September 8, 2026
Agenda Item No. 5
TO:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:
Seimone Jurjis, City Manager - 949-644-3001, [email protected] PREPARED BY:
Jason Al-Imam, Administrative Services Director - 949-644-3026, [email protected] TITLE:
Resolution No. 2026-74: Modifying the Key & Management Compensation Plan and Approving Side Letters of Agreement between the City of Newport Beach and the Newport Beach Police Association, Newport Beach Police Management Association, Newport Beach Fire Management Association, and Newport Beach Lifeguard Management Association ABSTRACT:
For the City Council's consideration is the approval of four side letter agreements with the following employee associations: the Newport Beach Fire Management Association (FMA), the Newport Beach Lifeguard Management Association (LMA), the Newport Beach Police Association (PA), the Newport Beach Police Management Association (PMA), and the adoption of a resolution amending the Key & Management (K&M) Compensation Plan. This is an administrative clean-up item intended to ensure the City’s labor agreements and compensation plans comply with California Public Employees’ Retirement System (CalPERS) documentation requirements. The proposed actions retroactively amend the applicable prior and current Memoranda of Understanding (MOUs) and compensation plans to expressly incorporate certain existing compensation provisions that were previously referenced in other City of Newport Beach (City) documents, including Temporary Upgrade Pay, Holiday Pay, Scholastic Achievement Pay, and Salary Adjustments. The amendments do not establish new compensation practices or benefits.
RECOMMENDATIONS:
Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and Approve Resolution No. 2026-74, A Resolution of the City Council of the City of Newport Beach, California, Modifying the Key & Management Compensation Plan and Approving Side Letters of Agreement Between the City of Newport Beach and the Newport Beach Police Association, Newport Beach Police Management Association, Newport Beach Fire Management Association, and Newport Beach Lifeguard Management Association Relating to Holiday Pay, Temporary Upgrade Pay, and Scholastic Achievement Pay.
DISCUSSION:
The City periodically undergoes CalPERS compliance reviews of its labor agreements and compensation plans. As part of this process, CalPERS requires certain compensation items, including Temporary Upgrade Pay, Holiday Pay and Scholastic Achievement Pay, to be expressly defined, authorized and documented in the written labor agreement or compensation plan applicable to the affected employees in order to satisfy the “condition of payment” requirements set forth in Title 2, California Code of Regulations (CCR), Section 571(b).
Historically, certain City MOUs and compensation plans incorporated compensation provisions by reference to other City documents rather than setting forth the applicable terms directly within the governing MOU or compensation plan. For example, certain MOUs referenced the City’s Employee Policy Manual and/or Civil Service Rules for Temporary Upgrade Pay (Acting Appointment) provisions. Similarly, the K&M Compensation Plan tied salary adjustments for certain safety management classifications to salary adjustments provided under the applicable safety management association MOUs rather than expressly stating the applicable salary adjustments within the K&M Compensation Plan.
Although these compensation practices were previously authorized and implemented by the City, CalPERS requires the applicable compensation provisions to be expressly stated within the governing MOU or compensation plan rather than incorporated by reference to a separate document. Accordingly, the City and the affected employee associations have agreed to retroactively amend the applicable prior and current MOUs, and staff recommends corresponding amendments to the prior and current K&M Compensation Plans, to expressly memorialize these existing compensation provisions. The amendments do not establish new compensation practices or benefits, but instead ensure that the existing provisions are documented in the form required for CalPERS compliance. The amendments are generally retroactive to July 1, 2022 (or January 1, 2022, for the K&M Compensation Plan), dates falling within the terms of the respective prior MOUs and compensation plan and carry forward through the current terms ending June 30, 2028.
The four side letter agreements and the K&M resolution address the following compensation items across the respective bargaining units:
Temporary Upgrade Pay — All Associations and K&M
All four side letter agreements and the K&M resolution include substantively identical Temporary Upgrade Pay provisions. The City Manager may authorize a temporary appointment to fill either a temporary vacancy (such as maternity leave, long-term disability, or military leave) or a permanent vacancy (separation or retirement), provided all temporary appointees satisfy the minimum qualifications for the position.
An assignment of an employee to perform the significant duties and responsibilities of a higher classification for more than 160 consecutive working hours constitutes an Acting Appointment. An Acting Appointment is limited to 90 calendar days in any 12-month period, unless extended by an additional 90 calendar days upon written recommendation by the applicable department head (Fire Chief, Chief Lifeguard, or Police Chief) and approval by the City Manager.
Temporary upgrade pay is calculated as the difference between the employee's current salary step and the step in the salary range for the higher classification that is at least 5% but not more than 15%, higher than the employee's current salary step. If the Acting Appointment is to a classification without a salary range, the employee receives additional compensation equal to 5% of the employee's current salary step. Temporary upgrade pay is paid biweekly as earned with the regular paycheck and is separate from, and in addition to, the employee's base pay.
To the extent permitted by law, the City shall report temporary upgrade pay to CalPERS as special compensation pursuant to Title 2 CCR Section 571(a)(3). Reportable compensation is limited to temporary upgrade pay received for time when the employee is performing 100% of the duties in the higher classification during normal hours of employment. In accordance with the Public Employees' Pension Reform Act (PEPRA) and Government Code Section 7522.34 and 2 CCR § 571.1, Temporary Upgrade Pay is non-reportable for PEPRA "New" members and shall only be reported as special compensation for qualifying "Classic" members.
LMA — Move-Up Pay (Unique Provision)
The LMA side letter includes an additional provision specific to that association: Move-Up Pay. Employees temporarily upgraded to the classifications of Lifeguard Captain or Lifeguard Battalion Chief (and equivalent positions) shall receive a 9.5% pay differential over their rate of pay for all time worked in the higher classification, provided the assignment is for a period of one working hour or longer. Move-up pay is separate from and in addition to the employee's base pay, is paid biweekly, and shall be reported to CalPERS as special compensation pursuant to Title 2 CCR Section 571(a)(3). All holiday, flex leave, and other paid leave shall be paid at the employee's regular rate of pay.
PA and PMA — Holiday Pay (Unique Provision)
The PA and PMA Side Letters also address Holiday Pay. Sworn and Non-Sworn PA employees who work in positions requiring scheduled staffing without regard to holidays will receive holiday pay in lieu of observing holidays at the rate of 96 hours per fiscal year (July 1 through June 30), at the rate of 3.7 hours per pay period. This compensates eligible employees for eight designated holidays: New Year's Day, Martin Luther King Jr. Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day and Christmas Day. The annual holiday benefit is based on eight holidays at 12 hours per holiday, for a total annual holiday-in-lieu pay equal to the value of 96 hours.
Similarly, all PMA Safety members work in positions requiring scheduled staffing without regard to holidays and receive holiday pay in lieu of time off at the rate of 96 hours per fiscal year and 3.7 hours per pay period, for the same eight designated holidays. Holiday Pay shall be reported to CalPERS as special compensation pursuant to Title 2 CCR Sections 571(a)(5) and 571.1(b)(4). Holiday Pay is non-reportable for PEPRA "New" members if the holiday credit is eligible to be used as time off in lieu of compensation; PA employees may not elect to receive holiday pay in the form of time off.
K&M Resolution — Additional Provisions
The K&M Resolution addresses four compensation items: Temporary Upgrade Pay, Holiday Pay, Scholastic Achievement Pay, and Salary Adjustments.
For K&M Safety employees, the resolution establishes Scholastic Achievement Pay for Police Safety (BA/BS — 7%; MA/MS/JD — 8.5%, non-cumulative) and Fire Safety (BA/BS — 5.5%; MA/MS/JD — 7.0%, non-cumulative), to be reported to CalPERS as special compensation pursuant to Title 2 CCR Sections 571(a)(2) and 571.1(b)(2). The Assistant Chief, Lifeguard Operations, is eligible for Scholastic Achievement Pay under the same terms as LMA members, with a stackable structure of 3.5% for a bachelor's degree and an additional 1% for a master's degree (total 4.5% if both are held).
For K&M Safety Holidays, Assistant Police Chiefs and Assistant Lifeguard Chiefs shall receive 3.7 hours per pay period of Holiday compensation as pay, while Assistant Fire Chiefs shall receive 5.26 hours per pay period. Effective July 12, 2025, the holiday benefit for K&M safety employees shall be tied to the retirement contributions required by members of their respective safety management associations.
Salary adjustments for K&M Safety employees are structured as follows:
Classification Group
Effective Date
Increase
Police Safety (all classifications)
June 28, 2025
4% (includes 3% previously scheduled + 1% additional)
Police Safety (all classifications)
First full pay period following July 1, 2026
4%
Police Safety (all classifications)
First full pay period following July 1, 2027
4%
Fire Safety (all classifications)
July 12, 2025
7% (includes 3% previously scheduled + 4% additional)
Fire Safety (all classifications)
First day of pay period following July 1, 2026
4%
Fire Safety (all classifications)
First day of pay period following July 1, 2027
4%
Lifeguard Operations (all members)
July 12, 2025
4%
Lifeguard Operations (all members)
First full pay period following July 1, 2026
4%
Lifeguard Operations (all members)
First full pay period following July 1, 2027
4%
Salary adjustments for the Police Chief and Assistant Police Chief classifications are tied to salary adjustments received by Police Lieutenants pursuant to the PMA MOU. Salary adjustments for the Fire Chief and Assistant Fire Chief classifications are tied to salary adjustments received by the Administrative Division Chief classification pursuant to the FMA MOU. Salary adjustments for the Assistant Chief, Lifeguard Operations, are tied to salary adjustments received by LMA Battalion Chiefs.
Each side letter agreement expressly states that it will not have the effect of an agreement and will not be binding on either party until approved by the City Council. Similarly, the K&M Resolution will not be binding until adopted by the City Council.
FISCAL IMPACT:
There is no new fiscal impact associated with these actions. Each side letter agreement and the K&M resolution is expressly intended to memorialize existing compensation practices already in effect, not to create new benefits or increase compensation. The retroactive amendments place the applicable compensation provisions directly within the governing MOUs and K&M Compensation Plan rather than relying on references to other City documents, thereby satisfying the written labor agreement and “condition of payment” requirements under Title 2 CCR Section 571(b) for CalPERS reporting purposes.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A – Resolution
A Resolution of the City Council of the City of Newport Beach, California, modifying the Key & Management Compensation Plan and approving side letters of agreement between the City of Newport Beach and the Newport Beach Police Association, Newport Beach Police Management Association, Newport Beach Fire Management Association, and Newport Beach Lifeguard Management Association.
September 8, 2026
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