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SARATOGA CITY COUNCIL
MEETING DATE: July 6, 2011 AGENDA ITEM:
DEPARTMENT: City Attorney CITY MANAGER: Dave Anderson
PREPARED BY: D. Mouser and M. LaBossiere DIRECTOR: Richard Taylor Labor Negotiating Team City Attorney
SUBJECT: SMO (Saratoga Management Organization) Side Letters of Agreement for
Reductions
RECOMMENDED ACTION:
Adopt resolution referencing the three Side Letters of Agreement with SMO agreeing to both
short-term and long-term reductions in compensation and/or benefits currently provided to the SMO-represented employees.
BACKGROUND:
SMO is the labor organization or exclusive representative of the directors employed by the City. SMO and the City’s labor negotiations team have met several times to bargain new economic
terms effective July 1, 2011, to support the City’s concern of declining revenue.
Recognizing that the City is still enduring a period of difficult economic conditions and
recognizing that significant structural changes to employee benefits are necessary for the long-term fiscal health of the City, SMO and the City’s negotiations team reached three side letter
agreements that contain the following items for long-term savings and short-term savings:
Long-term:
• For employees hired after July 1, 2011, the City’s contribution for medical insurance will be a specific amount set for each tier of coverage, with the employee paying the amount above
the City’s contribution level. ($600 for employee only, $1200 for employee and one
dependent, and $1500 for employee and two or more dependents).
• For employees hired after the City completes the PERS-required process, the retirement plan will be a second tier plan of 2% at age 60 plan using a three-year average compensation to
determine retirement benefits.
• Elimination of the longevity steps (performance incentive compensation) language from the
Memorandum of Understanding (impacting both current employees and future hires).
Short-term:
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• Effective July 1, 2011, each SMO unit member will contribute 7% of his/her compensation
on a pre-tax basis for the employee share of the CalPERS retirement program.
• Effective July 1, 2011, each SMO unit member will reduce his/her car allowance by $125 per month and receive an allowance of $275 per month.
• These items will remain in place for 4 years and will continue thereafter unless negotiated
otherwise.
• Council ratification of these three side letters is an agreement that these agreements are sufficient to address SMO’s portion of the budget shortfall and further reductions will not be
sought from SMO.
• The parties will continue to meet to discuss contract language issues.
FISCAL IMPACTS:
The monetary savings on a yearly basis is cumulative. In Fiscal Year 2011-2012, the savings
will be approximately $51,000 in total compensation and benefits.
CONSEQUENCES OF NOT FOLLOWING THE RECOMMENDED ACTIONS:
SMO unit members would continue to receive benefits as per SMO’s Memorandum of
Understanding.
ALTERNATIVE ACTION(S):
N/A
FOLLOW UP ACTION(S):
Payroll schedule will be adjusted to deduct the employee portion of the CalPERS contribution
from the gross salary of each SMO unit member and will register a $125 per month reduction in
the amount of auto allowance granted. In addition, payroll and human resource divisions will
remove the SMO positions as eligible positions for Performance Incentive Compensation (Longevity) effective July 1, 2011. The future scheduled longevity pay for SMO positions will
be cancelled.
ADVERTISING, NOTICING AND PUBLIC CONTACT:
Pursuant to Government Code 54954.2, this item was properly posted as a City Council agenda
item and was included in the packet made available on the City’s website in advance of the
meeting. A copy of the agenda packet is also made available at the Saratoga Branch Library each
Monday in advance of the Council meeting.
ATTACHMENTS: 1. Resolution
2. Three Side Letters of Agreement dated June 7, June 23, and June 30, 2011