A state arbitrator has issued his decision in the dispute between the city of Duluth and its police union over a new contract. The settlement, which the union says it will not appeal, means the city now has at least a tentative agreement with all five of its employee unions.
In a 38-page ruling issued Monday, Stephen A. Bard chose salary increases between the amounts proposed by the city and the union. He sided with the city on several other issues, including health-care benefits for retirees and active employees.
"On the most important issues, those relating to health care for actives, retirees and future employees, the city's position and long-range plan has been validated," John Hall, chief administrative officer for the city, wrote Thursday in a message to city councilors. "For this we are gratified and relieved, as I hope you are."
The police union and the city have the right to appeal Bard's decision to the state district court, but Sgt. Jon Haataja, president of the Duluth police union, said his union didn't intend to do so.
"We're going to let his decision stand,'' Haataja said. "We hoped that we would have done better. However, we are pleased that the arbitrator did recognize that we did deserve more than the 1 percent this year [the city was offering].
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"We had hoped that the arbitrator would have seen that the retiree health-care concession is of great value, and we had hoped he would have given us more regarding that," Haataja said. "We also would have hoped that the arbitrator would have seen ... that our patrol division has the same number of people responding to 911 calls today as it did over 25 years ago, [and] that our salary should have been increased based on just the amount of work we're doing with the same number of people."
Bard awarded the police union salary increases of 2 percent for this year, retroactive to Jan. 1; 3 percent for next year; and 3 percent for 2009. The union had proposed increases of 3, 3 and 4 percent. The city had proposed increases of 1, 3 and 3 percent.
The extra 1 percent increase in wages this year will "present a severe challenge to the administration at an inconvenient time," Hall wrote to councilors.
But it was the issue of retiree health-care benefits that "was the most hotly contested issue at the hearing and the one to which most time and attention was spent," Bard wrote.
In contract talks over the past year with its unions, the city has sought nearly complete elimination for new hires of the retiree health-care benefit package that helped create the city's $309 million retiree health-care liability.
The city wanted police to accept a retiree health-care benefit proposal under which:
* Employees hired before Jan. 1, 2007, would receive benefit Plan 3A free of cost.
* Employees hired on or after Jan. 1, 2007, would receive, after 36 months of continuous employment, a one-time deposit by of the city of $12,000 into a post-employment health-care savings plan account.
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* After Jan. 1, 2008, the city will contribute an amount equal to 1 percent of each active employee's basic monthly pay into a post-employment health-care savings account.
Under the union's proposal:
* Employees hired before April 26, 2004, who worked at least 15 years before retiring would receive free single and dependent coverage for life.
* For employees hired after April 26, 2004, the city would pay part of the retiree's premiums. The percentage would be determined by the retiree's years of services.
Currently and under the new contract, retirees at age 65 must enroll in Medicare and city health insurance becomes supplemental.
Bard ruled that the city's proposal is the one that will be in the contract. Though the union raised some valid points about the cost savings of moving all active members to a single health-care plan and reduced pharmacy benefits, the savings "even when combined with the increased revenues from the various measures adopted by the city will be insufficient to 'tame the gigantic gorilla' that is this unfunded liability," Bard wrote.
Bard also wrote that the city is making significant sacrifices and taking prudent steps to solve the problem.
Hall said he was pleased by Bard's ruling accepting the city's position without modification.
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"This is a very gratifying result for the administration and will allow the administration's plan for resolution of this problem to proceed," he wrote councilors.
In other issues, Bard:
* Ruled in favor of the city on the issue of medical coverage for active employees. Under that ruling, the city will continue to pay 100 percent of the premium for the single employee option and 80 percent of the premium for the employee with dependents. The city will increase from $50 to $75 its monthly contribution into a flex spending or deferred compensation account for the single employee.
* Agreed with the city not to change the contract wording on master police eligibility.
* Accepted, with some modifications, the union's proposal to require the city to reimburse full-time employees for health or fitness program membership fees.
The city and union argued their cases before Bard on Aug. 14 and 15. The sides went to binding arbitration after months of fruitless talks. In March, union members rejected a city contract offer on a 93-21 vote.
The city and its largest union, the American Federation of State, County and Municipal Workers, announced last month that they had agreed to a tentative contract. The confidential unit and the firefighters union settled their contracts earlier this year. Those contracts called for 7 percent salary increases. City supervisors also have reached a contract agreement.
News Tribune staff writer Mark Stodghill contributed to this report.
