CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
7/10/2023
1 SUBJECT:
Consideration of the Unrepresented Employee Group Revised Salary Schedule and Benefit Plan.
RECOMMENDED ACTION:
Adopt the resolution approving the Unrepresented Employee Group Compensation and Benefits Plan for the period of July 1, 2023, through June 30, 2025, including the revised salary schedule effective July 1, 2023, and July 1, 2024.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650)738-7301
[email protected]
Irene Camarena, Human Resources Manager
(650)738-7303
[email protected]
BACKGROUND/DISCUSSION:
The current Memoranda of Understanding with all represented bargaining groups within the City expired on June 30, 2023. The City of Pacifica (City) has negotiated in good faith and reached agreements with most represented groups regarding wages, hours, and other terms and conditions of employment in accordance with the Meyers-Milias-Brown Act (MMBA). The approval for those agreements is on the consent agenda.
On June 26, 2023, the City negotiation committee met with the members of the Management, Confidential, and Safety Management Employee Group. The Unrepresented Employee Group does not have a recognized bargaining representation, therefore, the City did not bargain with the Group. However, amendments to the Unrepresented Compensation and Benefits Plan are consistent with the other bargaining groups' provisions and align with the citywide framework approach to provide targeted equity adjustments to classifications below marked based on the citywide salary survey conducted by an independent compensation and classification consulting firm.
DISCUSSION
Fiscal and organizational stability is one of the Council's top priorities as the City continues to provide quality programs and services in a financially sustainable manner. In the previous years, the City's long-term financial forecast projected a significant multi-million ongoing structural deficit.
Because Pacifica residents approved Measure Y Transaction and Use Tax during the last elections, the Council adopted a structurally balanced FY 2023-24 Budget on June 26, 2023.
Although the passage of Measure Y was a considerable achievement for Pacifica that resolved Pacifica City Council 2
July 10, 2023
the City's ongoing structural deficit, the updated financial outlook only covers the current level of municipal services. The projected revenues from Measure Y will not be sufficient to address other critical organizational needs. The cost to deliver services and City operations has increased due to inflation, personnel costs, and unfunded liabilities related to pension and OPEB. Although Measure Y essentially helped balance the budget deficit, the City's tax revenue base remains significantly lower than the majority of Bay Area cities, and the City's long-term financial outlook is not sustainable to address future fiscal challenges.
Specifically, the challenging labor market remains one of the ongoing challenges the City will likely continue facing in the upcoming years.
Staff has previously shared with the Council the challenging labor market condition in the Bay Area. Like many Bay Area agencies, the City has been experiencing critical recruitment and retention challenges (over 30% turnover rate), having to conduct multiple recruitments for the most critical professional and management positions and their replacement is often challenging, taking a long time and often results in loss of institutional knowledge and substantial training and onboarding needs.
On average, the City is running a 10-15% vacancy rate, translating into 19-28 vacant positions at any given time. This is partially because more than 2/3 of City classifications appear below market in total compensation. Yet, the City does not have sufficient resources to bring them all to the market median at once.
Although the Adopted FY 2023-24 Budget does not include any assumptions for the outcome of the labor negotiations with all labor groups, the City Council made a commitment to start addressing this structural, organizational challenge as part of their recently adopted Strategic Plan and specifically, strategic goal #1 to Enhance Organizational and Fiscal Stability. The Council authorized the City's management team to negotiate labor agreements that include the citywide targeted equity adjustments to those classifications that are significantly (above 5%) below market, in addition to regular cost-of-living adjustments (COLA) to all classifications to help keep those positions currently at market as such.
Similar to the rest of labor agreements, the unrepresented employee groups (Executive, Management, and Confidential) will receive a two percent 2% annual COLA wage increase, plus structured equity adjustment to eligible classifications in each contract year. The structured equity adjustments are being implemented as a Citywide long-term framework approach to all labor groups to help eventually bring all City classifications to market per previously developed compensation philosophy. The structured equity adjustments are based on how far below market compensation for a specific classification falls according to the Citywide Total Compensation Survey conducted by the independent classification and compensation consulting firm. The structured equity adjustments range from 1%-4% each year of the contract, as illustrated in the table below (citywide/unrep.):
Below
Market
# of Affected
Classifications
(citywide/unrep.)
Equity
Adjustment
0-5% 24 / 8 0%
5-10% 19 / 2 1%
10-15% 21 / 3 2%
15-20% 10 / 2 3%
20+% 12 / 1 4%
Pacifica City Council 3
July 10, 2023
With Pacifica's perennial low staffing levels and below-market employee compensation compared to cities in our region, and limited revenue sources to fund critical infrastructure and other capital projects, this unprecedented package represents a strong commitment by the City Council to maintain the high level of municipal services by supporting this extraordinary investment in City staff to address the ongoing recruitment and retention challenges while maintaining long-term financial sustainability. The Council also committed to amending the FY 2023-24 Budget to include increased labor costs once the new agreements are approved and executed.
The redlined copy of the agreement is attached in Exhibit 1, together with the resolution to approve the Unrepresented Employee Group Revised Salary Schedule and Benefit Plan.
After Council approval, Staff will ensure the Compensation and Benefits Plan is properly cleaned up and all technical corrections are made, including any remaining typos, fixing the tables of contents, finalizing the documents for signature, and eventually posting online.
ALTERNATIVE ACTION:
None identified. Provisions of the Unrepresented Compensation and Benefits Plan are consistent with negotiated terms for represented units.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
The recommended action is consistent with the following Council goal: "Enhance organizational and fiscal stability" includes strategies to improve staff retention, recruitment, mental health, and wellness resources and increase staffing for rising workloads.
FISCAL IMPACT:
The FY 2023-24 fiscal impact associated with all labor agreements, including the unrepresented groups, is estimated to be approximately $1.4 million, with $1.2 million in General Fund. The second year of the contract will result in an additional incremental increase of nearly $1.1 million, including $0.9 million in the General Fund.
The cost associated with the Unrepresented Group employees is estimated at $145,000 in year one (FY 2023-24) and an incremental increase of $116,000 in year two (FY 2024-25).
The current FY 2023-24 Budget will be amended in a future meeting to include this increased cost and the following FY 2024-25 will also include salary savings assumptions built in the budget to accommodate the increased salaries and benefits over the life of these agreements.
ORIGINATED BY:
Human Resources
City Manager
ATTACHMENT LIST:
RESOLUTION UNREPRESENTED EMPLOYEE GROUP - APPENDIX A-1 (DOCX) EXHIBIT 1 - Unrepresented Management & Confidential Employees Group - 2023-2025 draft (PDF)