TUSTIN : City, Employees Reach Agreement

The city has reached a tentative agreement with three city employee groups on one-year contracts under which the employees agreed to forgo salary increases next year in exchange for improved health and retirement benefits.

The City Council today will review the contracts or so-called memorandum of understanding between the city and the Police Officers Assn., the Police Management Unit and the Tustin Municipal Employees Assn.

If approved, the contracts will take effect Jan. 1.

A key provision requires the city to contribute $150 a month for the medical insurance premiums of employees who retire after Oct. 1, 1993. This is in addition to the $16 monthly that the city now pays for eligible retirees under the Public Employees and Hospital Care Act, officials said.

City Finance Director Ronald Nault said the new benefit package is the first significant change in employee benefits over the past 15 years. He said it will cost the city about $50,000.

However, it’s not a “dramatic shift in cost. It’s the prudent thing to do,” Nault said. He said the city cannot afford salary increases at this time because of its financial difficulties due to declining revenue and budget cuts.

The benefits are incorporated in the so-called memorandum of understanding between the city and the three employee groups. The memorandum of understanding will expire Dec. 31, 1994.

Nault said that the health plans, purchased through the Public Employees Retirement System, will allow employees more choices in their health plans than the current self-insured plans the city extends to its employees.

In addition, Nault said because the retirement system is larger than most private health insurance companies, it will be less risky and less costly to the city in the long term.

Nault said that 13 of the city’s 246 employees may immediately take advantage of the retirement benefit. One police officer is eligible to retire, five

from the sergeants and lieutenants group and seven from the municipal employees group.

City employees will have a three-level health plan, instead of the current two, allowing more choices in medical health coverage, Nault said.