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MEMORANDA OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE STOCKTON FIREFIGHTERS’ LOCAL 456 FIRE UNIT, STOCKTON FIREFIGHTERS’ LOCAL 456 FIRE MANAGEMENT UNIT AND STOCKTON POLICE MANAGEMENT ASSOCIATION
recommended action
RECOMMENDATION
It is recommended that the City Council adopt by resolution the attached successor Memoranda of Understanding (MOU’s) effective July 1, 2019 through June 30, 2022, with the following groups:
1. Stockton Firefighters’ Local 456 Fire Unit;
2. Stockton Firefighters’ Local 456 Fire Management Unit; and
3. Stockton Police Management Association (SPMA) Unit.
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.
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Summary
In February 2019, representatives of the City began meeting with the Stockton Firefighters’ Local 456 Fire and Fire Management Units, and in May 2019 representatives of the City began meeting with the SPMA respectively, to discuss successor MOU’s. The Fire, Fire Management, and SPMA MOU’s expired June 30, 2019. On May 4, 2020, the City reached a tentative agreement on a successor MOU with the Stockton Firefighters’ Local 456 Fire and Fire Management Units. On May 15, 2020, the City reached a tentative agreement on a successor MOU with the SPMA.
The successor MOU’s presented herein for the Stockton Firefighters’ Local 456 Fire and Fire Management includes a contract term of three (3) years expiring June 30, 2022; a 4% cost of living increase adjustment (COLA) to base pay effective first full pay period following adoption, a 2% COLA in the first full pay period following July 1, 2021; base pay salary adjustment for employees in all classifications of 1% effective first full pay period following adoption, and a 0.41% will be added to the suppression classifications on the salary schedule for the Birthday Holiday effective the first full pay period following July 1, 2021.
The successor MOU’s presented herein for the SPMA includes a contract term of three (3) years expiring June 30, 2022; a 4% COLA to base pay effective first full pay period following adoption, a 2% COLA in the first full pay period following July 1, 2021; base pay salary adjustment for employees in the Police Captain and Police Lieutenant classifications of 1% effective first full pay period following adoption, and 0.5% effective the first full pay period following July 1, 2021.
In addition, all three units shall receive a one-time lump sum payment of $1,650; a vacation cash out option of 40 hours in years 2 and 3 of the contract; and an increase to the City’s health contribution effective first full pay period following adoption.
Although salary increases have been restructured to address market conditions, the overall level of increase is consistent with the City’s Long-Range Financial Plan (L-RFP). Additional compensation adjustments have been negotiated with the Stockton Firefighters’ Local 456 Fire and Fire Management Units and the SPMA to remedy current recruitment and retention difficulties. All compensation increases have been included in an updated L-RFP as described below, and long-term sustainability remains viable.
The City received notification on May 15, 2020 that the Stockton Firefighters’ Local 456 Fire and Fire Management Unit members ratified the successor MOU. The successor MOU is attached in redlined format as Attachments A and B respectively. The City received notification on May 20, 2020 that SPMA members ratified the successor MOU. The successor MOU is attached in redlined format as Attachments C.
It is recommended that Council adopt by resolution the attached successor MOU’s with the Stockton Firefighters’ Local 456 Fire and Fire Management Units and SPMA effective July 1, 2019 through June 30, 2022. The proposed resolution authorizes the necessary FY 2019-20 budget amendment as outlined in Exhibit 4 of the Resolution.
DISCUSSION
Background
Employees received no COLA in FY 2013-2014 and FY 2014-15. In FY 2015-16, employees received a 2% COLA and an increase to the City’s health insurance premium contribution. The City Council identified retention and recruitment of employees as a high priority and took action to set aside funds to address market conditions through the adoption of the General Fund Reserve Policy on March 29, 2016, and approval of one-time funding toward retention and recruitment. The ability to front-load the COLA with the contracts effective July 1, 2016, was due to one-time funding that was available.
In 2016, the City entered into three (3) year contract terms with all 9 bargaining units and was able to provide market salary adjustment to address recruitment and retention. Additionally, a 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.
Present Situation
The City’s Long-Range Financial Plan (L-RFP) assumptions for employee compensation include 2% annual COLAs and 2% annual increases in the City’s health contribution. At present, the City has limited funding available for compensation adjustments that are outside of the City’s L-RFP. Prior to the start of labor negotiations, the City contracted with a compensation consultant to perform an updated market salary survey in 2018; based on these findings, staff recommends market salary adjustments to certain classifications. 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 to the Stockton Firefighters’ Local 456 Fire and Fire Management Units, and the SPMA under the successor MOU’s are summarized as follows:
1. Term. MOU contract term for three (3) years retroactive from - July 1, 2019 through June 30, 2022 (Fire Unit MOU, Section 19, Fire Management Unit MOU, Section 19, SPMA MOU, Section 19).
2. COLA and Market Adjustment. Cost of living increase adjustment of 4% (COLA) to base pay effective first full pay period following adoption, a 2% COLA in the first full pay period following July 1, 2021, year 3 of the contract; base pay salary adjustment for employees in all classifications of 1% effective first full pay period following adoption (Fire Unit MOU, Section 15.9 (a) and (b), Fire Management Unit MOU, Section 15.8 (a) and (b), SPMA MOU, Section 15.1 (a) and (b)).
3. One-time Lump Sum. A one-time lump sum payment of $1,650 to each employee who was employed in the bargaining unit as of July 1, 2019 and remains employed as of the first full pay period following adoption of this agreement by City Council. (Fire Unit MOU, Section 15.11, Fire Management Unit MOU, Section 15.10, SPMA MOU, Section 15.1 (c)).
4. City Health Contribution. 2% increase to City’s capped health insurance premium contribution effective upon the first full pay period following adoption of this agreement by City Council, and 2% each fiscal year thereafter with the last increase effective July 1, 2021 (Fire Unit MOU, Section 14.1 (c), Fire Management Unit MOU, Section 14.1 (c), SPMA MOU, Section 14.1 (c)).
5. Amend health insurance eligibility effective date. For new hires to the first day of the month following date of hire (Fire Unit MOU, Section 14.1 (b), Fire Management Unit MOU, Section 14.1 (b), SPMA MOU, Section 14.1 (b)).
6. Amend holiday benefit value. Employees assigned to shifts that observe City Holidays shall receive full pay for any one (1) holiday (holiday time off value no longer limited to 8 hours) (Fire Unit MOU, Section 12 (a), Fire Management Unit MOU, Section 12 (a), SPMA MOU, Section 12.1 (a)).
7. Vacation Sellback Option. Allow vacation cash payment option/sell-back during the last two fiscal years of the contract term, of up to 40 hours of vacation each year in FY 2020-21 and FY 2021-22 (Fire Unit MOU, Section 9.1 (f), Fire Management Unit MOU, Section 9.1 (e), SPMA MOU, Section 9.1 (d)).
8. Birthday Holiday. Addition of birthday holiday for all employees. While this is not a cost paid out by the City, loss of productivity can result from the additional time off. No longer limiting the value of the holiday time off to 8 hours will also increase paid time off for employees (Fire Unit MOU, Section 12 (a), Fire Management Unit MOU, Section 12 (a), SPMA MOU, Section 12.1 (a)).
9. Holiday Compensation. Clarifies that Cesar Chavez FLOATING holiday must be used by December 31 of each year and does not carry forward into the subsequent year. There is no cash value for any unused floating holiday hours. Employees have not earned and cannot use the floating holiday hours until the actual holiday occurs (March 31); Further clarifies additional compensation is for employees who are normally required to work on an approved holiday because they work in positions that require scheduled staffing without regard to holidays. (Fire Unit MOU, Section 12 (d), Fire Management Unit MOU, Section 12 (d), SPMA MOU, Section 12.1 (c)).
10. Update to Union Security. Dues and membership information requirement pursuant to Senate Bill 866 (Fire Unit MOU, Section 2.1, Fire Management Unit MOU, Section 2.1, SPMA MOU, Section 2.1).
11. Update to New Hire Employee Orientation and Information Requirement pursuant to Assembly Bill 119 (Fire Unit MOU, Section 2.5, Fire Management Unit MOU, Section 2.5, SPMA MOU, Section 2.5).
12. CalPERS Reportability. New section to clarify the City makes no representation as to whether any of the compensation or payments in the MOU are subject to CalPERS service credit or pensionable income (Fire Unit MOU, Section 13.17, Fire Management Unit MOU, Section 13.15, SPMA MOU, Section 13.8).
13. Elimination of obsolete language and other language cleanup changes.
MOU specific amendments are summarized as follows:
Stockton Firefighters’ Local 456 Fire and Fire Management Units:
14. Birthday Holiday wage increase. Effective July 1, 2021, 0.41% will be added to the suppression classifications on the salary schedule for the Birthday Holiday. (Fire Unit MOU, Section 12 (b), Fire Management Unit MOU, Section 12 (b).
15. FLSA Hours Worked. Industrial Illness or Injury Leave (4850) taken within the the work period when 4850 leave begins or ends shall also count as actual time worked. (Fire Unit MOU, Section 11.1 (e), Fire Management Unit MOU, Section 11.2 (e).
16. Lapse of Certification. Employees receiving an add pay under Section 13 of this MOU, whose certification lapses will not be eligible for the add pay and will be subject to reassignment. Reinstatement of the add pay will commence upon recertification. (Fire Unit MOU, Section 13.18, Fire Management Unit MOU, Section 13.16).
17. Long Term Disability. This is clean-up language to eliminate existing language that outlines the City shall reduce the base pay of employees in the unit by seventeen dollars ($17.00) per month, to the City shall provide to each bargaining unit member seventeen dollars ($17.00) per month (Fire Unit MOU, Section 14.3, Fire Management Unit MOU, Section 14.2).
SPMA Unit:
18. Market Adjustment. Base pay salary adjustment for employees in the Police Captain and Police Lieutenant classifications of 0.5% effective July 1, 2021 (SPMA MOU, Section 15.1 (a) and (b)).
19. Workweek. Clean-up language to clarify the normal work week for Police Unit employees is defined as either the traditional work week consisting of 8 hours per day, 5 days per week; the alternate 9/80 work schedule consisting of 9 hour workdays Monday through Thursday, 8 hour workday on Friday with every other Friday off; or the 4/10 schedule consisting of 10 hour work days. (SPMA Unit MOU, Section 10.1).
20. Employer-paid member contribution (EPMC) CalPERS Contract. As soon as practicable, the City will modify its contract with CalPERS to provide for a 12.0% additional Member Contribution over and above Normal Contribution for classic members and a 3.0% additional Member Contribution over and above Normal Contribution for PEPRA members (SPMA Unit MOU, Section 13.1 (c)).
FINANCIAL SUMMARY
BASE PAY INCREASE
The total three-year cost for the COLA and Market Adjustment increases to base pay for the 201 employees in the Stockton Firefighters’ Local 456 Fire and Fire Management, and SPMA is $5.1 million of which $4.5 million is a General Fund cost. The tables below show the base wage increase cost for the 3 years. Funding for an annual 2% COLA was planned in the L-RFP. The L-RFP planned second 2% COLA is being implemented one half of a month early. The additional cost is offset by the delay in implementing the planned July 1, 2019 COLA and does not negatively effect the L-RFP. The market adjustments were not included in previous L-RFP projections.
HEALTH CONTRIBUTION INCREASES
Amending the health insurance effective date for new hires may increase health claim costs due to earlier coverage. However, this change is anticipated to assist with City recruitment efforts as it will minimize the length of time new employees might be uninsured.
The cost for the health contribution increases effective upon the first full pay period following adoption of this agreement by City Council, and each fiscal year through FY2021-22 is $331,832 of which $286,860 is a General Fund cost. The ongoing cost will be absorbed in the operating funds, including the General Fund.
ONE-TIME LUMP SUM PAYMENT
The cost to pay the Stockton Firefighters’ Local 456 Fire and Fire Management, and SPMA unit employees a one-time lump sum payment of $1,650 is approximately $326,741, of which $284,283 is a General Fund cost.
VACATION SELL-BACK
The cost of continuing the vacation sell-back option for the next two fiscal years is $269,427 of which $241,214 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.
BIRTHDAY HOLIDAY 0.41% FIRE & FIRE MANAGEMENT
The addition of the birthday holiday for administrative classifications in the Stockton Firefighters’ Local 456 Fire and Fire Management is effective upon the first full pay period following adoption of this agreement by City Council. While this is not a cost paid out by the City, loss of productivity can result from the additional time off. No longer limiting the value of the holiday time off to 8 hours will also increase time off for employees. The Birthday Holiday wage increase of 0.41% will be added to the suppression classifications on the salary schedule effective July 1, 2021. The Birthday Holiday is valued at $170,544 of which $145,530 is a General Fund cost.
BIRTHDAY HOLIDAY
The addition of the birthday holiday for all employees is valued at $66,784, all of which is a General Fund cost. While this is not a cost paid out by the City, loss of productivity can result from the additional time off. No longer limiting the value of the holiday time off to 8 hours will also increase time off for employees.
HOLIDAY COMPENSATION FOR NON-PATROL
Cost for additional SPMA Unit members assigned to shifts that observe City Holidays shall receive full pay for any one (1) holiday (holiday time off value no longer limited to 8 hours). The additional time off is valued at $54,405 all of which is a General Fund cost.
HOLIDAY HOURS EQUAL TO SHIFT
The cost to amend holiday benefit value to employees assigned to shifts that observe City Holidays shall receive full pay for any one (1) holiday (holiday time off value no longer limited to 8 hours). The cost of amending the holiday value for all employees is valued at $57,658 of which $49,314 is a General Fund cost.
The City is unable to front-load the COLA as it did in 2016 because sufficient one-time funding is not available. Most of these recommended compensation changes are ongoing costs to the City and should be sustainable in the long-term.
The total three-year cost of the successor Memorandum of Understanding (MOU) with the Stockton Firefighters’ Local 456 Fire and Fire Management, and SPMA is $6.4 million. The FY 2019-20 Annual Budget, as adopted on June 18, 2019, did not include appropriation for increases to employee’s compensation. With an anticipated effective date of June 16, 2020, the total FY 2019-20 cost of compensation changes for the Stockton Firefighters’ Local 456 Fire and Fire Management, and SPMA Units is $405,359, approximately 85% is within the General Fund as shown in Exhibit 4. The budget appropriations needed to implement the Stockton Firefighters’ Local 456 Fire and Fire Management, and SPMA MOU’s will come from available fund balance in the General Fund, Development Services, and Measure W funds. The FY 2020-21 Proposed Budget released on May 15, 2020 did not include the cost of increases in the Stockton Firefighters’ Local 456 Fire and Fire Management, and SPMA employee compensation totaling approximately $2.4 million. The FY 2020-21 Budget will be updated to reflect the cost of these MOU changes prior to adoption.
Attachment A - Stockton Firefighters’ Local 456 Fire Unit MOU - Redline
Attachment B - Stockton Firefighters’ Local 456 Fire Management Unit MOU - Redline
Attachment C - Stockton Police Management Association Unit MOU - Redline