Will Other Phila. Unions Embrace Police-Contract “Model”?

By Jeff Shields, The Philadelphia Inquirer

Jul. 15–The new one-year contract between the city and its police union could establish a new partnership between labor and management in City Hall, observers said yesterday, although it remains to be seen whether the other three municipal unions will embrace it as the model that Mayor Nutter would like it to be.

“The strategic importance of the contract was greater than the numbers would indicate, because it moved the needle back on one of the hardest areas there is to move the needle back on — health-care contributions,” said Pedro Ramos, a former managing director and city solicitor under Mayor John F. Street, and now a lawyer specializing in employee benefits.

The terms of the contract, especially the reduction in health-care contributions, set “a pattern and trend,” said Phil Goldsmith, who preceded Ramos as Street’s managing director.

“It was a feather in the city’s cap and puts somewhat of a burden on the other unions to resist that,” Goldsmith said.

On Thursday, Lodge 5 of the Fraternal Order of Police became the first of the city’s four municipal unions to reach a deal when an arbitration panel awarded a one-year contract. The police union, representing 6,285 sworn officers, won some wage and benefit increases, while the city cut its health-care contribution by more than 10 percent without affecting benefits.

The FOP’s success in managing its health plan helped both sides realize a cost savings. Those savings mean that the city will pay less than 1 percent more this year for the combination of wages, health-care, legal costs and uniforms, according to figures provided by Finance Director Rob Dubow.

Salaries for most police officers will increase by 5 percent as of Jan. 1. Because the raise is instituted in phases, it will only cost the city 3.5 percent more over the fiscal year. The union will also receive better benefits for police widows and the families of officers killed in the line of duty.

But Ramos and others said the city should be happy to trade those increases to reverse the trend of spiraling health-care costs.

“It’s a lot easier to manage wages than it is to manage the fringe benefits,” said Donald Kettl, director of the Fels Institute of Government at the University of Pennsylvania.

The city’s three other unions — the blue-collar workers of District Council 33 of the American Federation of State, County and Municipal Employees; the white-collar employees with AFSCME District Council 47; and the International Association of Fire Fighters — would not comment on the police contract or its effect on their negotiations.

“We’re still reviewing it,” said Brian McBride, president of the firefighters’ union.

Contracts with all four unions expired July 1. D.C. 47, with 3,372 workers, agreed to a 14-day extension that ends today. D.C. 33, the largest of the four with 9,419 workers, has agreed to continue negotiations without a firm deadline.

McBride’s union, representing 2,280 firefighters and paramedics, has its own timetable. Like police, firefighters cannot strike and are subject to binding arbitration. The arbitration hearings do not start until Aug. 18 and are scheduled through December.

FOP president John McNesby did not return calls for comment yesterday.

Former FOP president Richard Costello, who preferred one-year deals during his stints as union chief between 1988 and 2002, said the police union cannot worry about what the other unions want, and called any criticism of the deal “cheap shots.”

More crucial than the short-term gain on health care, Kettl said, is that the agreement by both sides to participate in a joint labor-management health-care evaluation committee sets up a new way to address costs beyond the traditional adversarial negotiating process.

“The most important thing is that they agreed to a short-term fix and a process for long-term improvement,” Kettl said. “It’s a completely different way of doing business.”

Kettl also said the police commitment to a “year-long conversation with the administration” makes it more difficult for the other unions to “opt out” of that process.

Nutter has generally declined to comment on negotiations, but last week did suggest that the police contract should “serve as a model” for the other unions.

His spokesman, Doug Oliver, declined to comment yesterday other than to point to Nutter’s words from last week.

A sticking point for some of the unions could be the one-year term that Nutter appears to be seeking, to get a better handle on long-term costs and revenues that the city will be facing. Nutter would also like to nail down in that time a pension obligation bond, likely to be at least $3 billion, that would shore up the city’s underfunded pension plan.

Successfully tackling both pension and health-care costs over the next year would be a huge accomplishment, Kettl said.

The city has been pressing for one-year deals with all four unions, but last week D.C. 33 indicated it wanted more than a one-year contract.

Nutter said last week that the city would pay for the straight costs of health care — “nothing more, nothing less.”

But unions traditionally ask for more than the current cost to create a reserve to offset unanticipated increases, and to cope with contract impasses.

McBride said the firefighters’ health-care fund was nearly bankrupted between 2005 and 2007, when the Street administration appealed arbitration awards and the health-care contribution did not increase for 30 months.

“I’m going to have to analyze what he meant by that, and what it is,” said McBride.

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Highlights of Police Contract

A wage increase of 2 percent retroactive to July 1, with a second 2 percent hike on Jan. 1. Longevity bonuses, based on years served, will increase by 1 percent on Jan. 1. This gives police officers 3.5 percent more money over the course of the year, though their salary level will rise 5 percent in six months.

The city’s contribution to health care goes from $1,303 a month for each officer to $1,165 per officer, saving $13.4 million annually without affecting benefits.

The city pays a $2 million lump sum to the police Legal Services Plan.

Officers killed in the line of duty since 2006 will have pension benefits calculated at the next-higher rank.

Widows of officers hired after 1986 — 80 percent of the force — will be eligible for 50 percent of their spouses’ benefit. Previously, only officers hired in 1986 or earlier enjoyed this benefit.

Combined uniform and “clothing-maintenance” allowance increases from $775 annually to $1,000.

Officers are now eligible for tuition reimbursement for college courses.

Sheriff’s deputies will be used to bring prisoners to court, freeing about 40 officers for street patrol.

Officers who do not use all of their sick days can bank them indefinitely.

The city will contribute $4 million to a trust fund that gives retirees no longer eligible for city prescription benefits up to $500 a year toward prescription and other health-related costs.

Commanders, including the ranks of captain and above, who were formerly required to work the Mummers’ Parade, the Fourth of July, the Greek Picnic and the Philadelphia International Championship Bike Race without being paid will now be paid a straight hourly wage for these events.

The city pays the FOP $500,000 for legal costs, reflecting the price of having to renegotiate a contract in 12 months.

Contact staff writer Jeff Shields at 215-854-4565 or jshields@phillynews.com.

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