1 STAFF REPORT
DATE: December 13, 202 2
TO: Justin Hess, City Manager
FROM: Betsy McClinton, Management Services Director
VIA: Brady Griffin , Acting Assistant Management Services Director BY: Julie Chaidez , Senior Administrative Analyst
SUBJECT: Adoption of a Resolution to Approve a Letter of Agreement Between the City of Burbank and the Burbank Police Officers’ Association
RECOMMENDATION
1. Adopt A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK
APPROVING A LETTER OF AGREEMENT BETWEEN THE CITY OF
BURBANK AND THE B URBANK POLICE OFFICERS’ ASSOCIATION
(BPOA). THE LETTER OF AGREEMENT AMENDS THE BPOA
MEMORAND UM OF UNDERSTANDING (M OU) DATED DECEMBER 14, 2021 – JUNE 30, 2024; BPOA MOU DATED OCTOBER 20, 2019 – JUNE 30, 2021; AND BPOA MOU DATED JANUARY 31, 2016 – JUNE 30, 2018.
BACKGROUND
The California Public Employees Retirement System (CalPERS) offers a defined benefit retirement plan that is available to most City of Burbank (City) employees, including employees represented by Burbank Police Officers’ Association (BPOA) . Retirement benefits are calculated based on a member’s years of service, age, and final compensation. CalPERS defines final compensation as the highest average annual compensation received during a consecutive 12- or 36- month period of employment, depending on the employee’s collective bargaining agreement or employer contract.
In addition to base salary, final compensation may include special compensation items , such as differential pay or special assignment pay, if CalPERS determines it is “pensionable” according to retirement law. Government Code (GC) Section 20636(c), exclusi vely identifies and defines special compensation items, and
MANAGEMENT
SERVICES
2 California Code of Regulations (CCR) Sections 571 (a) and (b), outlines the requirements for special compensation to be pensionable.
On December 14, 2021, the City Council approved the BPOA Memorandum of Understanding ( MOU) between the City of Burbank and the BPOA dated December 14, 2021 through June 30, 2024 by adopting resolution number 21- 29,281. As staff was concluding negotiations with BPOA and preparing the new MOU for Council approval , it came to the attention of City staff and the BPOA that CalPERS had made two determinations that would negatively impact the pensions of BPOA retirees .
First, CalPERS determined that Article II, Section I of the BPOA MOU (“Police Officer Specialty Assignments”) included conditions for payment (i.e., performance criteria) beyond those allowable pursuant to GC 20636 and CCR Regulations 571. As such, CalPERS did not count the Specialty Assignment ( i.e., Motor s) compensation toward the retired officer’s pension.
Second, based on its interpretation of the BPOA MOU, CalPERS calculated the Holiday Differential at a reduced rate toward the pensions of retired BPOA employees . In practice, the City calculates “straight time” at a rate that includes base salary plus all permanent differentials . However, CalPERS interpreted “straight time” in Article II, Section A.2. of the BPOA MOU (“Holiday Differential and Holidays Worked and Not Worked”) as an amount that includes base salar y only .
DISCUSSION
The current BPOA MOU approved by the City Council on December 14, 2021, partially addressed both issues by clearly defining “straight time” as it pertains to the Holiday Differential and revising language for Specialty Assignments to remove certain disqualifying language.
To provide additional assurance that pensions are calculated accurately on a prospective basis , and to retroactively correct any pensions that were negatively impacted by inaccurate MOU language, the City and BPOA have tentatively agreed to execute a Letter of Agreement that includes revisions to the current , and two preceding BPOA MOU s under which final compensation was potentially paid to retirees.
Pursuant to retirement law, CalPERS requires that the City Council of the City of Burbank duly approve and adopt the Letter of Agreement between the City and BPOA, thereby incorporating revisions pertaining to Police Officer Specialty Assignments, Straight Time, and Holiday Differential in to the current and two preceding MOUs . The agreed- upon revisions are necessary to ensure the special compensation is compliant with GC 20636 and CCR Regulations 571, and to fix the pensions of retired BPOA members who were negatively impacted by non- compliant MOU language.
3 POLICE OFFICER SPECIALTY ASSIGNMENTS
The City and BPOA agree that from its inception, the language pertaining to Specialty Assignments has been understood and executed in a manner that fully complies with CCR Section 571(a), which identifies and defines special compensation items, and CCR Section 571(b), which lists the requirements the special compensation items must meet to be pensionable. Briefly summarized, the regulations define “Special Assignment Pay” as compensation provided to employees w ho are “routinely and consistently assigned” to perform the duties of that assignment , without placing additional conditions for receiving the special pay. Indeed, BPOA members who were assigned to any Specialty Assignment defined in CCR 571(a) , including Motors, Helicopter, and K -9, have always been, and continue to be, compensated accordingly, and without further conditions , as required by CCR 571(b) .
The modifications in redline text included in the Letter of Agreement between the City and BPOA (Attachment 1, Exhibit A ) are provided to clarify the intent of the language, and thereby ensure the pensions of retired BPOA members are calculated as the Parties intended.
DEFINITION OF STRAIGHT TIME & HOLIDAY DIFFERENTIAL PAY
From its inception, the City and BPOA understood “straight time” to be an amount inclusive of base salary plus per manent differentials; further, this mutual understanding served as the basis from which the Holiday Differential was originally implemented and subsequently paid to all eligible employees.
The Parties agreed to include a clear definition of “straight time” in the MOU approved by Council on December 14, 2022, thus ensur ing accurate calculations of the Holiday Differential for employees’ pensions on a prospective basis .
However , it is necessary to correct “straight time” as it pertains to the Holiday Differential in the two preceding BPOA MOUs which will enable CalPERS to retroactively correct any pensions that were, or may be, calculated at a reduced rate.
The modifications in redline text included in the Letter of Agreement between the City and BPOA are provided to clarify the intent of the language, and thereby ensure the pensions of retired BPOA members are calculated as the Parties intended.
FISCAL IMPACT
There is no fiscal impact to the City; t he modifications to the BPOA MOUs as executed in the Letter of Agreement between the City and BPOA are for clarification purposes only, to ensure the pensions of BPOA members are calculated as intended retroactively and prospectively.
CONCLUSION
The City and the BPOA have tentatively agreed to the revisions contained in the Letter of Agreement to revise MOU language pertaining to Police Officer Specialty 4 Assignments and pertaining to the definition of Straight Time and the Holiday Differential , pending City Council approval. Staff recommends the City Council adopt the resolution approving the r evisions to the BPOA MOUs dated December 14, 2021 – June 30, 2024; October 20, 2019 – June 30, 2021; a nd January 31, 2016 – June 30, 2018, which will enable CalPERS to correct and ensur e the pensions of BPOA members are calculated as intended, retroactively and on a prospective basis .
ATTACHMENT
Attachment 1 – Resolution to Approve a Letter of Agreement between the City of Burbank and the B urbank Police Officers’ Association , including Exhibit A, which provides redline text to reflect the proposed changes to the BPOA MOUs referenced herein.