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Home My WebLink About05/19/2009, C8 - EMPLOYEE SALARY CONCESSIONS (""ZERO-YEAR"")" council ".�e°� 5-19-09 j acEnba Report ]�N..b` C� CITY OF SAN LU I S O B I S P O FROM: Monica Irons, Director of Human Resources 14 SUBJECT: EMPLOYEE SALARY CONCESSIONS ("ZERO-YEAR") RECOMMENDATION 1. Authorize the City Manager to execute amendments to the Memorandum of Agreement (MOA) between the City and represented employee associations that implement the "zero- year"tentative agreements described in this report. 2. Adopt a resolution stating there shall be no increases in management compensation through December 31, 2010. 3. Adopt a resolution approving the deferral of the July 2009 salary increase of 5% for confidential employees, as outlined in the report. DISCUSSION Overview This report outlines a plan for a"zero-year" in cost-of-living salary adjustments for all seven City employee groups during fiscal year 2009-10. While the approach with each group is somewhat different due to the varied natures of the groups and/or their existing agreements, collectively these concessions will assist the organization and the community in balancing the budget during a fiscally very challenging time. The efforts of all employee groups in working through these difficult issues are greatly appreciated. The specific cost savings and approaches to each group are outlined in this report. At the time of drafting this report, the preparation of formal MOA amendments was still be underway. However, this report outlines all of the major provisions with each group; with the more detailed amendments expected to be available for review in the Council Reading File no later than Monday, May 18, 2009. Upon approval of this report by Council, savings from these tentative agreements will be assumed in the Preliminary 2009-11 Financial Plan, which will be issued on May 28, 2009. Background Shortly after the Five-Year General Fund Fiscal Forecast was presented to Council on December 16, 2008, staff began working on strategies to close the projected General Fund budget "gap" of $10.4 million annually in 2009-11. Throughout the budget process, staff communicated the gravity of the situation to employees and requested employee participation in solving the budget gap. Employee groups were engaged in generating operating budget reduction options and indicated a willingness to participate through employee compensation concessions, if necessary. �O � I Employee Salary Concessions ("Zero-Year") Page 2 In February 2009, staff updated a layoff prevention plan first developed in 1992 by an employee working group. The updated plan has special emphasis on staffing cost savings and employee retention. It includes some of the features found in the City's Fiscal Health Contingency Plan, such as the hiring freeze implemented last year. Positions held vacant as a result of the hiring freeze provide short-term savings and more flexibility in considering possible reorganizations. To further increase flexibility, a one-time retirement incentive program was adopted by Council in April 2009. The retirement incentive program encouraged employees to commit to or accelerate retirement plans and allowed departments to benefit from additional staffing savings through temporary vacancies, while considering reorganization or elimination of positions. However, these vacancies combined with other strategies directed by Council, such as capital improvement plan reductions, revenue increases and some use of the reserve, still left the need to cut nearly $4 million from operating department budgets, including several vacant positions. Although employee groups indicated a willingness to participate in closing this remaining gap, they also voiced a desire to "share the pain" equally. Therefore, a "zero-year" concept was developed and proposed to all employee groups. The "Zero-Year" Concept The "zero-year" concept focused on eliminating salary increases in 2009-10 (either already negotiated or likely due to expiring contracts). By avoiding salary increases in the first year of the Financial Plan, the City builds in an estimated $938,000 in General Fund cost savings in 2009-10 compared with initial budget estimates, which largely carry forward into future years. MOAs or resolutions set to expire in December 2009 would be extended for one year. The one- year extension provides stability for many employees as well as the City by avoiding the need to negotiate and renew some agreements this fall, during a very difficult financial time. Gaining Agreement with Employees The City has seven employee groups: five are represented and two (managers and confidential employees) are unrepresented. The five represented employee groups are: 1. Fire Battalion Chiefs (BCs) 2. International Association of Firefighters, Local 3523 (Fire Union) 3. San Luis Obispo City Employees' Association (SLOCEA) 4. San Luis Obispo Police Officers' Association(POA) 5. San Luis Obispo Police Staff Officers' Association (SLOPSOA). The City has an obligation to meet and confer in good faith with its represented employee groups prior to changing wages, hours, or working conditions. The City initiated meet and confer sessions with represented employee groups in late March 2009 and reached tentative agreements on May 6, 2009. While the City does not have an obligation to meet and confer with its unrepresented managers and confidential employees, meetings were held with these employee groups to explain the T:\Council Agenda Reports\Human Resources CAR\CAR-EmployeeConcessions.doc l C Employee Salary Concessions("Zero-Year") Page 3 decision to recommend a zero-year and extend resolutions through December 31, 2010. Management and confidential employee compensation resolutions are attached. Five of the employee groups were scheduled for salary increases in July 2009. Understandably, accepting a zero-year in 2009-10 was a difficult decision for employees. Discussions focused on the budget gap that must be closed prior to budget adoption and concerns that the economy may worsen. Concessions are viewed by many as an insurance policy; allowing the City to enter the 2009-11 Financial Plan with adequate reserves at the 20% policy level, preserving critical staffing levels to ensure community priorities are met, allowing operating budget reductions to be more balanced, and avoiding layoffs. Summary of Tentative Agreements Between the seven employee groups, there are slight differences as to when salary increases were last received, when salary increases are next scheduled, and when the MOA or resolution is scheduled to expire. Therefore, although the zero-year goal was to eliminate across-the-board salary increases in 2009-10, a "one size fits all" approach was not possible. Through the meet and confer process, other no or low cost items were discussed and considered in exchange for agreement to achieve a zero-year in 2009-10. The following summarizes the proposed tentative agreements with each represented employee group: 1. The POA was not scheduled for a salary increase in fiscal year 2009-10; however, the MOA expires on December 31, 2010. The City has reached a tentative agreement with the POA to extend the current MOA with no increases in salary or benefits through December 31, 2011. Although some vacant POA positions will likely be eliminated in the 2009-11 Financial Plan, the City has assured the POA it will not layoff members in approved regular line item positions in the 2009-11 Financial Plan through the term of the extended MOA. 2. The Fire Union was scheduled for a 5% salary increase in July 2009, with an MOA term through December 31, 2009. The Fire Union agreed to defer the July 2009 salary increase of 5% asfollows: 3%to July 2010 and 2% to December 2010, with the MOA term extended to December 31, 2010. The City agreed not to request other salary deferrals through the term of the extended MOA. The City also agreed to redefine short-term vacancies (from 19 or less 24-hour.shifts to 60 or less) and long-term vacancies (from 20 or more 24-hour shifts to 61 or more); create a "union leave bank" funded by member donations of paid time off, and improve the employee paid long-term disability benefit for prevention personnel. 3. The City's general employees, represented by SLOCEA, were also scheduled for a 5% salary increase in July 2009, with an MOA term through December 31, 2009. SLOCEA agreed to defer the 5% salary increase in July 2009 in the same manner as Fire: 3% to July 2010 and 2% to December 2010, with the MOA expiring on December 31, 2010. The City agreed to not request further salary deferrals and to provide layoff protection to SLOCEA employees in approved regular line item positions in the 2009-11 Financial Plan through the term of the TACouncil Agenda Reports\Human Resources CAR\CAR-EmployeeConcessions.doc Employee Salary Concessions("Zero-Year") Page 4 extended MOA. 4. The BCs are in year three of a five-year MOA term, set to expire on December 31, 2010. The MOA negotiated with the City in 2006 includes a scheduled 5% salary increase in July 2009 and again in July 2010. The BCs agreed to defer the 5% salary increase in July 2009 to July 2011. The City agreed to not request additional salary deferrals, not layoff BCs in positions approved as part of the 2009-11 Financial Plan, and to clarify the calculation of starting pay of a BC promoted from Fire Captain. The City also agreed to a one-time acceleration of the 2009 step increases for three recently promoted BCs, recognizing that initial step placement was not competitive. 5. The City's Police management group, SLOPSOA, is about mid-way through a five-year MOA term, set to expire June 30, 2012. The MOA negotiated with the City in 2007 and amended in 2008, includes salary increases of between 3% and 4% in fiscal year 2009-10 depending upon classification. SLOPSOA agreed to waive the 2009-10 salary increases. The following summarizes the attached resolutions with unrepresented management and confidential employee groups: 1. Unrepresented management employees were not scheduled for salary increases in 2009-10; however, the management resolution expires on December 31, 2010. The proposed management compensation resolution provides there shall be no increases in salary or benefits through December 31,2011. 2. Unrepresented confidential employees were scheduled for a 5% salary increase in July 2009 as part of a compensation resolution that expires on December 31, 2009. The proposed compensation resolution defers the July 2009 5%salary increase in the same manner as the Fire Union and SLOCEA: 3% to July 2010 and 2% to December 2010. The resolution provides there shall be no increases in salary or benefits through December 31, 2010. FISCAL IMPACT As summarized below, employee salary concessions provide organization-wide savings of about $1.1 million annually compared with initial budget estimates. Of this amount, the General Fund accounts for$938,000 in 2009-10 and $806,200 in 2010-11. 2009-10 2010-1 General Fund 938,000 806,200 Other Funds 252,900 278,600 Total $12190 900 $1084 800 T:\Council Agenda Reports\Human Resources CAR\CAR-EmployeeConcessions.doc SL Employee Salary Concessions("Zero-Year") Page 5 ALTERNATIVES Do not approve the resolutions or authorize the City Manager to prepare and execute amendments to Memorandum of Agreement pursuant to the zero-year tentative agreements This alternative is not recommended, as the resolutions and tentative agreements are consistent with the Council's previous direction and the City's employer-employee relations policies. ATTACHMENTS 1. Management compensation resolution. 2. Confidential employees' compensation resolution. COUNCIL READING FILE The MOA amendments with each represented employee group are expected to be completed and available for review in the Council Reading File no later than Monday, May 18, 2009. T:\Council Agenda RepoAsUiuman Resources CAR\CAR-EmployeeConcessions.doc �+ _� 1 Attachment 1 Page 1 of 1 RESOLUTION NO. (2009 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO REGARDING MANAGEMENT COMPENSATION FOR MANAGEMENT EMPLOYEES AND SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLICT WHEREAS, the City has requested all employee groups participate in a "zero-year" in fiscal year 2009-10, thus deferring scheduled wage increases. NOW, THEREFORE, BE IT RESOLVED, that the Council of the City of San Luis Obispo hereby revises management compensation as follows: SECTION 1. Management compensation will continue without increases for a one-year term through December 31, 2010. SECTION 2. All other compensation and benefits afforded management employees under Resolution No. 1001013 (2008 Series) and Resolution No. 10036 (2008 Series) not superseded by the above, shall remain in full force and effect. SECTION 3. The Director of Finance and Information Technology shall adjust the appropriate accounts to reflect the compensation changes. Upon motion of seconded by and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this 19th day of May, 2009. Mayor David F. Romero ATTEST: Audrey Hooper City Clerk APPROVED AS TO FORM: t Jon Lowell City Attorney Attachment 2 Page 1 of 2 RESOLUTION NO. (2009 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO ADOPTING AND MODIFYING THE COMPENSATION FOR THE CITY'S CONFIDENTIAL EMPLOYEES WHEREAS, the City of San Luis Obispo has designated the Executive Assistant to the City Administrative Officer, the Executive Assistant to the Director of Human Resources, the Legal Assistant/Paralegal and the Human Resources Specialist as confidential employees pursuant to the Government Code, WHEREAS, as such, confidential employees are precluded from collective bargaining and therefore are not governed by a collective bargaining agreement, WHEREAS, the City has requested all employee groups participate in a "zero-year" in fiscal year 2009-10,thus deferring scheduled wage increases, WHEREAS, the wages, hours and other terms and conditions of employment for confidential employees are established by resolution, NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Luis Obispo hereby revises the confidential compensation as follows: SECTION 1. The July 2009 5% salary increase set by Resolution No. 9833 (2006 Series) is deferred as follows: 3%to July 2010 and 2%to December 2010 SECTION 2. The confidential salary ranges shall be adjusted according to the schedule shown in Exhibit"A". SECTION 3. All other compensation and benefits afforded confidential employees under Resolution No. 9833 (2006 Series) and Resolution No. 10010A (2008 Series) not superseded by the above, shall remain in full force and effect. SECTION 4. The Finance Director shall adjust the Personnel Services appropriation accounts to reflect the health insurance contribution changes. Upon motion of , seconded by and on the following roll call vote: C. 6- - 7F Resolution No. (2009 Series) Attachment#2 Page 2 of 2 AYES: NOES: ABSENT: The foregoing resolution was adopted this 19th day of May, 2009. ATTEST: Audrey Hooper,City Clerk Mayor David F. Romero APPROVED AS TO FORM: Jo P. Lowell, City Attorney T:\Council Agenda Reports\Human Resources CAR\ConfidentialsSalaryDeferral.doc ATTACHMENT a, Exhibit A Confidential Employees Range Change Effective January 2006 2%Increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,579 1,662 1,749 1,841 1,938 368 1,628 1,713 1,803 1,898 1,998 369 1,715 1,805 1,900 2,000 2,105 370 1,744 1,836 1,932 2,034 2,141 Confidential Employees Range Change Effective July 2006 2%Increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,610 1,695 1,784 1,878 1,977 368 1,660 1,747 1,839 1,936 2,038 369 1,749 1,841 1,938 2,040 2,147 370 1,779 1,872 1,971 2,075 2,184 Confidential Employees Range Change Effective July 2007 5%Increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,691 1,780 1,873 1,972 2,076 368 1,743 1,835 1,931 2,033 2,140 369 1,836 1,933 2,035 2,142 2,254 370 1,868 1,966 2,070 2,179 2,293 Confidential Employees Range Change Effective July 2008 5%Increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,775 1,869 1,967 2,071 2,180 368 1,830 1,927 2,028 2,135 2,247 369 1,928 2,029 2,136 2,248 2,367 370 1,961 2,064 2,173 2,287 2,408 Confidential Employees Range Change Effective July 2009 0%Increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,775 1,869 1,967 2,071 2,180 368 1,830 1,927 2,028 2,135 2,247 369 1,928 2,029 2,136 2,248 2,367 370 1,961 2,064 2,173 2,287 2,408 ATTACHMENTA Exhibit A Confidential Employees Range Change Effective July 2010 3%Increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,828 1,925 2,026 2,133 2,245 368 1,885 1,984 2,089 2,199 2,314 369 1,986 2,090 2,200 2,315 2,438 370 2,020 2,126 2,238 2,355 2,480 Confidential Employees Range Change Effective December 2010 2%increase Range Step 1 Step 2 Step 3 Step 4 Step 5 366 1,864 1,963 2,067 2,175 .2,290 368 1,922 2,024 2,130 2,242 2,360 369 2,026 2,132 2,244 2,361 2,487 370 2,060 2,168 2,283 2,402 2,530 01 S-/o Page 1 of 1 i 1 Council, SloCity From: sacramentonian@aim.com [sacramentonian@aim.com] Sent: Tue 5/19/2009 1:10 PM To: Council, SloCity Cc: Subject: Union Salary Concessions Attachments: Dear City Council Members, I am in favor of salary concessions from the unions. However,given the current economic conditions,a zero-year agreement is not enough of a concession. My expectations would be a 10% reduction in pay or 1 furlough day a month through 2010 for city employees.The public services union should voluntarily reduce their salaries 15% through 2010 because the current contractual raise of 30+% is extremely offensive to the general public. Thank You, Ron Malak We found the real 'Hotel California'and the 'Seinfeld'diner. What will you find? Explore WhereltsAt.com. f'��t2D GoPY .4/G _= RED FILE L�'COUNCIL C D DIR 2TA&�ht� FIN DIR IVfEETING AGENDA 4"ry�e2�'�RE CHIEF TTCRNEY LAW DIR DA 9 ITEM # CLERK/ORIQ OLICE CHF ❑ DEPT HEADS (O DIR C --1TIL OIFi SIR DIR � A/6cirJ Tlnj� �CbtlaJelG. cry iuG2 https://mail.slocity.org/exchange/slocitycouncil/InboxfUnion%2OSaluy%2OConcessions.E... 5/19/2009