With the encouraging news that Sonoma County's largest labor union has ratified a new 32-month contract, the county government appears, once and for all, to be turning the ship. It's a ship that, up to now, was headed for the rocky shoals of mounting debt, rising retirement costs and shrinking resources.
The new contract with Service Employees International Union Local 1021 sets a new course by eliminating a series of perks that allow workers to pad their compensation and thus drive up pension costs. It requires employees to pick up more of the cost of their retirement benefits, and it calls for a salary freeze over the next 16 months. County employees have already gone without a cost-of-living increase for the past five years. County officials say the pension reforms alone should save taxpayers more than $83 million over the next decade.
Ratification of the contract has the added benefit of preventing what could have been a protracted labor dispute. Members of SEIU Local 1021, which represents half of the county's 3,500 employees, including some of the lowest paid employees, had already planned a one-day strike over how contract negotiations were proceeding.
It's likely that contracts for other labor groups will model this agreement.
But the agreement did not come easily.
An earlier deal, which would have extended the current pay freeze for three years, was soundly defeated by union members in December. This contract was approved with just 52 percent of union members supporting it. Even then, the outcome was in doubt given that majorities of just two of the six bargaining units represented by SEIU supported the deal. Nevertheless, the union has notified the county that the vote will stand.
Now it's the job of the Board of Supervisors, before voting on the contract on March 19, to notify the public as to how this agreement helps the county achieve its larger goals of bringing down labor costs.
In addition, to this contract, supervisors will be voting on reducing their own compensation and that of other administrators. The cuts include a 3.5 percent reduction in compensation for managers, a 4 percent cut for department heads and a 6.9 percent reduction for supervisors themselves. All of these are encouraging steps.
But it's still not evident what impact they will have on the county's long-term financial state. Prior to the latest round of labor talks, supervisors had set a goal of reducing total employee compensation by 3 percent. In light of the fact that the county has $353 million in unfunded pension liabilities and a growing backlog of pothole repairs and other service needs, a 3 percent reduction was a modest objective.
And it appears the county didn't achieve even that. County administrators say the cuts would amount to an overall 2.5 percent reduction this coming fiscal year. But that will drop to 2 percent the following year, when employees start to receive cost-of-living increases.
Also unclear is how this contract helps the county achieve the Board of Supervisors' overall goal of getting pension costs back down to 10 percent of payroll, where they traditionally have been.
Pension costs, including the costs the county has to pay each year for past pension obligation bonds, have grown from to 20 percent of payroll at the moment and were on track to grow to 30 percent by 2022.