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APPROVAL OF MEMORANDA OF UNDERSTANDING AND LONGEVITY PAY SIDE LETTERS BETWEEN THE CITY OF STOCKTON AND THE STOCKTON POLICE MANAGEMENT ASSOCIATION, STOCKTON FIREFIGHTERS’ LOCAL 456 FIRE UNIT, AND STOCKTON FIREFIGHTERS’ LOCAL 456 FIRE MANAGEMENT UNIT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt by resolution the attached successor Memoranda of Understanding (MOUs) effective July 1, 2025 through June 30, 2026, and Longevity Pay Side Letters with the following bargaining groups:
1. Stockton Police Management Association;
2. Stockton Firefighters’ Local 456 Fire Unit; and
3. Stockton Firefighters’ Local 456 Fire Management.
It is further recommended that the Acting City Manager and the Employee Relations Officer be authorized to take all appropriate and necessary actions to carry out the purpose and intent of the resolution, including implementation and funding of these successor MOUs and side letters.
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Summary
In February 2025, City representatives began negotiations with the Stockton Police Management Association (SPMA), Stockton Firefighters’ Local 456 Fire Unit (Fire), and Fire Management Units for successor MOUs, as the contracts were set to expire on June 30, 2025. The City reached a tentative agreement on a successor MOU with the SPMA, Fire, and Fire Management Units. Additionally, in an effort to address retention of Unit members, the City and the SPMA, Fire, and Fire Management Units met and conferred and agreed to a side letter for Longevity Pay.
The successor MOUs presented for the SPMA, Fire, and Fire Management Units include a contract term of one (1) year; a two percent (2%) Cost of Living Adjustment (COLA) effective September 1, 2025; Lump Sum Payment equal to two percent (2%) COLA from July 1, 2025 through August 31, 2025; and a two percent (2%) increase to the City’s health contribution effective January 1, 2026. Also included is a reopener clause where if additional ongoing revenue source is identified during the term of the contract, the parties agree to meet to negotiate additional compensation items for unit members.
The Longevity Pay side letter presented for the SPMA, Fire, and Fire Management Units establishes a term from September 1, 2025, through March 31, 2034, to provide ongoing longevity based on specific eligibility criteria. Qualifying employees will also receive a one-time Lump Sum Payment equivalent to two (2) months of longevity pay for July and August 2025. The side letter outlines that for the period of July 1, 2025 through June 30, 2026, the City will fund Longevity Pay using one-time reserves.
On August 15, 2025, the City received notification that members of the Fire Management Unit ratified the successor MOU and accepted to approve the Longevity side letter. The redlined version of the Fire Management Unit successor MOU is provided as Attachment A, and the side letter is included as Attachment B.
On August 18, 2025, the City received notification that members of the SPMA Management Unit ratified the successor MOU and accepted to approve the Longevity side letter. The redlined version of the SPMA Management Unit successor MOU is provided as Attachment C, and the side letter is included as Attachment D.
On August 20, 2025, the City received notification that members of the Fire Unit ratified the successor MOU and accepted to approve the Longevity side letter. The redlined version of the Fire Unit successor MOU is provided as Attachment E, and the side letter is included as Attachment F.
It is recommended that Council adopt, by resolution, the attached successor MOUs with the SPMA, Fire, and Fire Management Units effective July 1, 2025, through June 30, 2026, and approve, by resolution, the attached Longevity side letters for these units.
DISCUSSION
Background
In 2016, the City entered into three (3) year contract terms with all 9 bargaining units and was able to provide market salary adjustments to address recruitment and retention. Additionally, a six (6%) COLA was front-loaded in year one of the contracts for each bargaining unit. The City re-set the City health insurance premium contribution to 90% of the low-cost Kaiser plan and allowed employees to begin electing vacation cash-out/sell-back.
In 2020, the City entered into a three (3) year contract term with SPMA, Fire, and Fire Management Units wherein the bargaining unit members received a four percent (4%) COLA to base pay following adoption and a two percent (2%) COLA in the first full pay period following July 1, 2021. SPMA members in the classifications of Police Captain and Police Lieutenant received a base pay salary adjustment of one percent (1%) following adoption and an additional 0.5% in the first full pay period following July 1, 2021. Fire and Fire Management Unit members received a base pay salary adjustment of one percent (1%) following adoption and a 0.41% was added to the suppression classifications on the salary schedule for the addition of the Birthday Holiday effective in the first full pay period following July 1, 2021. Additionally, the bargaining units received a one-time lump sum payment of $1,650, a vacation cash-out option of 40 hours in years two (2) and three (3) of the contract, and an increase to the City’s health contribution effective the first full pay period following adoption.
In 2022, the City entered into a three (3) year contract term with SPMA, Fire, and Fire Management Unit. Under these agreements, bargaining unit members received a two percent (2%) COLA upon contract adoption, an additional two percent (2%) COLA on July 1, 2023, and another two percent (2%) COLA on July 1, 2024. Market Adjustments were also provided over the term of the contract with a total increase of 12% for SPMA, 11.65% for Fire Unit, and 12% for Fire Management. In addition, members of these units received a one-time Lump Sum Payment of $5,000.
Present Situation
The relevant amendments under the successor MOUs for SPMA, Fire, and Fire Management Units are summarized as follows:
1. MOU contract term for one (1) year effective July 1, 2025, through June 30, 2026 (SPMA MOU Section 19, Fire Unit MOU Section 19, and Fire Management MOU Section 19).
2. Wage increases totaling 2% COLA effective September 1, 2025 (SPMA MOU Section 15.1 (a), Fire Unit MOU Section 15.9 (a), and Fire Management MOU Section 15.8).
3. Lump Sum Payment. Employees who are employed as of July 1, 2025 and who are in a paid status as of September 1, 2025, will receive a lump sum payment equal to the 2% COLA from July 1, 2025 through August 31, 2025 (SPMA MOU Section 15.1 (b), Fire Unit MOU Section 15.10, and Fire Management MOU Section 15.9).
4. City Health Contribution. 2% increase to City’s health insurance premium contribution effective January 1, 2026 (SPMA MOU Section 14.1 (c), Fire Unit MOU Section 14.1 (c), and Fire Management MOU Section 14.1 (c)).
5. Reopener. If an additional ongoing revenue source is identified, the parties will meet as soon as practicable to negotiate additional compensation items to be provided to the members during the term of the MOU (SPMA MOU Section 1.3, Fire Unit MOU Section 1.3, and Fire Management MOU Section 1.3).
6. Vacation Sellback provision allowing a vacation cash payment option/sell-back of up to eighty (80) hours of vacation for fiscal year 2025/2026 for a payment window of January 1, 2026, through June 30, 2026 (SPMA MOU Section 9.1 (d), Fire Unit MOU Section 9.1 (f), and Fire Management MOU Section 9.1 (f)).
7. Protected Nature of Family Sick Leave. Updating definition to include “designated person” per law update (SPMA MOU Section 9.2 (c), Fire Unit MOU Section 9.1 (c), and Fire Management MOU Section 9.2 (c)).
8. Bereavement Leave. Updating language regarding number of Bereavement leave days per the law update. Also included that if the deceased person is the employees “designated person” for purposes of family sick leave, the request to use sick leave or annual leave shall not be unreasonably denied. (SPMA MOU Section 9.3 (a), Fire Unit MOU Section 9.3 (a), and Fire Management MOU Section 9.3 (a)).
9. Elimination of obsolete language and other language cleanup changes.
The relevant amendments under the successor MOUs for Fire and Fire Management Units are summarized as follows:
10. Fair Labor Standards Act (FLSA). Adding the definition of “regular rate of pay” (Fire Unit MOU, Section 11.1 (f) and Fire Management MOU Section 11.2 (f)).
11. Retiree Medical Trust. Changes deductions to be made on a bi-weekly basis (Fire Unit MOU, Section 14.4 and Fire Management MOU Section 14.4).
MOU specific amendments are summarized as follows:
SPMA Unit:
12. Bi-Weekly Pay Period. Eliminating section that the City will move to bi-weekly pay as this is no longer applicable. The City moved to bi-weekly pay in 2024 (SPMA MOU Section 15.10).
13. Overtime Calculation. New section that provides for the inclusion of vacation and management time during a work period as “time worked” for purposes of calculating overtime in accordance with the Fair Labor Standards Act (FLSA) (SPMA MOU Section 11.1 (e)).
14. Police Lieutenant Salary Step After Promotion. Allows employees promoting from Police Sergeant to Police Lieutenant to be placed at a starting salary step of 4 of the Police Lieutenant classification. There are currently four (4) Police Lieutenants that will receive an increase to step 4 effective September 1, 2025 (SPMA MOU Section 15.5).
15. Special Assignment Pay. Adds the Ceasefire Section Commander, and Research and Development Commander as assignments eligible for the incentive pay (SPMA MOU Section 15.9).
Fire Unit:
16. Elimination of the Deputy Fire Marshall Series add pay that is no longer applicable (Fire Unit MOU, Section 13.12).
17. Administrative Positions. Adding clarifying language about how these positions are paid (Fire Unit MOU, Section 13.13).
Fire Management Unit:
18. Overtime Calculation. New section that provides for the inclusion of vacation leave during a work period as “time worked” for purposes of calculating overtime (Fire Management Unit MOU Section 11.2(e)).
19. Specialty Assignment. Adding clarifying language about specialty pay will be paid (Fire Management Unit MOU Section 13.10).
The relevant items under the Longevity Pay side letter for SPMA, Fire, and Fire Management Units are summarized as follows:
20. Lump Sum Payment: For qualifying employees who were employed as of July 1, 2025 and who are in paid status as of September 1, 2025, the City will provide a one-time lump sum payment equivalent to two (2) months of longevity pay to all eligible employees, which will be paid as soon as administratively possible.
21. Ongoing Longevity Pay. Provides longevity pay at various percentages for employees with at least five (5), ten (10), fifteen (15), and twenty (20) years of paid service.
FINANCIAL SUMMARY
BASE PAY INCREASE
The total one-year cost for the COLA increases to base pay and other adjustments including longevity for the 228 employees in SPMA, Fire, and Fire Management is $3,124,644 of which $2,758,445 is a General Fund cost. The table below shows the base wage increase cost with associated benefits for the 1 year based on a September 1, 2025 implementation. Funding for an annual 2% COLA and health contribution increases for the term of the contract was planned in the L-RFP. The longevity adjustments were not included in previous L-RFP projections.
|
COLA INCREASES |
|
Bargaining Unit |
# of Positions |
FY 2025-26 |
General Fund |
|
Fire Unit |
198 |
$ 758,541 |
$ 629,589 |
|
Fire Management Unit |
8 |
$ 49,733 |
$ 49,733 |
|
SPMA |
22 |
$ 146,227 |
$ 146,227 |
|
TOTAL |
228 |
$ 954,501 |
$ 825,549 |
HEALTH CONTRIBUTION INCERASES
The cost for the health contribution increases based on a September 1, 2025 implementation is $44,269 of which $37,923 is a General Fund cost. The ongoing cost will be absorbed in the operating funds, including the General Fund.
|
HEALTH CONTRIBUTION INCREASES |
|
Bargaining Unit |
# of Positions |
FY 2025-26 |
General Fund |
|
Fire Unit |
198 |
$ 37,324 |
$ 30,979 |
|
Fire Management Unit |
8 |
$ 1,852 |
$ 1,852 |
|
SPMA |
22 |
$ 5,093 |
$ 5,093 |
|
TOTAL |
228 |
$ 44,269 |
$ 37,923 |
ONE TIME LUMP SUM COLA
The cost to pay Fire, Fire Management, Unit and SPMA employees a lump sum payment equal to two months of the 2% COLA from July 1, 2025 through August 31, 2025 is $104,625 of which $90,341 is a General Fund cost.
|
ONE-TIME LUMP SUM COLA |
|
Bargaining Unit |
FY 2025-26 |
General Fund |
|
Fire Unit |
$ 84,026 |
$ 69,742 |
|
Fire Management Unit |
$ 5,509 |
$ 5,509 |
|
SPMA |
$ 15,090 |
$ 15,090 |
|
TOTAL |
$ 104,625 |
$ 90,341 |
ONE TIME LUMP SUM LONGEVITY
The cost to pay Fire, Fire Management, Unit and SPMA employees a lump sum payment equal to two months of the Longevity Pay from July 1, 2025 through August 31, 2025 is $144,033 of which $127,547 is a General Fund cost.
|
ONE-TIME LUMP SUM LONGEVITY |
|
Bargaining Unit |
FY 2025-26 |
General Fund |
|
Fire Unit |
$ 96,979 |
$ 80,493 |
|
Fire Management Unit |
$ 18,404 |
$ 18,404 |
|
SPMA |
$ 28,650 |
$ 28,650 |
|
TOTAL |
$ 144,033 |
$ 127,547 |
ANNUAL LEAVE AS TIME WORKED
The cost of counting vacation leave during a work period as “time worked” for purposes of calculating overtime for the Fire Management and SPMA Unit based on a September 1, 2025 implementation is $16,308 of which $16,308 is a General Fund cost.
|
ANNUAL LEAVE COUNTS AS TIME WORKED |
|
Bargaining Unit |
FY 2025-26 |
General Fund |
|
SPMA |
$ 11,472 |
$ 11,472 |
|
Fire Management Unit |
$ 4,837 |
$ 4,837 |
|
TOTAL |
$ 16,308 |
$ 16,308 |
ELIMINATE STEPS FOR LIEUTENANT
The cost of allowing employees promoting from Police Sergeant to Police Lieutenant to be placed at a starting salary step of 4 of the Police Lieutenant classification for the SPMA Unit based on September 1, 2025 implementation is $127,504 of which $127,504 is a General Fund cost.
|
ELIMINATE STEPS FOR LIEUTENANT |
|
Bargaining Unit |
FY 2025-26 |
General Fund |
|
SPMA |
$ 127,504 |
$ 127,504 |
|
TOTAL |
$ 127,504 |
$ 127,504 |
VACATION SELLBACK
The cost of the vacation sell-back option for the next fiscal year is $309,227, of which $274,298 is a General Fund cost. However, there could be an offsetting increase in productivity if staff take cash in lieu of time off as the hours worked could increase.
|
VACATION SELLBACK |
|
Bargaining Unit |
FY 2025-26 |
General Fund |
|
Fire Unit |
$ 205,465 |
$ 170,536 |
|
Fire Management Unit |
$ 39,429 |
$ 39,429 |
|
SPMA |
$ 64,333 |
$ 64,333 |
|
TOTAL |
$ 309,227 |
$ 274,298 |
LONGEVITY
The cost of implementing longevity pay with benefits at various percentages for employees with at least five (5), ten (10), fifteen (15), and twenty (20) years of paid service for Fire, Fire Management, Unit and SPMA employees based on September 1, 2025 implementation is $1,424,178 of which $1,258,976 is a General Fund cost.
|
LONGEVITY |
|
Bargaining Unit |
FY 2025-26 |
General Fund |
|
Fire Unit |
$ 971,778 |
$ 806,576 |
|
Fire Management Unit |
$ 184,420 |
$ 184,420 |
|
SPMA |
$ 267,980 |
$ 267,980 |
|
TOTAL |
$ 1,424,178 |
$ 1,258,976 |
Below is a table showing the breakdown of total costs as One time and on going
|
Total One Time Costs vs On Going Costs |
|
|
Total Costs of All Compensation Packages |
Impact to General Fund |
|
One time |
$ 248,658 |
$ 217,887 |
|
On going |
$ 2,875,986 |
$ 2,540,558 |
|
TOTAL |
$ 3,124,644 |
$ 2,758,445 |
All compensation increases, except one-time lump sum payments, are ongoing costs to the City. The total one-year cost of the successor Memoranda of Understanding (MOU) for the three units is $3,124,644 based on a September 1, 2025 implementation. The FY 2025-26 Annual Budget adopted by Council on June 24, 2025 must be amended to accommodate the increases in employee compensation. Funding for the increased costs will come from the Known Contingences category of the General Fund Reserves. With an effective date of September 1, 2025, the total FY 2025-26 cost of compensation changes are $3,124,644 with 88% attributable to the General Fund. The FY 2025-26 cost will be slightly lower if implemented in a later pay period. The recommended budget amendment needed to implement the three MOUs will increase the General Fund budget by $2.7 million from the fund balance. Future year salary and benefit increases will be incorporated into the annual budget development process.
Attachment A - Fire Management Unit MOU - Redline
Attachment B - Fire Management Unit - Longevity Side Letter
Attachment C - SPMA MOU - Redline
Attachment D - SPMA - Longevity Side Letter
Attachment E - Fire Unit MOU - Redline
Attachment F - Fire Unit - Longevity Side Letter