Published April 16, 2014
Township, patrolmen’s union reach agreement two days before arbitration
By Sarah Wojcik email@example.com
SHELBY TOWNSHIP — Both sides breathed a sigh of relief when the Shelby Township Police Department’s patrolmen’s union and the Board of Trustees ratified a contract April 1 — two days before they were slated to go to a third-party mediator.
The agreement allows for a 5 percent wage increase over four years — 2 percent effective immediately, a 2 percent increase in 2015 and a 1 percent increase in 2016 — and also switches new hires to a 401(k)-type plan instead of the existing pension plan.
In October 2013, the approximately 50-member union filed for Act 312 arbitration because it had not heard back from the township since March 2013, and its contract expired Dec. 31, 2012, resulting in higher health care premiums and a halt on wage increases and promised benefits.
Act 312 mandates that the arbitrator’s final decision is binding, so both sides’ legal representation expressed relief that they were able to successfully negotiate among themselves.
In an April 9 phone interview, Jim Tignanelli, the business agent for the union and president of the Police Officers Association of Michigan, said things started picking up in the last three weeks, and it took significant effort on both sides to achieve the negotiation.
“Both sides got something they felt they needed, and both sides gave up something they had not wanted to give up, but that’s how negotiation works,” he said.
He added that, ultimately, he was pleased with the agreement and “proud of his guys.”
As part of the deal, the township also agreed to finance the approximately $24 million in accrued liabilities in the police and fire pension plans.
“An important step to building some confidence for the members (of the union) was to make sure that after (they retired), the pension plan wasn’t going to get so far upside down that it would blow up in smoke,” Tignanelli said. “I think it will bring some peace to the place. It’s been pretty contentious at times.”
Craig Lange, the township labor attorney, said that reforming the pension plan has been the township’s No. 1 priority since Stathakis took office, and the new hires’ retirement plans would be identical to other township employees’ — the employer pays 10 percent of the salary, and the employees pay 5 percent into the same retirement plan.
“It’s a really great change, and we’re excited about it,” Lange said.
By capping the accrued pension liabilities, they will no longer be fluid and actuarial, so the township will be able to proceed with a budget and a plan for tackling the legacy costs.
As to how the township means to pay off the $24 million in pension liabilities, which Lange said is 67 percent funded, by March 31, 2015, he said it is actively exploring a wide range of options.
“I’m very fine with the terms of this contract,” Supervisor Rick Stathakis said. “The Board of Trustees unanimously agreed to the terms of the contract, so that was seven-zip. That’s important.”