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MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE STOCKTON POLICE OFFICERS’ ASSOCIATION AND AMENDMENT TO THE PREVIOUSLY APPROVED MEMORANDA OF UNDERSTANDING 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 a resolution:
1. Authorizing the approval of the Stockton Police Officers’ Association (SPOA) Memorandum of Understanding (MOU) effective July 1, 2022 through June 30, 2025.
2. Authorizing approval to amend changes to the approved Memoranda of Understanding between the City of Stockton and the Stockton Police Management Association (SPMA), Stockton Firefighters’ Local 456 Fire Unit, and Stockton Firefighters’ Local 456 Fire Management Unit. The changes consist of increasing the market adjustments effective July 1, 2023, and July 1, 2024, by 1% each year for members in these bargaining units.
3. Authorizing the City Manager and the Employee Relations Officer to take all appropriate and necessary actions to carry out the purpose and intent of the resolution, including implementation and funding of the successor SPOA MOU and amendments to the SPMA, Fire, and Fire Management Unit MOUs.
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Summary
SPOA
In March 2022, representatives of the City began meeting with the SPOA to discuss a successor MOU. The aforementioned MOU expired on June 30, 2022. On September 12, 2022, the City received notification that the SPOA accepted the City’s proposal on a successor MOU.
The successor MOU presented herein for the SPOA includes a contract term of three (3) years; a 9.8% increase to base pay (comprised of a 2% COLA and a 7.8% Market Adjustment) effective July 1, 2022, a 4% increase to base pay (comprised of a 2% COLA and a 2% Market Adjustment) effective July 1, 2023 plus a lump sum payment of $5,000 payable to all represented employees in paid status on July 1, 2023, a 4% increase to base pay (comprised of a 2% COLA and a 2% Market Adjustment) effective July 1, 2024; and an increase to the City’s health contribution effective July 1, 2022 following adoption; and an update to the members’ overtime calculation to include vacation leave during a work period as “time worked.” The successor MOU is attached in redlined format as Attachment A.
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 Unit 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.
It is recommended that Council adopt by resolution the attached successor MOU with the SPOA effective July 1, 2022 through June 30, 2025. The proposed resolution authorizes the necessary FY 2022-23 budget amendment as outlined in Exhibit 5 of the Resolution.
SPMA, FIRE, AND FIRE MANAGEMENT UNITS
On July 12, 2022, the City Council approved by resolution 2022-07-12-1206 the Memoranda of Understanding between the City of Stockton and the Stockton Police Management Association (SPMA), Stockton Firefighters’ Local 456 Fire Unit, and Stockton Firefighters’ Local 456 Fire Management Unit. In order to further address recruitment and retention difficulties, it is recommended that Council approve an increase to the market adjustments effective July 1, 2023, and July 1, 2024, by 1% for employees in the bargaining unit. The amendments to the MOUs are attached in redlined format as Attachment B, Attachment C, and Attachment D.
DISCUSSION
Background
SPOA
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 3 year contract terms with all 9 bargaining units and was able to provide market salary adjustments 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.
In 2020, the City entered into a three (3) year contract term with the SPOA wherein the bargaining unit members received a 4% COLA to base pay following adoption and a 2% COLA in the first full pay period following July 1, 2021. SPOA members in the classification of Police Sergeant and Police Officer received a base pay salary adjustment of 1% following adoption and an additional 0.5% in the first full pay period following July 1, 2021. Additionally, the SPOA received 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, an increase to the City’s health contribution effective the first full pay period following adoption, the addition of a Birthday Holiday, holiday compensation for non-patrol assignments, court appearance pay while in off-duty status, and a 10% flight pay differential.
SPMA, FIRE, AND FIRE MANAGEMENT UNITS
On July 12, 2022, the City entered into a three (3) year contract term with SPMA, Fire, and Fire Management. On July 26, 2022, the City Council approved by resolution 2022-07-26-1222 amendments to the Memoranda of Understanding wherein salary increases for the bargaining units were made effective July 1, 2022, rather than the previously approved date of July 16, 2022. Bargaining members received the following:
SPMA Unit
1. COLA and Market Adjustment. 10% increase to base pay (comprised of a 2% COLA and an 8% Market Adjustment) effective July 1, 2022, a 3% increase to base pay (comprised of a 2% COLA and a 1% Market Adjustment) effective July 1, 2023, a 3% increase to base pay (comprised of a 2% COLA and a 1% Market Adjustment) effective July 1, 2024 (SPMA MOU, Section 15.1(a)).
Fire Unit
1. COLA and Market Adjustment. 9.65% increase to base pay (comprised of a 2% COLA and a 7.65% Market Adjustment) effective July 1, 2022, a 3% increase to base pay (comprised of a 2% COLA and a 1% Market Adjustment) effective July 1, 2023, a 3% increase to base pay (comprised of a 2% COLA and a 1% Market Adjustment) effective July 1, 2024 (Fire Unit MOU, Section 15.9(a)).
Fire Management Unit
1. COLA and Market Adjustment. 10% increase to base pay (comprised of a 2% COLA and an 8% Market Adjustment) effective July 1, 2022, a 3% increase to base pay (comprised of a 2% COLA and a 1% Market Adjustment) effective July 1, 2023, a 3% increase to base pay (comprised of a 2% COLA and a 1% Market Adjustment) effective July 1, 2024 (Fire Management MOU, Section 15.8 (a)).
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. 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 classifications in this unit. 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 SPOA are summarized as follows:
1. MOU contract term for three (3) years effective July 1, 2022 through June 30, 2025 (SPOA MOU Section 20).
2. COLA and Market Adjustment. 9.8% increase to base pay (comprised of a 2% COLA and a 7.8% Market Adjustment) effective July 1, 2022, a 4% increase to base pay (comprised of a 2% COLA and a 2% Market Adjustment) effective July 1, 2023, and a 4% increase to base pay (comprised of a 2% COLA and a 2% Market Adjustment) effective July 1, 2024 (SPOA MOU, Section 15.1(a)). Any retroactive portion of this salary increase will be paid to employees as soon as administratively possible following City Council adoption of this agreement.
3. Lump Sum Payment. Employees in the bargaining unit as of July 1, 2023, will receive a $5,000 lump sum non-pensionable bonus to be paid in July 2023 (SPOA MOU Section 15.1 (b)).
4. City Health Contribution. 2% increase to City’s health insurance premium contribution effective retroactively to July 1, 2022 and 2% each fiscal year thereafter with the last increase effective July 1, 2024 (SPOA MOU Section 14.1 (b)).
5. Overtime Calculation. Provides for the inclusion of vacation leave during a work period as “time worked” for purposes of calculating overtime (SPOA MOU Section 11.2(c)).
6. Vacation Tiers. Employees shall accrue vacation based on their P.O.S.T. certification date. This change shall be implemented as soon as administratively possible but no later than December 31, 2022 (SPOA MOU Section 9.9 (a)).
7. Elimination of salary survey language agreeing for the parties to discuss salary survey jurisdictions and survey elements. The provision has a sunset date of October 1, 2021 (SPOA MOU Section 15.1 (d)).
8. Lapse of Certification. New section that makes employees ineligible to receive an add pay for a certification they allow to lapse. Reinstatement of the add pay will commence upon recertification (SPOA MOU Section 13.20).
9. Bereavement Leave. Redefining who qualifies as family to correspond with the sick leave usage for family definition (SPOA MOU Section 9.4).
10. Amend the birthday holiday language to clarify that employees may take the holiday beginning on the day of the employees’ birthday (SPOA MOU Section 12.1).
11. Update to the P.O.S.T. incentive pay provision to clarify language (SPOA MOU Section 13.7).
12. Update to state language regarding the mutual non-discrimination commitment (SPOA MOU Section 3.1).
13. Elimination of obsolete language, update to pronouns, and other language cleanup changes.
The relevant amendments under the MOUs for SPMA, Fire, and Fire Management are summarized as follows:
14. COLA and Market Adjustment. 4% increase to base pay (comprised of a 2% COLA and a 2% Market Adjustment) effective July 1, 2023, and a 4% increase to base pay (comprised of a 2% COLA and a 2% Market Adjustment) effective July 1, 2024 (SPMA MOU, Section 15.1(a) / Fire Unit MOU, Section 15.9(a) / Fire Management MOU, Section 15.8 (a)).
FINANCIAL SUMMARY
BASE PAY INCREASE
The total three-year cost for the COLA and Market Adjustment increases to base pay for the 460 employees in SPOA is $38,812,111, of which $36,568,326 is a General Fund cost. The table below shows the base wage increase cost for the 3 years. Funding for an annual 2% COLA for the term of the contract was planned in the L-RFP.
HEALTH CONTRIBUTION INCREASES
The cost for the health contribution increases effective retroactively to July 1, 2022, and each fiscal year through FY2024-25 is $866,537 of which $815,306 is a General Fund cost. The ongoing cost will be absorbed in the operating funds, including the General Fund.
LUMP SUM PAYMENT
The cost to pay SPOA employees a lump sum payment of $5,000 is $2,398,622 of which $2,256,960 is a General Fund cost.
SPOA OVERTIME CALCULATION
The cost of counting vacation leave during a work period as “time worked” for purposes of calculating overtime is $545,647 of which $514,102 is a General Fund cost.
SPMA, FIRE, AND FIRE MANAGEMENT UNITS
The cost of increasing the market adjustments for the three other safety units effective July 1, 2023, and July 1, 2024, by 1% is $1,691,615 of which $1,102,959 is a General Fund cost.
All of these recommended compensation changes except the one-time lump sum payment are ongoing costs to the City and should be sustainable in the long-term. The total three-year cost of the SPOA successor Memoranda of Understanding (MOU) is $42,622,917 based on a retroactive July 1, 2022 implementation. The FY 2022-23 Annual Budget adopted by Council on June 21, 2022 must be amended to accommodate the increases in employee compensation. With an effective date of July 1, 2022, the total FY 2022-23 cost of compensation changes are $9,176,892 with 94.6% attributable to the General Fund. The recommended budget amendment (Exhibit 5) needed to implement the SPOA MOU will increase the General Fund budget by $8.7 million from the fund balance. Future year salary and benefit increases will be incorporated into the annual budget development process.
As disclosed in the July 12, 2022 staff report, some of the assumptions in the City’s Long-Range Financial Plan (L-RFP) need to be adjusted to make this affordable in the long term. These changes included using FY 2021-22 year-end savings to fund the market adjustments, reducing future spending growth assumptions, and assuming more savings from vacancies. In addition to the items implemented with the July 12, 2022 action, updated revenue estimates based on FY 2021-22 year-end results were incorporated into the L-RFP to make future year market adjustments affordable.
Attachment A - SPOA MOU - Redline
Attachment B - SPMA MOU - Redline
Attachment C - Fire Unit MOU - Redline
Attachment D - Fire Management Unit MOU - Redline