TO: HONORABLE MAYOR FROM: Jennifer Schembri
AND CITY COUNCIL
SUBJECT: SEE BELOW DATE: March 30, 2022
Approved Date
3/30/2022
SUBJECT: TERMS OF SIDE LETTER AGREEMENT WITH THE SAN JOSE POLICE OFFICERS’ ASSOCIATION AND THE INTERNATIONAL
ASSOCIATION OF FIRE FIGHTERS, LOCAL 230 EXTENDING THE
TRIPARTITE RETIREMENT MEMORANDUM OF AGREEMENT
DESCRIBED IN THE ALTERNATIVE PENSION REFORM
SETTLEMENT FRAMEWORK AGREEMENT THROUGH JUNE 30, 2030
RECOMMENDATION
Adopt a resolution approving the terms of the side letter agreement between the City and the San Jose Police Officers’ Association and the International Association of Fire Fighters, Local 230 extending the Tripartite Retirement Memorandum of Agreement described in the Alternative Pension Reform Settlement Framework Agreement through June 30, 2030.
OUTCOME
The approval of the resolution will result in the Tripartite Memorandum of Agreement described in the Alternative Pension Reform Framework Agreement being extended for five years through 2030.
BACKGROUND
In July 2015, the Council approved the Alternative Pension Reform Settlement Framework Agreement (Framework Agreement) with the San Jose Police Officers’ Association (SJPOA) and the International Association of Fire Fighters, Local 230 (IAFF, Local 230). The Framework Agreement was a settlement with the SJPOA and IAFF, Local 230 regarding litigation over Measure B, otherwise known as the Pension Reform Act. The Framework Agreement contained a provision that the parties would enter into a Tripartite Retirement Memorandum of Agreement (MOA) to memorialize all agreements related to retirement, which would expire on June 30, COUNCIL AGENDA: 04/12/22
FILE: 22-482
ITEM: 3.3
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2022
Subject: Terms of Side Letter Agreement with the San Jose Police Officers’ Association and the International Association of Fire Fighters, Local 230 Extending the Tripartite Retirement Memorandum of Agreement Described in the Alternative Pension Reform Settlement Framework Agreement Through June 30, 2030.
2025. During the term of the Tripartite Memorandum of Agreement, the parties would need to mutually agree to meet and confer over any retirement issues that arise.
In November 2019, the City formed the Retirement Stakeholder Solutions Working Group (the “Working Group”) with the stated purpose of developing a shared understanding of the issues facing the City's retirement systems and to collaboratively develop a list of recommendations to be presented to City Council for review and consideration. The Working Group was comprised of representatives from a range of active and retired stakeholder groups representing active City bargaining groups, Federated and Police and Fire retirees, community groups, City Council, two members of each Retirement Board and City staff. The Working Group met nine times between November 2019 and February 2021. The Working Group explored various options and avenues to reduce the City’s unfunded pension liability, including the issuance of pension obligation bonds. A summary of the options explored by the Working Group are summarized in a final report dated April 2, 2021.
On October 5, 2021, the City Council adopted a resolution authorizing the issuance and sale of pension obligation bonds for the purpose of refunding certain pension obligation owed by the City; and directed the Administration to initiate validation proceedings to confirm the City’s authority. The City’s ability to issue any pension obligation bonds in the future is subject to a favorable judgment from the Superior Court of Santa Clara County. Any actual pension obligation bond issuance will depend on the retirement plan funding level and market conditions at the time of issuance. The City filed the Complaint for Validation with the Superior Court of Santa Clara County on November 18, 2021. The publication of Summons in the newspaper was completed on January 17, 2022. City’s eleven bargaining units were also provided with the Summons and Complaint for Validation as “interested persons” in the City’s validation action in December 2021. Any “interested person” including bargaining units could have filed an answer before January 27, 2021.
ANALYSIS
Prior to the deadline to file an answer to the complaint on January 27, 2022, the City received an inquiry from the SJPOA expressing concerns regarding the risk of pension obligation bonds and that this could result in the re-negotiation of retirement benefits. In order to provide security to employees, the POA proposed a side letter to extend the Tripartite retirement memorandum of agreement by five years to 2030, and in return, the SJPOA agreed to not file an answer to the pension obligation bond validation action or support any person that opposes the validation action. The Administration recommends approving the side letter; and proposed the same extension to IAFF, Local 230, who is the other party in the tripartite agreement. The additional five years provides reassurance and stability to the City’s workforce regarding retirement benefits, while allowing the City to pursue the Court validation process. Ratification by the SJPOA and IAFF membership is ongoing but will be completed prior to the April 5 th Council
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2022
Subject: Terms of Side Letter Agreement with the San Jose Police Officers’ Association and the International Association of Fire Fighters, Local 230 Extending the Tripartite Retirement Memorandum of Agreement Described in the Alternative Pension Reform Settlement Framework Agreement Through June 30, 2030.
meeting. The same offer has been made to the other nine bargaining units relating to the Federated Alternative Pension Reform Settlement Framework Agreement, but no agreement has yet been reached.
CONCLUSION
Should the Council approve the five-year extension to the Tripartite Retirement Memorandum of Agreement between the City, Local 230 and the SJPOA, the terms of the MOA will continue through 2030. If the parties wish to meet and confer over any of the items in the MOA, they will need to do so upon joint agreement.
EVALUATION AND FOLLOW-UP
The City will follow up with the Council on any further actions related to the validation action as needed.
CLIMATE SMART SAN JOSE
The recommendation in this memorandum has no effect on Climate Smart San José energy, water, or mobility goals.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the April 12, 2022 Council Meeting.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office.
COMMISSION RECOMMENDATION/INPUT
No commission recommendation or input is associated with this action.
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2022
Subject: Terms of Side Letter Agreement with the San Jose Police Officers’ Association and the International Association of Fire Fighters, Local 230 Extending the Tripartite Retirement Memorandum of Agreement Described in the Alternative Pension Reform Settlement Framework Agreement Through June 30, 2030.
CEQA
Not a Project, File No. PP17-010, City Organizational & Administrative Activities resulting in no changes to the physical environment.
JENNIFER SCHEMBRI
Director of the City Manager’s Office of Employee
Relations/Director of Human Resources
For questions, please contact Cheryl Parkman, Assistant to the City Manager, at [email protected] or (408) 535-8152.
Attachments:
Attachment A: Side Letter with SJPOA
Attachment B: Side Letter with IAFF, Local 230
2/9/2022
2/9/2022
2/25/2022
2/25/2022