August 9, 2005
SUBJECT: Adoption of Service Employees International Union, Local 715 (SEIU) Memorandum of Understanding and Amendment to the Salary Resolution
REPORT IN BRIEF
Tentative agreement has been reached between the negotiators on behalf of the City of Sunnyvale and the Service Employees International Union (SEIU). This agreement, if approved by the City Council, is effective July 1, 2005 through June 30, 2008. On July 19, 2005, SEIU’s chief negotiator, Phuong Tran, called Peter Brown, the City’s chief negotiator, to let him know that the SEIU general membership ratified this agreement on July 18, 2005, with 100% of the membership voting in favor of the agreement. This report recommends adoption of the SEIU Memorandum of Understanding (MOU), and that the Salary Resolution be amended to implement the agreed upon provisions of the SEIU MOU.
BACKGROUND
The MOU with SEIU expired on June 30, 2005. Negotiators for the City and SEIU began the meet and confer process in March 2005, with the first meeting occurring on April 25, 2005. Following the initial meeting, the negotiating teams spent additional time at the negotiating table to review and discuss items of interest to both parties in an effort to reach agreement. Consequently, tentative agreement was reached on July 8, 2005.
EXISTING POLICY
7.3 Legislative Management Sub-Element
Goal 7.3D: Maintain a quality workforce, consistent with laws, the Charter, and adopted policies in order to assure that City services are provided in an effective manner.
Policy 7.3D.1: Maintain a recruitment and selection process that ensures a highly competent workforce.
Action Statement 7.3D.1a: Maintain a competitive pay and benefit package for employees.
DISCUSSION
The general provisions of the proposed amendments are as follows:
Wage and Wage Related
The parties agree with the principle that wages should be “market competitive” as determined by the internal relationship to Regular Full-time classifications in the Sunnyvale Employees Association (SEA). The actual adjustment for each year of this MOU is determined by the Salary Survey conducted for SEA as follows:
Salaries for Year 1 shall be adjusted to equal the market average; and
Salaries for Years 2 and 3 shall be adjusted to equal the market average plus 2%.
If, during the term of this contract, the City modifies the survey cities it uses to survey for Sunnyvale Employees Association (SEA), SEIU may reopen negotiations on the issue of wages to discuss the subject of the external survey for the purpose of calculating wages.
Other Pay
Merit Increases
Employees shall be eligible for a merit step increase after the successful completion of probation at six months of continuous service. Employees shall be eligible for additional merit step increases upon completion of additional intervals of twelve (12) months of continuous service up to the top step of the pay range.
Bilingual/Translator Pay
Employees who meet the criteria for Bilingual/Translator skills shall be eligible to receive additional compensation equivalent to $35.00 per month. Eligibility will include departmental certification as to the regular and frequent need for bilingual assistance.
Membership in the California Library Association
The City agrees to pay annual membership dues and single-day registration fees to attend local conference up to a maximum of $500 for the entire bargaining unit per calendar year.
Retirement
The City has agreed to amend its contract with PERS and to implement at the earliest possible time legally allowable by PERS so that the retirement formula commonly referred to as “2.7% @ 55” will be effective July 1, 2007.
Employees will pay for any employee-required contribution above the basic 7% contribution currently paid by the City.
SEIU understands that the City must meet and confer and reach agreement over implementation of this benefit with other employee bargaining units representing miscellaneous employees, and comply with PERS regulations in the implementation of this benefit.
Health Insurance
Effective the pay period including July 1, 2005, the City shall contribute $248.92 per month towards medical insurance, and shall also contribute towards a cafeteria benefits plan designed to cover both taxable and non-taxable benefits. The amount the City contributes towards the cafeteria benefits plan shall be made based on paid time (actual hours worked plus paid leave) in the preceding thirteen (13) pay periods as outlined in the chart below. During the term of this contract, for each pay period that includes January 1st and July 1st, the City will look back over the preceding thirteen (13) pay periods and will then adjust for the ensuing six months, each bargaining unit member’s cafeteria benefits plan premium (up or down) based upon the average of his/her paid time.
In addition, the City will pay the full premium for the Employee Assistance Plan. These amounts will be adjusted annually based on the established formula for changes to be effective January 2006, 2007, and 2008.
21 – 22 hours per week: Cafeteria benefits plan premiums at 55% of SEA rate ($163.46). This amount will be adjusted in 2006, 2007 and 2008 in accordance with MOU provisions.
23 – 24 hours per week: Cafeteria benefits plan premiums which, when added to the base amount, results in the employee receiving 60% of the combined SEA base and cafeteria benefits plan amount ($200.95). This amount will be adjusted in 2006, 2007, and 2008 in accordance with MOU provisions.
25 – 26 hours per week: Cafeteria benefits plan premiums which, when added to the base amount, results in the employee receiving 65% of the combined SEA base and cafeteria benefits plan amount ($238.44). This amount will be increased in 2006, 2007, and 2008 in accordance with MOU provisions.
27 – 28 hours per week: Cafeteria benefits plan premiums which, when added to the base amount, results in the employee receiving 70% of the combined SEA base and cafeteria benefits plan amount ($275.93). This amount will be adjusted in 2006, 200, and 2008 in accordance with MOU provisions.
29 – 30 hours per week: Cafeteria benefits plan premiums which, when added to the base amount, results in the employee receiving 75% of the combined SEA base and cafeteria benefits plan amount ($313.42). This amount will be adjusted in 2006, 2007, and 2008 in accordance with MOU provisions.
31 – 32 hours per week: Cafeteria benefits plan premiums which, when added to the base amount, results in the employee receiving 80% of the combined SEA base and cafeteria benefits plan amount ($350.91). This amount will be adjusted in 2006, 2007, and 2008 in accordance with MOU provisions.
Leaves
Bereavement
An employee shall be eligible to take bereavement leave for covered relatives in the amount not to exceed 21 hours.
Paid Leave
Employee may use up to one-half of annual leave accrual for Family Medical Care Leave (e.g., to attend to spouse, registered domestic partner, parent or child’s illness).
Family Medical Care Leave and Pregnancy Disability Leave
Language was changed to bring the provisions of Family Medical Care Leave and Pregnancy Disability Leave into compliance with current law.
Other Changes
Reduction in Force
An employee affected by a reduction in force shall remain on a re-employment list for three years, and is allowed only one refusal to an offer of reinstatement from the list and will remain on the list. If an employee refuses another offer, he/she shall be removed from the list.
Renegotiations
The parties agreed that they shall endeavor to provide each other with notification of a desire to negotiate for a successor contract by 90 calendar days from the expiration date of the MOU. Upon receipt of such written notice from either party, negotiations shall begin no later than 60 calendar days prior to the expiration date of the MOU. If either party is unable to meet the timeline, it shall not result in any waiver of rights.
Grievance/MOU Interpretation Impasse Procedure
The grievance/MOU interpretation impasse procedure has been modified to provide for Binding Arbitration which replaces Confirmable Arbitration, which had been included in the previous MOU. The City’s Impasse Procedure, however, remains applicable as a dispute resolution procedure available during the meet and confer process.
COPE Deduction
The City will honor written assignments of wages to the Union’s Committee on Political Education (COPE) fund, for employees in the bargaining unit who submit written authorization to do so. Although the parties agree that the COPE deduction is valid and lawful, SEIU agrees to indemnify and hold the City harmless for any claims which may be brought as a result of the COPE deduction.
Casual Workers
The City agrees to monitor the hours of its casual workers and agrees to provide SEIU with a monthly printout of all casual workers whose hours exceed 900 hours in the fiscal year. For any casual workers whose hours exceed 900 hours in the fiscal year, SEIU may put the City on notice in writing that the City has five working days in which to either: 1) place that employee in the SEIU bargaining unit with a probationary period; or 2) no longer employ the person for the remainder of the fiscal year. Casual workers employed in the Recreation Division of the Department of Parks and Recreation are excluded from this provision.
MOU Language
Where necessary, non-substantive changes have been included for clarification and/or readability.
FISCAL IMPACT
Throughout the negotiations, all proposed amendments were analyzed for fiscal impact in the short and long-term. The following elements in the tentative agreement have a fiscal impact to the City:
Retirement - Under current actuarial assumptions provided by PERS, the implementation of “2.7% @ 55” for the SEIU bargaining unit will cost the City $128,000 annually beginning the fiscal year it takes effect. Of this amount, approximately $18,000 will be paid by the employee through the increase in the employee contribution rate. The 20-year net fiscal impact is a cost of $2.7 million. It is important to stress that this cost is based on current PERS assumptions. Through changes in the City’s workforce, market performance, and other factors, costs may change when the enhanced retirement goes into effect in FY 2007/2008.
Health Insurance – The increase in the City’s contribution for health insurance will cost the City approximately $52,000 in FY 2005/2006. This amount will increase with the annual change in CALPERS medical premiums. Based on the City’s current projections for medical premiums, the 20-year fiscal impact is a cost of $2.1 million.
Bilingual/Translator Pay – The increase in the City’s contribution for Bilingual/Translator Pay will cost the City $360 in FY 2005/2006 and a total of $9,000 over the 20-year financial plan.
Annual Dues and Registration Fees – The proposed membership dues and registration fees for membership in the California Library Association will cost the City $500 in FY 2005/2006 and a total of $12,000 over the 20-year financial plan.
Wages – The proposed salary adjustment schedule described previously can be funded with the salary increases assumed in the FY 2005/2006 Budget. The Budget includes salary increases of 0% for FY 2005/2006, 1% for FY 2006/2007, 3% for the next eight years, and 4% for the last ten years of the 20-year long range financial plan. Based on the current market position of the SEIU classifications, these increases will fund the proposed salary adjustment schedule. If the actual salary adjustments are determined to be higher or lower than these estimates, the fiscal impact will change. It should be noted that the salary increases budgeted in FY 2005/2006 were lower than what was budgeted in the previous year. This resulted in a total savings of $3.7 million over the 20-year financial plan. These savings have already been absorbed into the FY 2005/2006 Budget and helped address the structural deficit.
The total 20-year fiscal impact of these amendments is $4.8 million. On a year-to-year basis, the cost is approximately $53,000 and $59,000 in the first two years and then increases to $174,000 when the enhanced retirement benefit takes effect. This figure then grows by the budgetary assumptions for wages, healthcare costs and purchased goods and services over the remainder of the 20-year financial plan. These costs will add to the current structural imbalance in the General Fund. Annualized over twenty years, approximately $240,000 per year is required to address the fiscal impact of these MOU amendments.
It is important to emphasize that several assumptions are built into all of these calculations, including how much salaries and health premiums will increase during this time period. If these assumptions do not hold, the fiscal impact will change, resulting in higher or lower costs.
Additional Information for Council Consideration
As noted above, the parties have agreed with the principle that wages for SEIU classifications should be market competitive, as determined by a salary survey conducted for SEA employees, as well as an internal relationship between SEA (regular full-time) and SEIU (regular part-time) classifications. One of the key philosophical drivers throughout these negotiations has been the desire to pay similar wages for similar work, regardless of the bargaining unit to which an employee belongs.
On July 28, 2005, upon completion of the survey review process with SEA, the City provided SEIU with a copy of the salary survey conducted for the SEA benchmark classifications. Included was a spreadsheet that compared each SEIU classification to market. The salaries for SEIU classifications were found to be in the range of 2.69% to 12.97% above market.
On the same day, SEIU contacted the City stating it had been unaware of a change in the components used to conduct the market salary survey. That change, as previously negotiated with SEA, was to de-couple health insurance components, such that the resulting survey included only two components – base salary and the employer paid member retirement contribution (PERS). SEIU representatives indicated that they felt that this change in survey components impacted the recently concluded negotiations and the contract that had been ratified by the membership.
The City’s chief negotiator has been in contact with Sascha Eisner who is representing SEIU in Ms. Tran’s absence. SEIU felt it is important for the City Council to know that they were unaware of the change to the SEA salary survey components.
It is important to note that the language in the ratified MOU states that “Salaries for Year 1 (July 1, 2005 – June 30, 2006) shall be adjusted to equal the market average”. This language allows Council to adjust salaries up or down based on survey results. Given that current SEIU salaries are above market, Council could choose to decrease those salaries. However, in recognition of SEIU’s lack of understanding regarding salary survey components, staff’s recommendation is that the City Council adopt the ratified contract and maintain SEIU salaries at their current levels for Fiscal Year 2005-2006.
Conclusion
Council approval of the Memorandum of Understanding with the Service Employees International Union, Local 715 (SEIU) will complete the City’s obligation to meet and confer in good faith regarding the wages, hours, and certain other terms and conditions of employment for this bargaining unit, as required by law.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s office.
ALTERNATIVES
1. Adopt the Memorandum of Understanding with the Service Employees International Union, Local 715 (SEIU), adopt the related Salary Resolution amendments as proposed, and maintain the current salary ranges which were effective on June 20, 2004.
2. Modify selected sections of the Salary Resolution.
3. Do not adopt the MOU with SEIU nor amend the Salary Resolution.
RECOMMENDATION
Staff recommends adoption of Alternative #1: Adopt the Memorandum of Understanding with the Service Employees International Union, Local 715 (SEIU), adopt the related Salary Resolution amendments as proposed, and maintain for Fiscal Year 2005-2006 the current salary ranges which were effective on June 20, 2004.
Reviewed by:
Jane Fleenor, Interim Director, Human Resources
Prepared by: Sean Tran, Human Resources Analyst
Reviewed by:
Mary J. Bradley, Director, Finance
Prepared by: Grace Kim, Finance Manager
Approved by:
Amy Chan
City Manager