).

11 CET VERSUS CBA RETIREE HEALTHCARE CET * No provision for retiree healthcare RETIREE HEALTHCARE CBA * Added benefit The City contributes 2% of payroll to a fund, for actives when retired as of 1/1/15. City pays notes worth $218 million to fund (VEBA). * Added benefit coverage from 3/1/14 12/31/14, per Retiree Cmte suit settlement.

12 RETIREE HEALTHCARE UNTIL 1/2015 * City maintains group plan Medicare Advantage for Medicare eligibles. HRA for opt outs, with $115/month. * No City-paid group plan for non-medicare eligible, but stipend of $125/month. Up to $175 for households making < $75,000/yr. * Spouses under 65 yrs old, $125/month with < $75,000/yr household income. * $300/mth for retirees 65+ yrs old, non-medicare eligible. * City pays benefit for retirees at < 100% of federal poverty level * Dental ($ $57.17) and vision added.

13 CBA VERSUS CET MANAGEMENT RIGHTS CET MANAGEMENT RIGHTS CBA * City outsources union jobs at will. * City can change union wages and benefits at will. * City imposes new work rules at will. * City can change CET at will. * Added benefit City must follow Privatization Ordinance * Added benefit No City changes to wages/benefits. * Added benefit New City work rules must be reasonable and necessary. * Added benefit City cannot modify CBA.

14 OUTSOURCING BENEFITS ADDED IN CBA * Added benefit In following Priv Ordinance, City must provide requested information about outsourcing. * Added benefit Union may choose to partner with management to bid for work against vendors. * Added benefit the City s decision to outsource must not be arbitrary and capricious (thus, the decision can be grieved for arbitrariness).

15 OUTSOURCING BENEFITS ADDED IN CBA * Added benefit for work already outsourced, the Union can bid to insource work. The City reviews proposal on fair and reasonable basis, 60 days. * Added benefit outsourced e.e gets preferential hiring rights with new company. Must offer jobs to qualified City workers before others. No union bias. * Added benefit these rights in City contract with new company. * Added benefit outsourced workers can file grievance with new company, before arbitrator.

16 CET VERSUS CBA - RETIREMENT RETIREMENT OLD FORMULA * FAC highest 3 during the last 10 consecutive yrs x Years of Service x (1.6% for each of first 10 Yrs of service, 1.8% for next 10, 2% next 5, and 2.2% for each Yr > 25) * Pay includes longvty, bonus, * Service = 80 hrs for 1 month. Full year for 9 months. RETIREMENT NEW FORMULA * FAC (avg over the last 10) x Years of Service (after 6/30/14) x 1.5% * Pay includes base only; no OT, unused sick leave, longevity, vacation, etc. No COLA unless 100% funded * Service = For vesting: full year of service upon 1000 hours * For accrual: 1/12 for each month worked; 1 month of 140 hrs. Miller Cohen, PLC

17 CET VERSUS CBA - RETIREMENT ELIGIBILITY OLD * 30 yrs service regardless of age (hired prior to 1/1/96) * 30 yrs service and age 55 (hired on and after 1/1/96) * age 65 w/ 8 yrs of service * age 60 w/ 10 yrs of service * Reduced pension = age 55 and 30 yrs. Fired, get at age 62 * Service yrs b/4 & after 6/30/14, credited for vesting & eligibility. ELIGIBILITY NEW * 30 yrs and age 62. With a transition period for e.es who are age 53 and older as of 6/30/14 * Reduced pension = 30 yrs and age 55. * All service yrs b/4 and after 6/30/14, credited for vesting and eligibility.

18 CET VERSUS CBA - RETIREMENT Miller Cohen, PLC FUNDING OLD * Pension benefits funded by City. * Annuity Savings Fund, employee contributes 3, 5, 7%, at a minimum investment return set by Board (usually 7.9% before November 2011). Max investment return of 7.9% (after 11/2011) FUNDING NEW * E.r pays 5% base. E.es pay 4% base. 6.75% return rate. * COLA paid if 100% funded * Funding below 100%, take COLA, then money from rate stabilization fund, then e.e pay to 5% (5 yrs) * Funding below 80%, add the rescission of awarded COLA, then e.e contribute 6% (5 yrs), take ano COLA yr, reduce accrual to 1% * ASF interest = 0% 5.25%.

19 CET VERSUS CBA OVERTIME CET * City has right to schedule and mandate overtime, with no reference to equalization or seniority. OVERTIME AGREEMENT * Added benefit daily OT returned for hours worked beyond the normal workday * Added benefit City must either equalize OT, or assign OT based on seniority. Limited exceptions with Labor Relations Director written approval.

20 CET VERSUS CBA REDUCTION IN FORCE CET * City reserves the right to reduce the workforce. * City-wide bumping in the event of a layoff REDUCTION IN FORCE AGREEMENT * Added benefit City cannot layoff except for lack of work or lack of funds * City-wide bumping within Union retained.

21 CET VERSUS CBA MODIFICATION AND DURATION CET * CET in effect until City modifies it under emergency manager law. Then it can be modified at will. MODIFICATION AND DURATION AGREEMENT * Added benefit City must not modify CBA without agreement of the Union. Bankruptcy court has jurisdiction to enforce Term of CBA.

22 CONCLUSION * After many years, Unions finally have the security of not facing the risk of furloughs imposed on them, and other unilateral concessions. * The healthcare and pension changes are tough, but with the stability of the CBA, the City employees can survive to fight another day.