Memo to County Council re: UFCW Local 1994 FY20 Negotiated Collective Bargaining Agreement

Latest News



TO:                  Montgomery County Council
FROM:             Gino Renne, President/IVP
DATE:              April 30, 2019
RE:                   UFCW Local 1994 FY20 Negotiated Collective Bargaining Agreement

I would like to begin by acknowledging the hard decisions that lie ahead for the Council as we near the deadline to pass the FY 20 Operating Budget.

In addition, I appreciate that during the short time you have to analyze the proposed budget that you are inundated with conflicting data and demands from various constituency groups. Local 1994’s intent is not to add to that burden but to fulfill our responsibility to our members to assure funding for their negotiated agreement. An agreement that is a product of four (4) months of intense negotiations with the Executive branch ending with five long days of mediation under the scrutiny and guidance of a nationally renowned mediator/arbitrator.

During negotiations the parties struggled to reach a balance between the needs of our members who have had to endure dramatic workload increases in the face of diminishing resources while managing significant reductions in their overall household income.

As a recap please take into consideration that they received no step increases for three years (FY2011-FY2013) and no general wage increases (GWAs) or cost of living increase (COLAs) for four years (FY2010- FY2013). The County also forced them to pay more out of their own pockets toward their health and retirement benefits costs and implemented progressive furloughs in FY2011.

The net result of the above sacrifices, the permanent lowering of the MCGEO workforce payroll and the permanent erosion of our member’s spending capacity.

According to County data, the Cost of MCGEO labor in 2010 was $322M, $307M in 2011, $305M in 2012 and $303M in 2013, saving the County Government $60M alone during that time period. Please keep in mind that the County will continue to save on labor costs in perpetuity because of this lowered payroll.

Our members have lost earnings that they will never recoup. A nurse, for example, denied increments in all three of those years and failing to receive her general wage adjustments has lost over $48,000 in cumulative earnings to date. To make matters worse over this same time period our members experienced an actual reduction in their take home pay due to yearly increases in their contributions toward health care and retirement benefits.

Even after wage increases were restored wage growth has been sluggish. Another school health employee shared with us that her take home pay is only $125.00 more per pay period than it was in 2010.  Which if spread out over those ten (10) years equals a $325 per year increase. No wonder why hundreds and hundreds of our members have to hold two (2) jobs to make ends meet while working full time for Montgomery County.


The County’s Contribution to the Employee Retirement System was $93.2 million in FY18 – $53 million less than in 2015.

As a percentage of the total ERS contributions, the County’s share has fallen from a high of 87% in 2007 to 76% in 2018.

The Montgomery County Employees’ Retirement System Actuarial Valuation report as of July 2018 indicates the County’s contributions will continue to decline this fiscal year (FY19) and in FY20 to a low of $81.9–$69.4 million less than it did at its peak in FY2015.


Montgomery County has 4 Internal Service Funds

  • Motor Pool
  • Liability and Property Coverage Self Insurance
  • Central Duplicating

These funds record the goods and service provided to other funds of the government in return for a “fee” to reimburse costs.

The focus here will be on the Employee Health Benefits Self Insurance Fund. What is important to note about the “fee” is that part of it is paid by Montgomery County Government and part is paid by Montgomery County Employees in the form of premium payments, deductibles, etc.

After analyzing the Employee Health Benefit Fund’s Statement of Revenues, Expenses and Changes in Net Position, there are several critical takeaways to consider.

From FY2010 through FY2018 there have been five (5) Transfers OUT of the fund into the General Fund (there have been no Transfer IN)

  • $14.50 million in FY2010,
  • $19.03 million in FY2013,
  • $8.68 million in FY2014,
  • $10.75 million in FY2015,
  • $17.95 million in FY2018,

for a total of $70.9 million transferred OUT of the Fund and into the General Fund.

Given that Fund Reserves (“Charges for Services”) come from both Montgomery County Government and Montgomery County employees, one can argue that either

  • Mont Co employees are subsidizing other parts of County government with their premiums; or
  • Mont Co employees are paying a larger proportion of “Self-insurance incurred and estimated claims than their 25% premium share.

In every year, with the exception of the FY2006, Budgeted Expenditures have grossly exceeded Actual Expenditures as reported in the Montgomery County, MD Comprehensive Financial Reports, FY2006 through FY2018 (CAFRs).

The Actual Expenditures as reported in the County Budget documents are larger than those reported in the CAFRs.

Budgeted Expenditures as reported in County Budget documents do not correspond to those reported in the CAFRs either, but the discrepancies are not as large. The reason for the discrepancy is unknown, although this is yet another example of how the numbers are used against county employees to argue against negotiated wage enhancements and question the long term sustainability.

It goes without saying that If you continue to weaken a fund created to provide for services to employees, i.e. health benefits of course over time those benefits may become unsustainable, but they become so not due to the cost of said benefits but rather due to the employer manipulating the funds earmarked to provide the benefit and moving funds out to pay for other things not related to the sustainability of the workforce.

Getting back to our negotiated agreement, neither service increments nor longevity pay cost more this year than they cost last year or the year before. Why?  Because employee salary distribution across the pay scale scales is the same one year to the next–a similar number of new hires, mid-career, senior employees and employees close or at retirement. Employees march from the entry rate to longevity and retirement. They (and their maximum salary) then leave and are replaced by a new hire (at minimum salary). Average salary for over 10,000 County employees is unchanged over time, except for the effect of general wage adjustments.

Indeed, the County’s own data (the annually published Personnel Management Review) shows that average salaries for the County employees have increased over the past thirteen years by approximately the compounded general wage adjustment, even though service increments and longevity pay were granted in all but three (3) of those thirteen (13) years, a stark contradiction of the inflated numbers used by OLO.

The actual impact on total labor costs for the MCGEO workforce is far less impactful on the question of sustainability than the OLO numbers. For a ten year period 2008-20018 the true fiscal landscape is captured below.

  • CPI-U                                                                                  97%
  • MCGEO Actual Average Salary Increase 95%
  • MCGEO Compounded GWAs 26%
  • Taxpayers 10 Year Salary Cost Increase 75%
  • MCGEO 10 Year GWAs are less than inflation                             (3.22%)

MCGEO GWAs account for all of the change in Actual Average Salary. Despite the media and internal government rhetoric Increments are Cost Neutral.

As we move forward with our discussion regarding the fiscal impact of the MCGEO negotiated agreement I ask that Council keep some facts in mind.

  • This is a one (1) year deal
  • Total cost of the MCGEO negotiated agreement in FY20 is $9,892,373
  • Annualized cost of GWA will be $9,900,911
  • Annualized cost of FY11 Increment cannot be calculated at this time without knowing how many of the approximately 1200 members potentially eligible to receive it, max out or retire in FY21. Many are close to the top of their pay grade, payment of the delayed increment in FY20 doesn’t give them any more than they will ultimately get, it simply expedites their getting it. One thing is certain the cost will not be nearly as great as the inflated cost in the data provided the Council.
  • If you take into account that these 1,200 employees collectively forfeited $48,000,000 in earned income investing $1,545,669 in lost wages, I submit is a great investment toward improving moral and maintaining the confidence and cooperation needed to find and implement the cost efficiencies that they and rest of us know are needed to make the delivery of excellent public services more sustainable.
  • If you add up all the savings the County has realized due to lower wages, pension contributions and the overcharging of employees for health care benefits, overall labor costs have been sustainability reduced. Which will certainly benefit substansibility going forward.

There is false narrative surrounding OPEB, our pension fund is within a few percentage points of being 100% funded. Once fully funded the County will realize additional budget savings that can then be shifted to OPEB funding or other budgetary needs.

Most of you campaigned on your promise to honor the collective bargaining process. Our members serve the community on a promise to take care of their needs to the best of their ability. They have honored that promise even through the worst of times. All they ask in return is that you respect and support their negotiated agreements.

I have included slides from an Ability to Pay Analysis prepared by Dr. Elizabeth A. Paulin, Professor LaSalle University in our anticipation of interest arbitration.

(Slides 17, 20, 21, 22, 23 and 24 pertain to pension and healthcare funding and costs)

(Slides 4, 15, 16, 25, 26, 27 and 28 pertain to the County’s revenues, both past and projected)

Dr. Paulin’s assessment of the County’s revenues and expenditures is that the Council’s fiscal footing is on solid ground.

Let’s stop reacting to the demonizing of County employees by the media. Instead, let’s recognize the tremendous sacrifices they and their families have made to help balance the County’s past budgets by honoring their Collective Bargaining processes.


Leave a Reply

Your email address will not be published. Required fields are marked *