SunnyvaleRTC

April 11, 2006

SUBJECT: Adoption of Service Employees International Union, Local 715 (SEIU) Memorandum of Understanding and Amendment to the Salary Resolution

REPORT IN BRIEF

This report recommends adoption of the provisions of the Service Employees International Union (SEIU) Memorandum of Understanding (MOU), and that the Salary Resolution be amended to implement the agreed upon provisions of the SEIU MOU. This agreement, if approved by the City Council, is effective July 1, 2005 through June 30, 2008.

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. Tentative agreement was reached on July 8, 2005 and the SEIU general membership ratified this agreement on July 18, 2005. This item was previously scheduled for approval by the City Council on August 9, 2005; however, SEIU representatives requested the item be removed from the Council agenda as they believed their members did not have complete information prior to the ratification vote. The City Council removed the item from the August 9, 2005 agenda to allow for further discussion between the SEIU negotiations team and City representatives.

Both parties undertook further negotiations and seek to reach agreement within the financial parameters given by the Council at the onset of negotiations. The City negotiations team has now completed negotiations with SEIU. The tentative agreement, ratified by union membership, includes all previously agreed upon contract provisions and some modest changes listed below.

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

As noted above, after removal of this item from the Council Agenda on August 9, 2005, the City negotiations team returned to the negotiations table on August 16, 2005 to engage in further discussions with SEIU. These discussions concluded on February 22, 2006 and SEIU membership ratified the tentative agreement on March 27, 2006.

With the exception of the item concerning holidays/paid leave, all agreements listed below are unchanged from the tentative agreement reached prior to August 9, 2005.

The following contract amendments are included in the new MOU:

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.

Merit Increases

Employees shall be eligible for merit step increases based upon time in service as opposed to hours worked. An employees first merit increase will be 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 (previously $30 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 of “2.7% @ 55” will be effective July 1, 2007. This provision was previously agreed to with the SEA bargaining unit.

Employees will pay for any employee-required contribution above the basic 7% contribution currently paid by the City.

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 1^st 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.

Under the City’s contract with the Public Employees’ Retirement System (PERS), medical contribution for retirees (employees formerly employed in job classifications represented by SEIU) will be the same as for active employees. In order to comply with the PERS requirement, the City’s maximum contribution of those retirees needs to be increased by $42.63 per month. In accordance with PERS under the Public Employees’ Medical and Hospital Care Act (PEMHCA) a contracting agency is also required to have a resolution (Attachment C) which has been approved by its legislative body, filed with the PERS Board establishing the new contribution.

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 (currently 20 hours).

Family Medical Care Leave and Pregnancy Disability 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). Language was changed to bring the provisions of Family Medical Care Leave and Pregnancy Disability Leave into compliance with current law.

Holidays/Paid Leave

Effective July 1, 2006, SEIU employees shall be entitled to holiday leave hours

on an annual basis based upon years of service, as shown below:

0 – 4 years of service Two four-hour holidays (8 hours total)

5 – 9 years of service Four four-hour holidays (16 hours total)

10 or more years of service Eight four-hour holidays (32 hours total)

The holiday leave may be used in four-hour blocks of time during the week of a recognized City holiday. If an employee is not scheduled to work on a recognized City holiday, the employee may request approval to use holiday leave during a week in which a holiday occurs, or for the purposes of satisfying the requirement that employees work or use paid leave to equal at least 21 hours per week, the holiday leave hours will count as paid leave.

Effective July 1, 2006 the maximum accumulation of accrued leave shall increase from 225 hours to 257 hours.

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. A provision was included that 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.

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 for FY 2005/2006; of this amount the retiree medical portion is $5,600. This amount can be absorbed in the current budget. The cost will increase with the annual change in CALPERS medical premiums and will be taken into consideration in the development of the Recommended FY 2006/2007 Budget. 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 – Based on the current market position of the SEIU classifications, no fiscal impact is anticipated for the FY 2005/2006 Budget. The proposed salary adjustment schedule will be taken into consideration as part of the development of the FY 2006/2007 Recommended Budget. If the actual salary adjustments are determined to be higher or lower than the budgeted estimates, the fiscal impact will change.

Holidays – The proposed holiday leave may be used during the week of a recognized holiday if an employee is not scheduled to work and will count as paid leave for the purposes of satisfying the requirement that employees work or use paid leave to equal at least 21 hours per week. Although this benefit permits employees to build up additional time in their PTO bank, it is anticipated that the fiscal impact will be insignificant or cost neutral, depending on the leave usage of employees.

The total 20-year fiscal impact of these amendments is $4.8 million. On a year-to-year basis, the cost is approximately $53,600 and $59,200 in the first two years and then increases to $173,700 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 $239,000 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.

Conclusion

Council approval of the general provisions of the proposed amendments of the Memorandum of Understanding with the Service Employees International Union, Local 715 (SEIU) and all related resolutions 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 all related 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:

Erwin Young, 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

Attachments

A. Service Employees International Union Local 715 (SEIU) Memorandum of Understanding

B. Amendment to the Salary Resolution

C. PERS Resolution