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RESOLUTION APPROVING THE MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE OPERATIONS AND MAINTENANCE UNIT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt by Resolution the attached Operations and Maintenance Unit (O&M) successor Memorandum of Understanding (MOU) effective July 1, 2014 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 16, 2014, with representatives of the International Union of Operating Engineers’ Local No. 3 (OE3) - Operations and Maintenance (O&M) Unit on a successor MOU. The O&M MOU expired June 30, 2014, and the City and OE3 - O&M 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 O&M successor MOU contains similar terms and conditions as the prior two years, with other minor changes. On February 4, 2015, O&M declared impasse, and on April 13, 2015, took action under the Meyers-Milias-Brown Act (MMBA) to submit the remaining disputes to advisory factfinding. On July 22, 2015, the parties held a one-day factfinding hearing. The factfinder issued advisory recommendations received by the City on August 20, 2015. On October 1, 2015, the City received notification from OE3 - O&M 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 FY 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. In July 2012, the City Council adopted a successor MOU for O&M with a term of one year, July 1, 2012 through June 30, 2013. For FY 2013/2014, most bargaining units at the City agreed to a “contract rollover” and amendment to extend their MOU for a one-year term through June 30, 2014, with minimal changes. In spring 2014, City representatives began meeting with seven (7) bargaining units who had MOU’s expiring on June 30, 2014. In spring 2015, City representatives also began meeting with the other two (2) bargaining units who had one year term MOU’s expiring on June 30, 2014. The focus of these negotiations was to obtain a successor MOU with terms and conditions consistent with the City’s L-RFP.
Since negotiations began for fiscal years 14/15 and 15/16, the City Council has adopted successor MOU’s for six out of nine bargaining units with expiring MOU’s; on January 27, 2015, a successor MOU with the Mid-Management/Supervisory Level Unit (B&C) Unit was adopted, on June 23, 2015, a successor MOU with the Stockton Police Officers’ Association (SPOA) was adopted, on July 7, 2015, a successor MOU with the Stockton City Employees’ Association (SCEA) was adopted, on July 21, 2015, a successor MOU with the Fire Unit was adopted, and on August 18, 2015, successor MOU’s were adopted for the Stockton Police Management Association and the Trades and Maintenance Unit. These MOU’s have contract terms ending June 30, 2016. The City Council also approved and amended the Unrepresented Employee Compensation plan on May 5, 2015 and August 18, 2015. The terms and provisions of the O&M successor MOU presented herein are consistent with the employee groups already approved by Council.
Present Situation
The relevant amendments under the successor MOU for O&M are summarized as follows:
1. MOU contract term for two years - July 1, 2014 through June 30, 2016;
2. 2% base pay increase (COLA) effective the first full pay period after Council approval, consistent with the City’s L-RFP (MOU Section 15.1);
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)). Please note the rates in the successor MOU are being updated from FY 2012/2013 rates; there was an increase included in the FY 2013/2014 rollover and amendment which were not reflected in the MOU document. This explains why the edits appear to be increases greater than those listed below. The City’s overall contribution increase to O&M members’ health insurance premiums from their current contribution levels will be as follows:
• $21 per month for Employee Only;
• $38 per month for Employee plus 1 Dependent; and
• $51 per month for Employee plus 2 or more Dependents;
4. Vacation Cash Payment Option- O&M has agreed to continue the suspension of vacation cash payment option/sell-back during the term of the contract and until a successor MOU is reached (MOU Section 9.1(g));
5. Health Insurance - O&M 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);
6. Administrative Cost for Operating Engineer Health Plans - O&M has agreed to pay the City’s administrative overhead costs associated with the Operating Engineers health plans to the monthly OE3 plan costs. As of July 1, 2015, the cost is $26.98 per month per employee participating in the OE3 plan (MOU Section 14.1(g));
7. Agreement to amend the wastewater operator series quarterly add pay -Changing the provision that only operators are eligible, and to only pay for maintaining a certification one level above the minimum qualification required for the position held (MOU Section 13.10(d));
8. In conjunction with the operator series quarterly add pay changes, agreement to increase the Senior Plant Operator base salary by 16.7% (MOU Section 15.1). This increase was agreed upon as a market adjustment for a position critical to the utility operations.
9. Agreement to reclassify two (2) positions as exempt from overtime pursuant to the Fair Labor Standards Act (FLSA) (MOU Section 11.2(d));
10. Agreement to limit promotional appointment probationary periods to six (6) months, and cease practice of extending probationary periods for original and promotional appointments (MOU Section 4.2);
11. Agreement for O&M employees to use their floating holidays in one (1) hour increments, and reimburse the City for floating holiday hours used, but not earned upon separation of employment (MOU Section 12.2);
12. Agreement to limit Compensatory Time Off (CTO) annual carryover to a maximum of 40 hours each calendar year (MOU Section 11.5); and
13. Elimination of obsolete language and other language clean-up changes.
FINANCIAL SUMMARY
The cost for the 2% COLA beginning November 16, 2015 is approximately $147,000. O&M employees are funded completely from Municipal Utility Enterprise Funds so there will be no impact on the General Fund cost.
The cost for the health contribution increase effective November 16, 2015 is approximately $46,000. The $26.98 per month contribution for health administrative overhead costs associated with employees enrolled in OE3 health plans will recover approximately $12,000 per year to offset costs incurred in the Health Benefit Internal Service Fund.
Increasing the Senior Plant Operator base salary by 16.7% will cost approximately $157,000 on an annual basis for a total of ten (10) authorized and currently filled positons necessitating a $98,000 increase to the 2015/2016 Annual Budget based on the November 16, 2015 effective date. These amounts include both salary and benefit costs.
Funding for the 2% COLA and Senior Plant Operator salary adjustment will need to be appropriated from existing Municipal Utility fund and department balances in FY 2015/2016 for the costs associated with this MOU. The City funds that will experience cost increases as a result of this MOU are as follows:
Water Utility Fund $124,000
Wastewater Utility Fund $172,000
Stormwater Utility Fund $ 8,000
The recommendation authorizes the City Manager to appropriate these funds in the employee services accounts in the respective funds.
While vacation sell-back has been suspended since February 2012, the future cost avoidance from continuing to suspend vacation sell back is $180,000.
Attachment A - Operations and Maintenance Unit MOU - redlined