CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
7/14/2025
1 SUBJECT:
Resolution approving the Compensation and Benefits Plan for the Unrepresented Employee Group for the period of July 1, 2025, through June 30, 2028.
RECOMMENDED ACTION:
Adopt the resolution approving the Compensation and Benefits Plan for the Unrepresented Employee Group for the period of July 1, 2025, through June 30, 2028, including the revised salary schedules effective July 1, 2025, July 1, 2026, and July 1, 2027. Following Council approval, staff will ensure the Compensation and Benefits Plan is fully updated, including making any necessary technical corrections, addressing remaining typographical errors, updating the table of contents, finalizing the document for signature, and posting the final version online.
STAFF CONTACT:
Zach Harris, Human Resources Manager
650-339-3461
[email protected]
Yulia Carter, Assistant City Manager
650-501-6004
[email protected]
Marisol Gómez, Director of Finance and Administrative Services 650-501-0257
[email protected]
BACKGROUND:
The current Compensation and Benefits Plan for the Unrepresented Employee Group within the City of Pacifica expired on June 30, 2025.
The City of Pacifica has negotiated in good faith and reached agreements with most of its represented bargaining units regarding wages, hours, and other terms and conditions of employment, in accordance with the Meyers-Milias-Brown Act (MMBA). Approval of those agreements is included on the Consent Agenda for Council consideration.
As the Unrepresented Employee Group does not have recognized bargaining representation, the City did not engage in formal negotiations with this group. However, proposed amendments to the Unrepresented Compensation and Benefits Plan are designed to be consistent with provisions applicable to represented employee groups. These amendments align with the City's citywide framework, which provides for targeted equity adjustments to classifications falling below market based on the findings of the Citywide Total Compensation Survey conducted by an independent classification and compensation consulting firm.
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DISCUSSION:
Challenging Fiscal Realities
Fiscal and organizational stability remains one of the City Council’s top priorities. While the City continues to deliver high-quality programs and services, as highlighted during the Fiscal Year 2025-26 budget development process, it is becoming increasingly difficult to do so in a financially sustainable manner without identifying and pursuing additional long-term revenue sources.
The City's tax revenue base remains significantly lower than the majority of Bay Area cities, even with the voter-approved 2022 Measure Y Transaction and Use Tax and increase in the Transient Occupancy Tax to 15% in 2024. Despite these measures, the City's long-term financial outlook remains unsustainable to maintain current levels of municipal services and address future fiscal challenges. Projected revenue losses from recent changes to the ShortTerm Rental Ordinance, and reduced Cannabis Tax revenues have further contributed to a significant, ongoing multi-million-dollar structural deficit. At the same time, the cost of delivering services continues to rise due to inflation, increased personnel costs, and unfunded liabilities related to pension and OPEB. On June 23, 2025, the City Council adopted the City Manager’s recommended budget-balancing strategies, which included one-time policy adjustments such as reallocating Excess ERAF, pausing the annual pension trust contribution, and utilizing debt service fund relief to offset upcoming payment obligations. While these measures were necessary to achieve a balanced budget for FY 2025-26, they are not sustainable long-term solutions and underscore the urgency of identifying ongoing revenue sources to ensure the City’s fiscal stability.
On July 2, the second day of the new fiscal year, the City received notice that the adopted State Budget reduced the amount of Vehicle License Fee (VLF) backfill funding the City had anticipated by $772,000. In anticipation of this potential outcome, the City Council had previously approved a contingency strategy to offset the shortfall by reducing General Fund reserves in FY 2025-26. As a result, the adopted budget is no longer structurally balanced but instead relies on one-time use of fund balance and other temporary measures that may not be viable or available in future years.
Challenging Labor Market
The 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 ongoing challenges presented by the highly competitive Bay Area labor market. Like many public agencies in the region, the City continues to face significant recruitment and retention difficulties, with a historical turnover rate of approximately 16.8%. Turnover rate was calculated by dividing the number of full-time employee separations during the fiscal year by the average number of full-time employees over the same period. These challenges often result in multiple recruitment efforts for key professional and management positions. Replacing these roles is often difficult, timeconsuming, frequently resulting in the loss of valuable institutional knowledge, and placing additional increased demands on staff for training and onboarding of new employees.
On average, the City is running a vacancy rate of approximately 12% translating into 22-23 vacant positions at any given time. This continuing staffing challenge is due in part to the fact Pacifica City Council 3
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that over 95% of City job classifications fall below market in total compensation, ranging from as little as 5% to as much as over 30% below comparable positions in other agencies in San Mateo County. However, as outlined above, the City does not have sufficient resources to bring them all to the market median at once.
While the FY 2025-26 Adopted Budget does not include assumptions regarding the outcome of current labor negotiations, addressing this structural and organizational challenge remains a clear City Council priority.
Two years ago, as part of the labor contracts that recently expired, the City Council authorized an unprecedented compensation strategy focused on equity. Specifically, the Council approved targeted, classification-specific equity adjustments based on how far below market each classification was placed. This thoughtful and strategic approach (aligned on the Council’s commitment to fiscal and organizational stability) helped improve the City’s overall market positioning. As a result, the City was able to reduce its average vacancy rate from 16.8% and successfully fill several critical roles, including key positions at the Division Manager and Department Director levels.
Despite these efforts, the City remains uncompetitive in many classifications, and the worsening fiscal outlook has made it increasingly difficult to maintain progress initiated during the last negotiations. Nevertheless, instead of reverting to concession bargaining, a traditional approach during times of structural deficits, the City is pursuing to continue an equity-driven strategy that reflects its ongoing priority to attract and retain a talented workforce. This strategy includes budgeting for salary savings equivalent to 5% of total salaries and benefits. While this is not a fiscally sustainable practice, it is a necessary short-term measure given current financial realities and critical staffing priorities.
Compensation Framework
The Council reaffirmed its commitment to addressing these issues through the adopted Strategic Plan, specifically Strategic Goal #1: Enhance Organizational and Fiscal Stability. The Council authorized the City's management team to pursue labor agreements that include targeted equity adjustments for classifications more than 5% below market, in addition to costof-living adjustments (COLA) for all classifications to help improve market placement for those severely below market and maintain market alignment where it already exists. Per Council’s direction, this strategy places particular emphasis on public safety classifications, which play a critical role in protecting the community and ensuring the continuity of essential emergency and safety services. These efforts are especially sensitive, given the critical staffing challenges in the Police Department, which is currently operating with four vacant sworn positions and five officers out on medical or other leave, straining the department’s ability to maintain core patrol and response services.
While the current labor package reflects the City's best efforts within limited fiscal constraints, it is not sufficient on its own to fully address the City’s market competitiveness. Looking ahead, the labor market is expected to remain a significant challenge in the coming years. Continued progress will require not only sustained investments in the workforce but also strategic revenue enhancement to provide the resources necessary to improve market placement and maintain service delivery. Without additional ongoing revenue, the City’s ability to attract, retain, and support a high-performing workforce, and deliver critical services to the community, will remain at risk.
The package includes annual COLA wage increase, specified below. In addition, a structured equity adjustment, mirrored to other labor groups, was proposed as a Citywide framework to Pacifica City Council 4
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gradually bring all City classifications to market over time, consistent with the City’s previously adopted compensation philosophy. Under the proposed framework, members whose salaries were more than 5% below market, would receive an equity adjustment outlined in the table below, and would additionally receive a one percent (1%) COLA increase for FY 2025 / 26, and FY 2026 / 27.
Per City’s current compensation philosophy, positions that are up to 5% below market threshold are considered to be “at market” and would receive a one and half percent (1.5%) COLA increase for FY 2025 / 26, and FY 2026 / 27. Those that are below that threshold would receive 1% COLA and the equity adjustments. Positions in the 20% below market range category would receive a two percent (2%) COLA wage increase, plus a one-time additional step increase to their classification’s top step for a total of seven percent (7%) adjustment to a top-step salary in the third year of the contract. Classifications in the 25+% below market range would receive a 2% COLA and two additional 5% step increases will be added to their classifications in year three, resulting in total 12% adjustment to the top-step salary, subject to standard 5% annual merit-based step progression.
These structured equity adjustments were proposed as a Citywide framework approach to all labor groups in order to gradually bring all City classifications to market over time, consistent with the previously developed compensation philosophy. They are tied directly to how far below market each classification currently falls, based on data from the Citywide Total Compensation Survey conducted by an independent classification and compensation consulting firm.
In year 3, all employees receive a 3% COLA adjustment, except for those classifications eligible for extra steps based on their current market placement. Those classes will receive 2% COLA in the third year of the contract
With Pacifica's persistently low staffing levels and below-market employee compensation compared peer agencies, and limited revenue sources to fund critical services, infrastructure and other capital needs, this labor package represents a significant and strategic Council’s investment in the City workforce. It reflects the Council’s strong commitment to maintaining high-quality municipal services by supporting City staff, even within a constrained fiscal environment, as a key priority for long-term organizational stability.
The following adjustments are recommended to ensure fair and competitive compensation for the City’s unrepresented employee groups, which include executive, management, and confidential staff who are not covered by collective bargaining agreements.
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The City Clerk classification is proposed to be designated as an executive-level position under the new Unrepresented Employee Compensation and Benefits Plan. This realignment would allow the position to receive executive benefits, aligning it with other department head-level roles in the organization. In addition to receiving equity-based salary adjustments through the citywide compensation framework, this change would modestly improve the City Clerk’s overall compensation placement.
This recommendation also reflects recent trends across San Mateo County, where several comparable agencies have elevated the City Clerk position to executive status over the past two years. As a result, Pacifica’s City Clerk classification currently ranks at the bottom of the compensation survey conducted by the City’s independent classification and compensation consultant. The proposed change is intended to help with market competitiveness, ensure consistency with regional practices, and support recruitment and retention of talent in this key leadership role.
To enhance the overall competitiveness of the unrepresented benefits package and support employee retention, an additional 1% matching City contribution is being offered to unrepresented employees for their deferred compensation plan. This is in addition to the continuation of the existing 2% match, which was previously set to expire in June 2025. Unlike many represented classifications, unrepresented employees do not receive specialized benefits such as longevity, bilingual pay, educational incentive, or certification pay, uniform or safety shoe allowances (available to misc. employees in other groups). The additional deferred compensation match helps close that gap and maintain competitive total compensation.
To recognize and retain talent in leadership roles, the proposal also includes a longevity incentive providing an additional 1% increase to base salary for unrepresented executive and management employees who have completed more than five years of service with the City. This modest but meaningful benefit acknowledges institutional knowledge, sustained contributions, and the demands of leadership roles, particularly in a competitive regional labor market.
This recommendation is also informed by the City’s recent experience: over the past year, Pacifica conducted simultaneous recruitments for four department head positions and three division manager roles. These overlapping vacancies created significant organizational strain, impacted internal capacity, and challenged the City’s ability to effectively deliver on key priority initiatives outlined in the Council’s Strategic Plan. The proposed longevity incentive is intended to support greater stability in the City’s leadership team, promote internal succession planning, and reduce costly turnover among unrepresented management employees. Notably, the entire Executive Team’s salaries remain significantly below market compared to peer agencies, further heightening the risk of turnover.
Given that the current team is almost entirely new, only one employee would qualify for this benefit immediately, with one additional employee potentially qualifying near the end of the second year of the contract. As a result, the fiscal impact of this is minimal, estimated at approximately $2,000 over the life of the agreement, while the long-term organizational benefits are significant.
A copy of the updated Salary Schedule is attached as Exhibit 1. Following Council approval, staff will ensure the Compensation and Benefits Plan is fully updated, including making technical corrections, fixing the table of contents, finalizing the document for signature, and posting the final version online. In addition, staff will bring back to the Council a redlined version of the complete Compensation and Benefits Plan reflecting all approved updates for formal adoption.
ALTERNATIVE ACTION:
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The City Council may choose not to approve the proposed salary and benefit adjustments for unrepresented employees at this time and may direct staff to revise the recommendations.
RELATION TO CITY 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 2025-26 fiscal impact associated with the Unrepresented Employee Group, is estimated to be approximately $158k, with $130k in General Fund. The second year (FY 2026-27) of the contract will result in an additional incremental increase of nearly $325k. The third year (FY 2027-28) of the contract will result in an additional incremental increase of nearly $539k.
The current FY 2025-26 Budget will be amended during the mid-year budget review to include this increased cost and corresponding salary savings for a net zero change across all affected funds. The following FY 2026-27, and FY 2027-28 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
ATTACHMENT LIST:
Attachment A: Resolution for approving Salary Schedule for Unrepresented Employees (PDF) Attachment B: AppendixA_Unrep FINAL (DOCX)