ERMUSR OTHER BUSINESS 03-18-2003

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MAR-13-03 THU 09:42 AM MMUA FAX NO. 7635510459 P. 02/02 LMC 145 University Avenue West,St,Paul;MN 55103-2o44 1„g„a ohfi„weis atiat Phone: (6$x)281-saoo U (800)925-u22 Ctna,b.d.a�ea.YaMea Fax: (651)281-1299 0 TDD(651) 281-1290 INFORMATION SHEET SF 2l4; Wage Freeze Proposed Leeislatiop: The proposed legislation would institute a freeze on salaries and wage rates for state and public employees. ,League of Minnesota Cities Position: The League supports local decision making authority and opposes legislation intended to interfere in local employment-related decisions. D Local units of government are in the best position to decide how to manage proposed local government aid cuts for their cities. Local officials have the tools and the authority to implement a wage freeze for their employees if they decide that is in the best interest of their city and their taxpayers. D Local officials may decide that other ways of reducing wage and benefit expenses work best in their cities. For example,some cities are considering voluntary unpaid leave programs, early retirement incentive programs,voluntary reductions in work hours and other methods of achieving wage and benefit cost savings. D. The proposed legislation gives an advantage to unionized employees. It will result in situations in some cities where they have substantial portions of their work force receiving wage increases in 2003 and 2004 and only a small portion of the work force feeling the effects of a wage freeze. This is likely to be perceived by employees as very unfair. 9 The bill does not address the problem ofpotential lawsuits from employees who believe they. had an expectation and promise of a wage increase based on the city's compensation plan at time of hire or from union employees who believe it is a violation of their right to bargain collectively. There are costs to defend such suits whether they are successful or not D The bill penalizes employees in their"high 5”years of public employment. Public employment pension benefits for city employees are based on the highest five years of earnings as a city employee. Those who are unfortunate enough to be in their final five years of employment during the wage freeze will have their pension benefits permanently affected as a result of this bill. D. Wage freezes do not save money in the long run. Wages inevitably need to be"caught up"to the market so that cities can attract and retain qualified employees. 9 The wage freeze penalizes cities that have taken prudent fiscal measures to prepare for local aid cuts and have budgeted appropriate funds to pay for employee wage increases. 9 The wage freeze creates severe recruitment and retention problems for certain classes of employees that are in high demand such as registered nurses for city hospitals.