TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Lisa Jenkins, Human Resources Director
SUBJECT:Title
Consideration of Resolutions:
a) Approving Employee Additional Cost Share for Classic Full-Time Sworn Unrepresented Employees Pursuant to CalPERS Government Code Section 20516; and
b) Authorizing Compensation and Benefits Changes for the Classification of Division Chief in the Full-Time Unrepresented Employees Group
(Human Resources Director Jenkins).
ADOPT RESOLUTION NOS. 23-0114 AND 23-0115
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council:
1. Adopt Resolution No. 23-0114 approving the provisions of Government Code section 20516 (Employees Sharing Additional Cost) for sworn classic unrepresented employees in the Full-Time Unrepresented Employees group.
2. Adopt Resolution No. 23-0115 authorizing amendments to the compensation and benefits for the classification of Division Chief (Fire).
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FISCAL IMPLICATIONS:
1. There are no fiscal implications associated with the recommended action regarding amending the City’s contract with CalPERS for additional employee cost sharing.
2. In comparison to the current compensation and benefits provided, the changes to the Division Chief salary change are estimated to cost $72,544 for the remainder of fiscal year 2023-24, and a total increase of $252,456 for the next three years (ending June 30, 2026).
BACKGROUND:
The California Public Employees Retirement System (CalPERS) retirement benefits are funded by contributions from the employee and employer and investment earnings. The sworn unrepresented employee contribution is fixed at 9% of each employee’s pensionable income for “classic” CalPERS members (or 50% of Normal Cost for “new members”). “Classic” members are defined as those employed within a CalPERS agency prior to the Public Employees Pension Reform Act of 2013 (PEPRA) and “new members” are those who entered the retirement system after January 1, 2013. Government Code section 20516 permits employees to contribute to the employer’s contribution through CalPERS cost sharing provisions.
In November 2020, the Fire Management Association (representing Battalion Chiefs) entered into an agreement with the City to contribute a 3% cost-share towards their retirement. In March 2022, the City Council approved a Full-Time Unrepresented Employees Compensation Plan <https://manhattanbeach.legistar.com/LegislationDetail.aspx?ID=5520389&GUID=85AA1FBD-5B33-4127-935A-1C8EAA780A00&FullText=1> that centralized the compensation and benefits for unrepresented employees into a dedicated document. In an effort to achieve the same contribution as all other sworn “classic” CalPERS members in the City (including employees in the Police Officers Association, Police Management Association and Firefighters Association), the City and public safety Chiefs (Police Chief and Fire Chief) also agreed to increase the employee contribution by way of a 3% cost sharing toward the employer contribution. In November of 2022, the Fire Management Association (FMA) was dissolved by the current Battalion Chief. The Battalion Chief classification was re-titled to Division Chief and the Division Chief was incorporated into the Full-Time Unrepresented Employees Compensation Plan <https://manhattanbeach.legistar.com/LegislationDetail.aspx?ID=5933194&GUID=598BB0F7-E468-4EE8-A92E-C29F483DCCFD&FullText=1>. The updated compensation plan incorporated the 12% employee contribution towards retirement for all sworn employees, including the 3% cost share. The City Council also approved adjustments to the compensation and benefits for the Division Chief in November of 2022.
On June 20, 2023, the City Council approved and adopted a Memorandum of Understanding (MOU) between the City and the Manhattan Beach Fire Association (MBFA) for the period of July 1, 2023 through June 30 2026. The City Council and the MBFA negotiated salary increases of 2.5% - 4.5% annually over the course of three years. In closed session on August 1, 2023, the City Council considered adjustments to the Division Chief salary range.
DISCUSSION:
In November 2022, the Division Chiefs became unrepresented and were formally added to the Full-Time Unrepresented Employees Compensation Plan. Currently, “classic” sworn unrepresented employees (Police Chief, Fire Chief, and Division Chiefs) contribute 12% towards their retirement (9% employee contribution and an additional 3% employer contribution cost sharing) in accordance with the Full-Time Unrepresented Employees Compensation Plan. In order to ensure that the employee contribution towards employer cost sharing continues to be made on a pre-tax basis pursuant to Government Code section 20516(a) and IRS Code section 414(h)(2), staff is recommending ratification of this action through Resolution No. 23-0114. Approval of this resolution will allow staff to initiate the process to amend the City’s retirement contract with CalPERS. In accordance with CalPERS requirements, the resolution approving the additional employee cost sharing includes the signatures of all unrepresented impacted employees as an exhibit.
Additionally, staff recommends the City Council formally approve the compensation and benefits changes that Council provided authority for in closed session on August 1, 2023. These compensation adjustments to the Division Chief were recommended to prevent salary compaction between the Fire Captain and Division Chief ranks with the goal of encouraging succession planning and future promotions to leadership positions from within the Fire Department.
The salary adjustment provides an approximately 10% differential in pensionable income between the top step Fire Captain/Paramedic (including specialty pays) and the Division Chief, thereby providing an incentive for internal promotion. If approved by Council, the following are the salary adjustments to the Division Chief range that will be provided in the amended compensation plan in lieu of the future increases outlined in the current compensation plan:
• Increase of 7.64% effective September 9, 2023 (resulting monthly salary: $19,956)
• Increase of 2.43% effective the beginning of the pay period following July 1, 2024
• Increase of 2.92% effective the beginning of the pay period following July 1, 2025
The recommended amendments to the compensation plan also include an increase in the annual holiday hours provided from 123 to 139 to mirror the number of hours provided to employees in the MBFA as a result of the recent negotiations. If the compensation and benefits adjustments are approved, staff will return to the City Council with amendments to the Full-time Unrepresented Compensation Plan reflecting these changes.
PUBLIC OUTREACH:
Staff determined that additional public outreach is not required for this issue.
LEGAL REVIEW:
The City Attorney has approved the resolution and employment agreement as to form.
ATTACHMENTS:
1. Resolution 23-0114
2. Resolution 23-0115