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APPROVE RESOLUTION APPROVING THE MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE STOCKTON FIREFIGHTERS’ LOCAL 456 FIRE UNIT
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RECOMMENDATION
It is recommended that the City Council adopt by Resolution the attached Stockton Firefighters’ Local 456 Fire Unit successor Memorandum of Understanding (MOU) effective July 1, 2015 through June 30, 2016. The City Council adoption will: 1) Authorize the City Manager to execute the MOU, 2) Amend the Fiscal Year (FY) 2015/2016 budget to appropriate additional funds, and 3) Take actions appropriate to carry out the implementation of the MOU.
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Summary
Representatives of the City began meeting April 7, 2015, with representatives of the Fire Unit on a successor MOU. The Fire Unit MOU was set to expire on June 30, 2015, and the City and the Fire Unit desired to negotiate a successor MOU effective after that expiration. The successor MOU presented herein contains an increase to the City’s medical contribution effective the first full pay period after adoption; and a 2% cost of living increase adjustment (COLA) to base pay effective the first full pay period following adoption. Both increases are consistent with the City’s Long-Range Financial Plan (L-RFP) as incorporated into the City’s plan for exiting bankruptcy. The Fire Unit successor MOU contains similar terms and conditions as the prior year, with other minor changes. The parties reached a tentative agreement on June 24, 2015, and the City has received notification from the Fire Unit that the bargaining unit membership ratified this successor MOU. The successor MOU is attached in redlined format as Attachment A.
DISCUSSION
Background
The City has had substantial fiscal shortfalls over the past several years culminating in the bankruptcy filing in June of 2012. On June 26, 2012, the City Council adopted a final budget for Fiscal Year 2012/2013 under the Pendency Plan filed for the bankruptcy proceedings. It also adopted as part of its Pendency Plan changes in compensation and benefits. The City and representatives from the Fire Unit continued to meet and confer on a successor MOU and in August 2012, the City Council adopted a successor MOU for the Fire Unit with a term of one year, July 1, 2012 through June 30, 2013. For fiscal year 2013/2014, the Fire Unit agreed to a “contract rollover” and amendment to extend their MOU for a one year term, through June 30, 2014 with minimal changes. For fiscal year 2014/2015, the Fire Unit agreed to a one year contract term that included no wage increase and a small increase of the City’s capped health insurance premium contribution towards health insurance premiums.
Present Situation
The relevant amendments under the successor MOU for the Fire Unit are summarized as follows:
1. MOU Contract Term for one year - July 1, 2015 through June 30, 2016;
2. 2% cost of living adjustment (COLA) base pay increase effective the first full pay period after Council approval, consistent with the City’s L-RFP (MOU Section 15.9);
3. City contribution towards health insurance - the City has agreed to a small increase to the City’s capped health insurance premium contribution towards employee health insurance premiums effective the first full pay period after Council approval as shown below (MOU Section 14.1 (c)).
• $11 per month for Employee Only;
• $19 per month for Employee plus 1 Dependent; and
• $26 per month for Employee plus 2 or more Dependents;
This reflects a 2% increase in City contribution, consistent with the City’s L-RFP.
4. Health Insurance - Fire Unit has agreed to a reopener clause to meet and confer upon City’s request regarding proposals related to City sponsored medical plans and implementation of the Affordable Care Act (ACA) (MOU Section 14.0);
5. CalPERS 20516 Cost Sharing -The parties agree to continue CalPERS cost sharing, whereby the employee’s pay 9% towards the employer contribution, and the City pays 9% towards the employee contribution (MOU Section 13.1 (f));
6. Uniform Allowance - The City has agreed to increase the annual uniform allowance by $100 for all Fire Unit Members, from $600 per year to $700 per year (MOU Section 13.8);
7. For this contract term ending June 30, 2016, the City agrees to redirect part of the Health Reimbursement Account (HRA) City contribution (equal to 1% of employee’s base pay) towards the cost of other Fire Unit member benefits (MOU Section 14.3). The HRA City contribution will be reduced to 0.29%, while the remaining 0.71% will be re-allocated as follows:
• 0.20% will be re-allocated towards keeping four (4) remaining Fire Unit members at the Tier Two Grandfathered Longevity Rate (22 year) of 8.75% (versus the reduced rate of 4.75% effective July 1, 2012); and
• 0.51% will be re-allocated towards an additional $250 for annual uniform allowance for all Fire Unit members; this additional uniform allowance results in a total of $950 annual uniform allowance for this contract term;
8. Elimination of obsolete language and other language cleanup changes.
FINANCIAL SUMMARY
The cost for the 2% COLA beginning August 1, 2015 is $459,000 of which $387,000 is a General Fund cost.
The cost for the health contribution increase is approximately $46,000 annually of which $39,000 is a General Fund cost.
The cost for the City’s increase of $100 per year for uniform allowance is $28,000 of which $24,000 is a General Fund cost.
It is cost neutral for the City to redirect part of the 1% HRA City contribution towards other Fire Unit member benefits. The 1% HRA City cost for FY 2015/2016 is $139,000. Reducing the HRA contribution to 0.29% will reduce the annual cost to $40,000. Redirecting 0.20% of the HRA towards the Tier Two Grandfathered Longevity Pay for four (4) members represents a total of $26,000, and the 0.51% redirected towards additional uniform allowance represents $71,000.
Funding for the 2% COLA and health contribution increase was planned in the L-RFP and additional budget will need to be appropriated from existing fund balances in FY 2015/2016 for the costs associated with this MOU. The additional cost for Fire Unit member salary and benefits associated with this MOU will be distributed between three (3) City funds as follows:
General Fund $445,000
Development Services $ 15,000
Measure W Public Safety Tax $ 80,000
The above total for salary and benefit changes result in an additional City cost of $7,000 due to the August 1, 2015 implementation date of the HRA contribution redirection in conjunction with the full year of increased uniform allowance; however, due to the COLA and health contribution increases also being implemented August 1, 2015, and not for the full fiscal year, these cost savings outweigh any additional cost due to the mid-year implementation of the HRA redirection changes.
The recommendation authorizes the City Manager to appropriate these funds in the employee services accounts in the respective funds.
Attachment A - Fire Unit MOU - redlined