HomeMy WebLinkAboutE-15 Staff Report - Side Letter of Agreement for AMMACONSENT ITEM
E-15
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: NOVEMBER 18, 2019
SUBJECT: APPROVAL OF SIDE LETTER OF AGREEMENT BETWEEN THE CITY OF
AZUSA AND THE AZUSA MID-MANAGEMENT ASSOCIATION
BACKGROUND:
The City’s Memorandum of Understanding (MOU) with the Azusa Mid-Management Association
(AMMA) expired on June 30, 2018. Both parties were in negotiations for nearly 17 months and have
not been able to reach an agreement for an amended MOU. This action approves a Side Letter of
Agreement extending the term of the AMMA MOU ended June 30, 2018 through June 30, 2020.
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1)Approve the attached Side Letter of Agreement to extend the term of the Azusa Mid-
Management Association Memorandum of Understanding ended June 30, 2018 through June
30, 2020.
ANALYSIS:
The Negotiation sessions consisted of several discussions of the City of Azusa’s growing concern
related to Other Post-Employment Benefits (OPEB) costs, San Gabriel vs. Flores decision and Flexible
Benefit Plan: specifically, Cash in Lieu Payments. Other discussions consisted of the City’s desire to
reduce the City’s structural budget deficit by not providing on schedule Cost of Living Adjustment
(COLA) increases over the term of this contract.
The MOU between the City of Azusa and Azusa Mid-Management Association (AMMA) expired on
June 30, 2018. Azusa Mid-Management group is the first line bridge between Executive Management
and other department staff. The group mostly consists of major division leaders within each City
department. The expectation of AMMA is to provide a leadership role in carrying forward key Cit y
initiatives.
APPROVED
CITY COUNCIL
11/18/2019
AMMA Side Letter of Agreement
November 18, 2019
Page 2
After nearly 17 months of negotiations, on September 5, 2019, the City was notified that AMMA
rejected the City’s Last, Best & Final Offer (LBFO) and wanted to pursue a status quo deal for the
contract term beginning July 1, 2018. As directed by Council, the City Manager offered AMMA a fair
short-term contract without greatly impacting the City’s rising pension obligation, taking steps to tackle
the City’s growing OPEB liability while still offering a health retirement option to incoming members.
Notable terms of the City’s LBFO included:
• Payment of Single Lump Sum Stipend of 3% of the employee’s base salary for Fiscal Year
2018/19 and another 3% for Fiscal Year 2019/20 (for a total of 6%)
• Increase in City paid Deferred Compensation from $150 to $250 per month
• Increase in Education Incentive from $121 to $200 per month
• Increase to Flex Benefit Plan from $1,346 or $1,200 (depending on hire date) to $1,400
o Including reduction of flex benefit cash outs from $1,346 to $1,000
• Replacement of Lifetime Medical with a Health Retirement Account for new hires
• Cleanup of necessary language to be consistent with actual benefits legally provided
The City made great effort to come to an agreement with AMMA and to move forward with the
negotiation process, and while AMMA agreed to some of the terms in the Last, Best & Final Offer, the
group also wanted the City to consider the following:
1. Creating a Non-PERSable Management Incentive Program
2. Increasing the Deferred Compensation contribution to $300
3. Increasing Administrative Leave to 70 hours
4. Removing clean up language to several areas in the contract with the exception of Life Insurance
These requests were not reasonable from the City’s perspective as some of the benefits being requested
by AMMA would put them on par with Executive Management benefits and trigger fairness clauses in
other bargaining contracts which would amount to greater costs to the City beyond the AMMA group.
The City has been able to come to an agreement with the five other groups who were in negotiations this
round, all of which who made concessions to assist the City with: not adding to projected budget deficits
of $2.1 to $3.3 million annually over the next five years, reducing the City’s $47 million OPEB liability,
and took steps necessary to ensure the City’s cafeteria plan remains bonafide and a tax free program.
Staff believes the City would have a good case to impose the terms offered in the LBFO through June
30, 2020. However, Staff reluctantly recommends Council approve a status quo contract through June
30, 2020 in order to avoid spending additional taxpayer dollars to go through the impasse process as the
cost of impasse in this instance is greater than the temporary benefits to be achieved.
Instead of the City paying out an estimated $167,935 for imposing its LBFO, it saves $210,655 for no
changes in contract terms. Serious considerations for tackling the City’s long-term liabilities still exist
and Staff hopes the AMMA membership will take a leadership role in assisting with these initiatives in
the future.
AMMA Side Letter of Agreement
November 18, 2019
Page 3
FISCAL IMPACT:
The cost of the Last, Best & Final Offer made to the AMMA group would have included a one-time
payment of $152,225 and ongoing net costs of $58,430 for a total of $210,655, of which 37% is
allocated to the General Fund. Estimated impasse procedures are $50,000 plus one fiscal year of the
LBFO terms. Imposing terms of the LBFO is only estimated to save $168,800 with benefits reverting
back July 1, 2020 and subject to renegotiation. Therefore, the savings from a status quo contract
($210,655) outweigh the cost the estimated $50,000 cost of impasse procedures plus the one year
payouts of impasse at $117,935.
Prepared by: Reviewed and Approved:
Talika M. Johnson Sergio Gonzalez
Director of Administrative Services City Manager
Attachment:
1. AMMA Side Letter of Agreement