Town Meeting - We could have done better on police union contract

On Monday night, April 5, Town Meeting will be asked to approve the funding for the first of several municipal union contracts that have expired. This one is for the police supervisor's union, which is comprised of eight officers. (The others are still in negotiation and won’t be presented to this Town Meeting.) Article 12 is for the last three years and Article 13 goes forward another three.

Taxpayers could have done much better on this contract. Since this is the first contract we are being asked to fund, our decision as Town Meeting members will set several precedents. So we, as voters, should be very careful on what we approve.

In my view, this contract achieves one worthy goal: it establishes the concept that there should be "no cost" to the town over the next 3 years. This is not in the language in the warrant, but it is what was told to me by town management. According to the agreement, the officers will be given raises for five years in exchange for dropping the most expensive health-insurance plans in favor of the HMO. The savings from this switch are supposed to fully fund the raises.

I will discuss several problems I have with the agreement and I hope that during Town Meeting our town administrators and elected leaders will answer these questions to everyone's satisfaction. But keep this in mind: our leaders who negotiated this contract have a legal obligation to support the contract that is before Town Meeting. So expect little to no dissent from among those on the stage.

You can review the 20-page proposed union contract on the Town's website. Here is the link:

http://www.acton-ma.gov/DocumentView.aspx?DID=854

I urge you to take a few minutes to read the contract before you go to Town Meeting, since a copy is not provided in your warrant and there is no discussion of the specific contract in the warrant either.

SWITCHING TO THE HMO PLAN
The contract makes the members of the police supervisor’s union join the town’s HMO insurance plan, thus saving a fair amount of money into the future, since the town pays 85% of the cost. The expensive plans, called indemnity plans, cost around $30,000 per year for a family, while an HMO family plan is closer to $16,000 - $18,000.

According to the town, we would take these savings and use them for employee raises, so the net effect would be zero. The negotiated raises are 12% over six year, or an average of 2% per year. However, I do not know if this includes "steps" that are additional raises given for longevity. Steps can add 1.7% additional pay per year in the future, so we should be told what the actual raises are and if this "expense neutral" bargaining position includes the cost of steps.

In this economy, we need to control the growth in expenses. While some could quibble, I don’t see how a “net zero” increase over three years can be strongly criticized. So let’s take that concept as a good starting point. Let me applaud the union and management for reaching this agreement in concept. It is a fair and balanced result in this economic climate.

But it would have been better to let employees pick the coverage they desire and instead take our savings in the form of a lower health-insurance subsidy by lowering the town's 85% contribution.

Some union members presumably have been willing to pay more out-of-pocket over the years for these indemnity plans, perhaps because there are specific doctors or coverages that they need. Even though they’ve only been paying 15%, they could have saved money by switching to an HMO.

But under this agreement, these supervisory officers will be forced to drop these indemnity plans, which may be something some would prefer not to do. So as a concept, forcing people to drop their current plan in order to get a raise is not fair. It disproportionally affects some employees more than others.

For example, if an employee is currently on the HMO, they will get the 12% raise and have no changes to their health-insurance coverage.

If raises are desired by the employees and they are willing to accept cuts elsewhere (so that we achieve our “zero cost increase” budget), it would have been far better to lower the health-insurance subsidy, from 85% to some other number, let’s say 70% for the sake of discussion.

At 70%, employees would be responsible for paying 30% of their health insurance which would have doubled the incentive to switch from the indemnity plans to the HMOs, and those savings would benefit both the employee and the town.

By increasing an employee's cost, we would be naturally encouraging more migration from high-end plans to HMOs. But those who really needed the high-end plans would not be forced to switch. (And, remember, employees are getting raises to offset any decrease in the subsidy so it nets out to zero.)

In short, I think the taxpayers should be striving to reduce the subsidy paid for health insurance, and should be able to share in any savings when employees move from the indemnity plans to the HMO plan, without having to force them (and pay them) to switch.

OBAMACARE MAY HAVE ACHIEVED THIS SAME RESULT FOR FREE
Furthermore, with the national health insurance changes on the horizon, it may be that the federal government will make these high-end plans even more expensive, which would have increased the natural shift to HMOs anyway. We may be paying 12% raises to employees who would be switching out of the “Cadillac” plans in a year or two with no intervention on our behalf.

To give out generous raises when we could have achieved the same savings by doing nothing is not watching our tax dollars carefully enough.

SOME INDIVIDUAL INCREASES MUCH HIGHER
If you look at the chart on page 19, you will see individual officers listed under Wage Schedule A.

After 2010, all current members of the unit will move to Wage Schedule B, with everyone at the top step for their rank. Based on what is printed in the chart, it looks like all currently employed Sergeants will be making $59,116 in base pay and Lieutenants will be at $81,796 in base pay at the end of FY11.

In FY12, the top pay rises to $60,742 for Sergeants and $84,045 for Lieutenants.

If you compare these salaries with the base salary in FY07 (the start of the six-year period covered by the contract), the increases appear to be as follows:

Sergeants, $54,220 to $60,742 or 12%
Lieutenants, $66,083 to $84,045 or 27%.

Perhaps the town can explain this increase in layman's terms at Town Meeting. What are the actual annual increases? Are they 2.75% plus 1.72% for a total of 4.5% per year? Once an officer is put at the top of their step grade, does that mean no more steps until they get promoted?

And why do some employees appear to be getting raises that seem well above what is reasonable in this economy? This has not been explained.

WHAT HAPPENS IF INDEMNITY PLANS COME BACK?
Like many union contracts in town, understanding the full impact just by reading the agreement is very difficult. The contract talks about rolling back salaries to 2007 levels if the indemnity plans are used in the next two years by any of the officers covered, so it anticipates this possibility. But after July 1, 2012 (just about 2 years away), if the indemnity plans come back into play, the salaries can no longer be rolled back before 2012, so they'd get to keep the raises. So it seems like the town is taking a big gamble here by making the raises permanent while it allows for the possibility that it can't permanently prevent using the indemnity plans in the future.

FUTURE BENEFITS NEED TO BE DEFINED FOR TAXPAYERS
The underlying assumption is that having employees switch out of high-cost indemnity plans into lower-cost HMO plans benefits the taxpayers. How?

If we are giving out all the savings in raises over the next three years, then there should be some additional benefit to taxpayers in the future that would induce us to make this change. Otherwise, it would be safer to keep everything the same and just have no raises.

So town leaders need to explain on Monday how this provides a future benefit. For example, do HMO insurance costs rise more slowly than indemnity plans? If so, then this change may protect us against future increases in insurance. But if HMOs increase at about the same pace, then there is no obvious benefit in getting employees to switch. And if HMO rates end up rising faster than indemnity plans (say, because of millions of additional uninsureds joining HMOs) then this effort to move people into HMOs could end up costing more.

TOWN AND SCHOOLS NEED TO BE WORKING TOGETHER
We have two separate administrations in Acton: town and school. Taxpayers pay the salaries for both. And we have two competent staffs who administer these systems. It seems that when it comes to negotiating with our unions, these two sides aren't coordinating well.

Last year, back in June, the schools reduced their administrators' health insurance subsidy to 75%. While the school union contracts have not been finalized, it seems like there is a movement in the right direction to reduce this subsidy for all school employees. The Town Manager is supposed to be involved in the school union negotiations. Why hasn't this sensible proposal also been advanced on the town side?

For years, the schools have "found" extra money in health insurance savings by having some number of employees move into HMO coverage. So these savings should be no surprise to our negotiators. Why would we want to pay for this trend when we can accelerate it by having employees just contribute more of the cost?

WHAT HAPPENS IF WE REJECT THE FUNDING FOR THE CONTRACT?
If the funding for the union contract is rejected, our town negotiators will meet again with the union under arbitration and try to work out another deal. There is uncertainty as to what the outcome might be, or if an arbitrator would be forced to rule adversely against one side or the other.

But I would urge both sides to consider the long-term implications of their agreement and see if it wouldn’t be fairer to both taxpayers and union members to consider changing the subsidy instead of forcing employees to switch doctors or health plans, or making taxpayers give up all the savings in the form of raises.

And raises above the 12% that are being promised in exchange for any health-insurance changes need to be explained and documented. I don't see how some individuals can appear to be given raises in excess of 25% in this economic climate, without a lot of additional information that so far has not been provided.

Finally, since Town Meeting is being asked to fund new union contracts that will be in effect for three years, voters need much more information than what has been provided in the warrant. The warrant just has boilerplate. I hope there is a detailed handout and presentation that informs people about the implications and allows plenty of time for questions. If this is another "rubber stamp" proposal, then the reason to bring it before Town Meeting will be moot.

WE NEED BOTH SIDES PRESENTED AT TOWN MEETING
Many articles at Town Meeting have two sides: pro and con. But Town Meeting takes no action to make sure both sides are presented.

The warrant does attempt to do this. On controversial articles, there is an attempt to get "the opposition" to write up a paragraph. But on these two articles (12 and 13), there is no "pro" or "con" arguments in the warrant, so voters will have no time to consider the merits of either side in advance of the meeting.

I talked with Moderator Don MacKenzie about making a five-minute presentation so I could explain some of my misgivings about this contract. I was denied.

Will anyone be allowed to give the opposing point of view, or will voters be asked to just "trust their representatives" again? That is hard to do when our boards are always agreeing with each other on just about every major proposal.

So on Monday night, if you see no presentation about why you should consider voting against the funding for this article, you should know that an attempt was made to present "the other side" but presenting both sides of an argument appears not to be a concern of our town leadership.

Presenting both sides should always be the goal because many Town Meeting voters do not take the time to read and study every issue prior to Town Meeting. But in this particular case, it is even more important. As stated above, our leadership is legally obligated to support the bargaining process and must publicly support the agreement reached with the union. So having an "independent" voice that can speak out against the agreement that is reached is even more important.