HomeMy WebLinkAbout1978 01-19 CCM Special Session MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF
HENNEPIN AND THE STATE OF MINNESOTA
SPECIAL SESSION
JANUARY 19, 1978
CITY HALL
Call to Order The Brooklyn Center City Council met in special session and
was called to order by Mayor Dean Nyquist at 7:35 p.m.
Roll Call Mayor Dean Nyquist, Council members Tony Kuefler, Bill
Fignar, Gene Lhotka and Celia Scott. Also present were
City Manager Gerald Splinter, Director of Public Works
James Merila , City Attorney Richard Schieffer, Director of
Finance Paul Holmlund, Chief of Police Thomas O'Hehir,
and Administrative Assistant Ronald Warren.
State Senator Bill Luther and State Representative Lyndon
Carlson were also in attendance.
Legislative Matters Mayor Nyquist announced that this special meeting had been
called, and area State senators and representatives had been
invited, to discuss legislative matters to be considered during
the upcoming legislative session affecting municipalities.
He added that this would be an opportunity for an exchange
of ideas and concerns between the two groups.
The City Manager stated that it would be beneficial for the
State legislators to have an insight into what the City's current
insurance problems are. He further stated that insurance costs
have increased dramatically over the last few years and that
because of these costs, municipalities are looking at the
statutory limits for municipal liability and are concerned that
these li i.}ts stay s?rron C O. 'Te added that ii it is 'n.eces ary
municipalities are prepared to urge the State legislature to
reinforce these statutory limits. He explained this has become
a more recent concern of municipalities than in the past becausF_.
umbrella insurance coverage was cheap and municipalities
often insured above the statutory limits. He pointed out that
now umbrella coverage is becoming too expensive and that
municipalities are looking to insure only to the legal "limits in
an attempt to reduce costs
The City Manager also stated that many cities can barely afford
insurance coverage and that it is expected that the costs for
municipal insurance will continue to escalate rapidly in the
future. He pointed out that for these reasons the Association
of Metropolitan Municipalities has developed and adopted a
legislative proposal to urge the State legislature to enable
cities individually or jointly to self- insure in the future to
reduce costs.
The City Manager reported that another concern relating to
insurance costs has to do with worker's compensation insurance
and that the Ci .., ..,rges the State legislature i:o re4 %iew benefits
of worker's coy :pensation` and' modify them to control and reduce
premium costs. He further reported 't another area of concerr°
is unemployment compensation,.and added that it is felt that
the legislature should review unemployment compensation rules
and regulations to minimize the opportunity for unjustified
claims which have resulted in high costs to municipalities.
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The. Director of Finance explained that the worker's compensation
law was enacted in 1913 and provides compensation in case of
personal injury or death arising out of and in the course of
employment. He pointed out that worker's compensation does
not regard the question of negligence and the only defense for
such claims is if the injury or death is self - inflicted or due to
intoxication. The Director of Finance stated that the costs of
worker's compensation have increased substantially over the
last few years because of increased benefit levels; more claims
being filed; a greater portion of workers bcing declared perma-
nentf% disabled; an increase in supplemental benefits; the fact
that disability cases are allowed to be reopened and a person
can become eligible for an increased percentage of disability
at anytime; recent court interpretations dealing with retraining-
benefits which entitle insured workers to double income
benefits plus expenses during retraining; inflation and
medical costs; and the fact that insurance companies do
not deny claims that may appear fraudulent. The Director
of Finance explained that he has been informed that these
are the reasons why worker's compensation premiums have
increased drastically within the last few years and that
not much has been done to bring these costs down.
The Director of Finance next reviewed the benefits associ-
ated with worker's compensation and shoved transparencies
indicating worker's compensation costs to the City of
Brooklyn Center. He stated that for fiscal year 1974/75
the cost to the ,City for worker's compensation insurance
was $15,401 and that this amount had increased to $36,291 ,
for fiscal year 1975/76. He stated that the estimated cost
for 1976/77 is $40,778 and that it is projected that the
1977/78 costs will be $56,281 He added that the
insurance industry is asking for a 73% increase in
worker's compensation insurance rates which would be
retroactive to October 1, 1977
in response to an inquiry by Councilman Fignar, the
Director of Finance stated that the insurance rates
charged the City reflect the City's experience and that
the costs for worker's compensation insurance are not
outside levy limitations. He explained that increases
in liability insurance costs are outside levy limits but
that worker's compensation is not.
A brief discussion ensued relative to the Director of
Finance's report relating to worker's compensation
insurance costs.
Mayor Nyquist acknowledged the arrival of State Repre-
sentative Bob Ellingson at 8:15 p.m,
The Director of Finance concluded his report by stating
that there are four things recommended to reduce the
costs for worker's compensation. He stated that first
of all it is recommended that duplicate retraining benefits
be abolished; secondly, that a two year statute of limita-
tions for reopening of closed claims be established;
third, . that there be a cap on death benefit claims and
fourth, that the appeal board be restructured to assure
representation from all elements of society.
Further discussion ensued relative to worker's compensa-
tion with the City Manager pointing out that the breadth of
coverage for worker's compensation is being expanded and
ghat there have been claims for mental disabilities that are
)b related He added that another concern is that very
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little is done to look at and verify whether or not 'claiins v ti r K k
are fraudulent.. Mayor Nyquist stated that he has heard that
states with comparable benefits to that of Minnesota pay a
lesser worker's compensation insurance rate State Re, :,e-
sentative Lyndon Carlson responded that the legislature had
created a special worker's compensation study commission to
analyze worker's compensation problems and make varier ..
recommendiations. He pointed out that this is one of the area
that the study commission is looking into and that he 'ice hea..
that Wisconsin provides comparable benefits and yet t?-.
premium-rates are lower. He stated that this committee,
scheduled to report its findings to the State legislature fn
January, 1 979.
Councilman Fignar inquired if municipalities were at this time
allowed to self- insure for worker's compensation costs. The
Director of Finance responded that there was some doubt as
to whether a municipality was allowed to self' insure for
worker's compensation costs but that the proposed leg
being recommended to the State legislature relating tQ a3baw ing
municipalities to self - insure would leave no doubt as to
whether or not they could self- insure for worker's compen-sa-
tion insurance.
The City Manager then reported that binding arbitration is
another issue which concerns this City and a number of other
municipalities in the area. ` He explained that the Public
Employees Labor Relations Act establishes two classifications
of "employees, essential and nonessential, and that the
distinction between these classifications is primarily that
essential employees are not given the opportunity to strike
but rather differences must be submitted to binding arbitration
whilexonessential employees 'are given ` the right to strike
provided the employer will not subunit issues to binding'
arbitration. He poipted out that police officers have been
determined to be essential employees and are subject to
binding arbitration. He added that this means if negotiations
fail, an appointed arbitrator will decide the economic contract
language and fringe benefit issues. He stated that past e.,,peri
ence with the binding arbitration process has shown that
binding arbi�_ration frustrates and bypasses the negotiation
process. He further stated that experience has also shown
that the union has been able to get more through arbitration
than through negotiation and, therefore, are eager to bypass
barga).ni lg for a better deal with the arbitrator. He explained
that as a result a - nonelected`'`thiird party decides for an elected
City C.ouncil important economic and contract issues: He
added that because arbitration award costs are within levy
limits ; an excessive arbitration award - could, in effect, require
a City at the levy limit to cut services because of such an
award.
The City Manager reported that a number of cities= believe that
suburban police officers should be able to strike and that if
they did so, it would not be catastrophic. He added that such
a recommendation is being developed and that the legislature
is being urged to review the binding arbitration process for
public employees, particularly those classified as es sential
employees. He noted that suburban municipalities have taken
strikes in the past and because of the negotiation proces ha .:e
been able to hammer out settlements that have been agreeable
to both parties. He explained that by law police officers are
not classified as essential employees but rather the Public
Employee Relations Board had determined that they are essential
following the presentation of arguments regarding this issue.
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The City Manager reported that Cy Smythe of Labor Relations
Associates was present this evening to discuss with the
(;ity Council and State legislators the negative aspects of
binding arbitration.
Mayor Nyquist recognized Mr. Smythe who stated that the
Public Employees Labor. Relations Act created essentially
two classes of citizens--those that are considered essential
employees and have the right to strike and those that are
considered nonessential employees and do not have the,
right to strike. He explained the nonessential employees
are permitted to strike only if both representatives of labor
and management agree to not submit their differences to
binding arbitration. He stated that salaries for both fire
and police have increased substantially since the institution
of the binding arbitration process according to studies done
on the subject. He added that essential employees have
found out that they don't need to negotiate or to mediate
their disputes but rather that they fare much better sub -
mitting differences to binding arbitration. He added that
the negotiation process between cities and unions repre-
senting essential employees has, in effect, become a
race to arbitration because of this, He noted that, in
essence, the law has destroyed bargaining with essential
employees. He recommended that cities and counties be
given the right to determine whether or not differences
should go to arbitration. He explained that in some cases
a city may not be able to accept a strike as part of the
;:negotiation process and that in these cases arbitration
would then be in the best interests of the community.
He further stated that, on the other hand, if a community
determines that it can take a strike or that it cannot
afford to take a chance because of a potentially excessive
settlement that could be awarded by an arbitrator, it
Would have the option of not going to binding arbitration
but rather take a strike and continue the negotiation
process.
Mr. Smythe also commented on the problems associated
with choosing an arbitrator. He stated that arbitrators
are generally in the profession of arbitrating differences
and that they make their livelihood in this field. Because
of this he stated, arbitrators are beholding to those that
choose them and the whole arbitration process becomes
one of compromise He stated that arbitrators generally
try not to offend either party in the arbitration process
and also tend to find a middle ground between the two
sides as a settlement. He noted that because of this
an excessive union demand could result in a compromise
settlement which could hurt the City's ability to pay
without cutting back other City services due to the
6% levy limitation. He noted that arbitration awards
are subject to levy limitations,
Councilman Kuefier inquired if the present Public Employees
Labor Relations Act specifically makes police officers
essential employees. Mr. Smythe responded that the law
toes not specifically classify a police officer as an
essential employee but rather defines essential employee
as any person whose employment duties involve work or
services essential to the health or safety of the public,
and the withholding of such services would create a clear
and present danger to the health or safety of the public.
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The City Manager pointed out that the PER Board had ruled,
following the submission,, that police officers were essontial*
employees. He added that the feeling among many cities is
that police services could be carried on by supervisory
personnel if police officers were to go out on strike.
noted examples around the country where police officershad
gone out on strike and supervisory personnel had provided
police services during the strike. He further stated that there
is no assurance even with the binding arbitration process mat
there would not be a work stoppage among police officer, if
for instance, an arbitration settlement was not to their 11 -,
Councilman Kuefler stated that basically what is being room
mended is that the arbitration process be the same for brAh
essential and nonessential employees. Mr. Smythe agreed
with Councilman Kuefler and added that the law should either
be amended so that city councils can decide if they wand: to
seek arbitration as a means of reaching agreement on a &spate g
or amend the law so that city councils have similar authority
as the State legislature with respect to binding arbitratier, for
State employees, that being the right to overrule an arbil-r•ation
award that is felt not to be in the best interests of the State.
Mayor Nyquist recognized State Senator Bill Luther who stated
that presently the Public Employees Labor Relations Act specif-
ically only lists two groups as essential employees, that
being school principals and assistant principals and that other
essential employees have been determined by the PER Board.
He added that he was sure that those employees that are
classified as essential employees are glad they are classified
as such because of the binding arbitration process. He noted
that there has been a bill introduced in the legislature to
declassify principals and assistant principals as essential
employees. He explained that he felt the current Public
Employees Labor Relations Act is too broad ,with -re pest to
essential ei iployees and that some of the suggestions made
this evening are good. He inquired of Mr. Smythe as to his
opinion regarding final offer arbitration.
Mr. Smythe responded by explaining that final offer arbitration
does not give an arbitrator much lattitude and that basically ,
there are two types of final offer arbitration, final issue
arbitration and final package arbitration. He explained that
in final _offer arbitration an arbitrator is given 'only the option
to choose either the offer made by the union or the offer rude
by management and cannot establish ,a compromise or middle
ground for settling the dispute. He added that the theory of
final offer arbitration is that knowing the arbitrator can choose
only one of the two final offers, both sides will be more
reasonable in making their final positions He further explainer'
that in fin' -d package arbitration both labor and management
develop positions on a number of issues in dispute and offer a
final settlement based on all of the various issues and that the
arbitrator must choose one package over the other package.
He added that in final issue arbitration an arbitrator_ can either
pick the union's position or management's position on particular
issues rather than looking at the entire package. He stated
that of the two types of final offer arbitration, he favors final
issue arbitration because it is more realistic and there is less
likelihood that an arbitrator would be forced to decide on a
package containing some unrealistic positions
Senator Luther commented that the present system of binding
arbitration is lacking in attempting to make the parties involves';:
in an arbitration dispute reasonable in their demands. He added
that he felt final offer arbitration might be the right direction
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for getting ryore reasonable positions in the arbitration process
He also commented on his appreciation for Mr. Smythe's presenta-
tion and the opportunity presented by the City Council for discussing
this subject.
The City Manager stated that what he disliked most about the
current binding arbitration process is that the final decision
is made by a nonelected official and the results of that decision
can be potentially devastating to a community.
A brief discussion ensued relative to bindincr arbitration with
Mr. Smythe Lxplaining that the costs for binding arbitration
are split 50 -50 between the union and management He also
commented on how arbitrators are chosen to hear an arbitra-
tion case.
Councilman Lhotka inquired of Mr. Smythe if there are other
causes besides the binding arbitration process, that have
accelerated salaries and fringe benefits for essential employees.
Mr. Smythe responded that he felt the acceleration of salaries
and benefits for essential employees is tied in directly to the
arbitration process or at least the fear of arbitration. He
added that another associated problem is that due to the
great strides made by essential employees such as police
officers they are now in some cases making a better salary
than persons in responsible management positions which has
an adverse effect on persons serving in these management
positions. He reiterated that he felt the acceleration salaries
and fringe benefits was due directly to arbitration or the fear
of it.
The City Manager, referring to the policies and legislative
proposals adopted by the Association of Metropolitan Munici-
palities, stated that these policies and proposals address to
a number of other concerns that municipalities have which
are affected by the State legislation such as airport zoning
problems, special levies, municipal revenues and taxes and
ether matters. He added that the major concern this evening
was to discuss with area legislators binding arbitration problems
and insurance problems primarily with respect to levy limitations
and how they affect Brooklyn Center.
Councilman Kuefler referred to the Association of Metropolitan
Municipalities' policies and legislative proposals and stated
that he hoped the legislature would consider adopting a policy
that would include requiring the State legislature to prepare a
fiscal note detailing the financial implications of proposed
bills that affect local units of government so that municipalities
would have. a prior understanding of the fiscal implications of
particular legislation. Representative Carlson stated that
presently the House, at the request of a committee chairman,
will provide such information. Councilman Kuefler urged that
this become a policy of the whole State legislature stating
1- it would be very beneficial to municipalities. He also
commented on the importance of the airport zoning problem
and municipal self - insurance, and strongly urged the
legislature to enact these provisions
"he City Manager stated that the City Council, within the
next week, will be reviewing modifications to the police
pension plan and the fire pension plan. He added that if
the City Council authorizes the City Manager to proceed
with these modifications he would be in touch with area
legislators to author such a bill. The legislators responded
that they would be happy to cooperate with the City Manager
if the Council's action is positive.
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A brief discussion ensued relative to the Open Meeting Law
and the possibility of the League of Minnesota Cities' bill
relating to the Open Meeting Law being reviewed by the State
legislature during the current session. Senator Luther stated
that he is familiar with the League's bill and also a study
conducted by the Citizens League but that he was not optimistic.
that something would be done with respect to the Open Meeting
Law during the curre legislative session._ He added that
he would like to see bet cr definitions and better, procedures
outlined in the Open Meeting Law but noted that it is a very
complex and.to some extent` emotional issue. He pointed out
that although he did not feel much would be done with respect
to the Open Meeting Law during the current session, that it
was possible that during the legislative interim, the League's
bill might be given serious consideration.
Representative Carlson noted that the legislature intends this
session to be very short and added that if the City Council has
proposed legislation that they wish to be considered- during-
this session, they should do so quickly and contact area
legislators.
Senator Luther commented on his interest in the comments made
earlier in the meeting regarding the possibility of permitting
self- insurance for municipalities and also comments made
regarding worker's compensation. He explained that a legisla-
tine study regarding insurances and worker's compensation
will not be completed until approximately next January, and thaw
he doubted whether there would be any major revisions regarding
insurance and worker's compensation until after that report.
He stated that although there may not be any major revisions
he is nonetheless concerned about the comments made this
evening regarding insurance problems and worker's compensa-
tion
Following further discussion Mayor Tzlyquist thanked the legis-
lators, for attending this evening's meeting and added that the
City Council would be willing to lend any assistance possible
to the legislators regarding the matters raised this evening.
He also thanked Cy Smythe for his presentation.
Adjournment Motion by Councilmember..Scott and seconded by Councilmembe
Lhotka to adjourn the meeting. . Voting in favor: Mayor Nyquist,
Council members Kuefler, Fignar, Lhotka and Scott. Voting
against: none. The motion passed unanimously. The Brooklyn
Center City Council adjourned at 9:10 P.M.
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Cl e M o
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