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MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE WATER SUPERVISORY UNIT
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RECOMMENDATION
It is recommended that the City Council adopt by resolution the attached successor Memorandum of Understanding (MOU) effective July 1, 2023 through June 30, 2026, with the following bargaining unit: Water Supervisory.
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the resolution, including implementation and funding of this successor MOU.
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Summary
In March 2023, representatives of the City began meeting with the labor representatives to discuss successor Memoranda of Understanding. The aforementioned MOU expired on June 30, 2023. On August 9, 2023, the City reached tentative agreement on a successor MOU with the Water Supervisory unit. The MOU contains compensation and benefit changes similar to the Stockton City Employees’ Association (SCEA) MOU, the Mid-Management/Supervisory Level (B&C) MOU, and the Unrepresented Employee Compensation Plan approved by City Council on August 22, 2023. The Water Supervisory unit MOU in redline format is attached.
DISCUSSION
Background
The City Council identified retention and recruitment of employees as a high priority and has taken numerous actions to set aside funds to address retention and market conditions through the General Fund Reserve policy.
In 2019, the City entered into a four (4) year contract term with the Water Supervisory unit wherein the bargaining unit members received a two percent (2%) Cost of Living Adjustment (COLA) to base pay effective January 1, 2020; a two percent (2%) COLA effective July 1, 2020; a two percent (2%) COLA effective July 1, 2021, and a two percent (2%) COLA effective July 1, 2022.
Present Situation
The City’s Long-Range Financial Plan (L-RFP) assumptions for employee compensation include two percent (2%) annual COLAs and two percent (2%) annual increases in the City’s health contributions. Prior to the start of labor negotiations, the City contracted with a compensation consultant to perform an updated market salary survey in 2022. Based on these findings, staff recommends market salary adjustments to certain classifications in these units. Market salary adjustments are salary increases above the planned COLAs that are necessary to maintain compensation at levels competitive with similarly situated agencies. Market adjustment costs are incorporated in the L-RFP.
The relevant amendments under the successor MOU for the Water Supervisory unit are summarized as follows:
1. Water Supervisory contract term for three (3) years effective July 1, 2023, through June 30, 2026.
2. Salary Adjustments. Effective the first full pay period following ratification of this MOU by the Water Supervisory unit and approved by the City Council, a four percent (4%) COLA increase; effective July 1, 2024, three percent (3%) COLA increase; and effective July 1, 2025, three percent (3%) COLA increase. (Section 15.1)
3. Market Adjustments. Market adjustments for classifications that are more than ten percent (10%) below median of market effective July 1, 2024, and July 1, 2025. The market adjustments are scheduled to bring all classifications to the median of the market by the end of the contract. No employees in this bargaining unit will receive market adjustments based on the compensation study. (Appendix A)
4. Lump Sum Payment. Employees in the bargaining unit as of July 1, 2024, will receive a two-thousand-dollar ($2,000.00) lump sum non-pensionable bonus to be paid in July 2024. Employees in the bargaining unit as of July 1, 2025, will receive a two-thousand-dollar ($2,000.00) lump sum non-pensionable bonus to be paid in July 2025. (Section 15.1 (e))
5. One-Time Payment. A one-time payment in the amount of four hundred fifty dollars ($450.00) to all Water Supervisory unit members employed by the City upon adoption of the new MOU by the City Council. (Section 15.16)
6. City Health Contributions. Two percent (2%) increase to the City’s health insurance premium contribution effective upon approval of the City Council, and two percent (2%) each fiscal year thereafter, with the last increase effective July 1, 2025. (Section 14.2 (c))
7. Health and Welfare Benefits. Adding clarifying language that members are eligible for Anthem Plans A, B, C, and D and Kaiser Plans A, B, and A+. (Section 14.2 (a))
8. Vacation Cash Payment Option. Allow vacation cash payment option/sell-back of up to 40 hours during Fiscal Years 2023-2024 and 2024-2025 only. (Section 9.1 (e))
9. Safety Protective Footwear Reimbursement. Effective July 1, 2024, an increase to the footwear reimbursement from $200.00 to $250.00. (Section 13.4 (b))
10. Certification Training and Special Certifications. Increases to certifications for Water, Wastewater, Water Distribution, and/or California Water Environment Association (CWEA). Employees assigned to the Water Treatment or Distribution function in the operator series who receives and maintains a level 4 or level 5 Water Operator Certification (T or D) will receive quarterly amounts added to their paychecks. For one level above the minimum qualifications of the position, $1,000.00 and for two levels above the minimum qualifications of the position, $2,000.00. (Section 13.10)
11. Non-Discrimination. Updated language regarding the mutual non-discrimination commitment. (Section 3.1)
12. Retention/Rejection of Probationer. Clarify that the City will make a good faith effort to notify a probationary employee two (2) weeks before the end of the probationary period whether regular status is granted; however, a failure on the part of the appointing authority to file such a statement at the end of the probationary period shall not constitute a rejection of the probationer as defined in Civil Service Rules (Section 4.3)
13. Alcohol and Drug Testing. Clarifying language that all employees hired into safety-sensitive positions identified by the City must pass a drug and alcohol screening prior to being offered City employment due to positions requiring a commercial driver’s license or hazardous material endorsement. (Section 4.4)
14. Grievance Process. Update the grievance response deadlines. Update calendar days to working days for a Step 1 and Step 2 grievance response. (Section 8.3 (a) (b))
15. Protected Nature of Family Sick Leave. Updated definition to include “designated person” per the law update. (Section 9.2 (c))
16. Bereavement Leave. Update language regarding number of Bereavement leave days per the law update. (Section 9.3 (a))
17. Birthday Holiday. Clarifying that employees may take their Birthday Holiday off within sixty (60) calendar days beginning on their actual Birthday. (Section 12.2)
18. Compaction between classifications. Bryce Consulting provided a total compensation survey in 2022 and made recommendations for internal relationships between classifications in the units and employees in the same job family. In the event those internal relationships change, the parties will consider how to address potential compaction. (Section 15.1 (d))
19. Compensatory Time Payout. Clarify the definition of Compensatory Time. Any Compensatory Time balance in excess of 40 hours remaining at the end of the calendar year is automatically paid unless the employee submits a Compensatory Time deferral form to payroll by November 1st (Section 11.5).
20. Salary Step After Promotion or Demotion. Clarify that when an employee is promoted from a position in one class to a position in a higher class, the employee is entitled to the next step in the base salary of the higher class which is at least five percent above the employee’s current base salary. (Section 15.7 (a))
21. Exempt Status of Classifications. Remove provision outlining that specific classifications are exempt from overtime as provided by the Fair Labor Standards Act (FLSA). These classes remain exempt from FLSA, only removing language as clean up. (Section 11.2 (d))
22. Special Certification Pay. Remove provision that is no longer applicable to the successor MOU. (Section 15.14)
23. Elimination of obsolete language, update to pronouns, and other language cleanup changes.
FINANCIAL SUMMARY
The Water Supervisors unit consists of 14 authorized positions in the Municipal Utilities Department. These positions are fully funded by the Water, Wastewater, and Stormwater Utility Funds.
COLA and Market Adjustment
The three-year cost of the salary adjustments is $418,997. There are no market adjustments for this bargaining unit.
Lump Sum and One-Time Payments
Health Insurance
Based on an effective date of September 16, 2023, the cost to increase the City’s contribution to health insurance is $5,453 in FY 2023-24 and $25,649 for three years.
Vacation Cash Payment Option/Sell-back
The vacation cash out option in years one and two is estimated to cost $51,426.
Certification Pay and Safety Protective Footwear Reimbursement
Total Cost
The three-year cost of the successor MOU is $616,078 with $116,636 in FY 2023-24.
The FY 2023-24 cost is split as follows:
Water Utility Fund $36,937
Wastewater Utility Fund $66,258
Stormwater Utility Fund $13,441
The recommended budget amendment needed to implement this successor MOU is detailed in Exhibit 2 to the Resolution. Salary adjustments, health contributions and certification pays are ongoing costs to the City and should be sustainable long-term. Long-term projections show the Water and Wastewater utility funds can afford these cost increases. Rate studies will be prepared for each utility to determine if future rate increases are needed. Future year salary and benefit increases will be incorporated into the annual budget development process. There is no General Fund impact associated with this MOU.
Attachment A - Water Supervisory Unit MOU - Redline