PURPOSE:

The purpose of this report is to request City Council approval of the proposed resolution which would approve the Fiscal Years (FY) 2005-2008 Memorandum of Understanding (MOU) between the City of Burbank and the Burbank Management Association (BMA).

BACKGROUND:

Beginning in March 2005, the City began the FY 2005-06 negotiations with the Burbank Police Officers Association (BPOA), the Burbank Fire Fighters (BFF), the Burbank Fire Fighters � Chief Officers Unit (BFF-COU); the International Brotherhood of Electrical Workers (IBEW), the Burbank City Employees Association (BCEA), and the Burbank Management Association (BMA).  At this point, the Council has approved agreements with each of the bargaining units, except the BMA.  In addition, agreements with the unrepresented, appointed and elected officials have been approved.  The BMA is the final MOU to be considered by the Council.  The BMA members ratified the agreement on March 6, 2006 and are now requesting City Council approval.

For many years, it has been the City�s policy to look at four basic cornerstones when considering compensation issues for its employees:

• The condition of the economy as reflected by the Consumer Price Index (CPI) for the Los Angeles-Riverside-Orange County Urban Wage Earners and Clerical Workers from April 2004 to April 2005.  This year that CPI was 4.9%.

• The capacity in the City�s approved budget.

• Commitment to pay for performance is an on-going philosophy for the City.  In order to recruit and maintain qualified employees to serve the needs of the community and citizens it is vital that the City maintain this commitment even in the face of fiscal adversity.

• Equity in the marketplace as determined by market survey is the fourth criteria the City utilizes in setting compensation for employees.  The City continues to grapple with the ability to pay market wages due to budgetary constraints.  However, the City had a tremendous amount of trouble recruiting and retaining people this past year in large part due to our salary and benefit packages. 

ANALYSIS AND CONCLUSION:

A twelve (12) city survey (Anaheim, Garden Grove, Glendale, Huntington Beach, Inglewood, Long Beach, Pasadena, Riverside, San Bernardino, Santa Ana, Santa Monica and Torrance) was completed for the BMA general government positions. A survey utilizing four (4) utilities (Anaheim, Glendale, Pasadena and Riverside) was completed for BMA employees working at Burbank Water and Power.

As was done with the IBEW and BCEA, staff is suggesting a three year approach to the BMA compensation package.  This approach helps to maintain balance within the City�s General Fund budgeting and forecasting plans.  In addition, since a number of the benefits proposed for the BMA are similar to those offered to the BCEA and IBEW, it makes sense to tie the proposals together.

Following is a detailed description of the proposed compensation and benefit package for the BMA:

Salaries:

• Year 1: Effective July 1, 2005 all utility positions (those BMA positions at Burbank Water and Power) will be increased based on survey. The non-utility positions will be increased based on survey effective November 1, 2005. The cost to the General Fund for FY 2005-2006 is 4.14% with the actual cost for a full year implementation being 6.21%.

• Year 2: Effective July 1, 2006 there will be an increase in salaries based on the 2006-2007 salary survey up to a cap of 3.0%.

• Year 3: Effective July 1, 2007, there will be an increase in salaries based on the 2007-08 salary survey up to a cap of 3.0%.

Cafeteria/Medical Premium Amounts:

The City has agreed to continue the $553.19 per month � 125 fringe benefit contribution toward each full time eligible member of the unit hired prior to April 1, 2006.  For each eligible full time employee hired on or after April 1, 2006, the City will provide a � 125 benefit contribution of $300 per month. 

Due to the rising health costs and the fact that the cafeteria plan has not been increased for a number of years, an additional amount is proposed to assist employees with out of pocket medical premium costs.  Thus, in addition to the stated cafeteria amount, the City will make contributions toward the cost of medical premiums for full time eligible employees as shown on the following charts.  Such contributions will be for medical premium costs only.

 Year 1 - Effective April 1, 2006

Year 2 - Effective December 1, 2006

Year 3 - Effective December 1, 2007

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 to the employees.  The cost to the City will be capped at $103.00 per employee per month with an anticipated $15 per month employee contribution to the plan.  If this amount will provide coverage for the employees dependents that will be acceptable; otherwise the employee will be responsible for any additional dollars to provide this coverage to their dependents.

Retirement Enhancement for BMA:

The enhanced retirement was the most important issue to the IBEW, BMA and BCEA.  While it was the negotiations with the IBEW that led to the Council�s willingness to negotiate for an enhanced retirement, the City�s contract with the Public Employees Retirement System (PERS) requires that if the City is desirous of enhancing the benefit, all miscellaneous employees must receive the enhancement.  In addition to the IBEW, the PERS miscellaneous group includes the BCEA, BMA, Unrepresented Mid-Managers, Executives and Elected Officers.

More and more cities in the State have negotiated retirement enhancement provisions with their unions.  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 BCEA, BMA, Unrepresented Mid-Managers and Executives, seven of the 12 cities have enhanced retirements.  The cities of Anaheim, Long Beach and Riverside have the 2.7% at 55 formula; the cities of Glendale and Garden Grove have the 2.5% at 55 formula; Torrance has a similar 2.5% at 55 formula administered through the Public Agency Retirement System (PARS); and Inglewood has the 3% at 60 formula. 

As agencies throughout the State continue to approve better retirement provisions for their employees, it becomes extremely difficult not to make this concession.  Although the City Council ultimately made the difficult decision to allow the enhanced retirement formula of 2.5% at 55, they decided to do so in a fiscally prudent manner.  The proposal has the employees and City sharing in the cost of the benefit and the implementation has been delayed for three years.

As part of the negotiation process, the City had an outside, independent contractor perform an actuarial to ascertain the value of the enhanced retirement benefit.  The actuarial value was stated at 4.8%.  The IBEW and BCEA have agreed in their Memorandums of Understanding to share equally in the cost.  The Unrepresented Mid-Managers and Executives will also share in the cost beginning March 1, 2006.  The BMA proposal has their General Government employees sharing in the cost beginning November 1, 2005. The BMA utility employees will begin cost sharing effective July 1, 2005.  By having both the employees and the City share in the benefit cost through buying down the City�s current unfunded liability in PERS, the enhancement has been negotiated in a responsible manner.  It is believed that the additional 4.8% (2.4% employee contribution and 2.4% City contribution) that will be paid to PERS over the next three years will help to stabilize and/or reduce the City�s PERS employer rate once the enhancement is implemented.

To that end the City made a commitment to change the PERS retirement formula from 2.0% at 55 to 2.5% at 55 effective June 16, 2008.  Since agreement has now been reached with all of the miscellaneous groups, staff will return with an amendment to the City�s PERS contract in early 2007.

Non-Economic Contract Changes:

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

• Professional Development - Effective July 1, 2006 the compensation allotted to Professional Development ($42.00 per month) will be converted to the Cafeteria plan.

• Joint Labor/Management Committee � The parties agree to establish a Joint Labor/Management Committee to discuss policy issues relative to the City�s Workers� Compensation and Employee Assistance Programs, as well as revisions to the �working out of class� and grievance/discipline procedures. 

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

FISCAL IMPACT:

The total maximum cost of the proposed three year compensation package for the BMA is 14.33% or $ 2,036,995. The cost to the City to change the PERS retirement formula to 2.5% at age 55 is 2.4% or $341,158. While the proposed salary increases were anticipated in the FY 2005-2006 budget preparation, the actual funds were not appropriated at the time of the budget adoption. As such, a budget amendment is required to appropriate the necessary funds from the unappropriated fund balance to pay for the costs to be implemented in FY 2005-06 MOU.  The cost in years two and three will be included in their respective budgets.

RECOMMENDATION:

Staff recommends City Council adoption of the proposed resolution approving the Fiscal Years 2005-2008 Memorandum of Understanding with the Burbank Management Association.

 Respectfully submitted,

 Judie Sarquiz