REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to execute the 2024-2027 Memorandum of Understanding Between the City of Santa Clara and the Santa Clara Employees’ Association (hereafter, “Unit 578”), which incorporates the terms of the Tentative Agreement, and Adoption of a Resolution to Update the Classified Salary Plan for Classifications represented by Unit 578.
Report
COUNCIL PILLAR
Enhance Community Engagement and Transparency
BACKGROUND
The Santa Clara Employees’ Association (hereafter, “Unit 578”) Memorandum of Understanding (hereafter, “MOU”) expired on December 24, 2023.
The City and Unit 578 began formal negotiations on a successor MOU on approximately August 3, 2023, and the parties had approximately fourteen (14) formal negotiation sessions. In addition, the parties met informally approximately three (3) times in order to discuss terms that may be included in an overall agreement on a successor MOU. On or about April 26, 2024, the parties reached an overall Tentative Agreement on the terms to be contained in a successor MOU. Unit 578 notified the City on or about May 10, 2024, that the Tentative Agreement was ratified by Unit 578 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 578 consistent with the terms of the subject Tentative Agreement.
DISCUSSION
The recommended action authorizes the City Manager to execute a successor Memorandum of Understanding with a term of December 24, 2023, through and including December 31, 2027, that incorporates the terms of the Tentative Agreement reached between both parties.
The following is a summary of the notable provisions of the Tentative Agreement, and a complete copy of the Tentative Agreement is attached:
Term:
December 24, 2023 - December 31, 2027
Wages:
Effective June 23, 2024, all salary ranges in classifications assigned to Unit 578 shall be increased by approximately 5.0%
Effective December 22, 2024 (the first pay period of calendar year 2025), all salary ranges in classifications assigned to Unit 578 shall be increased by approximately 3.0%.
Effective the first pay period of calendar year 2026, all salary ranges for employees holding positions in classifications assigned to Unit 578 shall be increased by 3.0%.
Effective the first pay period of calendar year 2027, all salary ranges for employees holding positions in classifications assigned to Unit 578 shall be increased by 3.0%.
One-Time Non-Pensionable Discretionary 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 equivalent to approximately 1.0% of the employee’s base pay 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 578 at the time the one-time discretionary cash payment is made to receive the payment. The one-time discretionary cash payment shall be paid on June 28, 2024.
In addition, the City shall make a one-time discretionary cash payment equivalent to approximately $3,000 for regular employees in Unit 578 who received two (2) years of salary step freezes. The Parties intend and understand that this lump sum payment is non-pensionable and will not be reported to CalPERS. The one-time discretionary cash payment shall be paid on June 28, 2024.
Deferred Compensation:
On the pay date associated with the first pay period of calendar year 2025, the City shall make a one-time contribution equivalent to approximately 1.0% of the employee’s base pay at the time of the contribution on behalf of each represented employee in the City’s Section 457 deferred compensation plan. An employee must be in paid status and be enrolled in the City’s Section 457 deferred compensation plan at the time of the contribution in order to receive the City’s contribution.
On the pay date associated with the first pay period of calendar year 2027, the City shall make a one-time contribution equivalent to approximately 1.0% of the employee’s base pay at the time of the contribution on behalf of each represented employee in the City’s Section 457 deferred compensation plan. An employee must be in paid status and be enrolled in the City’s Section 457 deferred compensation plan at the time of the contribution in order to receive the City’s contribution.
Healthcare:
Effective January 1, 2025, employees will not receive any portion of the City’s contribution as cash or any other taxable benefit. This section does not apply to any employee receiving the cash-in-lieu benefit.
Non-Management Leave:
Effective December 22, 2024 (the first pay period of calendar year 2025), non-management leave shall be increased to forty (40) hours per calendar year for full-time regular employees. For calendar year 2024, employees shall receive sixteen (16) hours of non-management leave effective June 23, 2024.
Vacation Accrual Cap:
Effective June 23, 2024, the maximum vacation accrual rates shall be reduced from 450 to 420. Employees who have a vacation balance over 400 hours on June 22, 2024, shall have any excess hours added to the employee’s Temporary Supplemental Vacation Accrual balance and employees shall be required to first use these accrued vacation hours.
|
Completed Years of Service |
Annual Accrual |
Maximum Vacation Accrual Limit |
|
1 through 4 |
80 Hours |
420 Hours |
|
5 through 9 |
120 Hours |
420 Hours |
|
10 through 15 |
168 Hours |
420 Hours |
|
16 through 20 |
176 Hours |
420 Hours |
|
21 years + |
192 Hours |
420 Hours |
Standby Pay:
Effective June 9, 2024, standby pay shall be increased to $20/day ($140/week) from $100/week for employees in certain classifications.
Raingear/Footgear:
Effective the first pay period after July 1, 2024, employees in certain classifications shall receive a $150 stipend to purchase raingear.
Effective the first pay period after July 1, 2024, employees in certain classifications shall receive a $275 stipend to purchase safety boots.
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 costs of this MOU are within budget authority approved by the City Council through the negotiation process. The FY 2023/24 budget has sufficient funding to cover the one-time discretionary payments. In FY 2024/25, the costs associated with the negotiated agreement are slightly above the amounts assumed in the FY 2024/25 Proposed Budget (variance of $88,000 in the General Fund and $74,000 in other funds). It is anticipated that this additional amount will be absorbed within the existing budgets in FY 2024/25.
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 All Funds Cost |
|
Ongoing Items |
|
|
|
Wages (FY 24/25) |
5.0% |
$2.8M |
|
Wages (FY 25/26) |
3.0% |
$1.4M |
|
Wages (FY 26/27) |
3.0% |
$1.4M |
|
Wages (FY 27/28) July - Dec 2027 |
3.0% |
$707K |
|
Raingear/Safety Shoes |
$150/yr $275/yr For Eligible employees |
$3K |
|
Total Ongoing |
|
$6.3M |
|
One-Time Items |
|
|
|
Non-Pensionable Discretionary Payment (2024) |
1% of Base Pay (One-Time Payment) |
$304K |
|
Non-Pensionable Discretionary Payment (2024) |
$3,000 for employees with 2 year step-freeze (One-Time Payment) |
$219K |
|
Deferred Compensation (Jan 2025) |
1% of Base Pay |
$381K |
|
Deferred Compensation (Jan 2027) |
1% of Base Pay |
$404K |
|
Total One-Time |
|
$1.3M |
The savings associated with the healthcare change cannot be determined at this time as the City cannot predict enrollment behavior for the 2025 calendar year. In addition, any costs with the increase to standby pay and changes to rest periods are unknown.
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 Memorandum of Understanding between the City of Santa Clara and the Santa Clara Santa Clara Employees’ Association (Unit 578) with effective dates of January 1, 2024 - December 31, 2027, that incorporates the terms of the Tentative Agreement in a final form approved by the City Attorney; 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: Aracely Azevedo, Director of Human Resources
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Tentative Agreement between the City and Unit 578 dated April 30, 2024
2. Classified Salary Plan Eff 6-23-2024 (for Council 6-4-2024)
3. Resolution