SAN JOSE -- San Jose and its police union struck a deal on reducing pensions for new officers late Thursday, ending a months-long battle over efforts to cut costly retirement benefits at least for future city cops.
The settlement with the San Jose Police Officers' Association came on the eve of what would have been the city's first open arbitration hearing Friday to settle the dispute under terms voters approved in 2010 requiring arbitrators to weigh the city's ability to afford union pay and benefit requests. The two sides still plan to meet Friday morning with the retired judge acting as arbitrator to formalize the settlement.
"We deeply appreciate the work that the POA has put into these negotiations and the positive outcome avoiding arbitration," said City Manager Debra Figone.
San Jose has been locked in a bitter dispute with its employee unions over retirement benefits whose costs more than tripled in a decade, devouring funds for staffing and services. Voters have overwhelmingly backed the city in a series of ballot measures aimed at checking those costs. But unions are fighting in court to overturn the most recent, Measure B passed last June, which limits new-hire pensions and asks current employees to pay more toward the benefit or choose a reduced plan for their remaining years on the job.
The settlement comes at a critical time as the city is furiously recruiting officers to replace a rash of retirements and resignations over the past year. The Police Department, with approved staffing of 1,109 sworn officers, has fewer than 1,000 on full duty, well short of the nearly 1,400 on the force a few years ago.
John Robb, the officers' association vice president, blamed Mayor Chuck Reed for the officer exodus and said the deal on lowering pensions for new cops will only make it worse.
"This agreement provides little incentive for a police officer to come to work in San Jose when all they have to do is step over our city border and work for an agency that pays substantially more and provides a retirement plan commensurate with the risk of doing police work," Robb said. "Unfortunately, under the legally challenged Measure B, this represents the maximum benefit that we could have negotiated and neighborhood safety will pay the price for Mayor Reed's stubbornness."
San Jose already reduced the pensions offered to 118 new city hires outside the police and fire departments as called for in Measure B. But San Jose could not do the same for new cops and firefighters without union consent because of arbitration rights voters approved in 1980 to settle pay and benefit disputes with the city. Voters however limited those rights with Measure V in 2010. It requires arbitrators to hold open hearings and consider the city's ability to afford compensation hikes without cutting services.
Reed said earlier this week that the limits he called for in Measure V would encourage a settlement favorable to the city.
"We have new restraints on the ability of arbitrators to come into town, give away a bunch of money and leave," Reed said before the settlement was reached. "It will all have to be done in public, and they can't spend money we don't have."
Reed has blamed the shrinking police force on soaring pension costs, noting the Police Department lost a fifth of its officers while its budget grew by $96 million over a decade.
City correspondence with the officers' union showed the two sides agreed on the basics of a new-officer pension plan. It would raise the minimum age for full retirement benefits from 50 to 60 and lower benefit formulas. The maximum pension would be 65 percent of pay instead of 90 percent, with cost-of-living increases capped at 1.5 percent instead of the current 3 percent.
Disagreements centered on the city's right to amend the plan in the future and whether the reduced benefit should remain or be renegotiated for new hires if Measure B is blocked. It was unclear late Thursday how the settlement resolved those issues.
To date, none of Measure B's provisions have applied to city officers pending the outcome of legal challenges. Unions argue that Measure B violates employees' "vested rights" to the same or better retirement plan in place when they were hired. But the vested right protections only apply to current employees, giving government employers much more leeway in reducing retirement benefits for new hires.
San Jose officials have yet to reach an agreement with firefighters on new-hire pensions, and the city is asking a judge to compel arbitration.
The city and police still are scheduled for arbitration starting May 6 at City Hall on renewing the police officers' contract. The officers are seeking to restore 10-percent pay cuts and additional raises, while the city is seeking limited raises. The two sides have chosen retired Judge John A. Flaherty as the neutral arbitrator.
Contact John Woolfolk at 408-975-9346. Follow him at Twitter.com/johnwoolfolk1.
San Jose and its police officers settled a dispute over reduced pensions for new officers on the eve of the city's first scheduled open arbitration hearing. Some facts about the dispute: