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HomeMy WebLinkAbout06-19-2012 b3 slo ceamoacounci l aq€nba Report ---------------------------Meeting Date 06/19/201 2 Item Number B 3 C I T Y O F S A N L U I S O B I S P O FROM : Monica Irons, Director of Human Resource s Prepared By :Greg Zocher, Human Resources Manage r SUBJECT :MEMORANDUM OF AGREEMENT BETWEEN THE CITY OF SAN LUI S OBISPO AND THE SAN LUIS OBISPO CITY EMPLOYEES' ASSOCIATIO N FOR THE PERIOD OF JANUARY 1, 2012 THROUGH DECEMBER 31, 201 4 RECOMMENDATION 1.Adopt a resolution adopting and ratifying the Memorandum of Agreement with a three-yea r term between the City of San Luis Obispo and the San Luis Obispo City Employees ' Association (SLOCEA). 2.Adopt a resolution ceasing to pay and report the value of the employer paid membe r contribution (EPMC) to the California Public Employees Retirement System (Ca1PERS) fo r SLOCEA members . DISCUSSIO N Backgroun d SLOCEA represents approximately 147 members in classifications providing a wide variety o f services to the community including maintenance and utilities workers, inspectors, engineers , planners, and administrative support . Compensation and benefits for this group of employees i s established by a memorandum of agreement (MOA) and amendments that expired on December 31 , 2011 . Negotiations with SLOCEA commenced in early December 2011 following a notice to th e association from the City in September 2011 and an informational meeting with the SLOCE A membership in November 2011 . The notice and informational meeting outlined the Council's labo r relations objectives as follows : 1.Implement sustainable actions to reduce total employee compensation costs by 6 .8% or a total of $3 .1 million annually for all funds ($2 .6 million in the General Fund only) as se t forth in the 2011-13 Financial Plan ; and, 2.Achieve "significant progress" in the area of long-term systemic pension cost containment and reduction, including : o a shift to employees paying the full member contribution required by Ca1PER S (eight percent for Miscellaneous employees and nine percent for Safety employees); thus moving away from employer paid member contribution (EPMC) for current an d future employees ; and, o implementation of a second tier retirement benefit, or , o other actions that meet this objective . Representatives from SLOCEA and the City met on five occasions before the City declared impass e on economic issues on February 15, 2012 . While tentative agreements were reached on some non - economic items during the initial negotiation sessions, a difference of philosophical positions SLOCEA MOA Page 2 remained on economic issues . SLOCEA elected to use fact-finding, a dispute resolution proces s defined under AB646 . Fact finding is aimed at assisting parties in reaching agreement and include s a neutral, third-party fact finder . After the City and SLOCEA presented their respective positions t o the fact finding panel on June 1, 2012, a constructive mediation process led by the neutral fac t finder resulted in this compromise tentative agreement . Compensation reductions are phased-in , easing financial impacts on employees and their families while supporting the City's objective o f long-term and ongoing financial sustainability . The agreement achieves a total compensatio n reduction of 6 .8% and significant progress in the area of pension reform by shifting a portion of th e cost of employee pensions to the employee as well as the creation of a second tier pension formul a for new employees . The following summarizes the key terms of the agreement : 1.A three-year term (January 1, 2012 through December 31, 2014) with no cost of living o r other across the board salary increases . 2.Full payment of the 8% member contribution to Ca1PERS by employees phased in ove r eighteen months per the schedule below . a . Employee pays : 2% effective July 2012, 4 .0% effective January 2013, 6 .0 % effective July 2013, and the full 8 .0% member contribution effective January 2014 . 3.No increase in the City's health insurance contribution until December 2013 when cos t increases will be shared equally by the City and employees . 4.A reduced Ca1PERS retirement formula of 2% @ 60 (i .e . second tier) for employees hire d after implementation of a second tier contract amendment with CaIPERS and basing fina l compensation on three year average earnings . The City currently pays the full 8% Member contribution to Ca1PERS for SLOCEA employees . Several years ago, the San Luis Obispo Police Officers Association (POA), the San Luis Obisp o Police Staff Officers Association (SLOPSOA), and the Battalion Chiefs agreed to pay the membe r contribution to Ca1PERS and received equivalent salary increases . SLOCEA will not receive an y offsetting or across the board salary increases during the term of this agreement, through Decembe r 31, 2014 . Further, the City currently reports the value of the member contribution to Ca1PERS a s additional compensation . By adopting the two proposed resolutions, this practice will cease, as it i s phased-in, and the member contribution will no longer be reported to Ca1PERS as additiona l compensation . In addition to the substantial reductions to take home pay, long-term pension reform is a ke y component of this agreement . The compensation reductions are realized by the City becaus e SLOCEA members have agreed to "pick-up" certain costs associated with their pensions that ar e currently paid by the City . This reduces the cost to the City now and in the future . In addition , SLOCEA has agreed to a "second tier" pension formula, 2% @ 60 and three year average earning s for calculation of final compensation . This second tier formula applies to new employees hire d after implementation of a contract amendment with Ca1PERS . The second tier increases the norma l retirement age by five years and lowers the multiplier from 2 .7% to 2%. Actuarial analysi s estimates retirement costs for miscellaneous employees City-wide will be reduced by approximatel y $684,000 annually by the eleventh year as new employees are hired under this tier . At the end of this agreement SLOCEA members will have gone without a cost of living adjustmen t for four years (the last adjustment was a 2% increase received in December 2010 that was deferre d B3-2 SLOCEA MOA Page3 from 2009 to assist the City in achieving savings necessary to balance the 2009-11 financial plan). Further, these new employees hired under a second tier benefit, along with unrepresente d management and confidential employees and non-sworn personnel represented by Local 3523, wil l pay eight percent of retirement costs that were previously paid for by the City . FISCAL IMPAC T As approved by Council, use of one time savings from the prior year will be utilized to cover th e phasing in of personnel compensation reductions under the terms of this contract . For fiscal yea r 2011/12 one time savings of $468,500 is needed, $596,700 is needed for fiscal year 2012/13 and $120,500 is needed for fiscal year 2013/14 . Effective the first full payroll in January 2014 the tota l compensation cost reductions will result in ongoing annual savings of $952,400 which is a 6 .8 % reduction for this employee group . Combined with actions taken by the unrepresented management group in January, the Internationa l Association of Firefighters Local 3523 in March, the unrepresented confidential employees in April , the Battalion Chiefs in May, and the San Luis Obispo Police Staff Officers' Association in May , this agreement helps the City achieve approximately 83% of the targeted $3 .1 million in ongoing annual personnel cost reductions . ALTERNATIVE S Do not approve the resolutions and contract amendments .This alternative is not recommended, a s the resolutions and contract amendments are consistent with the Council's labor relations objective s and the City's employer-employee relations policies . ATTACHMEN T 1.Resolution adopting and ratifying the SLOCEA MOA. 2.Resolution ceasing to pay and report the value of EPMC to Ca1PERS for SLOCEA . AVAILABLE FOR REVIEW IN THE COUNCIL OFFIC E MOA between the City of San Luis Obispo and SLOCEA, January 1, 2012 through December 31 , 2014 . ATTACHMENT 1 Page 1 of 2 RESOLUTION NO . (2012 Series ) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISP O ADOPTING AND RATIFYING THE MEMORANDUM OF AGREEMENT BETWEE N . THE CITY OF SAN LUIS OBISPO AND THE SAN LUIS OBISPO CIT Y EMPLOYEES' ASSOCIATION FOR THE PERIOD OF JANUARY 1, 2012 THROUG H DECEMBER 31, 201 4 WHEREAS,representatives of the San Luis Obispo City Employees' Association me t multiple times with City representatives to identify sustainable reductions in total compensation costs, achieving Council's labor relations objectives to reduce total compensation costs an d implement sustainable pension cost containment and reductions ; and WHEREAS,the San Luis Obispo City Employees' Association acknowledges the fisca l challenges facing the City of San Luis Obispo and are committed to working with the City t o help achieve long-term sustainable solutions ; NOW, THEREFORE, BE IT RESOLVED,by the City Council of the City of San Lui s Obispo as follows : SECTION 1 .The Memorandum of Agreement between the City of San Luis Obispo an d the San Luis Obispo City Employees' Association, attached hereto as Exhibit "A" and incorporate d herein by this reference, is hereby adopted and ratified . SECTION 2 . The Director of Finance and Information Technology shall adjust th e appropriate accounts to reflect the compensation changes . SECTION 3 .The City Clerk shall furnish a copy of this resolution and a copy of th e executed Memorandum of Agreement approved by it to : Ron Faria, San Luis Obispo Cit y Employees' Association, and Monica Irons, Director of Human Resources . Upon motion of , seconded b y , and on the following vote : AYES : NOES : ABSENT : The foregoing resolution was adopted this 19th day of June, 2012 . Mayor Jan Marx B3-4 ATTACHMENT 1 Page 2 of 2 ATTEST : Sheryll Schroede r Interim City Clerk APPROVED AS TO FORM : J . Christine Dietric k City Attorney B3-5 EXHIBIT A A copy of the MOA is in the Council Reading File an d available for public review . At the time of this repor t deadline, appropriate signatures were being obtained . T :\Council Agenda Reports\2012\2012-06-19\SLOCEA MOA January 2012-December 2014\EXHIBI T A .docx B3-6 ATTACHMENT 2 Page 1 of 2 RESOLUTION NO . (2012 Series ) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO CEASING TO PAY AND REPORT THE VALUE OF EMPLOYER PAID MEMBE R CONTRIBUTIONS FOR THE SAN LUIS OBISPO EMPLOYEES' ASSOCIATION AN D SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLIC T WHEREAS,the Council of the City of San Luis Obispo has the authority to implemen t Government Code Section 20636(c) (4) pursuant to Section 20691 ; and WHEREAS,the Council of the City of San Luis Obispo has ratified a Memorandum o f Agreement with the San Luis Obispo City Employees' Association which reduces the Employe r Paid Member Contribution (EPMC) 2% effective July 26, 2012, 4% effective January 24, 2013, 6 % effective July 25, 2013 and which no longer provides for the normal member contributions to b e paid by the employer and reported as additional compensation effective January 23, 2014 ; an d WHEREAS,the Council of the City of San Luis Obispo has ratified a Memorandum o f Agreement with the San Luis Obispo City Employees' Association which no longer provides fo r the normal member contributions to be paid by the employer and reported as additiona l compensation for employees hired after the implementation of second tier contract amendment wit h Ca1PERS ; and WHEREAS,one of the steps in the procedures to implement Section 20691 is the adoptio n by the Council of the City of San Luis Obispo of a Resolution to no longer pay and report the valu e of said Employer Paid Member Contributions (EPMC); NOW, THEREFORE, BE IT RESOLVED,that the Council of the City of San Lui s Obispo hereby : SECTION 1 .Elects to no longer pay the member contribution and therefore no longe r report EPMC as additional compensation for employees hired after the implementation of secon d tier contract amendment with CaIPERS . SECTION 2 .Effective beginning July 26, 2012 the City elects to reduce the EPMC as se t forth in Section 3 and effective January 23, 2014 elects to no longer pay the member contributio n and therefore no longer report EPMC as additional compensation . SECTION 3 .The City's payment and reporting of the EPMC benefit to the San Lui s Obispo City Employees' Association hired before the implementation of second tier contrac t amendment shall be reduced and modified as follows : a.Effective July 26, 2012, six percent of the normal contributions will be paid a s EPMC, and the same six percent (value) of compensation earnable {excludin g Government Code Section 20636(c)(4)} will be reported as additional compensatio n for the San Luis Obispo City Employees' Association . b.Effective January 24, 2013, four percent of the normal contributions will be paid a s B3-7 ATTACHMEN T Page 2 of 2 EPMC, and the same four percent (value) of compensation earnable {excludin g Government Code Section 20636(c)(4)} will be reported as additional compensatio n for the San Luis Obispo City Employees' Association . c.Effective July 25, 2013, two percent of the normal contributions will be paid a s EPMC, and the same two percent (value) of compensation earnable {excludin g Government Code Section 20636(c)(4)} will be reported as additional compensatio n for the San Luis Obispo City Employees' Association : d.Effective January 23, 2014 this benefit shall no longer apply to all employees of th e San Luis Obispo City Employees' Association . e.Effective January 23, 2014, zero percent of the normal contributions will be paid a s EPMC, and the same zero percent (value) of compensation earnable {excludin g Government Code Section 20636(c)(4)} will be reported as additiona l compensation . Directs that prior resolutions relating to the San Luis Obispo City Employees' Associatio n compensation and benefits are hereby superseded to the extent inconsistent with this resolution . Upon motion of , seconded by , and on the following vote : AYES : NOES : ABSENT : The foregoing resolution was adopted this 19th day of June . Mayor Jan Marx ATTEST : Sheryll Schroeder Interim City Clerk APPROVED AS TO FORM : ATTACHMEN T Page 3 of 2 J. Christine Dietric k City Attorney Page intentionally lef t blank .