PURPOSE

The purpose of this report is to request City Council approval of the proposed resolutions for the Fiscal Year (FY) 2003-04 Memorandums of Understanding (MOU�s) for the Burbank City Employees Association (BCEA) and the Burbank Management Association (BMA), as well as the compensation packages for the Unrepresented Managers and Executives, including the Appointed Officials (City Manager and City Attorney).

BACKGROUND

Beginning in March 2003, the City began the FY 2003-04 negotiations with the BCEA and the BMA.  For many years, it has been the City�s policy to look at the following when considering compensation issues for its employees:  the condition of the economy as reflected by the Consumer Price Index (CPI); the capacity in the City�s approved budget; commitment to pay for performance, and equity in the marketplace as determined by market survey.

Although these compensation factors are important and should be considered, this year the reality is that the City experienced significant reductions in the FY 2003-04 Budget.  In fact, FY 2003-04 was the first of at least five fiscal years where the City is projecting deficits and preparing to make lasting budgetary reductions.  In preparation for the FY 2004-05 Budget, departments are considering two and four percent budget reduction scenarios.  In addition to the City�s own fiscal issues, the State continues to grapple with a huge budget deficit now projected at over $14 billion and, unfortunately, is looking to the cities and counties to assist in their �balanced� budget efforts.  As such, the ability to pay market wages is and continues to be hampered by this dismal economic outlook.

Understanding the financial dilemma the City is facing, the unions were willing to make concessions in order to reach a reasonable consensus.  One of these concessions was

an expansion to the traditional five-city survey (Glendale, Inglewood, Pasadena, Santa Monica, and Torrance).  The BCEA agreed to expand the traditional five-city survey to a ten-city survey (adding the cities of Anaheim, Garden Grove, Huntington Beach, Long Beach, and Santa Ana).  The BMA agreed to expand to a twelve-city survey (adding the cities of Anaheim, Garden Grove, Huntington Beach, Long Beach, Riverside, San Bernardino, and Santa Ana).  This same twelve-city survey was used for the Unrepresented Managers and Executives. 

ANALYSIS AND CONCLUSION

Within this difficult financial framework, staff is proposing City Council approval of economic packages for the BCEA, BMA, Unrepresented Managers, and Executives of 2.50% from the General Fund for each group.  It is worth noting that the City has traditionally used the CPI for Los Angeles-Riverside-Orange County Urban Wage Earners and Clerical Workers from April to April.  This year, that CPI was 3.5%, one percent above the negotiated settlements. 

HIGHLIGHTS OF THE BCEA MOU

The ten-city survey demonstrates that BCEA positions are under survey ranging from one percent (1%) to seventeen percent (17%).  This package, ratified by the members, is divided into the following components:  1.5% cost of living adjustment (COLA) to all BCEA positions; 0.65% for survey adjustments with any excess funds deposited into a training fund (see attached salary listing); and, 0.35% (up to $105 per month) to continue the out of pocket medical insurance premium supplement through June 30, 2004.  This economic proposal for the BCEA equals a compensation package totaling 2.5% of General Fund dollars. 

In addition to the economic portion of the package, there are some proposed changes to language contained in the MOU.  Some of the more significant changes include:

�      Payment of one day of Jury Duty for part-time employees.

�      Establishment of a training fund with survey monies not distributed.  Any expenditure must be approved through the Management Services Director.

�      Professional Development in lieu of wellness for supervisory and professional classifications at no additional costs.

HIGHLIGHTS OF THE BMA MOU

The twelve-city survey indicates that BMA positions are under survey ranging from one percent (1%) to twenty-one percent (21%).    It was not possible, within the current economic constraints, to bring the BMA positions to full-survey.  As such, it was agreed upon between the parties, and ratified by the members, to bring each position to approximately  51% of the average market rate.  Based upon this agreement, the highest increase will be approximately 10.5%.  It is important to note that those positions that are over survey will not receive any survey adjustment.  In addition, those employees with less than a satisfactory performance evaluation will also not receive any automatic survey adjustment.  This economic proposal for the BMA equals a compensation package totaling 2.5% of General Fund dollars as well as some minor Non-General Fund equity adjustments. 

In addition to the economic portion of the package, there are some proposed changes to language contained in the MOU.  Some of the more significant changes include: 

�      Thirty (30) days of paid Administrative Leave for transitional activities for those employees that will be laid off due to budgetary cuts.  In addition, the City will pay the remainder of the employee�s portion of the Retiree Medical Trust.

�      Establishment of Joint Labor/Management Committee to study Worker�s Compensation reform.

�      Any BMA employee that retires after January 1, 2004 will only be eligible for the Retiree Medical Trust and no other medical retiree stipend.

�      The City will pay for or reimburse fees for all licenses, certifications, examinations, or training that it requires of BMA employees in their present positions.

�      All minor disciplines (i.e. verbal reprimands, written reprimands, and suspensions up to and including three days) will be appealable to the City Manager or her designee.

�      Minor change to seniority language upon promotion.

UNREPRESENTED MANAGERS COMPENSATION

Salary

Following the completion of the BMA and BCEA negotiations, staff completed the salary surveys for the Unrepresented Managers.  The surveys are based on the same twelve-city survey methodology used for the BMA.  The Unrepresented Managers are under survey ranging from 0.77% to 20.44%.  Based upon the survey results, Unrepresented Managers classifications can only be brought to approximately 40% of the total average market survey in order to stay within a 2.50% impact upon the General Fund.  However, it should be noted that these survey adjustments are to the classification ranges and are not in-pocket adjustments.  All salary adjustments for Unrepresented Managers are performance based only and require an evaluation approved by the Department Manager.  

In the past, Police Captains have received survey adjustments in range that are at least equal to what the Burbank Police Officers Association (BPOA) negotiated.  However, due to the limited financial resources available, the Police Captains� salary range would not receive the 3.5% negotiated by the BPOA.  As such, it is proposed that the Police Captains be given the 3.5% increase received by the BPOA.  This increase would be placed into the PERS Stabilization Fund to offset the cost of the 3% @ 50 PERS retirement benefit.  Because this additional amount for these four employees is truly an equity adjustment that will maintain the appropriate parity between positions at the Police department, this additional 0.22% cost will not be counted against the 2.5% total compensation package for the Unrepresented Managers.  Not only is this good from a parity and leadership standpoint, it is also a significant financial benefit to the City in that the Police Captains will pay an additional 3.5% for the enhanced PERS retirement benefit.

Universal Leave

As part of the package for the Unrepresented Managers, it is proposed that a Universal Leave, similar to that of the Executives, be established.  This universal leave will convert current vacation, sick (at a reduced level), management, and floating holiday leaves into a combined leave.  From Management�s perspective, universal leave has three major benefits:  1. Encourages employees to better manage their sick leave usage which will have a trickle down effect and improve productivity; 2. Saves the City 20% in the current pay-out of sick leave; and, 3. Places a cap on sick leave accrual which will minimize the City�s unfunded liability exposure in the future.

EXECUTIVE COMPENSATION

Market surveys were also completed for the Executive classifications, including the City Manager and City Attorney.  The surveys are based on the same twelve-city survey methodology used for the BMA and Unrepresented Managers.  The results showed that the Executive classifications are under survey ranging from 5.92% to 10.95%.  Based upon the survey results, Executive classifications can only be brought to approximately 40% of the total average market survey in order to stay within a 2.50% impact upon the General Fund.  Again, these survey adjustments are to the classification ranges and are not in-pocket adjustments.  All salary adjustments for Executives are performance based only and require an evaluation approved by the City Manager, or in the case of the City Manager and City Attorney, by the Council.  

Like the Police Captains, the Police Chief, has historically received survey adjustments in range that are at least equal to what the BPOA negotiated.  Limited financial resources would not accommodate a range adjustment for the Police Chief equal to the 3.5% negotiated by the BPOA.  As such, it is proposed that the Police Chief be given the 3.5% increase received by the BPOA as an equity adjustment.  This increase, like the Police Captains, would be placed into the PERS Stabilization Fund to offset the cost of the 3% @ 50 PERS retirement benefit.  This adjustment will maintain parity among the ranks, as well as provide a significant financial benefit to the City in that the Police Chief will pay an additional 3.5% for the enhanced PERS retirement benefit.

FISCAL IMPACT

Compensation packages of 2.5% for the various groups, including some minor non-General Fund equity adjustments, impact the General Fund as follows:

                                    BCEA                                                 $ 583,688

                                    BMA                                                   $ 180,973  

                                    Unrepresented Managers                $ 173,338

                                    Executives                                         $   58,851

Please note that included in the Executives� package is a 3.98% potential increase for the City Clerk and City Treasurer.  Although included, this item will take separate Council action which is on tonight�s agenda. 

These proposed salary increases were anticipated in the FY 2003-04 Budget preparation.  However, the funds were not appropriated at the time of the Budget adoption.  As such, budget amendments are required to appropriate the necessary funds from the Unappropriated Fund Balance (Account No. 001.ND000.30004).

RECOMMENDATION

Staff recommends City Council adoption of the proposed resolutions approving the FY 2003-04 Memorandums Of Understanding with the BMA and the BCEA, and the compensation packages for the Unrepresented Managers and Executives, including the appointed officials.

Respectfully submitted,

Judie Sarquiz

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