CITY COUNCIL: Resolution Ratifying a Memorandum of Understanding (MOU) between the City & Carmel-by-the-Sea General Employees Association-LIUNA/UPEC Local 792

Meeting Date: September 13, 2011
Prepared by: John Goss

City Council
Agenda Item Summary

Name: Consideration of a Resolution ratifying a Memorandum of Understanding (MOU) between the City and the Carmel-by-the-Sea General Employees Association- LIUNA/UPEC Local 792.

Description: Understanding the fiscal challenges confronting the City, LIUNA/UPEC, which represents the City General Employees, has agreed to a one-year MOU which will provide a net savings to the City, and those savings will grow going forward. The City Council’s chief objective, taking steps to control its retirement expense, is met in this MOU.

Term: One year, July 1, 2011 through June 30, 2012

Compensation: 0%

Pension: All new employees will be hired under the California Public Employees Retirement System (Cal PERS) 2% @ 60, highest three consecutive years, retirement plan, rather than 2% @ 55, highest one year.

Other Fringe Benefits:
Medical Plan: Permits an employee covered by another agency’s health plan to “opt out” of the City’s Medical Plan, resulting in a savings to the City.
Deferred Compensation Plan: Treats LIUNA employees consistently with other City employees by providing that the City will contribute $25/month to their deferred compensation plan (457).
Insurance Review: Agree that the parties will continue to identify more affordable dental and vision plans within the existing premium.
Harassment Policy: The City agrees to “meet and consult” with LIUNA on any
revisions to the City’s Harassment Policy before any changes are presented to the City Council.

Overall Cost: There is an estimated savings of $13,628.
Grant Funds: N/A

Staff Recommendation: Adopt the Resolution.

Important Considerations: After meeting and conferring with the City’s negotiating team, the Association has ratified the new terms and conditions of employment as itemized above to be incorporated into a new one-year MOU.

Reviewed:


_______________________________ __________________________
John Goss, Interim City Administrator Date

TO: MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: INTERIM CITY ADMINISTRATOR
SUBJECT: CONSIDERATION OF A RESOLUTION RATIFYING A MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY AND THE CARMEL-BY-THE-SEA GENERAL EMPLOYEES ASSOCIATIONLIUNA/ UPEC LOCAL 792, AFL CIO___________________________________________________________________

The Carmel-by-the Sea General Employees Association is affiliated with LIUNA/ UPEC Local 792, AFL-CIO. The most recent multi-year Memorandum of Understanding (MOU) between the City and LIUNA expired June 30, 2011. Based on guidelines approved by the City Council, the Interim City Administrator negotiated a new one-year MOU that will expire June 30, 2012. This agreement was ratified by the LIUNA membership and is ready for Council approval.

The LIUNA representatives understand the current financial challenges facing the City. They also understand that the City’s primary objective this year is to bring its retirement costs under control. This is because the retirement costs of California Public Employees Retirement System
(CalPERS) have increased significantly over time.

Cities have attempted to control this retirement expense in two ways. One is to have employees their entire portion of the contribution to CalPERS. In fact, employees in some cities and local agencies have negotiated employees paying all of their contribution to CalPERS instead of the
City paying all or part of that contribution. In Carmel-by-the-Sea, however, the City has never paid a portion of an employees’ contribution by PERS. So this element of controlling retirement expense has always been in place in the City.

The second way to control CalPERS expense is to enroll new employees into the least expensive CalPERS retirement system. For so-called “miscellaneous” employees, as defined by CalPERS the least costly plan is the so-called 2% @ 60 based on the three consecutive highest years’ compensation. Currently, LIUNA employees are covered by the 2% @ 55 plan based on the highest year compensation. Moving to the 2% @ 60 plan for all new hires will help control current and future retirement expense, with the savings to the City increasing as new employees are hired.

Agreement to the 2% @ 60 plan, using the three consecutive highest years’ compensation, is the hallmark of this MOU. It moves the City in a significant direction in taking steps to control its retirement costs.

The elements of the MOU are as follows:

Term: One year – July 1, 2011 through June 30, 2012.

Compensation: 0%

Pension: All new hires will be included in the 2% @ 60 (three highest consecutive years) CalPERS retirement plan. It is estimated that the City will save $12,000 during 2011-12, depending upon the number of new hires made by the City. This figure will grow significantly as turnover occurs within the City’s work force.

Other Fringe Benefits:
Medical Plan: This will permit an employee who is covered by a spouse’s health plan with another agency or company to “opt out” of the City’s medical insurance plan. As provided in MOUs with other employees groups in the City, the employee “opting out” will receive $291/month. Since the City will avoid paying either two-party or family health insurance premium, the City will avoid between $8,956 – $11,643 in premium expense for each employee “opting out.” The net savings for each employee “opting out” will be between $5,464 – $8,151.

It is expected that the initial net savings to the City will be $10,928 annually ($5,464 x 2). As newly hired employees are hired who decide to “opt out” from the City’s medical plan, the City’s savings from implementing this provision will increase.

Deferred Compensation Plan: Currently, employees represented by LIUNA may participate in a deferred compensation plan (457). This provision will provide for a $25/month contribution to this plan for each employee. This will match the benefit now received by all other City employees. The annual cost of this provision is $9,300.

Insurance Review: The City and Association agree to continue an ongoing review of dental and vision plans to identify more affordable plans within the existing premium.

Harassment Policy: The City agrees to “meet and consult” with LIUNA on any revisions to the City’s harassment policy before any changes are presented to the City Council.

Fiscal Impact: The projected estimated savings to the City will be $12,000 for the pension revision, plus $10,928 savings from the “opt out” provision, partially offset by $9,300 for change in the deferred compensation contribution. The net savings to the City are estimated at $13,628.

Recommendation: It is recommended that a Resolution ratifying a Memorandum of Understanding between the City of Carmel-by-the-Sea and the Carmel-by-the-Sea Employees’ Association, LIUNA/UPEC Local 792, be approved. (see attached)

CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
RESOLUTION 2011-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA RATIFYING THE MEMORANDA OF UNDERSTANDING BETWEEN THE CITY AND THE CARMEL-BY-THE-SEA GENERAL EMPLOYEES ASSOCIATION-LIUNA/UPEC LOCAL 792, AFL/CIO

WHEREAS, the General Employees Association is represented by the Laborers’
International Union of North America (LIUNA/UPEC Local 792); and

WHEREAS, the City and LIUNA/UPEC 792 negotiated in good faith as prescribed by the Meyers-Milias-Brown Act and amended the terms of the Memorandum of Understanding; and

WHEREAS, funds are included in the FY 2011/2012 Annual Budget to meet the MOU obligations.

THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES RESOLVE AS FOLLOWS:

To approve and ratify a Memorandum of Understanding between the City of Carmel-by-the-Sea and the Carmel-by-the-Sea General Employees Association-LIUNA/UPEC Local 792 and authorize the City Administrator to execute the contract, to be placed on file in the City Clerk’s office.

PASSED AND ADOPTED by the City Council of the City of Carmel-by-the-Sea this 13th day of September 2011 by the following roll call vote:

AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:

SIGNED:

________________________
SUE McCLOUD, MAYOR

ATTEST:

___________________________
Heidi Burch, City Clerk

EXHIBIT “C”
MOU Changes – General Employees Association July 1, 2011 – June 30, 2012
Pursuant to an agreement between the City of Carmel-by-the-Sea and the General Employees Association (GEA), an affiliated unit of LIUNA/UPEC Local 792, the following new terms and conditions will be incorporated into a Memorandum of Understanding, effective July 1, 2011, upon adoption by the City Council:

ARTICLE 3: Term of Contract
3.1 The term of this MOU shall be from July 1, 2010 and continue through June 30, 2011, unless otherwise stated.

ARTICLE 6: Retirement Programs
6.1 Retirement benefits for employees represented by the Union hired after July 1, 2011, shall be those established by the Public Employees’ Retirement System (PERS) for local miscellaneous employees, 2% @ 60, based on the highest consecutive three year average salary.

ARTICLE 7: Deferred Compensation
7.2 The City shall make monthly contributions on behalf of each eligible employee in the amount of $25. It shall be the responsibility of the employee to specify the plan and investment option.

ARTICLE 20: Insurance Programs
20.7 Opting Out (Medical Program Only): Eligible employees may elect not to participate in the CalPERS medical plan. Anyone opting out shall only be eligible to take cash in the amount of $291 per month, providing they meet the following conditions:
A. They shall submit proof of medical coverage elsewhere.
B. They shall sign a medical plan waiver.
C. Married employees shall be required to obtain the signature of their spouse on the medical plan waiver form.
D. Employees under legal order to provide medical coverage for any dependents shall only be permitted to opt out after showing proof of coverage for each dependent identified in such legal order.

20.8 The City and Association will review the dental and vision plans to identify the most affordable and viable plan without increasing the plan(s) premium.

ARTICLE 30: Harassment Policy 30.1 The City agrees to meet and consult with the union before any changes to the City’s harassment policy are presented to the City Council.