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Ocean City

CITY TO INVESTIGATE PAY STRUCTURE, PENSION REVERSAL

(Feb. 8, 2013) With union contract negotiations under way, it appears likely that Ocean City will again be doing a comparative study and revision of its salary structure, as well as potentially making another major overhaul to its pension system.

At last week’s strategic planning session, it was noted to the City Council that the town has two pay studies on its horizon. A comparative, interdepartmental study of employee compensation was an action item for the near future, while another study, which looks specifically at the town’s public safety employees compared to those of similar jurisdictions, is currently being done in preparation for union contract talks.

Ocean City is home to two public employees’ unions: the International Association of Fire Fighters, whose collective bargaining rights were granted by the city in 2007, and the Fraternal Order of Police, whose bargaining rights were approved by the voters via referendum in 2002.

In negotiating with the FOP over officers’ salaries, the city has typically assessed itself by compiling salary data from other Maryland agencies that it believes to be comparable to the Ocean City Police Department. Agreement over what the FOP, the OCPD, and the city as a whole believe to be comparable agencies has set the tone for collective bargaining hence.

“I’ve been in on every negotiation from day one, back to our first contract in 2004-2005 … and at that time we came up with 10 comparables to use,” said Sgt. Art Grady, FOP treasurer and negotiations chair. “We got to the point where it was these 10 and it wasn’t really an issue after that.”

Mayor Rick Meehan recalled that the list includes the city’s regional competitors, such as Salisbury, as well as some larger agencies that reflect the work volume the OCPD sees in the summer, such as Maryland State Police and the Baltimore County Police Department.

“Some of the agencies are really top-notch agencies in the state,” Grady said. “I think they [the city] see the benefit of having some of those in mind.”

However, the comparative salary basis has had some questionable effects on the rest of the city, which Councilman and former City Manager Dennis Dare recalled at the planning session.

Following the first contract the city forged with the FOP, a citywide salary study was done, encompassing all employees in all departments, by consultants from the Charles Hendricks Group. That study revealed that because of the overtime policies established in the FOP’s contract, the average sergeant in the OCPD would be making 22 percent of his or her annual net pay in overtime hours.

To compensate for this, the city then bumped the pay of lieutenants by 22 percent, and captains another 7 percent over that, so that sergeants would not be making more than their superiors simply by merit of union membership.

“Then we had lieutenants working special events, making more than the department heads in charge of the sewage treatment plant, which was probably a more important utility to the town than the event,” Dare said.

The result of the Hendricks study was a pay raise for most all city employees. Those at the management level saw big increases of between 15 and 20 percent, corresponding to the police salary structure.

“It all [the citywide salary structure] went back to how much police officers in Rockville made and it was just an upside-down pyramid,” Dare said.

For this reason, Dare cautioned his colleagues against moving forward too far without doing an across-the-board salary study to establish a hard baseline.

“I’m not going to make the same mistake twice and I feel we’re going down that road,” Dare said.

Such a study is an upcoming administrative goal, said City Manager David Recor, “but we didn’t see that getting completed prior to a decision having to be made on the union contracts.”

“We have done some preliminary studies to validate some of our positions in the negotiations,” city Human Resources Director Wayne Evans assured the council.

But even after the establishment of a standard circa 2005, Grady said that the comparative data was again challenged in 2010, when a new majority was voted into City Council and subsequently tried to buck the FOP by changing the comparative data structure.

“They had requested one of our captains – who isn’t even part of the bargaining unit – to do a pay comparison study,” Grady said. “The just gave him 15 agencies to look at. Not one of those agencies was what we agreed upon at the table.”

The then-majority inferred that the union was inflating its standards, but the FOP maintains that such a reconfiguration of the comparative data would cause its ranks to stagnate.

“If you just do a comparison with a bunch of other resort communities … you’re just going to water things down to the lowest common denominator,” Grady said.

What will almost certainly be the crux of the union negotiation this year, however, is the desire expressed by both the FOP and the IAFF to move back to a defined-benefit pension system. In early 2011, the then-majority of council moved to close the city’s public safety pension trust fund to new hires, and implemented a 401(a), individual contribution retirement plan.

Since then, the OCPD has hired 22 officers under the new plan. But the FOP has maintained that the lack of a proper pension makes officers less committed to staying with the department long-term, presenting a poor return on training investment for the agency. The then-minority of the City Council, as well as Meehan, agreed, and were staunchly opposed to the change.

Because retirement benefits are part of their contract, Grady said the FOP could’ve fought the change as a violation of the agreement, but chose not to.

“We could’ve fought it, but we also looked to the future, and it sounded like, if things in November got changed, we knew we were looking forward to negotiations happening right after the elections,” Grady said. “We knew it was a matter of time [before a political change], and what the minority at the time down there thought of it [the pension change] was pretty clear.”

The FOP, as well as the IAFF, backed a slate of candidates in last years’ election that returned the post-2010 minority back to majority power.

“They had given us their word that they were at least going to go back and revisit this with open eyes, and potentially get rid of the new [defined contribution] system,” Grady said.

He praised that faction of council for its open communication, even when requesting concessions, such as the pay freeze that has been in place since 2009.

“We have a really good dialogue with them,” Grady said. “That’s how the conversation kind of got started, they came to us and said, ‘The city is in a tough spot here, and we need some help.’”

Grady said the union would not be looking for extra compensation for the last four years of hardship.

“We’re not asking for blood in this,” Grady said. “We’re not asking for a huge windfall or a back pay raise. I think they [the city] see that and appreciate it.”

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