The police officers’ union and the city have reached a tentative agreement over pensions that includes reducing benefits for new hires and that will save the city an estimated $385,000 a year in the long-term.
Under the new, two-year agreement, to be announced July 2, pensions for new police employees will be calculated using the 3 percent at 55 formula, meaning they will be eligible to collect three percent of each year’s earnings multiplied by the number of years of service once they turn 55.
Currently, public safety employees can begin receiving pensions at 50 years of age.
Other public safety employees—dispatchers, record clerks and others working in an administrative capacity—will now be hired under the 2 percent at 60 formula. Instead of using the highest paid year as a basis for the retirement package, the city will now use a three-year final average formula, which will also reduce the overall spending.
The announcement comes after four years of on-off negotiations that have left some wondering whether the city, which has seen a reduction is sales and property taxes and the union, eager to preserve pension committments for its employees, would ever see eye to eye.
"Things were tense at times, but we were able to have some candid conversations and ultimately break the stalemate," said Paul Gilman, president of the Peace Officers' Association of Petaluma.
One big point of comparison was the city Santa Rosa, which in March implemented a second-tier pension plan for police and fire employees, but also gave them an 8 percent raise.
But the difference, said Gilman, was that Santa Rosa cops had not been paying into their pensions, while Petaluma public safety employees were paying 9 percent a year.
"There was hope for some raises, but the budget is just not structured that way right now," Gilman said. "We think that two years provides stability for the new chief and allows revenues from new projects to start coming in. So when we sit down to negotiate again, the city will hopefully be in a better situation."
City Manager John Brown could not be immediately reached Wednesday, but issued a statement saying that the city was pleased to reach an agreement that “will pay dividends into the future.”
Yet because the reductions revolve around retirement benefits of people who have not yet been hired, it will be at least 20 years before the savings are felt. Meanwhile, unfunded pension liabilities—money the city owes its retirees, but doesn’t have— continue to climb, totaling more than $37 million in 2009 (the latest available figure.)
What do you think of this agreement? Is it sufficient? Or do more drastic measures need to be taken?