CITY OF MELBOURNE, FLORIDA MINUTES SPECIAL MEETING BEFORE CITY COUNCIL APRIL 24, 2017

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1 A special meeting of the City Council was held in the City Council Chamber, 900 East Strawbridge Avenue, and was called to order at 6:30 p.m. by Mayor Kathy Meehan. 1. Pledge of Allegiance. 2. Roll Call. Present: Kathy Meehan Mayor Tim Thomas Council Member, District 1 Betty Moore Council Member, District 2 Yvonne Minus Council Member, District 3 Debbie Thomas Vice Mayor, District 4 Paul Alfrey Council Member, District 5 Teresa Lopez Council Member, District 6 Alison Dawley City Attorney Cathleen A. Wysor City Clerk Representing Management/City: Andy Hament Mike McNees Shannon Lewis Linda South Carol Burns Chuck Bogle Attorney City Manager Deputy City Manager Management Services Director Human Resources Manager Fire Chief Representing the Union/IAFF Local 1951: Richard Siwica Attorney Roger Van Kramer Past president Ryan Young President-elect Doug Conte Vice president Monte Rann Treasurer 3. Impasse Hearing between the City of Melbourne and the International Association of Firefighters (IAFF) a. Introduction and explanation of procedure by City Attorney City Attorney Alison Dawley said that the purpose of this meeting is to consider recommendations that were made by a special magistrate in light of the rejection of certain positions on disputed issues between the union and the city. At this meeting, the City Council is sitting in its capacity as a legislative body. The decisions that City Council makes at this meeting will be offered to the union and then to City Council for ratification. If the agreement is ratified, it may continue for multiple years. If it is not ratified, the terms decided at this meeting would be effective for a one-year period and would apply to only fiscal year Page 1 of 23

2 Both parties will follow the procedures that were adopted by City Council at its regular meeting on April 11. She reviewed the process and procedures, which are generally summarized on the agenda. b. Presentation by City Manager through designated representative, Attorney Andy Hament (45 minutes additional time may be granted upon approval of City Council) Andy Hament, attorney representing city management, introduced members from the bargaining team. He reviewed a PowerPoint presentation and highlighted the following: The union and city are at impasse over items coming out of a collective bargaining agreement that expired September 30, Approximately a dozen bargaining sessions were held from July 2015 through March In February 2016, an impasse in negotiations was declared. The impasse procedures in state law were followed: a special magistrate was appointed by the Florida Public Employees Relations Commission; an extensive evidentiary hearing was held with the parties; the magistrate considered other fire departments in the local operating area and departments of similar size in the state; and the special magistrate issued a report, which contains recommendations to the City Council. The city s bargaining team reconvened with the union to sort through the issues in light of the special magistrate s recommendations. The city presented a proposal to compromise on its previous positions on wages and overtime, if the pension proposal was accepted also known as a packaged proposal. The union did not accept the city s packaged proposal. At that point, the next phase of the process was prompted where the parties have a right to reject the recommendations of the special magistrate. F.S (3) provides: Such recommended decision shall be discussed by the parties, and each recommendation of the special magistrate shall be deemed approved by both parties unless specifically rejected by either party by written notice If that occurs, the item comes out of impasse. There were a number of items that the city rejected in making its proposal. The union did not reject a single recommendation made by the special magistrate. Therefore, as a matter of law, the union accepted the recommendations. The remaining articles for the City Council to decide relate to: Article 11 Overtime Vacation but not sick leave counted as hours worked toward overtime calculation. Article 30 Pension Multiplier and member contribution; and establishment of share account Article 39 Wages Salary increase; and education incentive With regard to Article 40, Duration, the special magistrate recommended a three-year contract with three openers on non-economic items. The city is fine with that and the Page 2 of 23

3 union did not reject that recommendation. Technically, this article is no longer before Council. Although Council cannot impose a duration, it can certainly state its opinion on it. Mr. Hament proceeded with review of the first item for consideration. Article 11, Overtime The City Manager s message throughout the city is that only time worked should count towards overtime. There has been a practice in the past of vacation, sick leave, and other forms of non-working time being counted in the overtime calculation. The city proposed to exclude hours where no work is performed (vacation and sick) from overtime calculations. The IAFF proposed the status quo, which is all hours are counted in overtime calculations, even if no work is performed. The special magistrate recommended that vacation leave be counted and that sick leave not be counted in the calculation. The city accepted the recommendation as part of the wage and pension package. By not rejecting the special magistrate s recommendation, the union accepted it. The city s position is consistent with the law governing wages and hours, the Fair Labor Standards Act, which provides that only working time needs to be counted towards overtime. The city s contract with the laborers union and policies for general employees provide that vacation does not count as time worked for overtime calculation. In making its recommendation, the special magistrate noted that this would not be such an extreme change from the current practice; it would be on par with most of the governmental bodies in the local operating area and comparable statewide. Management Services Director Linda South reviewed the next article for consideration. Article 30, Pension The firefighters pension plan is a very important element of the compensation package. The city is interested in making sure that the plan is sustainable and provides the firefighters with the benefits that they deserve. There are several items that go into a pension calculation. The two major items are the multiplier (percentage of final compensation times years of service) and the contribution rate. The multiplier is the expense side of the pension calculation. The city proposed a 2.75% multiplier, which is down from the current rate of 3.25%. Additionally, the city proposed the member contribution rate, which is the income side of the plan, of 7.5%. The IAFF proposed a 3.25% multiplier, a 6.25% contribution rate, plus an unknown amount based on an annual actuarial calculation. On the expense side, the union proposed keeping the same expenses the 3.25% multiplier. On the revenue side, the union proposed changing the member contribution rate to a number to be determined each year based on actuarial valuation. Page 3 of 23

4 Ms. South stated that during the post-magistrate negotiation session, the union did not offer a change while the city came to the table with concessions and considerations. However, in reviewing the post magistrate brief, the union indicated that it had increased the member contribution rate by.25%, although that was not offered to the negotiating team at the table. Continuing, Ms. South discussed the reasons why it is necessary for the city to change the pension plan. The city has a responsibility to not over-promise benefits. In reviewing the actuarial statements, the city is concerned that the plan as it exists is not sustainable. In the budget process, there are more needs in the city than the General Fund is able to pay for. The 2017 required firefighters pension contribution is $3,747,014. The cost is shared as follows: city contribution is $2,645,963; the state contribution through the insurance premium tax is $545,561; and the member contributions is $555,490. The annual required contribution by the city includes a payment in the amount of $1.5 million on the plan s unfunded liability of $17.4 million. This means that in the benefits promised, there is a $17.4 million unfunded actuarial liability; this is a concern. The pension funding from the three sources mentioned shows a trend over time of a disproportionate burden on the city. Beginning in , there was a sharp and dramatic increase in the proportional share paid by the city for the pension obligation. Another way of showing how expensive the firefighters pension plan has become is to express it as a percentage of payroll. The following shows a comparison of all Melbourne pension plans: Plan % of Payroll in 2003 % of Payroll in 2016 Firefighters 3.93% 43.82% Police 22.64% 37.09% General employees 7.39% 7.26% Laborers 7.39% 7.26% Airport police 18.53% 22.04% Ms. South stated that today, for every dollar the city spends on firefighters salaries, another 43 cents is paid towards the pension plan. In contrast, she reviewed the various employee groups in the city (see chart above). This demonstrates that the plan needs attention in order for it to be sustainable. Half of the conversation with the special magistrate revolved around pension issues. A great deal of research was presented to the special magistrate. Direct quotes from the special magistrate include: The city provided substantial evidence that something must be done to correct the extremely disproportionate cost to fund the plan. When compared to other cities in the local operating area like Rockledge and Titusville, the 2.75% multiplier is consistent. The city s position appears to be reasonable under the circumstances and should be implemented. Page 4 of 23

5 Ms. South closed by repeating the City Manager s recommendation of a 2.75% multiplier and 7.5% contribution rate, and that the premium tax be deposited to the share account within 30 days of receipt. This recommendation is conditioned on the acceptance of the overtime and wage article. Returning to the lectern, Mr. Hament emphasized that the change in multiplier would be prospective only. Under Florida law, a change like this cannot effect years of service that have already occurred. The change would only take effect and be calculated on years of service going forward. Whatever someone has earned under the old multiplier would remain earned. Article 39, Wages and Differentials Attorney Hament stated that the city proposed an increase of 2.5% across the board in 2016 and 2017 with no retroactive pay. The IAFF proposed a 2.5% step increase every October 1 going forward, plus a 3.75% across the board increase September 30, The city s bargaining team objected to the IAFF s automatic October 1 step increases because the city would lose its right to bargain over that issue each year. The special magistrate recommended 2.75% across the board retroactive to October 1, 2015, plus 2.5% step increases on October 1, 2016 and The city accepts the special magistrate s recommendation, with the exception of the full retroactive pay. The IAFF accepted the special magistrate s proposal by not rejecting recommendation. Mr. Hament said that one of the important drivers is how Melbourne compares with other fire departments. Compared with Palm Bay, Titusville, Cocoa, Brevard County and Rockledge, Melbourne is doing well second on the list in the salary range for the position of firefighter. Statewide, Melbourne is also competitive fifth on the list in the salary range. City Manager Mike McNees commented that the issue of retroactivity is very important for a number of reasons. The contract that is being negotiated has been expired for nearly two years, and the process of negotiating another contract will begin immediately. It s complicated, becomes difficult to keep square, and is not the best business practice. Long and protracted negotiations create bad blood within the organization, and that is not what the city is trying to achieve through this type of collective bargaining. Management feels it is important to incentivize efficient, high quality, good faith bargaining. The only way to incentivize this process is not to promise pay raises all the way back to the beginning. Management feels strongly that Council not grant full retroactivity. As a compromise, the city has offered 2.75% across the board retroactive to October 1, 2016 and a 2.5% step increase October 1, He closed by stating that granting retroactive pay to 2015 sends a bad message and rewards the wrong thing; it rewards foot dragging. Mr. Hament returned to the lectern and noted that the second item under Article 39 relates to the education incentive. The city proposed the current incentive of a two-step increase for Fire Science or Emergency Management degrees. The IAFF proposed to expand this to any degree that is eligible under state incentives. The special magistrate recommended that the expanded degrees receive a two-step incentive. The city does not accept the Page 5 of 23

6 special magistrate s recommendation and supports keeping the current language. The IAFF accepted the recommendation by not rejecting it. The status quo is that the degree has to be directly related to what the Fire Department does in order to get the incentive. With regard to degrees eligible for state incentives, the city does not know what this means. It could be a wide array of degrees and types of education. The City Manager strongly feels that the education incentive should be tied to Fire Science or Emergency Management. Continuing with Article 39, Mr. Hament addressed the non-solo paramedic incentive. The city proposed current contract language, which provides no incentive for completing nonsolo paramedic certification. The IAFF proposed a $4,000 incentive upon completing nonsolo state paramedic certification. The special magistrate recommended a one-time incentive of $2,000 for completing non-solo paramedic certification. The city does not accept the recommendation and instead proposes a one-time incentive of $1,000. The IAFF accepted the special magistrate s proposal by not rejecting the recommendation. Article 40, Duration Attorney Hament reviewed this item for information as the city and the union accepted the special magistrate s recommendation of a three-year agreement with three non-economic openers available each year. c. Short recess (at the discretion of the Mayor) The meeting continued without a recess. d. Presentation by the IAFF through designated representative, Richard Siwica (45 minutes additional time may be granted upon approval of City Council) Richard Siwica, attorney representing the IAFF Local 1951, introduced the members of the bargaining team. Attorney Siwica provided background information for City Council. The Public Employee Relations Act provides the process for impasse. The City Council is sitting in the capacity of a legislative body. Up until this point, City Council had been negotiating against the firefighters and the City Manager had been simply delivering City Council s proposals to the firefighters. The City Manager doesn t draft proposals and make decisions as to what gets presented across the bargaining table. The city has noted that the union technically accepted the special magistrate s recommendations. However, the only way the union can accept the recommendations is to not reject them. The union accepted the recommendations the good and the bad. Mr. Siwica said that the city did the equivalent of taking its ball and going home when it rejected only the items it didn t like. The union is asking the City Council to respect the process. A Page 6 of 23

7 professional neutral was asked to analyze the evidence, bring to bear her skills as a professional expert in labor relations, and make a recommendation. City Council is now in a position where it can resolve each individual impasse by doing one of three things: accept the city s proposal, which has always been the City Council s proposal; accept the union s proposal; or do something else. Attorney Siwica said that there will be substantial discussion on the topic of pension. The term unsustainable is being used all over the state irrespective of the soundness of a pension plan. He asked what this terms means and pointed out that the city did not say that it can t afford the plan or that it s too expensive to be funded. The pension is a promise made to firefighters when they came on board. With respect to wages, the union is in favor of what the special magistrate recommended. She analyzed in great detail all of the comparisons and came to a reasonable conclusion. The union wants the pay increase to be retroactive because it is not the union s fault that the special magistrate took so long to issue her decision; the union should not have to pay a penalty for that. On the issue of duration, if the city is good with a three-year contract with annual reopeners, the union is also good with that. He pointed out that in the city s materials, it is listed as an item open to resolve at this meeting. Roger Van Kramer distributed copies of the union s PowerPoint presentation and reviewed same. He provided the history of the negotiations leading up to the meeting with the special magistrate in August Mr. Van Kramer stated that the city cherry picked the special magistrate s recommendations. At the post magistrate meeting held in March, the union received the city s take it or leave it packaged proposal with undesirable terms. As a result, the union decided to leave it. Mr. Van Kramer provided examples from the bargaining process that he said points to a pattern of taking your ball when you don t want to play anymore and going home. Continuing, he noted that the data used for the local operating area in the special magistrate s recommendations came from Rockledge and Titusville as comparison for pension purposes. Palm Bay, Titusville, Cocoa, and Rockledge were used as comparison for salary purposes. The union does not believe these are apples to apples comparisons. He provided statistical data from each of the cities to support his statement. The union s position is that the magistrate did not use the most obvious closest, true comparisons in the local operating area for basing some of her recommendations. Article 11, Hours of Work and Overtime The union agreed to the start times in the previous collective bargaining agreement. The times were needed to alleviate issues with pensionable earnings calculations. As a result, there have been payroll discrepancies and 40 hours of additional pay per member per year lost. The union feels that the start/stop time should mirror the normal tour of duty, which is 0730 to The union also feels strongly that time earned, no matter how it is taken, should be counted as time worked. Page 7 of 23

8 Article 30, Pension On a statewide basis, a 3% multiplier is the most prevalent and is the statistical average of 70 plans. Twenty plans statewide have a multiplier of 3.5%. For comparison in Brevard County, 3% is the most prevalent and the statistical average of four out of eight plans. The average contribution rate in the county is 7% of pay. The statewide average member contribution rate is 7.14% of pay. Mr. Van Kramer reviewed the following changes that were made to the plan in 2012: $90,000 maximum annual benefit amount; overtime in excess of 300 hours per fiscal year is excluded from salary for pension purposes; sick and vacation sell backs are excluded from salary for pension purposes for all employees hired after March 24, 2015 and limited for all others; DROP interest rate went from 6.5% to 1.3%; and the employee contribution rate increased from 6% to 7.5%. In , the financial crisis was considered by many economists to be the worst financial crisis since the Great Depression. Investment returns for the firefighters pension plan are an integral part of funding for the plan. During this period, returns were well under the 8% assumption rate of the plan. In 2008, the returns were -11.3%; in 2009, the returns were -4.2%; in 2010, the returns were 6.6%; and in 2011, the returns were -1.8%. Returns since 2012 have rebounded. In 2012, returns were 19.3%; in 2013, returns were 13.4%; in 2014, returns were 11.2%; in 2016, returns were 10.6% was flat at.2%. The actuarial forecasts for the city-required contributions are trending in the right direction since 2015 from 45% of payroll in 2015 to 35.7% forecast for 2018, which is a 21% decrease. The funded percentage of the plan is also trending well, going from a low of 67% funded in 2012 to 78.5% forecast for The combination of the changes that have already been made to the plan and good investment returns are beginning to show positive changes in the plan s status. Changes to plan benefit levels are considered long-term solutions and will show even more positive changes over the life of the plan. Mr. Van Kramer summarized the pension issue by saying that the union recognizes the need to be proactive, yet reasonable, when negotiating proposed changes to the retirement plan. The union also recognizes the importance of having a retirement fund that is well funded, sustainable, and a competitive recruitment tool for prospective employees. He pointed out that the initial and all subsequent city proposals were for a 3% multiplier and an 8% contribution rate. It wasn t until just before impasse was declared in February 2016 that the city offered 2.75% with a 7.5% contribution rate as an option. The union does not believe that a below average multiplier of 2.75% coupled with an above average contribution rate of 7.5% is justified at this time. It will hinder the city s ability to attract the best quality candidates for future openings. Currently, members pay 7.5% for a 3.25% service multiplier. That equates to: 6.25% contribution rate = 3% multiplier Page 8 of 23

9 Plus: Additional 1.25% contribution rate = total 3.25% multiplier The union believes a 7.75% contribution rate for a 3.25% multiplier is reasonable. This is broken down as follows: 6.5% contribution rate from all members (including those in DROP) = 3% multiplier Plus: Additional 1.25% contribution rate = total 3.25% multiplier for members not in DROP Additionally, the union believes that it is fair and not unreasonable to expect distributions of its share of the premium tax revenues within 30 days of receipt as the special magistrate found. Article 39, Wages and Differentials Mr. Van Kramer said that the union proposed to the special magistrate a 3.75% cost of living adjustment on September 30, 2016 and step movement on October 1. There has been no step movement for firefighters since April The union is in agreement with the magistrate s recommendation of 2.75% effective October 1, 2015, a step increase of 2.5% effective October 1, 2016 and a step increase of 2.5% effective October 1, This is fair, equitable, and in line with other city employee groups. Since 2011, firefighters have averaged a 1% pay raise per year when every other city employee has averaged 2.5%. Melbourne s starting pay for each fire job classification has slipped and is no longer the highest in the local operating area. Several years of either no raises or subpar raises have left employee wages stagnant and falling behind other departments. The union also agrees with the magistrate s recommendation that if the State of Florida recognizes a degree as having merit or value to the fire service and pays state incentive money accordingly, the city should do the same. Some members have gone to college to get some type of degree that would allow them to advance further in management. He added that it is his understanding that the Fire Chief has a Bachelor of Science in Business Administration. Following discussion, Mr. Van Kramer said that it is the union s position that if a person is educated to the level of a Bachelor of Science or a Master s Degree and he holds a firefighters certification and/or a paramedic card, he should not have to buy an Associate s Degree in order to get an increase in pay that he is justly due. Mr. Van Kramer moved on to the magistrate s recommendation on state paramedic incentive pay, which the union agrees with. He noted that their members work very hard to achieve state certification as a paramedic and should be rewarded incentive pay upon completion of certification. When firefighters graduate from paramedic school and take the state exam, they re certified but not solo. A certified paramedic can become solo in a district in two to six months after being approved by the medical director. If the city had its way, paramedics who are going to become solo at some point who are doing all the work Page 9 of 23

10 of a paramedic would receive $1,000 instead of the $4,000 that would be duly given the day they become solo. The union does not believe this is right based on the training and education that they received. Article 40, Duration The union proposed a one year contract after the third negotiation meeting in response to the city s proposals. The union doesn t necessarily oppose a three-year contract if the terms of the open articles become agreeable to both parties. Mr. Van Kramer returned to the topic of salaries and said that the salary for a firefighter is on very thin ice. When articles are taken away, benefits removed, retirements lowered, and contribution rates raised, the city is going to have a hard time keeping employees. The Melbourne Fire Department does not want to become Brevard County and be 30 to 100 paramedics and firefighters short because we can t get them to stay. e. 10-minute recess (at the discretion of City Council) Moved by Moore/Alfrey to recess for ten minutes. Motion carried unanimously. Council recessed at 7:52 p.m. and reconvened at 8:03 p.m. f. Public comment for persons not represented by the IAFF or City management (three minutes per speaker with total of 20 minutes for the item). Item may be expanded by an additional 15 minutes upon approval of City Council, not to exceed a total of 35 minutes. Eric Hoppenbrouwer, 2727 Mariah Drive, stated that he is a combat veteran of the Afghanistan War. He thanked the firefighters for what they do every day. As a combat veteran, he said that he understands the everlasting effects of stress. Firefighters should be compensated well for the work that they do. The City Council should only make promises that future City Councils can and will honor. He discussed the public pension crisis in America and noted that Florida is no exception. He closed saying that he hopes City Council will protect this critical public service for the future by making a prudent decision at this meeting. Joshua Madsen, Indian Harbour Beach, said that he works for Brevard County Fire Rescue. He stated that there have been some dark times in the county and there are many dark (days) ahead. There is a paramedic shortage in the State of Florida. He spoke about incentives being offered by other cities to paramedics and reported that Brevard County lost 65 employees last year. Additionally, Mr. Madsen made the following comments: the comparables used on the management side do not provide an apples to apples comparison; the display of the minimum/maximum range for firefighters is false as they never reach the top; management engaged in picking and choosing in its use of statistics, similar to a pastor reaching for scripture that is taken out of context just to sell his point; (payment of retroactive pay) is not rewarding bad behavior because the union followed the Page 10 of 23

11 impasse process and did what the law requires; the state dictates what is correct when it comes to degrees for public safety employees. He closed by saying that hundreds of people used to turn out for firefighter testing in the county. During the last test, 61 responded. He cautioned against losing experienced employees because it is expensive to replace them. g. Rebuttal and summation by City Manager s representative (10 minutes) Mr. Hament said that during the break he heard an interesting comment from the city s bargaining team. They heard more from Mr. Van Kramer at this meeting then they did during 12 bargaining sessions. There was an insinuation that the union was willing to accept all the special magistrate s recommendations but the city was taking its ball, leaving, and cherry picking. For the record, Attorney Hament said that after the union failed to reject any of the special magistrate s recommendations, he repeatedly reached out to the union and asked if they were willing to recommend a collective bargaining agreement to their membership and accept all of the special magistrate s recommendations. If so, he said that he was willing to take that to the City Manager and then to City Council during the insulation period. There is a bad trick that can be played with impasse proceedings, which is: you accept all of the special magistrate s recommendations; the city in turn says that it won t reject them either; Council loses the right to decide the issues; it goes to ratification; the agreement is not ratified; and the process starts all over again. Mr. Hament said that he could never get agreement from the union that if the special magistrate s recommendations were not approved by the membership, they were not going to start the process over. That is why the City Council never heard from the City Manager about the union s willingness to accept all of the special magistrate s recommendations. The union wants to negotiate with the City Council rather than the bargaining team, and that pattern needs to change. With regard to incentives, the city has a very generous tuition reimbursement program. Firefighters can study general courses and be reimbursed. On top of that, the union wants a pay raise even if the course work is not directly related to what they do. The cost of that is not inexpensive. Regarding the change in the pay week, the city has a uniform practice for all of its employees of cutting off payroll for the week and paying at a certain time. The union proposed a special pay week for its employees. The special magistrate rejected that because the city pointed out that it would cost about $40,000 and would create an administrative nightmare. Two different payroll systems does not make sense. Linda South addressed Council and stated that the city did not use the concept of unsustainable when the pension plan was addressed because that is not the point. The point is that the city does not want it to become unsustainable; therefore, action needs to be taken today. The rates of return over the last five years are good, but there are two kinds of rates of return from the actuarial statement: the pure rate of return and a smoothed rate of return, which averages a return over a five-year period. She said that management looked at 21 years, ten years, and five years. The 21-year plan return is 7.3% and smoothed over five-year averages is 7.2%. The ten-year rate of return is 5.3%. The fiveyear return is 10.8% and smoothed is 5.8%. There have been nice plan returns over the Page 11 of 23

12 last five years, but that does not smooth the rate of return to the 8% used in the plan assumptions. The burden continues to shift to the city to pay the unfunded liability when the pension investments don t hit 8%. She closed by stating that she objects to the concept that the city picked up its ball and went home. As recent as the last bargaining session, the city put six articles on the table for consideration, which resulted in nothing. Mr. Hament referenced the point made earlier that the city is going to lose applicants. He reported that the last time a firefighter position posted in September 2016, the city received 150 applications, with 102 meeting the minimum qualifications. Attorney Hament distributed a copy of the city s proposals to resolve the IAFF impasse, which are also included in Council s agenda package. He reviewed the language that the city is requesting under each article. Council Member Tim Thomas and Attorney Hament briefly discussed the counters that were made back and forth; proposals that were rejected; and proposals that weren t rejected. Council Member Paul Alfrey asked how long it takes to become a solo paramedic. Chief Bogle said that a new paramedic can take anywhere from six months to a year. A person with experience can fast track that process. Council Member Teresa Lopez asked the incentive a firefighter receives when he/she becomes a solo paramedic. Attorney Hament replied that according to the collective bargaining agreement, it ranges from $4,000 per year to $6,500 per year, depending on the number of years. Chief Bogle confirmed for Mr. Alfrey that there are only two people in the department who opted to remain non solo. The majority of employees go through the solo process. Mr. Alfrey asked why this is such a sticking point and the Chief replied that the new language would apply to those certified after ratification. h. Rebuttal and summation by IAFF s representative (10 minutes) Attorney Siwica referenced the packet of information distributed to City Council earlier and noted that the last page contains proposed motions. He pointed out that the union did not reject a single recommendation from the special magistrate. Rather, management has been playing the trick by cherry picking. With regard to the remark that the union is trying to negotiate with City Council instead of the City Manager, he pointed out that is what the law provides for. The union has been negotiating with the City Council from day one until the insulation period. The City Manager only delivers the City Council s proposals. The City Manager is a mouthpiece. He pointed out the admission from the city that it is not claiming that the pension plan is not sustainable. The pension plan is sustainable. Roger Van Kramer returned to the lectern and stated that the changes made in 2012 through 2015 to the agreement/pension are doing what they were intended to do, and the Page 12 of 23

13 union would like to allow the changes to work. A pension doesn t get out of control in a year and it doesn t get fixed in a year. He repeated the union s support for the expanded degrees incentive and said that it seems ridiculous to go to college to get a certificate that says a person has a level of education below or different from what they started with. With regard to recent hiring years in the city, he noted that there have not been many people passing the test. If the number is less than ten, the bar is simply moved in order to accept more. He closed by discussing his talking level during the negotiations. In response to Vice Mayor Debbie Thomas and Council Member Moore, Mr. Van Kramer discussed the effect of vacation being considered time not worked on an employee s paycheck in a two week period. i. Final opportunity for questions/clarification by City Council and City Attorney Council Member Tim Thomas said that during the Great Recession, the city lost over a billion dollars in property values. That, coupled with the assumptions that were made in the rate of return for the pension plan, have been detrimental. The city has to provide services and ensure that the firefighters receive the benefits that they deserve while remaining fiscally solvent. To illustrate the impact of assumptions, he stated that the city s contribution to the fire pension was $417,765 in 2006 and over $2.6 million in While the city s proposal won t stop the bleeding, it will slow it down. Increased employee contributions need to be added to the mix so that City Council is not returning to the taxpayers and asking for an increase in taxes or proposing a cut in services. This is an unfortunate position to be in, but these are the cards that we were dealt. Mr. Thomas stated that the City Council, as leaders, must support not only the firefighters, but also the taxpayers. He closed by saying that what the city has proposed is fair. Council Member Moore said that she is concerned about wages. Melbourne was number one for years and now the starting salary is not that high. The city s spends approximately $2,000 or more outfitting and training a new firefighter. After a couple of years, they start looking at neighboring communities that pay more. She recommended that the pay increases be retroactive to Although the argument has been made that there will be no incentive by doing that, she said that she will have to trust that this (impasse) will not happen again. Ms. Moore expressed support for approving retroactive pay in 2015 with increases in 2016 and Council Member Lopez agreed that the pay increases need to be retroactive to As a retired Melbourne police officer, Council Member Alfrey said that the bleeding is real. There are other agencies that would love to take our firefighters and police officers. He discussed his personal experience with the hard work and dedication of firefighters and expressed agreement with retroactive pay. Council Member Minus said that our families rely on these men and women. She expressed support for making the pay retroactive; however, she would like to know the Page 13 of 23

14 cost. Ms. Minus summarized by saying that we should not be going through this process every year; it s disheartening. Mr. Van Kramer said that the cost of retroactive pay is approximately $347,000. Ms. South stated that she did not have that information. Mr. McNees clarified that the number would be compounded each year going forward. Mr. Alfrey said that he does not want the everyday firefighter who is trying to provide for his family to be punished by the retro issue. It s not the city s fault and it s not the union s fault; this is how the system works. Mr. Thomas referenced the current cost of the pension plan and asked what effect the increase would have on that. He pointed out that the city has to pave roads and possibly build a new police headquarters. Mr. Thomas stated that although he would love to give the firefighters everything that they want, the City Council must make wise decisions. Currently, the city s benefits are competitive and retention is good. People are happy and they want to work here. He stressed that the city cannot raise taxes again as we ve reached the limit on what we can do to the taxpayers. Ms. Lopez said that Titusville does not compare to Melbourne, yet Titusville offers a higher salary for firefighters. Ms. Moore stated that our new hires are being penalized for what occurred with the pension years ago. She said that she s not sure she can support the multiplier requested by the union. She expressed support for a 2.75% multiplier with a 7% contribution rate. Mr. Hament reminded City Council that under Florida law, the City Council cannot impose an increase in contributions. Council can make suggestions, but if it s not ratified, the process starts all over again. That is why the city left the contribution rates alone in its proposal. In response to Ms. Lopez, discussion followed regarding the difference between a defined benefits plan (pension) and a defined contribution plan. The firefighters have a pension/defined benefits plan. j. Hearing will close. At the discretion of the Mayor, a recess may be called Mayor Meehan closed the hearing. A recess was not called. k. Deliberation by City Council and resolution of the following impasse items: Article 11 Articles of Work and Overtime Mayor Meehan indicated that Council needs to decide whether to take the union s position, management s position, or the special magistrate s position. Attorney Dawley clarified that Council is not tied to any of those. Page 14 of 23

15 Council began with the question of whether sick and vacation should count towards overtime. Attorney Siwica clarified that it is the union s position that accrued leave should count as time worked. Ms. Dawley said that she thought the union supported the special magistrate s recommendation on this issue. Mr. Siwica explained that when management cherry picked, it opened the door for the union to state its position. He drew Council s attention to the union s list of recommended motions. Mr. Hament said that the city has taken the special magistrate s position that sick time would not be counted but vacation would be. Moved by Minus/Lopez for approval of the magistrate s and city s position that vacation shall be counted and sick shall not be counted as time worked. Motion carried unanimously. Council briefly discussed the payroll start/end times. Mayor Meehan recalled the earlier conversation where it was noted that the city would have to pay an additional $40,000 to change the payroll system. Moved by Lopez/T. Thomas to continue with the city s suggestion (no modification to the contract language) to be consistent with payroll. Motion carried. Council Member Moore voted nay. Article 30 Firefighters Pension and Retirement Plan At the request of the City Attorney, Roger Van Kramer repeated the union s position (see Page 9). He noted that DROP employees do not currently make pension contributions and the union s proposal is that DROP employees pay 6.5% to assist the city in paying the bills that the pension creates. Ms. Dawley asked Mr. Siwica to comment on the legality of requiring a DROP member to contribute towards a plan. Mr. Siwica replied that it s legal and, beyond that, it is what you call brotherhood and sisterhood. The members have made a decision to help. Mr. Hament asked City Council to refer to the special magistrate s recommendation on this issue. A brief discussion followed regarding the definition of a DROP (deferred retirement option plan) employee. The city s position and union s position on this issue were repeated. Ms. Moore stated that this item is exceptionally confusing. She quoted from the special magistrate s comments on this issue and pointed out that the union is proposing that the people in DROP contribute. Mr. Alfrey asked what would happen if the multiplier moved to 2.75%. Mr. Van Kramer replied that there would be cost consequences and employees would move to other jurisdictions that have a 3% multiplier. He confirmed for Mr. Alfrey that the standard Page 15 of 23

16 multiplier in Brevard County is 3%, with the exception of those in the Florida Retirement System. Mr. McNees commented that the city is not asking that DROP employees contribute anything new. As stated, the city is seeking a 2.75% multiplier with 7.5% contribution rate as it exists today. He asked Council to focus on today s contract and what those numbers should be rather than what past rates were set at. Mayor Meehan asked for confirmation that the change would not go backwards. Mr. McNees said the change would be prospective only. Ms. South pointed out that with regard to expenses, the city will be making a payment of over $1 million per year to the unfunded liability 20 years from now. Based on the rules that were adopted, Mr. Siwica called a point of order and said that this is beginning to devolve into argument. Moved by T. Thomas/Meehan for approval of the city s position (2.75% multiplier for years of service going forward and no change to the 7.5% member contribution). The vote was: Aye: T. Thomas, Lopez, D. Thomas, and Meehan Nay: Moore, Minus and Alfrey Motion carried. (Note: See Page 22. This motion relating to the pension was rescinded and a new motion was adopted.) Ms. Dawley said that the remaining pension issue relates to the premium tax dollars. The union is asking for the default language as defined by Florida law: the premium tax dollars shall be deposited into the share account within 30 days of receipt. The city s position is outlined in the packet distributed to City Council. Ms. Dawley said that it is her understanding that the language recommended by the special magistrate is accepted by both parties. From the audience, the union and management nodded in agreement. Article 39 Wages and Differentials Ms. Dawley summarized the position of both parties. She said that the union s recommendation is to mirror the special magistrate s recommendation (2.75% across the board increase on October 1, 2015, plus 2.5% step increases on October 1, 2016 and October 1, 2017), except that the step movement will automatically occur annually on October 1 going forward. The city s position is that (in fiscal year 2015, there is no increase; if the contract is ratified, the salary schedules would be increased by 2.75% retroactive to the first pay period in October 2016; and the first pay period in October 2017, the members would receive a step increase of 2.5%). Page 16 of 23

17 Moved by Moore/Alfrey for approval of 2.75% across the board in 2015 (October 1), 2.5% (step increase) in 2016 (October 1) and 2017 (October 1). Following discussion, Ms. Lopez stated that the salaries need to come up to par with that of other cities. She recommended retroactive pay and increases of 8.5% across the board. Mr. Thomas cautioned against adding to our debt. He said that he would love to be able to do this; however, we can t do it. It s not responsible. Ms. Lopez disagreed and said that she believes the city can do this. Mr. Alfrey said he would love to as well, but we need to see where we are in a few years. Police and fire need to move to the position of being the best paid in the area. He agreed that we have to be responsible and going with retroactive pay is more than fair. The question was called. Attorney Dawley asked for confirmation that the motion does not include language that would provide automatic increases going forward. The maker/seconder said that is correct. The roll call vote was: Aye: Moore, Minus, Alfrey, Lopez, D. Thomas, and Meehan Nay: T. Thomas Motion carried. Attorney Dawley said that the next topic is education incentive. Management would like to retain the current incentive of a two-step increase for Fire Science or Emergency Management Degrees. The union s position is to expand the education incentive to any degree that is eligible under the state incentives. Vice Mayor Thomas said that she believes it should be expanded to include a degree in Business Administration, which is the degree that Chief Bogle has. Ms. Minus recommended that an across the board allowance be added. For example, a Master s or Ph.D. would qualify rather than identifying a specific degree. Ms. Dawley repeated the union s position and said that she is not familiar with the degrees listed under state incentives in the state statute. Although it doesn t cover everything, it is still somewhat broad. Mr. Siwica replied that the actual degrees are listed on the state web site. It is established, public, and well known. Page 17 of 23

18 Vice Mayor Thomas said that she supports the union s proposal on this. Ms. Lopez commented that any degree, including social services and business administration, can be beneficial in their role as a firefighter. Discussion continued regarding expanded education. Ms. Moore stated that she supports the union s recommendation on this issue. Moved by Lopez to approve the proposal that the union recommended that additional degrees should be included in the step-up of raises. Ms. Dawley said that the union s request is that it should be based on what the state statute recognizes as being related to fire service. However, Council s conversation went beyond that scope. Ms. Lopez clarified that she would prefer including degrees in management, social services, and criminology. At this point, Ms. Moore said that she would second the motion, as broad as it is. Mayor Meehan said that she would like to see the state statute language. City Council called for a recess to allow the City Attorney time to access the state statute language. City Council recessed at 9:37 p.m. and reconvened at 9:44 p.m. Attorney Dawley read from the following statute: Firefighters; supplemental compensation. (1) QUALIFICATIONS FOR SUPPLEMENTAL COMPENSATION. The Legislature recognizes the need for supplemental compensation for firefighters who pursue higher educational opportunities that directly relate to the improvement of the health, safety, and welfare of firefighters and those who firefighters protect. The State Fire Marshal shall determine, and adopt by rule, the coursework or degrees that represent the best practices toward this goal in the field of firefighting. (a) In addition to the compensation now paid by a fire service provider to any firefighter, every firefighter shall be paid supplemental compensation by the fire service provider when such firefighter is a full-time employee, as determined by the employing fire service provider, and has complied with one of the following criteria: 1. A firefighter who receives an associate degree from an accredited college, which degree is directly applicable to fire department duties, as outlined in policy guidelines adopted by rule by the division, shall be additionally compensated as outlined in paragraph (2)(a). 2. A firefighter, regardless of whether or not she or he earned an associate degree earlier, who receives from an accredited college or university a bachelor s degree, which bachelor s degree is directly applicable to fire department duties, as outlined in policy guidelines adopted by rule by the division, shall receive compensation as outlined in paragraph (2)(b). She noted that the state pays the money that is provided for in this law. The union is proposing that if a firefighter receives a degree directly applicable to fire department duties Page 18 of 23

19 as outlined in the law, then they would be eligible to receive a two-step increase. Mr. Van Kramer confirmed for Attorney Dawley that current contract language provides a maximum two-step increase for education under this article. For clarification, Mr. Alfrey asked if this would be additional compensation from the state. Mr. Van Kramer replied that is correct. Mr. Hament clarified for the record that this would result in additional compensation from the city. Mr. Alfrey said that this would result in two incentives: one from the state and up to a two-step increase from the city based on those guidelines. Ms. South asked City Council to remember that for every dollar of educational incentives, 43 cents is paid for additional pension costs. Chief Bogle confirmed that the city is currently following that statute. When a person earns a degree, an application is sent to the state to either accept or deny the degree for the incentive. The union is asking that if the state accepts the degree, it should qualify for the maximum of a two-step increase from the city. Discussion followed regarding the types of degrees that the state accepts. Ms. Moore stated that there is a motion on the floor. Mr. Alfrey asked for clarification. The maker/seconder clarified that the motion on the floor is for the union s proposal (expand the two-step increase to any degree that is eligible for state incentives). Mr. Alfrey asked the effect of this on the pension. Ms. South repeated that for every dollar of compensation, the city pays 43 cents towards the cost of the pension. This two-step increase would be included in the calculable wages on which pensions are paid. Mr. Alfrey stated that he has an issue with that, especially when the city is trying to reduce the liability. Ms. Moore asked the number of firefighters that would be taking advantage of this. Chief Bogle replied that currently 13 have (various degrees) who are not receiving any steps as a result. Ms. Lopez asked the effect of new contract language on those employees. Chief Bogle replied that if the union s language passes, he assumes that those people who currently have a degree would be eligible for the two-step increase, or one-step if they have already received one-step. Monte Rann referenced the comment Ms. South made regarding pensionable earnings and noted that the pension will go down to 35% of payroll in 2018 according to valuations. He pointed out that all earnings are pensionable earnings; this is not an abnormal benefit being added to the pension. Mr. Alfrey asked what this change would do to the unfunded liability of the pension. Ms. South replied that the current actuarial valuation indicates that it will take until 2038 to pay Page 19 of 23