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HomeMy WebLinkAbout03 - NB Police Association MOUCITY OF NEWPORT BEACH City Council Staff Report July 8, 2014 Agenda Item No. 3 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dave Kiff, City Manager— (949) 644 -3002, dkiff @newportbeachca.gov PREPARED BY: Terri L. Cassidy, Deputy City Manager /HR Director, and Maggie Williams - Dalgart, Senior HR Analyst PHONE: (949) 644 -3303 and (949) 644 -3337 TITLE: Resolution No. 2014 -54: Adopting a Memorandum of Understanding with the Newport Beach Police Association; and Resolution No. 2014 -55: For the Paying and Reporting of the Value of the Employer Paid Member Contribution (EPMC) ABSTRACT: On June 30, 2014, the Newport Beach Police Association (NBPA) Memorandum of Understanding (MOU), the labor agreement that defines the wages, benefits and other terms and conditions of employment for employees represented by the NBPA, expired. In April 2014, the City's negotiating team and representatives from the NBPA began meeting and conferring on the terms of a successor memorandum. On June 5, 2014, in advance of contract expiration, the City and the NBPA reached a Tentative Agreement on a Memorandum of Understanding for the term July 1, 2014, through June 30, 2017. The City Council's ratification of the MOU is the final step in the meet and confer process, completing the agreements. RECOMMENDATION: a) Adopt Resolution No. 2014 -54, A Resolution of the City Council of the City of Newport Beach Adopting a Memorandum of Understanding (MOU) between the City of Newport Beach and the Newport Beach Police Association (Staff Report Attachment A); and b) Adopt Resolution No. 2014 -55, A Resolution of the City Council of the City of Newport Beach for Employer Paid Member Contributions and Rescinding Resolution No. 2012 -57 for Employees Represented by the Newport Beach Police Association, eliminating the paying and reporting of the value of the Employer Paid Member Contribution (EPMC) for certain non -sworn NBPA members, to the California Public Employees' Retirement System (PERS), as provided in the Memorandum of Understanding (Staff Report Attachment B). FUNDING REQUIREMENTS: See financial information in the body of the discussion text. DISCUSSION: Background The Newport Beach Police Association represents approximately 180 employees in the Police Department, 22 including sworn (e.g. Police Officer) and non -sworn (e.g. Police Dispatcher) members. In April 2014, the parties began meeting and conferring to discuss items for a successor MOU. From the beginning, the tone of negotiations was professional as the parties discussed matters of mutual interest, including allowable modifications to the City's retirement plans (employer and employee cost sharing and contributions to the pension benefit), reasonable cost of living adjustments, and how to address increases in healthcare costs. The City's negotiation team included Terri Cassidy, Deputy City Manager /Human Resources Director; Susan Giangrande, Budget Manager; Maggie Williams- Dalgart, Senior Human Resources Analyst; and Jon Holtzman, Attorney, Renne Sloan Holtzman and Sakai. The NBPA negotiating team consisted of sworn and non -sworn members and included Police Officer Jeff Munsell, NBPA President; Police Officer Vladimir Anderson, NBPA Vice President; Community Services Officer Emily Bledstein, NBPA Secretary; Police Dispatcher Jason Hurd- Servin, Member -at- Large; and Attorney Steve Silver, Silver Hadden Silver Wexler and Levine. The City and NBPA representatives met five (5) times before reaching a comprehensive Tentative Agreement. The success of these negotiations is based upon an approach the parties agreed upon at the outset, which was a commitment to negotiate in good faith and come to the table for honest and productive discussions about the topics. Though the parties disagreed on issues, the mutual respect demonstrated by all members aided in reaching resolution on a contract prior to the expiration of the current one - a very rare occurrence in challenging labor relations discussions. Ongoing Pension Reforms In keeping with the stated Total Compensation Philosophy, adopted by the Newport Beach City Council and memorialized in Resolution 2011 -55, an objective in the negotiations was to continue pension (PERS) cost sharing between the City and the employees. As detailed in the 2014 -2017 MOU, sworn NBPA members will be contributing a total of 13.6% of pay toward pension costs by year three of the contract (a 1.5% increase over what they are currently contributing). Non -sworn members will be contributing an additional 4.35% - 6.25% (depending on which of the retirement tiers they fall under, determined by hire date), for a total employee contribution of 12.35% of pay by year three of the contract. This amount represents a significant pick up of the entire cost of the retirement benefit for Miscellaneous (non- sworn) employees — in line with contributions made by employees in other bargaining units. This 13.6% contribution by sworn members and 12.35% contribution by non -sworn members are among the highest employee contribution rates toward pension costs among Orange County cities. In addition to increasing employee contributions, as part of the City's ongoing efforts to reduce retirement benefit costs, the City adopted multi -tier retirement formulae, lowering the benefit levels for new employees. In 2012, the City adopted a "second tier' program; and in 2013, following the California legislature's adoption of the Public Employees Pension Reform Act (PEPRA), the City established a "third tier" retirement benefit for employees hired after January 1, 2013. The City's benefit tiers include: Tier I: 3 % @50 (sworn) and 2.5 % @55 (non- sworn) for employees hired on or before November 23, 2012; Tier II: 3 % @55 (sworn) and 2.0 % @60 (non- sworn) for employees hired between November 24, 2012, and December 31, 2012, or "lateral" employees who have worked under the PERS system at another agency; Tier III: 2.7 % @57 (sworn) and 2.0 % @62 (non- sworn) for new employees hired after January 1, 2013, under the Public Employees Pension Reform Act (PEPRA) of 2012 (now mandated for all new hires never previously enrolled in the PERS retirement plan). The establishment of the second and third retirement tiers, along with payment of additional retirement contributions by employees, is consistent with the mutual goal of labor and management to keep the organization strong financially and to be responsible to the taxpayers. Tiers II & III will help reduce the City's PERS liability /contributions over time, which will be reflected in the annual PERS actuarial valuation received in late October. Many changes are still not permitted under state law - such as moving all employees to a 401(k) defined contribution program. We will continue to monitor both the CalPERS Board actions and proposed legislation, for new ways to address the rise in pension costs, much of which is attributed to factors beyond our control. 23 Terms of the Successor MOU In addition to greater pension contributions, the provisions of the successor MOU include cost -of- living adjustments to help maintain employee "purchasing power" and keep pace with inflation, increases to the .,cafeteria benefit" to address the rising costs of healthcare for employees and their families, increasing the educational standards for the Master Officer Retention Program (level IV) for new employees, creating a pilot program for supplemental matron duty assignment to better address department operational needs, among other changes. The specific terms are as follows: - Term of three (3) years from July 1, 2014, through June 30, 2017; - Additional employee contributions to the PERS pension benefit: Sworn Employees 3 On or about July 1 of each year (2014, 2015, and 2016), employees will pick up an additional 0.5°% of pension costs, for a total employee contribution of 13.6% by the end of the contract; Non -Sworn Employees On or about July 1 of each year (2014, 2015, and 2016), employees will pick up an additional 1.45% - 2.1% (depending on the benefit tier) of salary for pension costs for a total employee contribution of 12.35% by the end of the contract; - Two and a half percent (2.5 %) cost -of- living adjustment for all members on July 1 of each year in 2014, 2015, and 2016; - An increase of $100 per month to the current $1,324 monthly benefit, in both January 2015 and 2016, toward the cafeteria allowance to be used for purchasing medical, dental, and vision insurance, or excess taken as taxable cash distribution, in accordance with Internal Revenue Code Section 125. Also effective January 1, 2015, the maximum contribution for current employees who opt -out of medical will be reduced from $1,274 per month to $1,000 (for anyone hired after MOU adoption the opt -out is $1,000); - An agreement to reopen negotiations in July 2016, for the purpose of discussing the cafeteria and healthcare benefit due to changes or revisions in law, such as the federal Affordable Care Act; - A one -time bonus equity payment for non -sworn employees of $2,000 (Tier 1), $2,500 (Tier 11) and $3,000 (Tier III). The payment is non- PERSable (not included as pensionable compensation) and does not roll into base pay or impact other forms of compensation. It is proposed so the entire bargaining unit receives an equal cost -of- living adjustment rather than review sworn /non -sworn separate comparable data: - An increase in the minimum call back pay for Police Officers required to be on call to report for court appearances, from two hours to four hours; - A change to the Master Officer Retention Program (MORP), requiring a Bachelor's Degree for new employees in order to obtain MORP IV status; - An increase in the minimum benefit for employees assigned "matron duties ", from one hour of base pay per shift to one and one -half hours; and an agreement for a pilot "matron duty standby' program for improved operational efficiency, if necessary; - Creation of a one -time, non - accruing 100 -hour leave bank for sworn employees to provide flexibility in scheduling time off for personal matters. This request came forward as a result of recently implemented, department wide schedule changes to enhance patrol coverage, but limited some officers' ability to get unanticipated days off. Sworn employees may use up to forty (40) hours in a year; the bank has no cash value and sunsets with expiration of the MOU; - Other contract changes include: increased flexibility for NBPA board members to use release time for association business; inclusion of step - parents and step - children in the Bereavement Leave benefit with 24 some additional requirements; eligibility for certain civilian positions (e.g. Senior Dispatcher, Senior Community Services Officer) for Field Training Officer pay when assigned training duties; an 1% increase for Scholastic Achievement for employees with five years of service who obtain a master's degree (delayed until July 2016) to encourage higher education among more experienced officers. At the time of print of this agenda item, the membership of the NBPA is within the 10 -day voting period required to ratifying the agreement (requiring a majority vote in the by- laws). The agreement would not become effective, per Government Code §3505.1, until the governing body, i.e., City Council, takes action to adopt it. Providing the majority of NBPA membership approves the proposed agreement, this is presented for City Council adoption. MOU language changes are noted in italics, and the comprehensive MOU will be published following adoption. Per Government Code §20636 (c)(4), in order to implement changes to employee contributions toward retirement benefits, the City Council must adopt a resolution for each employee group specifying the terms of the change. The attached resolution (Attachment B) reduces (in 2014) and then eliminates (in 2015) paying and reporting the value of the City's contribution of the Member Contribution (referred to as the Employer Paid Member Contribution or EPMC) for non -sworn employees (the City stopped reporting any EPMC for sworn members in 2013). If the City Council approves adoption of the Memorandum of Understanding and the resolutions necessary to implement the Employer Paid Member Contribution changes, Human Resources and Finance Department staff will work to implement the provisions as soon as practicable. As City Manager and Deputy City Manager /Human Resources Director, we thank the NBPA for the collaborative and respectful way in which they approached these negotiations. These are challenging times for city governments and a strong partnership between the City and its bargaining units remains vital to provide the community excellent services. Fiscal Impact: The additional 1.5% (sworn) and 4.35% (non- sworn) employee contributions (amount contributed by end of contract) toward the PERS retirement benefit, plus the reductions to the cafeteria opt out benefit, will provide a savings of approximately $947,800 between now and June 2017. The net cost to the City for the three year term of the contract is estimated to be $1,871,300, which represents an approximate increase in total compensation costs of 2.2% each year. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: Public notice was fulfilled with the posting of the agenda and report for this item. ATTACHMENTS: Description Attachment A: Resolution Adopting a Memorandum of Understanding Between the City and the Newport Beach Police Association Attachment B - Resolution for Employer Paid Member Contributions and Rescinding Resolution No. 2012 -57 for Employees Represented by the Newport Beach Police Association 25 ATTACHMENT A RESOLUTION NO. 2014 -54 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ADOPTING A MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF NEWPORT BEACH AND THE NEWPORT BEACH POLICE ASSOCIATION WHEREAS, the City Council of the City of Newport Beach previously adopted Resolution No. 2001 -50, the "Employer- Employee Relations Resolution," to promote improved relations and communication between the City of Newport Beach and its employee associations; and WHEREAS, the City of Newport Beach previously entered into a Memorandum of Understanding with the Newport Beach Police Association for the period of January 1, 2012, through June 30, 2014; and WHEREAS, representatives from the City of Newport Beach and representatives from the Newport Beach Police Association have met and conferred in good faith and agreed to modify the current Memorandum of Understanding; and WHEREAS, the City Council of the City of Newport Beach desires to replace the Memorandum of Understanding between the City of Newport Beach and the Newport Beach Police Association by adopting a successor Memorandum of Understanding for the period July 1, 2014, through June 30, 2017. NOW, THEREFORE, the City Council of the City of Newport Beach does RESOLVE as follows: Section 1. Wages, hours, fringe benefits, and other terms and conditions of employment for employees represented by the Newport Beach Police Association shall be provided in accordance with the provisions of the attached Memorandum of Understanding (Exhibit A). Section 2. The term of the Memorandum of Understanding shall be for 36 months, commencing retroactively to July 1, 2014, and will remain in full force and effect through June 30, 2017. Adopted this day of 2014. I:]'1 /_11911=6161 City Clerk Mayor of the City of Newport Beach 26 ATTACHMENT B RESOLUTION NO. 2014 -55 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH FOR EMPLOYER PAID MEMBER CONTRIBUTIONS AND RESCINDING RESOLUTION NO. 2012 -57 FOR EMPLOYEES REPRESENTED BY THE NEWPORT BEACH POLICE ASSOCIATION WHEREAS, the City Council of the City of Newport Beach previously adopted Resolution No. 2012 -57 to pay and report a portion of the value of the Employer Paid Member Contribution (EPMC) to the California Public Employees Retirement System (CalPERS) for Miscellaneous employees and to eliminate reporting EPMC for Safety employees represented by the Newport Beach Police Association; and WHEREAS, the City Council of the City of Newport Beach has the authority to implement Government Code Section 20636(c)(4) pursuant to section 20691 to report the value of EPMC if provided for in a labor agreement; and WHEREAS, the City Council of the City of Newport Beach and the Newport Beach Police Association have a written agreement which specifically provides a portion of the normal member contributions for Tier I Miscellaneous employees to be paid by the employer; and WHEREAS, one of the steps in the procedures to implement Section 20691 is the adoption by the City Council of the City of Newport Beach of a Resolution to modify paying and reporting said Employer Paid Member Contributions; and WHEREAS, the City Council of the City of Newport Beach has identified the following conditions for the purpose of its election to pay EPMC. NOW, THEREFORE, the City Council of the City of Newport Beach does RESOLVE to pay EPMC as follows: Section 1. This benefit shall apply to all Tier 1 Miscellaneous and Safety employees represented by the Newport Beach Police Association. Section 2. Effective July 1, 2014, this benefit shall consist of paying .97% of the normal contributions as EPMC and reporting the same percent (value) of compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation for Miscellaneous employees; and consist of paying 0% of the normal contributions as EPMC for Safety employees. 27 Section 3. Effective July 1, 2015, this benefit shall consist of paying 0% of the normal contributions as EPMC and reporting the same percent (value) of compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation for Miscellaneous employees. Section 4. The effective date of this Resolution shall be retroactive to July 1, 2014. Adopted this day of July, 2014. m GTTFST- City Clerk Mayor of the City of Newport Beach M-