This report recommends that the City Council approve payment of supplemental compensation beyond that provided by current policy to eligible reservists. Such supplemental compensation would start after paid military leave required by law and City Policy (30 days) and would include the difference between regular City pay and their military pay.

In addition, the employee and dependents would continue to receive applicable retirement, medical, dental premium, vision and employee assistance program benefits as currently received by each employee reservist who is activated. This extension shall last for a maximum of twenty-six (26) pay periods. This extension would apply exclusively to this specific military event related to Executive Order 13223.

This report also includes three modifications to the benefits approved by Council on October 23, 2001. The first modification increases the extension period from thirteen pay periods to twenty-six. Second, it removes the required eligibility of employees to be able to participate without having attained "regular" status. This is mainly due to the fact that safety-sworn employees have a probationary period of thirty-nine pay periods equivalent to a year and one-half of service before attaining regular status. Finally, it excludes from the employee military reimbursement the Basic Housing Allowance (BAH). All other requirements remain intact.

The estimated maximum cost for a total of 26 pay periods is $445,607. Council had previously approved but not funded $178,245. An additional $148,552 is needed after taking into account $52,852 which is already provided by the current Benefits budget for Military Leave and $65,958 of cost savings from the affected Departments. A budget modification will also be required to fund the current year portion of these costs.

On October 23, 2001, the City Council approved a resolution to provide a supplemental military leave benefit for City of Sunnyvale eligible employees called to active duty as a result of terrorists attacks on the country. This language was subsequently included in the Salary Resolution 145-02. However, it is evident by the current orders being issued to a number of employees that this particular duty will extend beyond six months, some orders are being issued for 365 days or longer.

Current State Law (Military and Veterans' Code, Section 395) provides that a member in the reserve of the Armed Forces, National Guard or Naval Militia, who has been a public employee for more than one year is entitled to receive his or her salary or compensation as a public employee for the first 30 calendar days of any such absence. Pay for those purposes may not exceed 30 days in any one fiscal year, except as otherwise authorized by resolution of a legislative body of a public agency or as provided in a memorandum of understanding reached with an employee organization. Additional protections and rights such as reinstatement to employment after return from duty are extended to employees through the Uniformed Services Employment and Reemployment Rights Act (USERRA) signed into law on October 13, 1994. However, USERRA does not require continuation of pay or extension of employer-paid benefits for employees on military leave.

Currently no Memoranda of Understanding with the City of Sunnyvale addresses this issue; the only way these benefits could be extended is by a resolution passed by the City Council. It has been confirmed that there is no statute that would prohibit the City from extending these benefits and supplemental salary beyond 30 days and providing additional extensions.

It has been found that other Bay Area public agencies are providing or considering providing extensions beyond six months, including the County of Santa Clara, City of San Jose, City of Livermore, State of California, City of Hayward, City of Santa Clara, Redwood City, and City of Mountain View.

It is proposed that the City of Sunnyvale provide an extension to continue full pay and applicable benefits for employee and dependents. The affected employees then would reimburse to the City the difference in the amount received for their reserve services in the form of salary plus allowances excluding Basic Allowance for Housing (BAH). It is assumed for projection purposes and based on the information received by current orders, that this pay would be the approximate equivalent of 33% of full employment salary for Public Safety Officers Association (PSOA) represented employees and 43% for Sunnyvale Employee Association (SEA) employees. This percentage may be modified slightly when accurate information on military pay is obtained from employees upon activation.

It is also proposed that this Resolution, if adopted, be retroactive to the date when the first Executive Order 13223 was issued on September 14, 2001. Employees who are already in the first extension would not be allowed to exceed the one year total granted by this resolution.

The following is a recommended description of the eligibility requirements and conditions to receive these extended benefits:

1. Must be a current, active part-time or full-time employee (excludes temporary employees);
2. Must be a member of the reserve of the Armed Forces, National Guard or Naval Militia as of September 14, 2001;
3. Is or has been activated after September 14, 2001.
4. Returns to City employment within 60 days after the end of active duty status; and
5. Remains as an active employee for at least six months following his/her return to City employment.

Employees will be required to sign an agreement detailing their rights and obligations pursuant to the receipt of these benefits and supplemental salary beyond the mandatory 30 days. Those who elect not to return to City service would be required to repay the City for the cost of the benefits and supplemental salary plus interest at the 26-week T bill rate. The rate will be the rate applicable at the time that the final supplemental compensation was provided and for the period of time that exceeded the mandatory 30 days, when applicable. The City Manager will have the discretion not to require repayment in the event of an employee's death or disability as a result of his/her active military duty.

Supplemental Salary
The City will provide a bi-weekly check in an amount equal to base salary, plus any other compensation the employee would have received had he/she been actually working. The amounts paid to the employee as basic salary for military service will be reported and reimbursed to the City of Sunnyvale, properly documented by military orders, paycheck stubs or similar acceptable documentation, as soon as the employee receives it.

All payments will be reconciled by Payroll to minimize overpayment.

There are currently seven employees who have been identified as reservists and who would qualify for this proposed extension of benefits and supplemental salary. All are full-time employees including five Public Safety Officers and two miscellaneous employees. The estimated maximum cost for a total of 26 pay periods is $445,607. Council had previously approved $178,245 for an extension of coverage to six months. The Benefits Fund already has a budget of $26,426 for Military Leave each fiscal year. As this proposal will span two fiscal years, the total budget amount for Military Leave is $52,852. The Departments of Parks and Recreation and Public Safety will contribute $65,958. Staff requests Council approve an additional $148,552 in order to extend coverage for a full 26 pay periods. Contributions from the Departments of Parks and Public Safety would result from the savings in budgeted dollars vs. the less expensive cost of backfilling the positions with either overtime or temporary personnel.

Five employees have been activated to date. It is unknown if others will be activated; however, the cost estimates for both Fiscal Year 2002/03 and Fiscal Year 2003/04 include an assumption of all seven employees being activated either as of his actual activation date or as of May 11, 2003. Should the remaining two employees not be activated in FY 02/03, the funding would be rolled over to FY 2003/04 pending activation or conclusion of the current situation. Although $178,245 was approved by Council previously, the Budget Modification was not completed so those funds are included in this Budget Modification for Council’s approval.

1. Resolution