To: Sonoma County Board of Supervisors
Department or Agency Name(s): Human Resources Department
Staff Name and Phone Number: Jeremia Mills, 707-565-3228
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Memorandum of Understanding between the County of Sonoma and Engineers and Scientists of California, Local 20
End
Recommended Action:
Recommended action
Adopt a Resolution approving the Memorandum of Understanding (MOU) between the County of Sonoma and Engineers and Scientists of California, Local 20 (ESC) for the period June 6, 2023 through March 25, 2026.
end
Executive Summary:
Representatives of the County and Engineers and Scientists of California, Local 20 (ESC) met and conferred and reached a Tentative Agreement and Side Letters regarding negotiated changes to the terms and conditions of employment for a successor Memorandum of Understanding (MOU) to be effective , 2023 through March 25, 2026 (Attachment A).
ESC membership has voted and ratified the tentative agreements.
All negotiated changes for the 2023-2026 successor MOU and Side Letters must be noticed at a public meeting (Cal Gov’t Code 23026) and become effective upon adoption by the Board of Supervisors, unless otherwise specified in the Tentative Agreement. The actuarial valuation of the impacts of salary changes on the funding status of the Sonoma County Employees Retirement Association (SCERA) are outlined below and in Attachment B (Cal Gov’t Code §7507 and §31515.5).
The actuarial valuation of the impact of negotiated changes outlined in Article 10 of the Tentative Agreement on the County’s liability for Other Post-Employment Benefits (OPEB) and future costs, are outlined below and in Attachment C (Cal Gov’t Code §7507 and §31515.5). In accordance with Government code section 7507, your Board received and reviewed the actuarial information from Segal Consulting at your Board meeting on May 23, 2023, which is required prior to acting on this change. All required public information and disclosures have been made.
Discussion:
Representatives of the County and ESC met and conferred and reached a Tentative Agreement regarding the terms and conditions of employment, for a three-year term.
The following is a summary of the major provisions negotiated in this agreement:
Term of Successor MOU:
June 6, 2023 - March 25, 2026
Salary - Cost of Living Adjustments (COLA):
During the three-year term, all job classifications covered by this MOU will be provided annual cost-of-living adjustments based upon the following schedule:
• Effective June 13, 2023 - 5% COLA
• Effective April 2, 2024 - 4% COLA
• Effective April 1, 2025 - 4% COLA
Salary - Market/Equity Adjustments:
Effective the pay period beginning May 30, 2023 for the June 23, 2023 pay date, and contingent upon Board approval, the County will provide market equity adjustments by increasing the adjusted A-I Steps of each job classification in Appendix A of the ESC MOU, where the benchmark for those classifications was below the market average. While most benchmark increases range from 1.6 % to 6.5%, a few specialized classifications will have significant increases, such as Public Health Nurse at 9.1%, and Staff Psychiatrist at 15.9%. All increases are outlined in Appendix A-1 of the ESC MOU.
The County will concurrently increase the A-I Steps of each non-benchmark classification salary scale based on the County’s internal salary administration alignments.
Salary - Hourly Cash Allowance:
• Effective June 27, 2023, the hourly cash allowance will be eliminated
• Effective the first full pay period in July 2023, and July 2024, in consideration of the above, each regular, full time, employee hired prior to June 30, 2023 in a step below the “I” step of the salary scale, shall receive a one-time, non-recurring, pensionable lump sum payment in the amount listed below:
|
Salary Step as of 6/30/23 |
Hourly Roll-In* |
Payment July 2023 |
Payment July 2024 |
|
A-step |
$2.84/hr |
$1,268.80 |
$811.20 |
|
B-step |
$2.91/hr |
$1,123.20 |
$540.80 |
|
C-step |
$2.98/hr |
$977.60 |
$374.40 |
|
D-step |
$3.05/hr |
$832.00 |
$208.00 |
|
E-step |
$3.13/hr |
$665.60 |
$20.80 |
|
F-step |
$3.21/hr |
$499.20 |
- |
|
G-step |
$3.29/hr |
$332.80 |
- |
|
H-step |
$3.37/hr |
$166.40 |
- |
• Increases the “I” step of all job classifications covered by the MOU by $3.45/hour
• Increases AODS Specialist salary differential from AODS Counselor II by 7.5%
Deferred Compensation:
• Effective the first full pay period of April 2025 and again in March 2026, provides a County contribution of $1,000 into the County’s 401(a) plan for permanent employees hired prior to April 17, 2023
Pension/Retiree Medical:
• Retiree Medical - Revises Article 10 to allow portability of retiree medical contributions to pre-2009 hired employees who retire on or after July 1, 2023 and move out of a medical plan service area
Health & Welfare:
The County’s monthly contribution towards medical plan premiums will be based upon the following schedule:
|
Effective Date |
June 13, 2023 |
May 14, 2024 |
May 13, 2025 |
|
Employee Only |
$851/mo. |
$893/mo. |
$938/mo. |
|
Employee + 1 |
$1701/mo. |
$1786/mo. |
$1876/mo. |
|
Employee + 2 or more |
$2405/mo. |
$2525/mo. |
$2652/mo. |
• Discontinues County Health Plan PPO and EPO to new enrollment
Time Off/Leaves:
• Holiday - includes additional floating holiday of 8 hours effective the first pay period in 2024, 2025 and 2026 for permanent employees hired prior to April 17, 2023.
• Adds qualifying family members for using sick leave and Paid Parental Leave
• Ensures employees properly move to COBRA benefits when on unpaid leaves
• Side Letter to meet and discuss integration of State Disability Insurance (SDI) to occur by October 31, 2024
Staff Development/Wellness:
• Provides an additional $1,500/yr. for continuing competency activities for Physical and Occupational Therapists
• Regional Parks General Memberships for all bargaining unit members will be made available upon request beginning July 1, 2023.
Various Economics:
• Holiday Compensation expands options for holidays occurring on regular day off
• Bilingual Premium: County established a $1.50 per hour premium on all paid status hours for employees in a fluent bilingual assignment
• Adds classifications eligible for safety shoe/boot allowance
• Expands eligibility for night shift premiums
Classification Study:
• County agrees to evaluate Senior Client Support Specialist classification
Miscellaneous Changes:
• Updates and clarifies various articles/sections
• Side letter to provide a Consumer Protection Program for Environmental Health Specialists
• Adds classifications eligible for reimbursement for initial required licenses/certifications
• De-genders contract language consistent with the County’s pillars, goals and objectives
Government Code Compliance Requirements:
Various provisions of the California Government Code require certain disclosures before the Board can adopt changes in salaries or benefits, with additional disclosures required for changes in pension and other post-employment benefits. Any changes in salaries and benefits must be adopted at a public meeting of the Board (Cal Gov’t Code §23026). Notice of the consideration of such increases must be provided prior to the meeting and shall include “an explanation of the financial impact that the proposed benefit change or salary increase will have on the funding status of the county employees' retirement system.” (Cal Gov’t Code §31515.5).
In addition, when considering changes in retirement benefits or other postemployment benefits, the Board “shall secure the services of an actuary to provide a statement of the actuarial impact upon future annual costs, including normal cost and any additional accrued liability, before authorizing changes in public retirement plan benefits or other postemployment benefits.” (Cal Gov’t Code §7507). When there are changes in retirement benefits or other postemployment benefits, the statement of actuarial impacts shall be provided by an enrolled actuary and shall be made public at a meeting at least two weeks before the adoption of the increase in benefits. (Cal Gov’t Code § 7507, 31516).
This staff report recommends the Board adopt changes in the ESC MOU, including changes to salary and benefits contributions only, with no changes to pension benefits and a minor change to other post-employment benefits (retiree medical).
Segal Valuation Analysis of Cost of Living/Market/Equity Adjustments
Based on the analysis conducted by Segal Consulting (Segal), the actuaries for the Sonoma County Employees Retirement Association (SCERA), the net impact over the term of the three-year MOU results is an increase in the County’s annual contributions, as the actuarial assumptions included in prior valuations are not sufficient to cover the costs of all negotiated cost of living and equity adjustments over the three-year term.
The analysis compares proposed labor changes to the following Sonoma County Employees’ Retirement Association (SCERA) adopted salary assumptions:
• 3.25 % applied to the December 31, 2020 valuation used to establish employer and employee pension contribution rates for FY 2022-23
• 3.0 % applied to the December 31, 2021 Actuarial Valuation used to establish employer and employee pension contribution rates for FY 2023-24. and was used to illustrate the potential cost impact of salary increases in FY 2024-25 and FY 2025-26
The actuarial assumption variations from year to year offset some annual increases and decreases, resulting in a net increase of $667,000 over the three-year term of the MOU. Staff’s review of the average annual increase spread over the current and next three fiscal years is approx. $166,750 which should not materially impact the ongoing cost of the plan or the funding status of SCERA. Segal’s analysis of the annual impact for each of the three years of the MOU are included in Attachment B, and the following table summarizes the annual impact and net overall increased County costs over the four fiscal years:
|
|
Change in Annual Employer Normal Cost |
Change in Annual UAAL* amortized cost |
Total Increased Annual Contribution |
|
|
(a) |
(b) |
(a + b ) |
|
Remaining 2022/23 |
+ $13,000 |
+$22,000 |
+$35,000 |
|
Year 1 - 2023/24 |
+ $221,000 |
+$389,000 |
+$610,000 |
|
Year 2 - 2024/25 |
+ $30,000 |
+$55,000 |
+$85,000 |
|
Year 3 - 2025/26 |
+ $3,000 |
+ $4,000 |
+ $7,000 |
|
Net Increased Costs over 3-year term |
+ $241,000 |
+ $426,000 |
+ $667,000 |
*Unfunded Actuarial Accrued Liability
Segal Valuation Analysis of Changes to Retiree Medical
The Tentative Agreement also revises Article 10 of the successor MOU to allow future retirees who reside or move out of a County offered medical plan service area, the option to place the $500 monthly retiree medical contribution into the Retiree HRA. Currently, a retiree must be enrolled in a County sponsored medical plan to receive the monthly contribution. If a retiree moves outside of a service area, their only option to receive the County contribution is to enroll in the County Health Plan, or if Medicare eligible, to enroll into AARP United Healthcare. Due to cost factors, some retirees decide not to opt for any coverage through the County. The revisions to Article 10 provide another option to retirees to receive the monthly contribution into the Retiree HRA which can be used to enroll in any medical plan available in the area where they live. Providing this option allows future retirees who live or move out of a service area the opportunity to access this benefit, thus participation may increase slightly. This benefit is available to bargaining unit members who were hired before 1/1/2009 and retire on or after 7/1/2023.
Based upon the actuarial analysis by Segal Consulting, (Attachment B) this change results in a slight increase to the OPEB liability for ESC by 0.30% or $7,690, as illustrated below. This slight increase is due to a greater percentage of bargaining unit members who were hired prior to 1/1/2009 are older and closer to retirement than members of other bargaining units, who are younger and experienced a slight decrease.
|
ESC OPEB Liabilities as of June 30, 2022 |
Pre-2009 ESC Current Benefit |
Proposed $500/Mo HRA |
$ Impact |
% Impact |
|
Implicit Subsidy |
$735,588 |
$708,003 |
($27,585) |
(3.75%) |
|
Medicare Part B |
$229,593 |
$221,295 |
($8,298) |
(3.61%) |
|
Cash Subsidy |
$1,577,136 |
$1,620,709 |
$43,573 |
2.76% |
|
Total OPEB Liability |
$2,542,317 |
$2,550,007 |
($7,690) |
0.30% |
Your Board received and reviewed the actuarial information from Segal Consulting which was made public at your Board meeting on May 23, 2023. In addition, the County Administrator has reviewed and acknowledges her understanding of the current and future financial impacts of the negotiated changes to retiree medical or other post-employment benefits (Cal Gov’t Code §7507) (Attachment C).
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with all the pillars, goals, and objectives.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
May 23, 2023: Received and Reviewed OPEB Actuarial Valuation of Changes to Retiree Medical for ESC Successor MOU.
July 23, 2019: Adopted ESC MOU, Resolution #19-0298
October 23, 2018: Adopted ESC MOU Extension, Resolution #18-0455
June 11, 2018: Adopted Side Letter for Vacation Purchase Plan, Resolution #18-0423
September 13, 2016 Adopted Side Letter Agreement Resolution, #16-0331
September 13, 2016: Approved ESC MOU, Resolution #16-0332
Fiscal Summary
|
Expenditures |
FY 22-23 Adopted |
FY23-24 Projected |
FY 24-25 Projected |
|
Budgeted Expenses |
$249,764 |
$4,971,439 |
$6,807,593 |
|
Additional Appropriation Requested |
|
|
|
|
Total Expenditures |
$249,764 |
$4,971,439 |
$6,807,593 |
|
Funding Sources |
|
|
|
|
General Fund/WA GF |
$8,842 |
$175,989 |
$240,989 |
|
State/Federal |
$240,922 |
$4,795,450 |
$6,566,604 |
|
Fees/Other |
|
|
|
|
Use of Fund Balance |
|
|
|
|
Contingencies |
|
|
|
|
Total Sources |
$249,764 |
$4,971,439 |
$6,807,593 |
Narrative Explanation of Fiscal Impacts:
The successor MOU represents a total estimated operational cost increase for FY 2022/23 of $249,764. Current year unanticipated costs are expected to be absorbed within existing appropriations. The CAO staff will work with departments at year-end close should additional appropriations be necessary. The FY 2023/24 recommended budget includes appropriations for anticipated labor costs. Adjustments to individual departmental budget appropriations will be made during consolidated budget adjustments as necessary and future costs for FY 2024-25 will be incorporated into the recommended budget.
|
Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
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Narrative Explanation of Staffing Impacts (If Required):
Not applicable
Attachments:
1. Resolution
2. Attachment A - Tentative Agreement - Successor MOU
3. Attachment B - Four GC 31515.5 Disclosure Letters from Segal Consulting dated May 30, 2023
4. Attachment C - Actuarial Analysis Letter from Segal dated May 10, 2023 per GC §7507
5. Attachment D - Memorandum from County Administrator pursuant to GC §7507
Related Items “On File” with the Clerk of the Board:
None.