Sean Belk
Staff Writer
After months of negotiations, the Signal Hill City Council voted unanimously (5-0) on Tuesday, Dec. 16 to approve a two-year labor contract with the Signal Hill Employees Association (SHEA) that provides salary increases with some economic benchmarks and requires that employees pay their “full share” toward pension costs.
In a memorandum of understanding (MOU), the City has agreed to give members of SHEA, which represents about 50 city employees in non-safety and management positions, a 3-percent cost-of-living-adjustment (COLA) salary increase for Fiscal Year (FY) 2014-2015, which begins July 1, 2015.
Under the agreement, mid-management employees are also eligible for the 3-percent pay raise. However, department heads will not be receiving the salary increase, according to city staff.
For FY 2015-2016, all employees will receive a 2-percent COLA salary increase, provided, however, that the City meets certain “economic thresholds.”
The labor contract also includes: re-instituting the eligibility of “step” (incremental pay raises based on years of experience) or merit increases; provides a “modest” $50-per-month increase toward health-benefit premiums and an additional $5-per-hour increase for shifts in “standby” pay; and formally recognizing the City’s policy regarding pay for training new employees.
The labor contract is expected to cost the City an additional $410,000 over the next two fiscal years after $67,100 in savings is expected from employees covering the full employee share of their California Public Employee Retirement System (CalPERS) plans. The General Fund, Water Fund and Fleet Fund will share the costs, according to city staff.
Under the contract, employees will increase their pension contributions from 5 percent or 6 percent, depending on date of hire, to the full employee share of 7 percent, city staff notes.
All City Council members, department heads, mid-managers and miscellaneous employees will also contribute 100 percent of the employee share of their pension costs that range between 7 percent and 9 percent, depending on whether they are in a safety or non-safety pension plan, city staff notes.
The economic thresholds for FY 2015-2016 require that: retirement-plan rate increases for that fiscal year do not exceed 23.351 percent and the rates for the 2-percent-at-age-60-retirement formula do not exceed 7.267 percent; the City doesn’t lose a business that generates $300,000 in sales-tax revenue or more; and sales-tax revenues meet or exceed 12.5 million a year.
The new labor deal comes after Signal Hill city management has kept a tight lid on employee wages and hiring for the past six years, especially during the Great Recession.
Between 2008 and 2012, the City was forced to reduce budget costs by nearly 7 percent, freeze salaries on a year-by-year basis, initiate a hiring freeze on all positions except police officers, and request that employees begin paying a share of their pension and retiree healthcare benefit costs, according to city staff.
Since then, however, a number of sales-tax-revenue-generating businesses have cropped up as a result of the City’s “aggressive economic development program,” putting the City in a better spot to negotiate with SHEA on compensation “competitiveness,” city staff said.
These new businesses include In N Out, Applebee’s, Ross Dress for Less, Fresh & Easy, the EDCO Transfer Station, and an expanded Signal Hill Auto Center with the addition of Hooman Nissan and Boulevard Cadillac. More recently, the City has seen additions at the Signal Hill Gateway Center, including a new Starbucks, Chipotle restaurant and a Sprint retail store.
City staff also notes that, in addition to receiving benefits from the recent opening of the Costco gas station and the expansion of the BMW and Mini auto dealerships, the State Department of Finance has approved the City’s long-range property management plan, which will now enable to City to pursue other economic development opportunities, including the vacant 700 Spring St. site across from the Signal Hill Gateway Center.
“[This] positive economic outlook has placed the City in a better position to work with SHEA in addressing the competitiveness for compensation for non-safety and management positions,” said Signal Hill Human Resources Manager Mary Gilmore, who added that the local economy and City revenues are showing signs of “slow but steady improvement.”
Mayor Ed Wilson said the multi-year labor agreement is expected to benefit employees in the short term and the long term. The contract also shows the City is “getting back on stable footing,” he said.
“Our revenues are starting to inch up,” Wilson said. “We just had some rain. We got sunny skies in the future.”
Councilmember Tina Hansen and Mayor Wilson applauded City Manager Ken Farfsing for refusing to take a salary increase for many years, including when the City dealt with hardships brought on by the economic downturn.
Under the contract, Farfsing will maintain a salary of about $214,505 a year, however, he will be given a 3-percent COLA increase, he noted.
Additionally, city staff notes that Farfsing and Deputy City Manager Charlie Honeycutt, whose annual salary will increase from about $138,412 to $181,608, already pay their full 7-percent pension cost.
Farfsing thanked the Council for their praise and pointed to the City’s “hard-working staff,” adding that he wanted to “set the tone and example from the very top” by being the first to forgo any pay raises during the recession and contributing his full share toward pension costs.
Additionally, in December 2013, the City reached a two-year labor contract with the Signal Hill Police Officers Association that included pay raises in return for pension reforms, creating a total additional cost of $651,200.
Farfsing added that, while the budget is in a better position financially than during the recession, the City remained “conservative” in approach to the labor contract.
“I believe the Council has been very fair and generous with the employees,” he said. “The budget is getting better, but we’re conservative. I think the benchmarks are critical in terms of moving forward into year two. We set benchmarks that we feel are realistic. They’re not too high of a bar to cross over.”
