REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to execute the 2026-2029 Memorandum of Understanding Between the City of Santa Clara and the Unclassified Fire Management (Unit 9B), Approve a Corresponding Update to the Unclassified Salary Plan and Approve the Related Budget Amendments
Report
BACKGROUND
The Unclassified Fire Management (Unit 9B) Memorandum of Understanding (MOU) expired on or about December 31, 2025. The City and Unit 9B began negotiations on a successor MOU in March 2026 and met approximately eleven (11) times. On or about July 2, 2026, the City and Unit 9B reached a Tentative Agreement on terms for a successor MOU. Unit 9B ratified the Tentative Agreement on July 8, 2026.
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 unclassified salary plan for all classifications represented by Unit 9B consistent with the terms of the subject MOU.
SB 707
Effective July 1, 2026, Senate Bill (SB) 707 amended sections of the Brown Act requiring that, prior to taking final action, the legislative body shall orally report a summary of the recommendation for a final action on the salaries, salary schedules or compensation paid in the form of fringe benefits when involving a local agency executive or department head of the local agency, as defined by the law. The Fire Chief (Job Code 117) is the head of the Santa Clara Fire Department, and is a classification represented by the Unclassified Fire Management (Unit 9B). While the Tentative Agreement between the City and Unit 9B does not include a salary range increase for the classification of Fire Chief in the first year of the Tentative Agreement, it does involve a one-time non-pensionable discretionary cash payment to the Fire Chief as well as salary range increases in subsequent years of the successor MOU.
DISCUSSION
The recommended action authorizes the City Manager to execute a successor Memorandum of Understanding with a term of January 1, 2026, through and including December 31, 2029, that incorporates the terms of the Tentative Agreement on a successor MOU.
The following is a summary of the notable provisions of the Tentative Agreement.
Term:
January 1, 2026 - December 31, 2029
Wages:
Effective the first pay period after Council adoption, all salary ranges for employees holding positions in classifications assigned to Unit 9B, except the Fire Chief (Job Code 117), shall be increased by approximately 4.0%.
Effective the first pay period after January 1, 2027, all salary ranges for employees holding positions in classifications assigned to Unit 9B shall be increased by approximately 4.0%.
Effective the first pay period after January 1, 2028, all salary ranges for employees holding positions in classifications assigned to Unit 9B shall be increased by approximately 3.5%.
Effective the first pay period after January 1, 2029, all salary ranges for employees holding positions in classifications assigned to Unit 9B shall be increased by approximately 3.0%.
One-Time Non-Pensionable Discretionary Cash Payment:
In lieu of retroactivity, 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 $6,000 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 9B at the time the one-time discretionary cash payment is made to receive the payment.
In lieu of a salary adjustment for the Fire Chief (Job Code 117) in 2026, a one-time discretionary cash payment of $4,000 will be paid to the Fire Chief. The Fire Chief base salary range will remain at $417,463.92 annually.
Deferred Compensation:
Effective the first month following adoption of the MOU, the City will increase its contribution to $330/month (from $230/month) to the employee’s deferred compensation. Once the 401(a) is established, the City’s prospective contributions after the 401(a) is established will go to the 401(a).
Workers’ Compensation Fast Track Program Side Letter:
Extend via Side Letter Agreement the Workers’ Compensation Fast Track Program available to other public safety bargaining units including the Santa Clara Firefighters, International Assoc. of Firefighters, Local 1171 (Unit 1), Police Officers Association (Unit 2), and Unclassified Police Management (Unit 9A) to employees represented by Unit 9B.
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 Unclassified Salary Plan has been modified to reflect the 4.0% salary range increase for classifications assigned to Unit 9B, except the Fire Chief (Job Code 117).
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 General Fund 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.
The chart below reflects the estimated changes in costs in the General Fund as well as other funds over the term of the MOU.
Estimated Costs
|
Item |
Description |
Estimated Cost |
|
Wages |
|
|
|
Wages (2026) |
4.0% wage increase |
$169 K |
|
Wages (January 2027) |
4.0% wage increase |
$175 K |
|
Wages (January 2028) |
3.5% wage increase |
$159 K |
|
Wages (January 2029) |
3.0% wage increase |
$142 K |
|
Total Wages |
|
$645 K |
|
Deferred Compensation |
$330/month |
$13K |
|
Total Ongoing Costs |
|
$658 K |
|
One-Time Costs |
|
|
|
One-time Non-pensionable Discretionary Cash Payment (2026) |
$6,000 (one-time) |
$60 K |
|
One-time Non-pensionable Discretionary Cash Payment to Fire Chief (2026) |
$4,000 (one-time) |
$4 K |
|
Total One-Time Costs |
|
$64 K |
In FY 2026/27, the total cost associated with the negotiated agreement is approximately $422,000, including $364,000 in the General Fund, $32,000 in the Fire CUPA Fund, and $26,000 in the Fire Development Services Fund. In future years, the costs for this agreement will be factored into the annual operating budgets.
Budget amendments in the impacted funds are recommended as detailed in the table below.
Budget Amendment
FY 2026/27
|
|
Current |
Increase/ (Decrease) |
Revised |
|
General Fund |
|
|
|
|
Expenditure |
|
|
|
|
Fire Department |
$80,527,946 |
$364,000 |
$80,891,946 |
|
|
|
|
|
|
Fund Balance |
|
|
|
|
Unrestricted Ending Fund Balance |
$3,939,253 |
($364,000) |
$3,575,253 |
|
|
|
|
|
|
Fire CUPA Fund |
|
|
|
|
Expenditure |
|
|
|
|
Fire Department |
$2,083,179 |
$32,000 |
$2,115,179 |
|
|
|
|
|
|
Fund Balance |
|
|
|
|
Unrestricted Ending Fund Balance |
$1,210,889 |
($32,000) |
$1,178,889 |
|
|
|
|
|
|
Fire Development Services Fund |
|
|
|
|
Expenditure |
|
|
|
|
Fire Department |
$4,296,410 |
$26,000 |
$4,322,410 |
|
|
|
|
|
|
Fund Balance |
|
|
|
|
Unrestricted Ending Fund Balance |
$1,820,578 |
($26,000) |
$1,794,578 |
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, or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to execute a 2026-2029 Memorandum of Understanding and any related Side Letter Agreements Between the City of Santa Clara and the Unclassified Fire Management (Unit 9B) on the terms presented, as reflected in the Tentative Agreement, including a one-time non-pensionable discretionary cash payment to the classification of Fire Chief (Job Code 117) totaling $10,000 ($4,000 to the classification of Fire Chief in lieu of a salary adjustment, and $6,000 to all Unit 9B employees) and remaining status quo on an annual base salary of $417,463.92 for the Fire Chief;
2. Adopt a Resolution Updating the Salary Plan for various Unit 9B unclassified positions to satisfy the requirements of California Code of Regulations Section 570.5; and
3. Approve the following FY 2026/27 budget amendments:
a. In the General Fund, increase the Fire Department budget in the amount of $364,000, and decrease the unrestricted ending fund balance in the amount of $364,000;
b. In the Fire CUPA Fund, increase the Fire Department budget in the amount of $32,000, and decrease the unrestricted ending fund balance in the amount of $32,000; and
c. In the Fire Development Services Fund, increase the Fire Department budget in the amount of $26,000, and decrease the unrestricted ending fund balance in the amount of $26,000.
Items 3a - 3c, five affirmative Council votes required for the use of unused balances.
Staff
Reviewed by: Marco Mercado, Acting Director of Human Resources
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. City-Unit 9B Tentative Agreement
2. Unclassified Salary Plan (Effective July 5, 2026) and Approved July 14, 2026
3. Resolution Approving Updated Unclassified Salary Plan Effective July 5, 2026