10:28 a.m. clarification: International Union of Operating Engineers Bargaining Unit 12, which represents roughly 12,000 skilled craftsmen, maintenance and equipment operators, has reached a tentative agreement with Schwarzenegger. The union also represents about 1,000 building maintenance employees in Bargaining Unit 13, which has not reached a tentative agreement and continues to bargain with the administration.
Gov. Arnold Schwarzenegger's administration has come to tentative labor agreements with two unions, the Union of American Physicians and Dentists and the International Union of Operating Engineers. Both pacts include higher pension contributions for all members, lowered pension benefits for new hires and eventually employees paying to prefund retiree health benefits.
The deals, struck late last week, would run from July 1, 2010 to July 1, 2012 and cover a combined 14,000 employees who have been working under expired contracts for two years. If ratified, the changes will save the state $66 million in fiscal 2010-11, the administration estimates.
The UAPD and IUOE tentative agreements contain the same kind of pension changes that four other unions tentatively endorsed last week, including rolling back retirement formulas for new employees, in effect forcing them to work longer to receive full benefits. The new formulas: 2 percent at age 55 for safety workers; 2 percent at age 60 for miscellaneous employees.
Current and new workers would also contribute at least 5 percent more of their pre-tax pay toward retirement than the state currently requires.
Beginning July 2012, employees in both groups will pay 0.5 percent of salary toward pre-funding their retiree health benefits. New employees under the IUOE agreement would be required to work 25 years instead of the current 20 to be eligible for full retiree health benefits.
The UAPD and IUOE pacts add a sixth step raise for employees at the top of their job classifications.
Both tentative agreements maintain earlier contract provisions that calculate pension benefits based on the highest three years of wages. Now they will go to union members and the Legislature for ratification, a process that will likely take several weeks. The contracts would become binding upon signature by the governor.
Click here for the administration's press release.