MACOMB COUNTY — New contracts for about 2,500 Macomb County employees do not include any salary increases, but they do provide a series of lump-sum payments and put an end to unpaid furlough days.
The Board of Commissioners voted unanimously in favor of these labor agreements, which were negotiated with 17 of the county’s labor unions by Executive Mark Hackel and his staff, at its Dec. 19 meeting. By approving the three-year contracts, the board authorized the Executive Office to make the necessary budget adjustments to allow the lump-sum distributions to be made. The additional expense for Macomb County will amount to about $8.2 million, $5.4 million of which will be paid for via the county’s general fund.
The new contracts include payments of $3,000 per full-time employee — for both union and nonunion workers — which were issued in their final paychecks of 2013. They also include one-time payments of $500 in 2015 and 2016. In addition, part-time employees received a $300 payment at the end of 2013. While county officials stated that there should be sufficient funding within the existing budget, these changes may also require budget transfers between individual departments.
Deputy Executive Mark Deldin referred to these expenditures — the first pay increases of any kind for Macomb County employees since 2007 — as “restitution” for enduring such a long period without additional compensation.
“That money was given to our employees not only to recognize that their pay was frozen for the last several years, but also that they have accepted reduced health care benefits and unpaid furlough days,” he explained. “There was no hesitation at all on our part to do this. This was the end of our budget year, so we saw that there was more than enough money available to make these payments.”
County officials have estimated that, by the end of 2014, the county budget will boast a fund balance of about $80 million, which amounts to roughly 42 percent of its total general fund expenditures of $191 million. This number is well above the commonly recommended benchmark of 15-20 percent.
These lump-sum payments will not apply to elected officials, however. Deldin pointed to a stipulation within the county charter stating that the salaries of elected officials cannot be changed mid-term.
According to Board Chair Dave Flynn, D-Sterling Heights, “While I initially had some reservations about these new contracts, I was persuaded when I saw that the union membership agreed on these one-time payments in lieu of salary increases. The collective bargaining process was fully respected, which is why I voted in favor of this.”
In addition to the lump-sum payments, the new contracts include the elimination of the six unpaid furlough days that workers have endured for the last four years. Deldin noted that this provision essentially amounts to a 2.3 percent pay increase for county employees, which will cost Macomb County about $2 million in 2014 alone. Still, he said, by restoring these six furlough days, the county will be adding about 75,000 more work hours each year.
But by accepting these increases, county workers also agreed to a number of cuts to their health care and retirement benefits, particularly those for recent hires and future employees. Workers hired after Jan. 1, 2016, will be hit the hardest: They will not be eligible to participate in the same pension system as other county employees and will instead be given the option to contribute to a 401(k) retirement plan. They also will not be entitled to any of the county’s retiree health care benefits, although the county will still set aside money for future medical expenses. In addition, all employees hired since January 1, 2012, will now receive reduced health care coverage.
Deldin and Flynn agreed that officials must take steps to decrease Macomb County’s ballooning legacy costs, while at the same time honoring any previous agreements made with county workers.
“Our biggest priority is to make sure that we maintain our commitment, our promise, to current employees for their post-retirement benefits,” Deldin said. “If you look at what’s been happening in Wayne County lately, that’s a disaster we want to avoid at all costs. Future employees will be taking major cuts, but we have to give current employees what they deserve. To pull the rug out from under them and put their pensions in jeopardy would be completely unfair.”
Some county officials were more ambivalent about the new contracts, however. Commissioner Fred Miller, D-Mount Clemens, chair of the board’s Finance Committee, was the only member to vote against the lump-sum payments at the committee level. He cited concerns over what these changes could mean for union employees over the long haul.
“I really agonized and wrestled over this decision,” Miller said. “From an organizational and management standpoint, this was a very smart financial move for Macomb County to make. We’re taking steps to rein in our legacy costs, and this will save us a lot of money in the long-run. But from the standpoint of someone who supports the middle class, I think this was not necessarily a great deal. Ultimately, it will result in a lot fewer dollars in our employees’ pockets after retirement. This was a huge concession for our unions to take.”
Still, like Flynn, Miller was encouraged by the fact that “a huge majority” of union members voted in support of the new contracts. He was also glad to see that the county is in good enough financial shape to give something back to its employees in the form of lump-sum payments.
According to Deldin, the county is still in the process of negotiating new contracts with three of its unions: two representing employees at the Department of Roads and another representing corrections officers at the Macomb County Jail. He admitted, though, that the trend of offering modest financial incentives in exchange for reduced post-retirement benefits is likely to continue as the county moves forward.
“This is something new for Macomb County government, but it’s nothing new for other units of government or private companies all over the country,” Deldin said. “Unfortunately, this really has become the new normal.”
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