Mendo’s Labor Wars

The slo-mo labor relations trainwreck between SEIU 1021 and Mendocino County continues to play out with both sides having now issued dueling press releases based on the findings and recommendations of a “fact finding” panel.

The fact finders were Donna Williamson, the County's pricey outside lawyer hired to represent the County because the County's own half-dozen lawyers in the County Counsel's office are apparently unable to conduct simple labor negotiations. She's from a firm of union busters called Liebert, Cassidy & Whitmore.

Then there was Jason Klumb, the non-pricey SEIU 1021 Area Field Director; and Paul Roose, an arbitrator and mediator chosen from a list maintained by the California Public Employment Relations Board (PERB) acting as the neutral chairperson.

Not surprisingly, the hired guns representing SEIU and the County canceled each other out, so the report and recommendations released in the name of the panel really came down to the opinion of the chair, in this case Mr. Roose, who was mutually agreed upon by SEIU and the County. In the absence of agreement by the parties, PERB would have appointed a so-called “neutral” chairperson from the PERB- maintained list. Except PERB is dependably pro-union (not necessarily pro-employee) and if anyone was truly neutral they would not stay on a PERB-maintained list for long.

At the beginning of negotiations SEIU, still smarting from a 10% cut in wages three years ago, demanded a 16% wage increase over three years and other add-ons, later reduced to a demand for a 10% increase. At the very last minute, and at the end of factfinding, SEIU reduced its wage demand to a 3% increase. The County held firm all along in asking for a status quo contract with no cuts and no increases, maintaining that revenues remain flat and the County cannot grant an on-going wage increase without being certain they can pay for it.

The County has managed to rebuild its reserve fund but says it has done so with different pots of “one time” money that have wafted in to Ukiah over the last three years. The County says the reserve fund is a hedge against future pay cuts and layoffs in case of another downturn in the economy. And who doesn't think the Wall Street Ponzi is again headed for a mondo-crasho?

The panel chair advised both parties in advance that he was unlikely to choose a middle ground between their proposals but was more likely to pick one or the other, kinda like baseball-style arbitration. The SEIU leadership finally realized that given a choice between status quo, and a 10% increase, that the panel chair would recommend the status quo.

The last minute about face is the first and only indication that the SEIU leadership has any grasp of practical realities or strategic thinking. The revised request for a 3% increase is reasonable on its face and the last minute change in position also prevented the County from presenting any information to counter the new proposal.

The panel chair conceded that the revised SEIU proposal for a 3% increase “is not justified by salary comparisons with other jurisdictions” but described the County's status quo position as “overly conservative...at a time when revenues are stabilizing and the employer has made significant strides in beefing up its reserves.”

The panel chair concluded that the County could pay for the 3% salary increase by taking money out of the County contingency fund, reasoning that paying for the increased wages out of the contingency fund would leave the reserve fund intact. The chair also wryly noted that the one day strike, called by SEIU back in September, presumably resulted in some salary savings to the County that could now be applied to a salary increase.

During the factfinding hearing, SEIU and the County continued to bicker over the County's financial position, with SEIU maintaining that the County was flush with money, just as they have throughout the negotiation period. SEIU claims that the County budget obscures the actual state of the County's finances. SEIU brought up a staffer from Oakland named Meredith Staples to pore over the County's financial documents. Staples, who is not a CPA or an auditor, but who seems to have taken a couple of bookkeeping classes, claimed to have found “hidden reserves” of up to $12 million, which was news to everyone in County administration. Unfortunately, Ms. Staples hadn't accurately decoded differing terminology and reporting requirements for different financial documents.

The panel chair dodged the financial issues by saying that since the County had enough money to pay the 3% increase on a one- time basis “the disputed budget numbers are moot.” Which either displays a remarkable lack of curiosity concerning the mystery bonanza of $12 million Ms. Staples alleged was stuffed in a County mattress somewhere, or dismisses her findings as obviously not reality-based. After all, if the County really is sitting on an extra $12 million, then there is enough money to restore the entire 10% wage cut. More likely the panel chair realized the SEIU allegations were bogus but simply decided to sidestep the issue.

SEIU issued a fairly tepid press release announcing the factfinding report recommendation, saying “a neutral, third party has concluded that SEIU Local 1021 members deserve a fair wage and the County has the ability to pay for it. The report also sides with employees who are asking for a 3% wage restoration in a one-year contract. Since 2009, workers lost 10% in wages, while also losing more than one-third of the county workforce to attrition and layoffs. This means that while paychecks have shrunk, workloads have dramatically increased. Workers are literally doing 30% more work for 10% less pay.”

Er, not exactly. Eliminating an administrator, for instance, also eliminates the need for an administrative aide and a receptionist. Some individual workloads have increased, but in other cases it just means the wait time has increased.

The SEIU press release went on to sound some familiar themes, saying, “The report is a recommendation to the County, but the County still, even after the report was released to both parties 10 days ago, refuses to move from its original position. We have tried to work with the county over and over, but they continue to disrespect their own workers while refusing to move off their original position of ‘no.’ We demand accountability and transparency from the Board of Supervisors, but they continue bad ‘status quo’ policies that harm the residents of this community,” according to Helen Michael, Mendocino County Chapter President, SEIU Local 1021.

The SEIU press release concluded by quoting the panel chair saying that the County's self-insured health plan “creates special problems of transparency and comparability. Can the plan participants, the county's employees have full confidence that it is being managed fairly and efficiently?”

Of course not, which makes it just like every other self-insured health plan in a small county. Or program for that matter. If County finances and operations had been competently managed over the last couple of decades or so, the County wouldn't be in the jam it is in now. But the current Board of Supervisors have, for the most part, been focused on making prudent budget decisions and cleaning up the financial wreckage created by their recent predecessors. Delbar, Shoemaker, Campbell, Colfax, Wattenburger, Lucier, and travel cheat Smith may have been labeled liberal or conservative politically, but they were all irresponsible spendthrifts when it came to the budget. In a worse economy, the County would have been forced into bankruptcy, and large swathe of County workers would have been made jobless.

The County issued a one page press release, just like SEIU, spinning the report in the light most favorable to the County, but also issued a four page “Extended Edition” press release that expanded on the County spin. The County also included its “partial dissent” from the factfinding report. The County one-pager quoted Assistant CEO Kyle Knopp saying: “Overall we are very pleased. The Board's position continues to be based on stabilizing County finances and tying increased compensation to sustainable increases in County revenue.” Which roughly translated means the employees can expect a raise when hell freezes over.

Commenting on the recommendation for a 3% increase, the County simply said that the report was “unable to identify a sustainable source of funding to finance the enhancement.” Predictably, the County highlighted the fact that the report found in favor of the County on 7 out of 9 disputed areas, including SEIUs demand that the County be prohibited from contracting out and that the recent 3% increase in healthcare premiums be rescinded.

The County's “Extended Edition” press release covered the technical details of the factfinding process and then, detailed SEIU's original laundry list of salary and benefit demands, as if to show just how unrealistic and greedy they were:

“SEIU 1021 began the bargaining process in July by requesting a 16% pay increase phased in by July of 2015. By the time the factfinding hearing began on January 7, 2014, SEIU was requesting a 10% pay increase phased in by January of 2016. SEIU 1021 also called for:

• Additional merit/longevity based pay increases

• Increases to on-call & bilingual premium pay

• Rescission of a 3% increase in healthcare costs

• Increases in materials reimbursements

• The banning of contracting-out bargaining unit work

• Elimination of the award limit from the grievance procedure

• Added contractual language allowing SEIU to make a presentation during the County’s new employee orientation.”

Next up, Juanie Cranmer, Human Resources Manager for the County was quoted to set the stage: “We entered the hearing understanding that SEIU's position revolved around a restoration of the 10% cut. Since SEIU was the party requesting a change in the status quo, all sides agreed that SEIU would bear the burden of proof — that they would need to justify a 10% pay increase and let us know how it could be financed.”

Could SEIU pull off a Perry Mason moment? Not according to Meredith Ford, the County’s Auditor-Controller:

“The SEIU argument really just fell flat. SEIU struggled to interpret the County’s third party audit-reports and failed to understand that audit reports and budget documents cover different subjects and have different terminology and legal reporting requirements. SEIU ignored numerous explanations and repeatedly cited various figures from audit and budget reports, falsely claiming that the County was hiding money. Their goal wasn’t to reconcile budget reports to audit reports. Myself and Assistant CEO Knopp met with them numerous times both at the bargaining table, outside of the table in private, and through written responses to multiple information requests. Their goal was simply to confuse the neutral factfinder, Mr. Roose.”

Ford seemed to be worried about the ability of poor Mr. Roose to stand up to the SEIU thugs before she continued with the County party line:

“They brought up recent upgrades from Standard & Poor’s and Fitch Ratings. Like the audit reports, they show the County’s finances improving – improving as a result of the hard decisions the Board of Supervisors have made over the past few years to align spending with revenues and create financial stability in the system. An upgrade doesn’t give the County a green light to increase compensation; instead, it is a result and reflection of living within our means.”

The County then interjected an unattributed statement recalling the dire financial straights of recent years:

“The County, with high debt and minimal reserves, was ill prepared for the recession. and teetered near junk-bond status and possible bankruptcy as the financial crisis deepened.”

Assistant CEO Knopp detected a sinister purpose behind SEIU's “drastically revised” last minute change of position:

“SEIU amended their argument at the last minute because they know a 10% increase is not remotely feasible or prudent given the County’s improved but still precarious financial condition. They brought it down to 3% all the way from 16% when we first started negotiations. This sudden reversal prevented the County from presenting evidence or responding to SEIU’s new position.”

The County, in another unattributed statement, acknowledged, but quickly downplayed the recommendation in favor of SEIU's revised salary demand:

“Mr. Roose recommended in favor of the 3% increase, which is probably an average COLA increase for the Bay Area, but which is problematical in rural Mendocino County where the local economy and the tax revenue to support government services continues to lag behind more urbanized areas.”

The County went on to quote Assistant CEO Knopp slamming the factfinders recommendation:

“The factfinders report states that the County can simply liquidate our contingency fund to finance the pay increases. Obviously, that is not a sustainable manner to finance an ongoing pay increase and shows a lack of understanding of the purpose of a contingency fund. We made it clear that the Board of Supervisors wants sustainable solutions that leave the next generation in Mendocino County more options, not less.”

After crowing that the report found against SEIU on 7 of 9 areas in dispute, including the issue of contracting out services (because SEIU failed to identify any County employee who had been laid off or suffered reduced work hours as a result of recent contracting out of mental health services) the County detailed what SEIU gets now:

“SEIU 1021 employees receive 30 hours of personal leave annually, 3 days of bereavement leave with options to extend, 40 hours of vacation accrual cash-out, 24 hours of banked compensatory time off (CTO), a $20,000 life insurance policy, clothing allowance for certain classifications, access to approved bilingual pay, a defined benefit pension plan, 75% cost coverage for health insurance (Medical, Dental and Vision), regularly scheduled merit pay increases of 5%, access to 3 deferred compensation plans, 11 paid holidays, up to 25 days of paid vacation annually with an option to bank an additional 25 days in a year, 15 sick days, family sick leave, 8 hours of wellness leave and jury duty pay.”

Jury duty pay? That will certainly get one through the winter. Clearly, whoever wrote the County press release (it was sent out over CEO Carmel Angelo's signature) was intent on showing just what a bunch of ingrates the SEIU nitwits really are. But the killing blow was the following quote from Fourth District Supervisor Dan Gjerde, who was previously thought by SEIU to be sympathetic to their cause, but who is now saying they can get a raise if they agree to cut their costly retirement plan:

“Even with a status quo contract, compensation is going up. For example, the salaries and workforce levels are holding steady, yet retirement costs for legacy contracts are requiring County taxpayers to increase their contribution this year to the pension system dramatically. If a salary increase is the top priority for employees, then the path to fund an increase is through meaningful reforms that curtail these unsustainable pension costs.”

In another unattributed statement, the County next pulled out the violins to bemoan the high cost of the retirement obligation:

“The County’s unfunded liability for pension debt has grown from approximately $24 million in 2007 to over $131 million in 2013. That doesn’t include the 2002 Pension Obligation Bond (POB) issuance which currently costs $8 million annually in the County budget for debt service. Consequently, county retirement costs associated with every dollar of payroll have increased dramatically. In addition to payments on the unfunded liability and POBs, for every $1.00 dollar the County pays for non-public safety employees, it pays another $.63 cents in benefit costs.”

The County also included a chart showing that retirement system costs as a percentage of payroll have increased from 19.69% in 2007 to 37.13% in 2013 with an increase in annual cost during the same time from $13.2 million to $18.7 million.

The County's “Extended Edition” press release concluded with a quote from Supervisor and current Board Chair John Pinches:

“I find it funny that after all of this work by both SEIU and the County since November on this whole AB 646 factfinding business — the result is that it’s advisory. This process is completely non-binding. Thank you for the advice to spend one-time funds for ongoing pay increases, but this county has been there and done that. The Board is committed to doing this the right way, and I think the majority of our employees know that and understand that little by little, we’re getting back into a position to provide some relief — and make it stick this time.”

So there you have it. After all the song and dance of the factfinding processes, the report recommendations are merely advisory. Which means the recommendation for a 3% wage increase to be funded out of the County contingency fund is not only dead on arrival but was dead before it got out of the starting blocks.

County employees, despite pay and benefits that are the envy of most private sector employees, typically feel that they are underpaid, overworked and underappreciated. These feelings are understandable based on the cuts in wages and staffing that were imposed in the wake of the economic collapse that began in 2008. County employees had previously benefited from the famous (some say infamous) “Slavin Study,” circa 2000, which was used to justify significant pay increases — including those at the top who agreed with it — but without identifying where the money was going to come from to pay for it and without setting aside anything to pay for the increased retirement benefits that resulted from the increased wages.

Pinches, who was not on the Board when the Slavin Study increases were approved, drove all the way down from his ranch at Island Mountain to argue against the increases, commenting dryly “there's an acorn for every pig.” Pinches comment in the press release about “been there and done that” is an apparent reference to the Slavin Study increases which formed the foundation for a structural budget imbalance for the County as well as a rapid escalation in the unfunded pension fund liability.

County employees were still getting wage increases (based on the last round of contract talks) as late as 2009, long after many private sector businesses and employees were already feeling the pinch of the economic collapse. And it was the economic collapse that unmasked the unsustainable nature of the Slavin Study pay raises. Suddenly, the current Board of Supervisors was struggling to cash a series of checks written by previous Boards of Supervisors. The financial crisis exploded the myth of an ever expanding economy and set the Supervisors scrambling to balance the budget.

When SEIU Local 1021, the County's largest bargaining unit, (based out of Oakland and local in name only) and the County finally got around to negotiating a new contract in 2010, SEIU drug out negotiations for a year and refused to accept any pay cuts. The other seven county bargaining units all agreed to accept a 10% cut in wages, except for Probation and the Public Attorney's who joined with SEIU in dragging out negotiations and finally agreed to 12.5% cuts out of fear the County would impose even steeper cuts. With this background, it was obvious to everyone but the Einstein's running SEIU that the best they could do was to accept the 10% wage cut the County was asking for.

But the SEIU leadership refused to budge, forcing the County to impose a 12.5% cut when the County really only wanted10%. Following several months of unnecessary posturing the SEIU leadership finally agreed to let their members vote for a 10% wage cut. The rank and file had no trouble realizing that a 2.5% restoration of wages was worth more to them than the on-going name calling and finger pointing favored by their so-called leadership. Not that there wasn't enough finger pointing to go around. For every stupid blunder committed by SEIU there was an equally insensitive or dismissive response or provocation from the County. None of the people at the bargaining table in 2010 had any previous collective bargaining experience and it showed.

SEIU underwent a corporate style merger some years ago with all hiring and strategy decisions and all finances concentrated at SEIU headquarters in Oakland. Gone are the days when the local dues paying members could decide who to hire for their local business agent. Instead, the SEIU shot-callers in Oakland dispatch a revolving series of low level staffers who shuffle in and outtahere, never staying long enough to understand the local political landscape or win the confidence or respect of their members, much less of the people sitting across the table from them.

The County has responded by paying big bucks for outside hired guns equally unfamiliar with local conditions and unconcerned with the wreckage of bungled negotiations they leave in their wake. Gone are the days when the chief negotiators for both sides lived in the community and knew they would need to work together on future issues. As recently as a few years ago, during the Linda McClure era, SEIU still had truly local business agents who knew the County, knew their membership and knew how far to push things without destroying their working relationships with people they would need to be sitting across the table from next week or next year.

For example, back in November SEIU and the County engaged in mediation in another fruitless effort to reach agreement. Usually reliable sources, including within SEIU, have confirmed that the County offered make a one time lump sum payment of up to $1,000 to every SEIU member and to roll back the 3% healthcare premium increase that SEIU made the centerpiece of their p.r. campaign. SEIU could have taken the offer and declared victory for stopping the healthcare premium increase and for delivering a sizeable one-time bonus to their members just in time for Christmas. Instead, SEIU turned down the offer and refused to take it to their members for a vote. SEIU then sent its members an email falsely stating: “While we have moved, the County has not moved off its original position for the last five months of bargaining.”

But in fact the County had moved — by offering to roll back the healthcare increase and to make a one-time lump sum payment to every SEIU member. Sources within SEIU confirm that at least one or two of the bargaining team members wanted to take the offer but the majority insisted on keeping the fight going. Two months later the healthcare premium increase has gone into effect and the proffered Christmas bonus is a distant memory. And the parties are back to square one with no contract, no negotiations scheduled and no love lost for each other. And unlike last time around when delay worked to the advantage of SEIU, this time the County is getting what it wants — a status quo contract — on the daily installment plan.

The SEIU email went on to say: “We must remain strong, with our supporters behind us, in the knowledge that we are standing up for the right reasons: Our families, our livelihoods and our community. Since our county leaders are failing in their duties to protect their workforce, we must ramp up to organize the community and show them what real leadership looks like. We have done everything internally — from unity breaks, rallies, board actions, purple up/sticker up days and our one-day strike. Stay tuned, get your walking shoes ready. We will be knocking on doors and holding the Board of Supervisors and CEO Carmel Angelo accountable, signature by signature, block by block, neighborhood by neighborhood! We are keeping the pressure on!”

Really? If anyone in Mendoland has received a knock on the door from SEIU we would love to hear about it.