The labor negotiations involved substantial involvement between the Receiver, Mr. Douglas Dahn (Receiver’s labor attorney) and the City Controller. The principal contracts resolved during the receivership included: AFSCME, Firefighters and Police Officers unions.

AFSCME

At the inception of the receivership, AFSCME had received an arbitration award under the "Me Too" clause with Ecorse concerning an earlier resolution of the police and fire contracts. The Receiver took no significant action to quantify the AFSCME arbitration award for over a year. However, in the summer of 1987, an estimate of the maximum exposure to loss should AFSCME win the arbitration was as high as $500,000, plus the affect on fringe benefits.

Throughout the 1988 fiscal year, the Receiver continued to discuss the award with AFSCME. By June 1988, the Receiver had decided to privatize the Department of Public Works (DPW). As discussed previously, the AFSCME membership approved the revised contract allowing the Receiver to privatize the DPW, eliminating the "Me Too" clause, and providing pay increases and limited sick and vacation pay to the remaining AFSCME employees.

The AFSCME contract settlement, however, resulted in the payment of $669,650 (including fringe benefits) to AFSCME employees. This settlement was recorded in the 1988 fiscal year.

Firefighters Union

A budget to actual comparison of the Fire Department expenditures (exclusive of pension contributions) for the three years leading up to the receivership follows:

Budget

Actual

1984

$901,778

$925,172

1985

$915,318

$1,228,772

1986

$1,257,370

$1,322,841

Included within these escalating costs was overtime of $50,168, $85,345 and $212,121 for the 1984, 1985 and 1986 fiscal years, respectively. In each of the 1984, 1985 and 1986 fiscal years, the Fire Department exceeded its operating budget by $23,394, $313,454 and $65,471, respectively. The 1987 fiscal year expenditures, which declined largely resulting from the January 1987 lay-off, were $1,184,292. The Receiver was convinced that reversing this three year trend of increasing fire service costs was critical to Ecorse’s long-term survival.

As early as spring 1987, the Receiver began to explore alternatives to providing fire services, including contracting with other surrounding communities to provide this service. No community would provide this service on Ecorse’s behalf, in part, due to Ecorse’s financial condition. Ultimately, the problem had to be resolved through the utilization of a combination of full-time Ecorse fire personnel and part-time reservists. However, the Receiver would be unable to immediately institute changes to the labor agreement as the Firefighters agreement was effective through June 30, 1988.

One of the most significant components in the settlement of the Fire Department labor contract for the fiscal year beginning July 1, 1988 involved the use of part-time reservists paid at $5.00 per hour, in lieu of more expensive full-time personnel. Reservists also did not receive fringe benefits. The use of reservists would also contribute to the control of excessive overtime. Other significant concessions in the Firefighters settlement included the removal of the "Me Too" clause and minimum staffing requirements from the labor agreement and the limitation of sick and vacation pay.

The ability to obtain these concessions resulted in an increase in compensation and pension benefits paid to the existing full-time Fire Department personnel. In addition, the Receiver assured the Firefighters Association of no reductions in existing full-time fire personnel. However, part-time reservists would replace those positions vacated by normal attrition.

The reduction of Fire Department costs arising from these concessions is demonstrated in the following table:

Budget

Actual

Pre-receivership – 1986

Receivership:

$1,257,370

$1,322,841

1989

$933,200

$954,825

1990

$1,034,350

$1,113,331

Post-receivership – 1991

$955,215

$1,075,977

While the Fire Department has continued to consistently exceed its operating budget since 1989, the actual amounts expended for these services has declined almost 28% between the 1986 and 1989 fiscal years.

Police Officers

The Police Officers contract, which also expired on June 30, 1988, was settled at the same time as the Firefighters contract. The provisions were similar in nature to those of the Firefighters, except that there was no provision for police reservists. Instead, the Police Officers accepted a two-tier pay structure whereby newly hired police officers would be paid $16,500, substantially below the then lowest grade officers in the Department.

The Police Officers’ contract also eliminated the "Me Too" clause and minimum staffing requirements and limited sick and vacation pay. Increases in compensation and pension benefits were provided.

Health Insurance

The Receiver was successful in revising the health insurance programs provided by Ecorse. Previously, all health insurance costs were paid by Ecorse. As a result of the labor negotiations, if traditional Blue Cross / Blue Shield health insurance (which was more costly) would be retained by the employee, a co-pay arrangement was required. Should employees chose to participate in a health maintenance organization, which was less costly, Ecorse would pay for all health insurance costs.

Sick and Vacation Pay

One Receiver’s concerns involved the virtually unlimited amount of sick and vacation pay, both as to rates and days accumulated, that Ecorse personnel could accrue. The following is a table presenting the outstanding, vested sick and vacation pay recorded in the General Long-term Debt Account Group at various year ends:

June 30

Balance Outstanding

1985

$1,242,489

1986

$1,288,548

1987

$1,182,331

1988

$871,500

1989

$574,314

1990

$495,942

1991

$494,000

Through negotiations with the various bargaining groups, the Receiver obtained limitations on the pay rates to be used and number of days that could be accumulated. In addition, a regular payment schedule was instituted whereby a portion of the excess sick and vacation accruals would be paid each year.

The sick and vacation pay obligations were reduced from $1.3 million to $.5 million over a period of four years. The reductions in the obligation were generally charged to General Fund operations when paid. In addition, the accuracy of the obligation in the later years improved as the controls over the maintenance of the records were instituted.