PURPOSE

The purpose of this report is to request City Council approval of the proposed resolutions which would adopt the Fiscal Years 2005 � 2008 Memorandums of Understanding (MOU) between the City of Burbank and the International Brotherhood of Electrical Workers (IBEW), and the Burbank City Employee�s Association (BCEA), as well as amend the annual budget for FY 2005-06.

BACKGROUND

In early 2005, the City began negotiations with the IBEW and the BCEA.  For many years, the City has adhered to the following four cornerstones when considering compensation issues for its employees:  the condition of the economy reflected by the Consumer Price Index (CPI); the capacity of the City�s approved budget; the City�s commitment to pay for performance; and, equity in the marketplace as determined by survey.

Negotiations with both unions were very challenging this year.  While the City has continued to pay market salaries for the work performed by the employees in these bargaining units, the City has not totally kept pace with some of the benefit packages paid to workers in other agencies.  The main reason this has occurred is that for the past few years the City has been dealing with on-going budget shortfalls which have required reductions in the Citywide budget.  The City�s financial difficulties combined with the State�s budget deficit have made it extremely difficult to keep pace with average market wages and benefits for City employees. 

While the 2005-06 Fiscal Year (FY) found the City in a much better financial position, the General Fund is still facing significant budgetary shortfall over the next five years.  In addition, with the price of natural gas, Burbank Water and Power (BWP) is also experiencing higher than normal costs.  These factors are being dealt with through long range financial planning/budgeting, however, it is still worth noting that all of the bargaining groups have shared in addressing the financial burden of the City.  All employee groups have been team players during the past couple of years by taking less than the average of the market which has assisted the City in getting to a more stable financial position.   

ANALYSIS AND CONCLUSION

With these financial concerns in mind, staff created a three year strategy to address, as best as financially possible, the market issues of the bargaining groups.  It is within this financial framework, staff is proposing City Council approval of the following economic packages for the IBEW and BCEA.  The IBEW and BCEA membership ratified their three year agreements on December 20, 2005 and December 2, 2005 respectfully. 

IBEW HIGHLIGHTS

Salaries:

• Year 1: Effective July 1, 2005, salaries will be set based on the salary survey (includes the cities of Glendale and Pasadena, Los Angeles Department of Water, and Southern California Edison).  The projected increases for the IBEW positions range from 3.71% to 9.10%. Unit salaries as a whole will be increased by approximately 6.00% ($ 586,908). 

• Year 2: Effective July 1, 2006, up to 4.00% of total salaries will be used on a prorated basis to increase salaries based on market survey.                       

• Year 3: Effective July 1, 2007, up to 4.00% of total salaries will be used on a prorated basis to increase salaries based on market survey. 

Cafeteria/Medical Premium Amounts:

The City has agreed to provide a $ 552.00 per month � 125 fringe benefit contribution toward each full time eligible member of the unit hired prior to January 1, 2006, and a � 125 benefit contribution of $ 300.00 per month for employees hired on or after January 1, 2006.  In addition to this cafeteria amount, the City will make contributions toward the cost of medical premiums for full time eligible employees as shown on the charts below.  Such contributions will be for medical premium costs only.

Year 1 (January 1, 2006)

Year 2 (January 1, 2007)

Year 3 (January 1, 2008)

Calculations on the chart reflect an amount, when added to the cafeteria amount, equate to 90% of a competitive preferred provider organization (PPO) medical plan.

In addition to the aforementioned changes in the � 125 plan, the City will also implement the following benefits:

• Year 2:  Effective July 1, 2006, the City will provide a vision plan at no cost to the employee. 

• Year 3: Effective July 1, 2007, the City will supply a dental plan at no cost to the employee.  The cost to the City will be capped at $ 118.00 per employee per month. 

Retiree Medical:

• Year 3: Effective July 1, 2007, the City will contribute $ 44.00 a month to a retiree     medical account (i.e. Retired Health Savings or other plan) for each employee.

Health, Welfare and Safety Clause:

To protect the interests of the utility and the City, the union agreed to the following language:  �Prior to and during any job action, the IBEW agrees to maintain sufficient numbers of critical employees to ensure that Burbank Water and Power supplies the necessary services to maintain the health, safety and welfare of the community.�

Non-Economic Contract Changes:

In addition to the economic portion of the package, there are some proposed non-economic changes which include the following:

• Term of Agreement � A three year contract from July 1, 2005 to June 30, 2008.

• �Joint Labor/Management Committees � The parties agree to establish Joint Labor/Management Committees to discuss policy issues relative to the City�s Employee Assistance and Workers� Compensation Programs.

• Language Changes � In addition, contract language was revised to clarify and comply with current policies and procedures.

BCEA HIGHLIGHTS

Salaries:

• Year 1: Effective July 1, 2005, salaries will be set based on the salary survey (includes the cities of Anaheim, Garden Grove, Glendale, Huntington Beach, Inglewood, Long Beach, Pasadena, Santa Ana, Santa Monica, and Torrance).  The projected increases for the BCEA positions range from 2.40% to 19.39%.  Unit salaries as a whole will be in creased by no more than 4.00% ($ 1,303,836).   

• Year 2: Effective July 1, 2006, up to 4.00% of total salaries will be used on a prorated basis to increase salaries based on market survey.

• Year 3: Effective July 1, 2007, up to 4.00% of total salaries will be used on a prorated basis to increase salaries based on market survey. 

Salary Differentials:

The parties have agreed to provide a 5.00% salary differential to Painters and Painter Supervisors when the employees are performing lead abatement assignments.  A 1.00% salary differential is being provided to employees who are certified by the State and designated by their department to operate a mobile crane.  Also, three hours of straight time per week is being provided to Animal Control Officers and Senior Animal Control Officers when on-call after hours and an additional four hours of straight time per week is being provided to Forensic Specialists and Forensic Specialist Supervisor when on-call.   These salary differentials will cost approximately 0.05% ($ 15,983 annually).

Cafeteria/Medical Premium Amounts:

The City has agreed to continue the $ 515.19 per month � 125 fringe benefit contribution toward each full time eligible member of the unit hired prior to January 1, 2006.  For each eligible full time employee hired on or after January 1, 2006, the City will provide a � 125 benefit contribution of $ 300.00 per month.  The City has also agreed to continue the $ 257.60 per month � 125 fringe benefit contribution toward each part time eligible member of the unit hired prior to January 1, 2006.  The City will provide a � 125 benefit contribution of $ 150.00 per month, for each eligible part time employee hired on or after January 1, 2006. 

In addition to this cafeteria amount, the City will make contributions towards the cost of medical premiums for eligible employees as shown on the charts below.  Such contributions will be for medical premium costs only.

Medical Premiums for Full Time Eligible Employees

            Year 1 (January 1, 2006)

Year 2 (December 1, 2006)

Year 3 (December 1, 2007)

Medical Premiums for Part Time Eligible Employees

            Year 1 (January 1, 2006)

Year 2 (December 1, 2006)

Year 3 (December 1, 2007)

Calculations on the chart reflect an amount, when added to the cafeteria amount, equate to 90% of a competitive health maintenance organization (HMO) medical plan.

In addition to the aforementioned changes in the � 125 plan, the City will also implement the following benefits:

• Year 3: Effective July 1, 2007, the City will supply a dental plan for employees.  The cost  to  the City  will be capped at $ 91.75 with the employees  contributing $ 26. 25 for a maximum premium amount of $ 118 per month per employee.  

Tool Allowance:

The tool allowance for affected employees will be increase from $ 470 to $ 500 annually which will cost 0.001% ($ 600). 

Health, Welfare and Safety Clause:

To protect the interests of the City, the union agreed to the following language:  �Prior to and during any job action, the BCEA agrees to maintain sufficient numbers of critical employees to ensure that the City of Burbank supplies the necessary services to maintain the health, safety and welfare of the community.�

Non-Economic Contract Changes:

In addition to the economic portion of the package, there are some proposed non-economic changes which include the following:

• Term of Agreement � A three year contract from July 1, 2005 to June 30, 2008.

• Joint Labor/Management Committee � The parties agree to establish a Joint Labor/Management Committee to discuss policy issued relative to the City�s working out of class policy, grievance and appeal procedures, worker�s compensation program, and the Employee Assistance Program (EAP).

• Language Changes � In addition, contract language was revised to clarify and comply with current policies and procedures.

Retirement Enhancement highlights

The most important issue to both the IBEW and BCEA employees was an enhanced retirement benefit.  More and more cities in the State have negotiated retirement enhancement provisions with their unions and this made it extremely difficult not to make a concession on this issue.

At this point, all agencies in the IBEW market survey with the exception of Pasadena have a better retirement than Burbank.  Moreover, in the surveys conducted for the Burbank City Employees Association (BCEA), the Burbank Management Association (BMA), the unrepresented managers and the executives; seven of the twelve cities have enhanced retirements.  The cities of Anaheim, Long Beach and Riverside have the 2.7% @ 55 formula; the cities of Garden Grove and Glendale have the 2.5% @ 55 formula; Torrance has a similar 2.5% @ 55 formula administered through the Public Agency Retirement System (PARS); and, Inglewood has the 3.0% @ 60 formula.

Pursuant to the City�s contract with the Public Employee Retirement System (PERS) if the City is desirous of enhancing the retirement benefit of the IBEW or BCEA, it must be done for all miscellaneous employees.  The miscellaneous employee group includes not only the IBEW, and the BCEA, but also the BMA, unrepresented managers, and executives.  Currently, the City has only reached agreement with the IBEW.  However, a tentative agreement has been reached with the BCEA on the enhanced retirement issue and their membership will be voting on January 17, 2006.  The City is still negotiation with the BMA.  In the end, agreement must be reached by all unions in order for the City to be in a position to amend its contract with PERS for the enhanced retirement.

While the City has ultimately agreed to provide the miscellaneous employees with the enhanced retirement, it has been proposed in such a way that both the employees and the City share in the cost of the benefit.  In addition, the City has proposed a delay on the implementation of the enhanced retirement for three years.

The City had an actuarial completed to ascertain the value of the benefit.  The actuarial value was stated at 4.80%.  The IBEW has agreed to share equally in the cost and the BCEA has tentatively agreed to this cost sharing arrangement pending final approval of their membership vote on January 17, 2006.  By having both the employees and City share in the benefit cost through buying down the City�s current unfunded liability in PERS, the enhancement has been negotiated in a fiscally prudent manner.  It is believed that the additional 4.80% that will be paid to PERS over the next three years will help to stabilize and/or reduce the City�s PERS rate particularly once the enhancement is implemented.

To that end the City made a commitment to change the PERS retirement formula from 2.0% @ 55 to 2.5% @ 55 effective June 16, 2008 should all the miscellaneous groups agree.  Both the City and the unions will begin contributing 2.40% (this 2.40% is in addition to the City�s current PERS employer rate) effective July 1, 2005.  As previously stated, this provision will only become effective if agreement on the 2.5% @ 55 enhanced retirement can be reached with all the miscellaneous groups.  Should agreement be reached by all groups, staff will return with an amendment to the City�s PERS contract in the second year of the IBEW MOU. 

FISCAL IMPACT:

The total maximum cost of the package for the IBEW over the three fiscal years is 20.46% ($2,001,356).  The total maximum cost of the package for the BCEA over the three fiscal years is 16.95% ($ 7,030,116).   The total cost may be less than these amounts depending on the results of the market surveys in the second and third years of the MOUs.  It should be noted that these maximum costs include the 2.40% City contribution for the PERS 2.5% @ 55 enhanced retirement formula that will be provided to all miscellaneous employees should all the effected groups be able to reach an agreement. 

The cost of the IBEW package will be funded by the Burbank Water and Power Department and will not have an impact on the City�s General Fund. 

RECOMMENDATION:

Staff recommends City Council adoption of the proposed resolutions approving the Memorandums of Understanding between the City of Burbank and the International Brotherhood of Electrical Workers (IBEW) Local 18 - Unit 50 and the Burbank City Employee�s Association (BCEA), as well as amending the annual budget for FY 2005-06.

Respectfully submitted,

Judie Sarquiz

Management Services Director