News Release News Release The City of Palo Alto
Communications Department
250 Hamilton Ave
Palo Alto, CA 94301


PRESS RELEASE 10/27/2009
Subject :

City of Palo Alto: City Declares Impasse with SEIU; Council Imposes Last, Best and Final Offer
Contact : James Keene, City Manager    650-329-2105
Palo Alto, CA – After five months of good faith negotiations with SEIU, the City Council adopted a resolution imposing the City's last, best and final offer on October 26, 2009. The offer approved by the Council last night will save the City’s General Fund $1.2 million in this fiscal year. The City is facing a $10 million deficit in its current year General Fund Budget and needs $3 million in savings from its employees.

"The City Council recognizes the difficult times we are in and our decision to impose this offer was not taken lightly," City Council Member Pat Burt said. “We recognize contributing to health care and pension costs will be hard for our employees, but we also want their pension benefits and health care to be there for them into the future.”

The City’s offer asks current SEIU employees for changes in health care and retirement contributions while leaving those benefits unchanged. Currently, the City pays 23% of an employee’s salary towards retirement and pays 100% of health insurance costs. The City requested that employees pay 8% towards retirement between now and June 2010. In June 2010, the employee’s contribution towards retirement will drop to 5.75% annually. When the health care contribution begins, the City estimates that the likely impact of both the pension and health care contribution in the first full year would be between a 2.9% and 3.5% reduction in an employee’s regular pay check (depending on an employee’s individual circumstances).

The City has been negotiating with SEIU over the past 5 months and has held 26 negotiating sessions. Every week without an agreement costs the City $49,000 ($24,000 in the General Fund). The City and SEIU have differed fundamentally on the magnitude of the City’s financial challenges during negotiations and the City must act now to secure a viable financial future through changes to employee benefit contributions.

“During negotiations, the City reduced its requests to SEIU by almost $2 million (for FY2010),” said Rob DeGeus, member of the City’s negotiating team, “For five months, we’ve explored numerous salary and benefit savings alternatives to reach a negotiated agreement but the City and the union fundamentally disagree on the level of savings that can actually be achieved with specific strategies.”

The City is required to meet and confer with SEIU on a new agreement before adoption of the FY2011 budget in June 2010. The last, best and final offer terms will remain in effect until a new agreement is reached with SEIU.

For more information and additional details about the City’s proposal, visit the City’s website at