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MEMORANDA OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE OPERATIONS AND MAINTENANCE UNIT AND TRADES AND MAINTENANCE UNIT
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RECOMMENDATION
It is recommended that the City Council adopt by resolution the attached successor Memoranda of Understanding (MOUs) effective July 1, 2023, through June 30, 2026, for the following units:
1. Operations and Maintenance (O&M);
2. Trades and Maintenance (T&M); and
3. Amend the Fiscal Year 2023-24 Annual Budget by increasing the expenditure appropriation by $1,680,412.
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 these successor MOUs.
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Summary
In March 2023, representatives of the City began meeting with the labor representatives to discuss successor MOUs. The prior MOUs expired on June 30, 2023. On March 20, 2024, the City reached a tentative agreement on successor MOUs with O&M and T&M. The O&M and T&M MOUs in redline format are attached as Attachment A and B, respectively.
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 adoption of the General Fund Reserve policy.
In 2019, the City entered into a four (4) year contract term with O&M 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. Also in 2019, the City entered into a four (4) year contract term with T&M wherein the bargaining unit members received a two percent (2%) 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 recommended 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 market adjustments offered by the City would have impacted 60 O&M positions out of 155 budgeted O&M positions and 38 T&M positions out of 78 budgeted T&M positions. However, during bargaining the O&M and T&M units did not agree to market adjustments. The units instead chose to receive higher COLAs for all classifications and no market adjustments for specific classifications.
The relevant amendments under the successor MOUs for the O&M and T&M units are summarized as follows:
1. Contract term for three (3) years effective July 1, 2023, through June 30, 2026.
2. Salary Adjustments. Effective May 1, 2024, eight percent (8%) COLA increase; effective July 1, 2024, zero percent (0%) COLA increase; and effective July 1, 2025, three percent (3%) COLA increase. (O&M Section 15.1), (T&M Section 15.1).
3. One-Time Payment. Effective May 1, 2024, the City will make a one-time payment in the amount of five thousand ($5,000.00) dollars, subject to applicable withholdings, to O&M and T&M bargaining unit members employed by the City upon adoption of this agreement by City Council. (O&M Section 15.15), (T&M Section 15.15).
4. Lump Sum Payment. Employees in the O&M and T&M bargaining units as of July 1, 2024, will receive a two thousand ($2,000.00) lump sum non-pensionable bonus to be paid in July 2024. Employees in the bargaining units as of July 1, 2025, will receive a two thousand ($2,000.00) lump sum non-pensionable bonus to be paid in July 2025. (O&M Section 15.1 (f)), (T&M Section 15.1 (d)).
5. Standby Duty Compensation. Effective May 1, 2024, employees assigned to standby duty shall be paid four dollars ($4.00) per hour while assigned to be on standby. (O&M Section 11.3 (b)(1)), (T&M Section 11.3 (b)(1)).
6. Annual Leave as Hours Worked for FLSA purposes. Effective September 1, 2024, and continuing for a period of twelve (12) months, vacation leave taken within the work period shall also count as “time worked.” This pilot program will sunset at the end of twelve (12) months. (O&M Section 11.2 (d)), (T&M Section 11.2 (a)).
7. Safety Protective Footwear Reimbursement. Effective July 1, 2024, an increase to the footwear reimbursement from $200.00 to $250.00. (O&M Section 13.4 (b)), (T&M Section 13.3 (b)).
8. City Health Contributions. Two percent (2%) increase to City’s health insurance premium contribution effective May 1, 2024, and two percent (2%) each fiscal year thereafter, with the last increase effective July 1, 2025. (O&M Section 14.1 (c)), (T&M Section 14.1(c)).
9. Health & Welfare Benefits. Adding clarifying language that members are eligible for Anthem Plans A, B, C, and D and Kaiser Plans A, B, and A+. (O&M Section 14.1 (a)), (T&M Section 14.1 (a)).
10. Salary Survey for Future Negotiations. Upon request of the O&M and T&M, but no later than September 1, 2024, the parties agree to discuss (1) salary survey jurisdictions and (2) salary survey elements to be utilized by both parties during the next round of negotiations. If parties do not reach a consensus, the parties are able to perform their own surveys during the next round of negotiations. (O&M 15.1 (e)), (T&M Section 15.16).
11. New Hire Orientation and Information Requirements. In accordance with Assembly Bill (AB) 119, the City shall provide the O&M and T&M units with all bargaining unit member information including name, job title, department, work location, phone number, home address, and email address every thirty (30) days. (O&M Section 2.2 (a)), (T&M Section 2.2 (a)).
12. O&M and T&M time banks. Upon request of the O&M and T&M once per calendar year, each employee covered by the MOU must contribute up to one (1) hour of vacation time to maintain a bank of time to be used by O&M and T&M officers, directors, and members for O&M and T&M business. The City will provide the Union current time bank balance in February and August of each calendar year. (O&M Section 2.5), (T&M Section 2.5).
13. Non-Discrimination. Updated language regarding the mutual non-discrimination commitment. (O&M Section 3.1), (T&M Section 3.1).
14. Retention/Rejection of Probationer. Clarifying language of the provision. 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. (O&M Section 4.3), (T&M Section 4.3).
15. Birthday Holiday. Clarifying employees may take their Birthday Holiday off within sixty (60) calendar days beginning on the day of their Birthday. (O&M Section 12.2), (T&M Section 12.2).
16. Protected Nature of Family Sick Leave. Updating definition to include “designated person” per the law update. (O&M Section 9.2 (c)), (T&M Section 9.2 (c)).
17. Bereavement Leave. Updating language regarding number of Bereavement leave days per the law update. Also included that if the deceased person is the employees “designated person” for purposes of family sick leave, the request to use sick leave or annual leave shall not be unreasonably denied. (O&M Section 9.3 (a)), (T&M Section 9.3 (a)).
18. Grievance Procedures. Clarifying the provision to include that “day” shall mean days in which the Human Resources office is open for business. Changing the “calendar” days to working days for the purpose of filing deadlines and response deadlines for the Department and Human Resources. (O&M Section 8), (T&M Section 8).
19. Vacation Cash Payment Option (Sellback). Eliminating provision since it is sunset language. The Union elected to not re-negotiate this option. (O&M Section 9.1 (g)), (T&M Section 9.1 (f)).
20. Elimination of obsolete language, update to pronouns, and other language cleanup changes.
The relevant amendments under the successor O&M are summarized as follows:
1. Certification, Certification Training, and Special Certifications. Increases to the one-time add pays for Water, Wastewater, Water Distribution, and California Wastewater Environment Association (CWEA). Also, increasing crane operator and backflow add pay amounts up to a maximum of eight (8) crane operators. (O&M Section 13.10).
2. Potential Compaction between classifications. Bryce Consulting made specific recommendations for internal relationships between classifications in the O&M Unit and employees in the same job family. In the event these internal relationships change, the parties will consider how to address compaction between those classifications. (O&M Section 15.1 (d)).
3. Compensatory Time. For hours worked in excess of forty (40) hours in a seven (7) day work period as defined in section 11.2 (a), Compensatory Time may be earned at the rate of time and one-half (1-1/2). No more than one hundred (100) hours may be carried on the books at any time. (O&M Section 11.5 (b)).
4. GPS Policy, Rest Periods, New Standby List. The parties agree to hold Meet and Confer meetings to discuss the Global Positioning System (GPS) Policy, Rest Periods, and a new Standby List proposed by the O&M unit during negotiations. The parties will hold separate meetings and must mutually agree before any changes may be implemented. (O&M Section 21).
5. Attendance at Meetings by Employees and Negotiations. Increasing the number of allowed bargaining unit members to be excused for meeting purposes. The number of employees excused for such purposes shall not exceed five (5). For MOU negotiation meetings, the number of employees excused for such purposes shall not exceed six (6). (O&M Section 2.5).
6. Exempt Status of Classifications. Eliminating 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. (O&M Section 11.2 (d)).
7. Salary Step After Promotion or Demotion. Clarifying 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 salary scale of the higher class which is at least five percent (5%) above the employee's current base salary. (O&M Section 15.7 (a)).
8. Special Certification pay. Eliminating provision that no longer is applicable, only removing language as clean up. (O&M Section 15.14).
9. Municipal Utilities Work Appearance Policy. Making edits to the Municipal Utilities Department Work Appearance of Municipal Utilities Department Employees policy.
The relevant amendments under the successor T&M are summarized as follows:
1. Meal Allowance. Increasing the meal allowance to fifteen dollars ($15.00) for an employee who is held over and works a minimum of four (4) hours. Employees called back to work or called back from a day off with less than two (2) hours’ notice shall qualify for the fifteen-dollar ($15.00) meal allowance when they work a minimum of four (4) hours. (T&M Section 11.6)
2. Tool Allowance. Effective July 1, 2024, an increase to the annual tool replacement allowance for Mechanic employees assigned to the Central Garage who are required to personally supply their own set of mechanic hand tools, as required and approved by the Fleet Manager, from $400.00 to $800.00. (T&M Section 13.4).
3. GPS Devices in City Vehicles. Eliminating the provision since the City already met and conferred on the GPS policy for the Public Works Department and therefore language is no longer applicable. (T&M Section 21).
FINANCIAL SUMMARY
COLA. The bargaining units elected for a higher COLA in the first year of the contract and did not agree to any market adjustments for specific classifications. The value of market adjustments combined with the delay in implementation enabled the City to fund an 8% pay increase effective May 1, 2024, rather than a 4% increase on July 1, 2023, and a 3% increase plus market adjustments on July 1, 2024. Adjusting the timing of salary increases has a minor impact in the short term and no measurable long-term financial implications.
The total three-year cost for the COLA increases to base pay for the 233 employees in O&M and T&M is $5.1 million, of which $828,000 is a General Fund cost. The tables below show the costs for the 3-year term by bargaining unit based on a May 1, 2024 implementation.
Lump Sum in Lieu of Retro. The cost to pay O&M and T&M employees one lump sum in lieu of retro of $5,000 is $1.3 million, of which $236,000 is a General Fund cost.
Lump Sum. The cost to pay O&M and T&M employees two lump sum payments of $2,000 each is $1.0 million, of which $189,000 is a General Fund cost.
Health Insurance. The cost for the health contribution increases is $348,000, of which $58,000 is a General Fund cost.
Certification Pay, Allowances and Safety Protective Footwear Reimbursement. The cost to increase certification-related pays and footwear reimbursements for the O&M unit is $238,000 over three years with no impact on the General Fund. The cost of increasing meal, footwear, and tool allowances for the T&M unit is $21,000 over three years, of which $14,500 is a General Fund cost.
Annual Leave Counts as Time Worked. The cost to implement the Annual Leave Couts as Time worked Pilot program is $62,000 for one year, of which $6,000 is a General Fund cost.
Stand By Pay Increase. The cost to increase Standby Pay by $1 per hour (from $3 to $4) is $138,000 over three years, of which $12,500 is a General Fund cost.
Total by Bargaining Unit
The total three-year cost of the successor Memoranda of Understanding (MOU) for the two units is $8,223,394 based on a May 1, 2024 implementation date. All of these recommended compensation changes except the lump sum payments are ongoing costs to the City and should be sustainable in the long-term.
The FY 2023-24 Annual Budget adopted by Council on June 20, 2023, must be amended to accommodate the increases in employee compensation. As detailed in Exhibit 3 to the Resolution, the total FY 2023-24 cost of compensation changes is $1,680,412, with 10% attributable to the General Fund. The recommended budget amendment needed to implement the two successor MOUs will increase the General Fund budget by $168,326 from the fund balance. The O&M unit is fully funded by the City’s utility funds with 45% of the $1,680,412 in the Wastewater Utility Fund (610), 20% in the Water Utility Fund (600), and 4% in the Stormwater Utility Fund (620). Other significant funding sources include Gas Tax and the Fleet Internal Service Fund at 12% and 9% of the total cost, respectively. The budget appropriations needed to implement the O&M and T&M MOUs will come from available fund balances in the various City funds and reimbursement from other agencies. Future year salary and benefit increases will be incorporated into the annual budget development process.
Attachment A - O&M MOU - Redline
Attachment B - T&M MOU - Redline