Report 2016-111 Recommendation 3 Responses

Report 2016-111: City of Irwindale: It Must Exercise More Fiscal Responsibility Over Its Spending So That It Can Continue to Provide Core Services to Residents (Release Date: November 2016)

Recommendation #3 To: Irwindale, City of

Considering that the city's retirement benefits are more generous than those of most comparable cities, and in light of its financial situation, the city should reduce its employee benefits costs by negotiating with employee bargaining groups and key management employees for the elimination of further city contributions to the PARS supplemental benefit plan or at least and increase in participant contributions to cover the full employee share of the plan's costs, recognizing that under California case law the city may not destroy vested pension rights legislatively.

Annual Follow-Up Agency Response From October 2018

Changes to employee benefits can only be made during Labor Negotiations, which take place approximately every three years.

The City completed labor negotiations for the term 2016 - 2020 and the City Council approved Tentative Agreements with all bargaining units reflecting negotiated changes on October 25, 2017. The final MOUs are being prepared and will be presented to City Council for approval on November 14, 2018. The labor negotiations were extensive and took several months. Although City management worked hard to incorporate cost-saving benefit changes during the labor negotiations, the Increase of PARS Participant Contributions was not one of the items that was agreed to by the employee associations.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

We believe the city should continue to pursue the elimination of further city contributions to the PARS supplemental benefit plan or an increase in participant contributions to cover the full employee share of the plan's costs in future labor negotiations.

1-Year Agency Response

Changes to employee benefits can only be made during Labor Negotiations, which take place approximately every three years.

The City recently completed labor negotiations for new 3-year MOU's with each of the employee associations. The labor negotiations were extensive and took several months. The final MOU's for each of the employee associations are projected to be finalized and presented to the City Council during one of their council meetings in January 2018. Although City management worked hard to incorporate cost saving benefit changes during the labor negotiations, the Increase of PARS Participant contributions was not one of the items that was agreed to by the employee associations.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

We believe the city should continue to pursue an increase in participant contributions to cover the full employee share of the plan's costs in future labor negotiations.

6-Month Agency Response

Changes to empoyee benefits can only be made during Labor Negotations, which take place approximately every three years.

The City will begin active negotiations in the coming fiscal year, which will allow for the opportunity to negotiate for an increase of PARS employee contributions.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Any changes to employee benefits can only be changed during Labor Negotiations, which take place approximately every 3 years.

California State Auditor's Assessment of 60-Day Status: No Action Taken

All Recommendations in 2016-111

Agency responses received are posted verbatim.