January 11, 2005
SUBJECT: Adoption of Sunnyvale Employees’ Association (SEA) Memorandum of Understanding and Amendment to Salary Resolution
REPORT IN BRIEF
Tentative agreement has been reached between the negotiators on behalf of the City and the Sunnyvale Employees’ Association (SEA). This agreement, if approved by the City Council, is effective July 1, 2004 through June 30, 2008. SEA general membership ratified this agreement on January 6, 2005. This report recommends adoption of the SEA Memorandum of Understanding (MOU), and that the Salary Resolution be amended to implement the agreed upon provisions of the SEA MOU.
BACKGROUND
The MOU with SEA expired on June 30, 2004. Negotiators for the City and SEA began the meet and confer process in January 2004, with the first meeting occurring on April 1, 2004, and have spent a considerable amount of time at the negotiating table. Impasse was invoked by SEA on August 18, 2004. Pursuant to the City’s Employer-Employee Relations Code, the City’s Municipal Employee Relations Officer (MERO), who is the City Manager, held several meetings to review the positions of the parties in an effort to reach agreement on the disputed issues. Following the meetings with the MERO, and further meetings with the negotiating teams, agreement was reached on the outstanding issues, with a tentative agreement signed on December 9, 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
Salary adjustments during the term of the agreement are as follows:
Salaries for Year 1 remain unchanged from FY 2003-2004;
Salaries for Year 2 shall be adjusted to equal the market average; and
Salaries for Years 3 and 4 shall be adjusted to equal the market average plus 2%.
Further, the total compensation survey components have been revised to include only two elements, top-step monthly base salary, and the maximum agency monthly contribution of the employer paid employee contribution to retirement. A timeline for the survey has also been included, as well as a review for benchmark comparability. No special studies are included in this MOU.
Other Pay
Overtime
Authorization to Work - Language was added to clarify that any overtime worked must be approved in advance by the employee’s management supervisor or his/her designee.
Flex Scheduling – For employees who would be considered exempt under the Fair Labor Standards Act (FLSA) the City shall be allowed to reasonably flex or change the work schedules of these employees in order to minimize the cost of overtime pay. The actual classifications will be determined by a study to be completed no later than June 30, 2005, for an effective date of no later than July 1, 2005. A preliminary review indicates that employees in approximately 40 classifications may fall under this provision.
Bilingual/Translator Pay
Eligibility will include departmental certification as to the regular and frequent need for bilingual assistance.
Certification Pay
In addition to classifications in the Water Pollution Control Operator series, effective January 2, 2005, for those employees in the Department of Public Works, Field Services Division required by the City to obtain and maintain certification in the areas of Water Treatment, Water Distribution, and Backflow/Cross Connection, and other certifications agreed to between the City and the Association, shall be eligible for certification pay.
Standby Pay
Language was added to address the specific schedules for the Water/Sewer Unit of Field Services so that time worked can be reported correctly.
Call-Out and Call-Back Pay
Due to many of these calls for service being completed over the telephone or by computer without the employee physically returning to work, the call-out and call-back provisions were amended so that if the employee does not physically return to work, he/she does not receive a call-out/call-back minimum, but is instead paid at the overtime rate for the hours actually worked.
In addition, for call-out, if a new call-out is received within the original 1.4 hour call-out minimum, it will not be compensated as a separate call-out.
Note: For Standby, Call-Out, and Call-Back, the hours worked shall be recorded under separate timecard codes so that this information can be tracked separately from regular overtime charges.
Court Pay
Language was added to clarify that an employee is only eligible for court pay if scheduled and required by the City to appear in court.
Class A and B Driver’s License Pay
Effective January 2, 2005, employees who are required by the City to acquire and maintain a Class A or B California Driver’s License and who the City requires for the position to have as their primary job responsibility operating equipment requiring a Class A or B license shall receive $75 per month. There are currently 60 employees that will be eligible for this new benefit.
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.
SEA 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.
Insurances
Health Insurance
Effective January 2, 2005, the City shall contribute $208.89 per pay period ($452.59 per month) towards medical insurance, and $137.17 per pay period ($297.20 per month) towards a cafeteria benefits plan. The cafeteria benefits plan will be designed to cover both taxable and non-taxable benefits, excluding cash. 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 2005, 2006, and 2007.
Cash In-Lieu of Medical Coverage
Cash in-lieu payments shall be made pursuant to the established schedule; however, the amount of such payment is limited. The cash in-lieu payment shall not, when combined with the City’s contribution for medical insurance, if applicable, and the cafeteria benefits plan, exceed the combined City contribution for medical insurance and the cafeteria benefits plan.
Domestic Partners
Language has been included to recognize that SEA and the City shall comply with State and Federal law regarding the provision of Registered Domestic Partner benefits.
Leaves
General
Language was added to emphasize that any leave of absence requires pre-approval of the employee’s management supervisor or his/her designee.
Floating Holiday/Medical Appointment/Family Emergency
Effective January 2, 2005, Floating Holiday will be increased by 10 hours per year as a result of the elimination of Medical Appointment Leave and Family Emergency Leave.
In-Lieu Holiday – Water Pollution Control Plant
Effective January 2, 2005, employees in the classification series of WPC Operator, instead of taking holidays off, shall receive an additional 3.39 hours of pay for each pay period. Such additional pay shall be paid in-lieu of the 88 hours of holiday time off.
Other Changes
Tuition Reimbursement
Clarified that tuition reimbursement is dependent upon the City’s financial condition, and the funds available in departmental budgets.
Reclassification Requests
Modified the provision so that reclassification requests may only be submitted once a year, during the month of February. In addition, if the City reclassifies a job and the employee was eligible to be promoted when the request was filed, the employee shall be appointed to the new position effective the first day of the pay period following the pay period in which the classification study was completed and approved (i.e. change in status will not be implemented retroactively).
Reduction in Force
Included the language previously agreed to by SEA, which states that when an employee exercises his/her “Bumping” rights, the employee must meet the minimum qualifications for the classification and possess the knowledge, skills, and abilities to perform the duties and responsibilities of the specific position.
Renegotiations
If either party serves notice to renegotiate a successor agreement, the Association shall provide the City with its initial written proposals 120 days prior to the termination of the MOU.
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.
MOU Language
Where necessary, non-substantive changes have been included for clarification and/or readability.
FISCAL IMPACT
The City Council provided direction to staff to develop an agreement that was cost neutral for the City over the long term. 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” will cost the City $3.1 million annually beginning the fiscal year it takes effect. Of this amount, approximately $400,000 will be paid by the employee through the increase in the employee contribution rate. The 20 year net fiscal impact is a cost of $58.6 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 $470,000 in FY 2004/2005. This number will grow with the change in medical premiums. Based on the City’s current projections for medical premiums, the 20 year fiscal impact is a cost of $31.7 million.
Certification Pay – Based on the current number of employees, the additional positions receiving certification pay will cost the City $10,000 for FY 2004/2005 and then $20,000 annually when the adjustment is in effect for the full year. The 20 year fiscal impact is a cost of $545,000.
Class A and B Driver’s License Pay – This additional pay will cost the City $27,000 for FY 2004/2005 and then $54,000 annually when the pay is in effect for the full year. This calculation is based on the current number of employees impacted. The 20 year fiscal impact is a cost of $1.4 million.
Leaves - Although the increase in floating holiday leave hours is a cost increase, it is offset by the elimination of family emergency and medical appointment leave. Therefore, this amendment is cost neutral.
Overtime – It is estimated that the flex scheduling for employees considered exempt under FLSA will save the City approximately $41,000 annually. This is based on current overtime usage. The 20 year fiscal impact is a savings of $1.2 million.
Wage – With the proposed salary adjustment schedule described previously and current budget assumptions, it is anticipated that a small salary adjustment would first occur in FY 2006/2007. Salary increases would then occur as budgeted, 3% in the first ten years and 4% in the second ten years of the 20 year financial plan. The 20 year fiscal impact is a cost of $266.6 million.
The total 20 year fiscal impact of these amendments is a cost of $357.6 million. However, the Budget already includes salary adjustments for SEA employees. A total of $354.5 million is budgeted for the 20 year financial plan. The budgeted salary adjustments cover most of the costs of the proposed MOU with a net 20 year fiscal impact of $3.1 million. On a year to year basis, savings will occur upfront and then be drawn down when the enhanced retirement benefit takes effect. 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.
Conclusion
Council approval of the Memorandum of Understanding with the Sunnyvale Employees’ Association 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 Sunnyvale Employees’ Association, and adopt the related Salary Resolution amendments as proposed.
2. Modify selected sections of the Salary Resolution.
3. Do not adopt the MOU with SEA nor amend the Salary Resolution.
RECOMMENDATION
Staff recommends adoption of Alternative #1: Adopt the Memorandum of Understanding with the Sunnyvale Employees’ Association, and adopt the related Salary Resolution amendments as proposed.
Reviewed by:
Jane Fleenor, Interim Director, Human Resources
Prepared by: Tammy Parkhurst, Senior Management Analyst
Reviewed by:
Mary J. Bradley, Director, Finance
Prepared by: Grace Kim, Finance Manager
Approved by:
Amy Chan
City Manager
Attachments (pdf format)
A. Sunnyvale Employees’ Association Memorandum of Understanding
B. Amendment to the Salary Resolution