The city of Duluth has prevailed in its efforts to keep contract proposals secret during its protracted negotiations with the city's largest union.

The decision, dated Jan. 17 by Minnesota Department of Administration Commissioner Dana Badgerow, has implications for media outlets, watchdog organizations and private citizens statewide. The previous standard allowed outsiders to keep an eye on mediated and arbitrated negotiations with public employees, potential costs to taxpayers and monitor the risk for strikes.

But the city and State Bureau of Mediation Services representatives successfully argued that the process of negotiations goes much more smoothly when both sides feel they can speak freely at the bargaining table and proffer ideas that may or not make it into the final agreement.

Duluth is negotiating a new three-year contract with the American Federation of State, County and Municipal Employees Local 66, which represents about 500 of the city's more than 800 employees. AFSCME's last contract expired Dec. 31.

The city is trying to eliminate retiree health-care benefits for future employees as they ask for greater financial contributions from current employees and retirees as a key part of a complicated solution to Duluth's $309 million unfunded retiree health-care liability. Union and city leaders also have disagreed over pay increases, among other issues.

AFSCME is the last union still negotiating with the city after the city firefighters and police officer unions reached tentative agreements last month. The firefighters union is scheduled to vote on its contract Feb. 7-8.

AFSCME and the city agreed to work with the State Bureau of Mediation. Without getting into specifics, mediator Josh Tillson said Tuesday that the sides "remain quite far apart" after their last meeting on Jan. 9.

He said he doesn't expect another conference until mid-February.

"Both sides are trying lots of ambitious positions," Tillson said. "We decided that a little break was in order, but I remain in regular contact with both sides."

The "temporary classification" of the material runs until June 2009, but could be permanently enacted into law by the Legislature. First, Attorney General Lori Swanson's office will review the judgment to decide its legality.

Tillson said he asked the city to seek Badgerow's participation after the News Tribune successfully petitioned to sit in on earlier nonmediated negotiations. Once the mediation process begins, reporters can no longer attend the sessions.

For decades, media outlets have used the Minnesota Data Practices Act to get a peek at the contract proposals, wrote Minnesota Newspaper Association attorney Mark Anfinson in opposition to the city's application.

City officials said the request made sense since the same information already is considered protected when it's with the State Bureau of Mediation. In her decision, Badgerow agreed with that opinion.

Tillson also noted that the contracts become public once they are agreed upon and presented to the City Council for approval.