04-0520R

RESOLUTION APPROVING A COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY OF DULUTH AND ITS CONFIDENTIAL BARGAINING UNIT FOR THE YEARS 2004, 2005, AND 2006.

BY COUNCILOR NESS:

BE IT RESOLVED, that the proper city officials are authorized to execute and implement a collective bargaining agreement between the city of Duluth and Union of Needle Trades, Industrial and Textile Employees Local 150, representing the confidential bargaining unit, containing the same terms and conditions, and being in the same form (except for typographical or insubstantial corrections) as the contract on file with the city clerk as Public Document No. __________, covering the years 2004, 2005 and 2006.


STATEMENT OF PURPOSE:  The confidential unit contains five employees. The parties have negotiated and reached an agreement which is essentially the same as that of the other four bargaining units for the years 2004, 2005 and 2006.

The significant changes to the contract include:
1. A three year contract with wage increases as follows: 2004 - 1.5%, 2005 - 4%, 2006 - 4%. With consideration of the zero increase in 2003, this is a 9.5% increase over four years or 2.375% per year. If all contracts are settled with the same wage increases, the additional expense is estimated as follows: 2004 General Fund $523,000, 2004 non-General Fund $459,000; 2005 General Fund $1,415,000, 2005 non-General Fund $1,242,000; 2006 General Fund $1,472,000, 2006 non-General Fund $1,292,000;
2. Active employee health insurance is changing from a defined employer contribution for family coverage to an employer percentage contribution for family coverage. All bargaining units will have access to Plan 4, which previously was only available to AFSCME employees. The city will contributed 35% of the cost of family coverage for Plans 1, 2, and 4 and 80% of the cost of family coverage for Plan 3. Employer will pay 100% of the cost for single coverage for all plans and, additionally, will deposit $50 per month into a flex benefits account for employees taking single coverage under Plan 3. Additionally, employees will now be required to pay for prescriptions on a tiered basis: $7 for generic, $12 for non-generic with no generic equivalent, and $20 for non-generic where there is a generic equivalent. The estimated additional expense is difficult to determine when considering that there will be movement between plans and there is the potential for a decrease in total cost as participants move to the deductible plan. Based on current demographics and premiums, the additional expense in 2004 will be approximately $1,000,000 across all funds;
3. Retired employee health coverage now contains language that:
(a) Has new hires retiring under Plan 3 only and puts into place a sliding scale for the percentage of the cost borne by the city; and
(b) Allows the city to research and, if approved by all unions, purchase a Medicare supplement for new retirees. These changes have the potential of reducing the city's future accumulated post-employment benefit obligation by 12-15%, and, if applied to all retirees, a reduction of 25%;
4. The eligible date for receiving health, dental, life insurance, and sick leave are changed to being the first day of month after hire instead of six months after hire;
5. In 2004 only, employees have the opportunity to sell back to the employer one week of accrued vacation.