Police officers in Arroyo Grande have agreed to contribute more to their retirement costs and accepted a two-tier pension plan in negotiations with Arroyo Grande administrators.
The Arroyo Grande Police Officers Association signed the contract in part to help the city deal with its budget deficit. The city faces a $703,000 deficit to the $13.4 million general fund.
By agreeing to pay more for their retirement costs, the POA generated a savings of $280,000 for the city, union leaders said.
The new agreement is retroactive to July 1 and runs through June 30, 2012. The contract covers sworn officers, dispatchers and records personnel.
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In the past two years, the POA deferred scheduled pay increases so the city could reach about $360,000 in budget savings.
About $410,000 will be saved in the new budget by increasing the amount employees contribute to their pensions and by requiring all staff except public safety employees to take three nonpaid furlough days from Dec. 27 to 29. Public safety employees would pay a slightly higher pension contribution.
The rest of the shortfall would be covered by $350,000 in reserve funds.