REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to execute the 2025-2029 Memorandum of Understanding Between the City of Santa Clara and the Engineers of the City of Santa Clara (Unit 4), that incorporates the terms of the Parties’ Mediation Joint Recommendation on terms for a successor Memorandum of Understanding, and Adoption of a Resolution to Update the Classified Salary Plan for Classifications represented by Unit 4.
Report
BACKGROUND
The Engineers of the City of Santa Clara (hereafter, “Unit 4”) Memorandum of Understanding (hereafter, “MOU”) expired on June 30, 2025. The City and Unit 4 began negotiations on a successor MOU in May 2025 and met approximately nineteen (19) times, including a pre-impasse mediation session. As the parties were unable to reach agreement during negotiations and reached impasse, the City and Unit 4 engaged in mediation on or about December 11, 2025, where the City and Unit 4 reached a Mediation Joint Recommendation on terms for a successor MOU. On or about December 15, 2025, Unit 4 notified the City that the Mediation Joint Recommendation was ratified by Unit 4 membership.
Updated Salary Plan
Section 9 of the Personnel and Salary Resolution requires City Council approval of compensation plans for both classified and unclassified positions. California Code Regulations Section 570.5 requires the adoption of updated publicly available salary schedules by the governing body. The attached Resolution approves the updated salary plan for all classifications represented by Unit 4 consistent with the terms of the subject MOU.
DISCUSSION
The recommended action authorizes the City Manager to execute a successor Memorandum of Understanding with a term of July 1, 2025, through and including June 30, 2029, that incorporates the terms of the Mediation Joint Recommendation on a successor MOU.
The following is a summary of the notable provisions of the Mediation Joint Recommendation, and a complete copy of the Mediation Joint Recommendation is attached:
Term:
July 1, 2025 - June 30, 2029
Wages:
Effective December 21, 2025 (the first pay period of calendar year 2026), all salary ranges for employees holding positions in classifications assigned to Unit 4 shall be increased by approximately 4.0%.
Effective the first pay period after July 1, 2026, all salary ranges for employees holding positions in the Senior Electric Utility Engineer shall be increased by approximately 4.5%, and all salary ranges for the remaining classifications assigned to Unit 4 shall be increased by approximately 4.0%.
Effective the first pay period after July 1, 2027, all salary ranges for employees holding positions in classifications assigned to Unit 4 shall be increased by approximately 3.0%.
Effective the first pay period after July 1, 2028, all salary ranges for employees holding positions in classifications assigned to Unit 4 shall be increased by approximately 3.0%.
Special Salary Adjustment:
Effective December 21, 2025 (the first pay period of calendar year 2026), the salary ranges for the Senior Civil Engineer (Job Code 322) classification shall be increased by approximately 4.0% which, in addition to the salary range increase described above, results in an approximately 8.0% increase in the salary range for the Senior Civil Engineer (Job Code 322) classification.
One-Time Non-Pensionable Discretionary Cash Payment:
In recognition of, and to help secure the employees' speedy ratification of this MOU, the City has exercised its discretion to provide a one-time discretionary cash payment of $5,000 for regular employees (pro-rated for part-time employees) in the bargaining unit following Council approval of this MOU. The Parties intend and understand that this lump sum payment is non-pensionable and will not be reported to CalPERS. An employee must be employed in a classification assigned to Unit 4 at the time the one-time discretionary cash payment is made to receive the payment.
Deferred Compensation:
Effective December 21, 2025 (the first pay period of calendar year 2026), the City will contribute $330/month per employee for employees in classifications assigned to Unit 4. It should be noted that the City currently contributes $330/month per employee for employees in classifications assigned to Unit 4 in the City’s electric utility department, Silicon Valley Power.
Personal Safety Equipment:
Effective December 21, 2025 (the first pay period of calendar year 2026), employees shall receive an annual flat dollar lump sum of $400/year (prorated if hired after July of the calendar year) in lieu of the $200/year reimbursement towards the purchase of protective personal safety equipment.
Non-Management Leave:
Effective December 21, 2025 (the first pay period of calendar year 2026), each full-time employee in the Senior Electric Utility Engineer classifications shall be entitled to a total of twenty-four (24) hours of non-management leave per calendar year. Non -management leave does not accrue or carry-over to subsequent years and is not subject to pay out. Employees hired on or after July 1st shall be entitled to only twelve (12) hours of non-management leave in the first calendar year in which they were hired. Eligible employees are not eligible for more than twenty-four (24) hours of non-management leave per calendar year.
Compensatory Time Off:
Effective the first pay period of calendar year 2027, employees in classifications assigned to Unit 4 shall no longer be able to cash out any earned but unused Compensatory Time Off.
Vacation:
Effective the first pay period of calendar year 2027, the Maximum Vacation Accrual limit shall be increased to 480 hours. Employees will no longer be able to accrue vacation hours above the Maximum Vacation Accrual limit.
Additionally, lateral hires (employees who have served as an Engineer in another public agency), may receive service credit for vacation accrual purposes for up to 10 years at the discretion of the City Manager.
Long-Term Disability Insurance (LTD):
Effective January 1, 2026, the City will pay the cost of a long-term disability insurance program (LTD) for employees represented by Unit 4 same as what is provided for the Unclassified Miscellaneous Management (Unit 9).
Life Insurance:
Effective January 1, 2026, the City will pay the required premium for life insurance for employees represented by Unit 4 equal to the employee’s annual base pay, up to a maximum of $250,000 in life insurance coverage.
Side Letters:
The parties reached a Side Letter Agreement to continue discussions on the reclassification process, recruitment process, and performance appraisals.
Updated Salary Plan:
The City of Santa Clara contracts with the California Public Employees’ Retirement System (CalPERS) to provide retirement benefits for employees in both classified and unclassified positions. When the City makes modifications to the salary schedules for its classified or unclassified positions, the City Council must approve and adopt the publicly available salary schedules to comply with California Code of Regulations (CCR) section 570.5. The Classified Salary Plan has been modified to reflect the 4.0% salary range increase for classifications assigned to Unit 4, in addition to the 4% Special Salary Adjustment for the Senior Civil Engineer (Job Code 322) classification.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The City regularly budgets the total compensation cost for its current employees and integrates known and projected cost increases from MOUs in the City’s annual budget. The ten-year forecast also incorporates the projected labor costs. The costs of this MOU are within budget authority approved by the City Council through the negotiation process.
In FY 2025/26, the costs associated with the negotiated agreement are approximately $0.6 million, of which $0.17 million are in the General Fund. It is anticipated that this amount will be covered within the existing departmental budgets in FY 2025/26. Expenditures will be monitored throughout the year, and budget actions will be brought forward to the City Council if necessary. In future years, the costs for this contract will be factored into the annual budgets.
The chart below reflects the estimated changes in costs in the General Fund as well as all funds over the term of the MOU.
Estimated Costs
|
Item |
Description |
Estimated GF Cost |
Estimated Other Funds Cost |
Total Costs |
|
Ongoing Costs |
|
Wages (January 2026) - Senior Civil Engineer |
4% wage increase + 4% salary adjustment for a total of 8% |
$92K |
$100K |
$192K |
|
Wages (January 2026) - All Others |
4% wage increase |
$66K |
$333K |
$399K |
|
Wages (July 2026) - Senior Electric Utility Engineers |
4.5% wage increase |
$0 |
$189K |
$189K |
|
Wages (July 2026) - All Others |
4% |
$118K |
$344K |
$462K |
|
Wages (July 2027) |
3.0% |
$92K |
$400K |
$492K |
|
Wages (July 2028) |
3.0% |
$95K |
$412K |
$507K |
|
Deferred Compensation (January 2026) |
$330/month for non-SVP classifications (from $166/month) |
$25K |
$24K |
$49K |
|
Personal Safety Equipment (January 2026) |
$400/year stipend (from $200/year reimbursement) |
$2K |
$8K |
$10K |
|
LTD (January 2026) - First year cost |
LTD same as Unit 9 |
$4K |
$12K |
$16K |
|
Life Insurance (January 2026) - First year cost |
Up to 1x annual base salary up to $250K maximum |
$19K |
$57K |
$76K |
|
|
Total |
$513K |
$1,879K |
$2,392K |
|
One-Time Costs |
|
One-time Non-Pensionable Discretionary Cash Payment (January 2026) |
$5,000 (one-time) |
$65K |
$190K |
$255K |
|
|
Total |
$65K |
$190K |
$255K |
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>, or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to execute the 2025-2029 Memorandum of Understanding Between the City of Santa Clara and the Engineers of the City of Santa Clara (Unit 4), that incorporates the terms of the Parties’ Mediation Joint Recommendation on terms for a successor Memorandum of Understanding, and Adoption of a Resolution to Update the Classified Salary Plan for Classifications represented by Unit 4; and
2. Adoption of a Resolution to approve the revised salary plan for various classified positions to satisfy the requirements of California Code of Regulations Section 570.5.
Staff
Reviewed by: Marco Mercado, Acting Director of Human Resources
Approved by: Jōvan D. Grogan, City Manager
ATTACHMENTS
1. City-Unit 4 Mediation Joint Recommendation (12-11-2025)
2. Classified Salary Plan (Effective 2025-12-21) and Approved 2025-12-17
3. Resolution Approving Update Classified Salary Plan Eff 2025-12-21