Kenai Peninsula Borough Mayor David Carey said he was recently prompted to investigate ways to adjust for a recent spike in borough employees' health care costs.
In a memo sent to all borough employees Monday, the mayor wrote 2010 health care costs rose by $811,000, a 17-percent increase from 2009.
Carey said he spoke with the Kenai Borough Employees Association to reopen and negotiate the collective bargaining agreement pursuant to a clause addressing rising health care costs.
The mayor made several suggestions as to how the 233-member union and the borough could find a solution for the rising costs, he said, including union members giving up some personal leave hours or an increase in premiums, or other combinations.
"That didn't go very well," Carey said.
Another option Carey proposed included employees giving up one day of work and pay.
"The union leadership spoke to their members and the vote was overwhelmingly against it by four to one," he said.
After meeting with the union again to see what suggestions they had for a solution to the increased costs, the borough received little feedback, Carey said.
In the meantime, Carey announced last Tuesday to the 66 non-union borough employees under his direction that they would start paying an additional $21 per 14-day pay period in health care premiums.
In Monday's memo, the mayor also stated there would be a "reduction in force" of up to four employee positions and potential reduced work schedules for 56-hour employees.
The $21 per pay period increase was also the same deal Carey proposed to the union. That idea was also rejected, he said. The deal, as outlined in Carey's memo, would have the borough covering the first 13.5 percent of the 17 percent health care cost increase and union and non-union employees picking up the remaining 3.5 percent, which translates to the $21 increase.
"In negotiations there is always good faith," Carey said. "My intention was to show good faith by starting off by saying those people that I absolutely control from the standpoint of setting their wages, I am making that decision now for them that they are going to pay that amount."
Carey said he has received no backlash from those non-union employees about the increase in premiums.
"These are at-will employees," he said. "Quite frankly they can be dismissed at any minute and I wouldn't expect them to be very vocal."
Carrie Henson, president of the Kenai Peninsula Borough Employees Association, said the issue was handled poorly by borough administration.
"It wasn't really a negotiation -- we were told that they wanted a certain amount of money from us, but we could decide how we wanted to give it to them," she said. "So, the negotiations weren't really handled that well in that respect.
"I don't think the members are all that opposed to the $21, it isn't a greatly unreasonable amount, but the way it was handled from the very beginning was, 'You need to do this or there will be a threat of layoffs.'"
Henson noted the borough would not guarantee safety from layoffs if the union agreed to the cost-sharing measure.
"We think the whole thing has been handled poorly by the administration," she said. "We know that rising health care costs are a problem. We do want to work with the administration, but we want to work in a way that would benefit employees and help the bottom line for the borough."
Kenai Peninsula Borough Assembly president Gary Knopp said he feels the union "kind of threw their own membership under the bus," considering the mayor's response of laying off four employees.
"I think the employees association passed on a screaming deal," he said. "It was a great opportunity and by not being willing to do that, it has to be picked up somewhere and I guess the mayor's only option is to reduce some hours and some employment."
Henson said the union previously gave up two weeks of sick leave when the current collective bargaining agreement was approved and has also seen an increase in premiums that took effect Jan. 1.
"Partly, the union feels like we have already helped to take care of these increases in cost," she said.
Carey said he hoped his action of imposing the extra $21 per pay period increase on non-union employees would spur the union to come back to the negotiating table. He said he heard some "scuttlebutt" from employees that "didn't really think I would do anything" about the rise in costs.
"I thought that might help in discussions with the union to see that we actually are going to work to recoup this," he said.
Henson said the union has "conceded" to let borough administration and the assembly "do what they want to." However, she said that doesn't mean the union would rule out appealing the matter to the assembly during an upcoming budget meeting.
"We regret that this is the avenue they are going to take," she said.
Carey said there is "only so much that the taxpayers can be asked to shoulder and this is $811,000 more," noting he was unsure what this year's health care costs would be.
"I'm still hoping there might be a response (from the union)," he said.
Brian Smith can be reached at email@example.com.
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