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HomeMy WebLinkAbout4 - MOUs for Bargaining UnitsCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 4 September 11, 2007 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, Assistant City Manager 949 -644 -3002, dkiff @city.newport- beach.ca.us SUBJECT: Labor Negotiations — New MOUs with Miscellaneous Employee Bargaining Units and PEA and FFA; Supplemental MOUs with PEA and FFA; Non -MOU Agreement with Key and Management Personnel ISSUE: Shall the City enter into new 3 -year MOUs, MOUs with most of the non - safety employees and a change to the retirement plan? RECOMMENDATION: two supplemental MOUs and up to five 10 -year who work for the City, including salary increases 1. Authorize the Mayor to execute comprehensive new 3 -year Memoranda of Understanding (MOUs) with the Newport Beach City Employees Association (CEA), the Newport Beach Employees League (League) and the Newport Beach Professional and Technical Employees Association (Prof- Tech); 2. Authorize the Mayor to execute supplements to the existing MOUs with the Police Employees Association (PEA) and the Newport Beach Fire Fighters Association (FFA) that incorporate an employee- funded 2.5% at 55 retirement program for non - safety personnel with the California Public Employees Retirement System (PERS) and 3. Authorize the Mayor to execute specific new 10 -year Memoranda of Understanding (MOUs) with CEA, League, Prof -Tech, PEA, and FFA limiting future negotiations to change the proposed 2.5% at 55 PERS plan and its employee -paid nature; and 4. Authorize the same level of benefits (same as non - safety miscellaneous employees) for "Key and Management" personnel. DISCUSSION: The City Council has nearly completed negotiations in accordance with the Myers - Milias -Brown Act ( "MMBA') with three bargaining units. MMBA is the state law (California Government Code §3500 et seq) that the City must follow regarding negotiating wages, benefits, and working conditions with our employees. The MMBA is intended to: • "Promote full communication between public employers and their employees by providing a reasonable method of resolving disputes regarding wages, hours, and other terms and conditions of employment between public employers and public employee organizations; and to Misc. MOUs September 11, 2007 Page 2 • "Promote the improvement of personnel management and employer - employee relations within the various public agencies in the State of California by providing a uniform basis for recognizing the right of public employees to loin organizations of their own choice and be represented by those organizations in their employment relationships with public agencies. " The MMB Act, among other things, sets forth: • The right of city employees to organize themselves. • The right of city employees to be represented. • The right to form an "agency shop" (all persons working within specific classifications must be members of the employees' organization). • The obligation of an employer to "meet and confer" on employment matters; • A path for mediation when necessary. The three bargaining units involved in the most recent discussions with the Council are: • City Employees Association ( "CEA ") — library staff, recreation, clerical, administrative support, more • Newport Beach Employees League ( "League ") — primarily the staff in General Services and Utilities • Newport Beach Professional and Technical Employees Association ( "Prof - Tech ") — engineers, building inspectors, IT staff, more CEA, the League, and Prof -Tech are often referred to as the "Miscellaneous" group of associations. The contract terms for the Miscellaneous group expired June 30, 2007. There is a "Key and Management" designation for division managers and others — Key and Management personnel are not an association, but generally get the benefit level of the Miscellaneous units. Department directors are included within Key and Management. Current Benefits Retirement Benefits. Most Newport Beach city employees do not receive Social Security, because the City does not pay into Social Security. Today, City employees' pension benefits include a "2.0% at 55" Defined Benefit ( "DB ") Plan from PERS and a "3% at 50" DB Plan for safety employees. Retirement benefits are calculated using a member's years of service credit, age at retirement, and final compensation (highest twelve month average salary). EXAMPLE: Senior Police Dispatcher (dispatchers are not "swom" personnel) PERS -able Compensation at last year of service = $80,000 Tenure in the system = 30 years Retirement Age= 55 2% of compensation x 30 years = $48, 000 retrement benefit per year. Each public agency that participates in CaIPERS does so via a contract. The contract sets forth the type of retirement program plus the City's and CaIPERS' respective obligations to fund the City's program, invest funds, and make retirement payments. Each year, CaIPERS informs the City what the City's "employer contribution rates" will be for the coming fiscal year. CaIPERS estimates these rates, typically expressed as a percentage of overall payroll, based on: • The benefit level promised to City employees by the City; • An actuarial valuation of the City plan assets' ability to meet long -term pension obligations using CalPERS' investment estimates. Misc. moos September 11, 2007 Page 3 Because CaIPERS' rates are based on payroll, and because the MOUs (and sometimes CaIPERS) define certain benefits (like uniform allowances) as benefits similar enough to salary that the benefits affect retirement, these benefits are considered "PERS- able." In other words, awarding these benefits to an employee will result in an increase to the employee's retirement benefit (and typically an increase to the City's employer contribution rates). How the Health Benefit Works. The City has a "cafeteria plan" that allows full -time personnel to choose their medical plan and providers from a variety of options. The City pays about $774 per month for safety and non - safety employees. If an employee chooses to pay more for their health care, they pay that out -of- pocket. If they choose to pay less, they receive that in compensation or can accrue it in an (IRS) 'Section 125" plan. How the MERP Works. The Medical Expense Reimbursement Plan or "MERP" has become the colloquial term for the City's new Retiree Medical Program. This "Integral Part Trust' program has been in place since January 2006. The program provides a vehicle for employees to accumulate funds for medical expenses after separation from the City. This DC MERP Plan replaced a previous DB MERP Plan. Here's how it works: • Current Retirees receive their DB payment (essentially $400 per month) by direct deposit into their MERP accounts. • Each active employee and new hire deposits 1% of salary (mandatory contribution) into his or her MERP account each month. After 5 years employment the City provides partial matching funds (today generally $1.50 per month per employee), based.on a multiple of years of service plus years of age. When these employees retire or otherwise separate service, the funds in the account essentially "belong" to them However, once employees have left City service, the City's financial obligation regarding medical costs is minimal. As a result of the MERP, the City's Other Post - Employment Benefit ( °OPEB ") liability has been capped. It will not get any larger, but it will get smaller over time, eventually approaching zero. Other MOU- driven benefits (holidays, flex leave, special pays, certification pay, scholastic achievement pay, tuition reimbursement, and more) are within existing MOUs. Proposed Benefit Levels in the New MOUs As a part of the MMBA negotiations process, the City and the five employee groups representing non - safety employees have reached the following 'tentative agreement." The tentative agreement must be confirmed by the City Council via this agenda item's authorization to execute new MOUs and amendments to existing MOUs. In short, the major changes proposed for the new MOUs (compared to the existing MOUs) are as follows: SUMMARY OF MAJOR MOU TERMS Term. CEA, Prof -Tech, and the League's MOUs with the City would cover the period of July 1, 2007 through June 30, 2010. Salary Increases. Wage increases of: • 2% retroactive to July 1, 2007; • 2.5% effective January 1, 2008; • 2.5% effective July 1, 2008, and • 4% effective July 1, 2009. Misc. mous September 11, 2007 Page 4 This results in a total compensation change of 11 % over a 36 -month period. Retirement Benefits. The 2% at 55 PERS defined benefit retirement plan would be replaced by an employee -paid 2.5% at 55 PERS defined benefit retirement plan for all full -time non - safety personnel, effective January 1, 2008. The employees would pay for this by directing that about 3.42% of an overall 11% wage increase program over three years would go to cover the cost of the difference between the 2% at 55 plan and the 2.5% at 55 plan (3.42% of payroll). Please see the Staff Report dated September 11, 2007 regarding the Resolution of Intention to amend our PERS Contract for more information about the employee -paid nature of this retirement plan. Using the example we used on Page 2, then, the proposed MOU would affect this person as follows: EXAMPLE: Senior Police Dispatcher PERS -able Compensation at last year of service (assumes 1.1% net raise) = $80,880 Tenure in the system = 30 years Retirement Age= 55 2.5% of compensation x 30 years = $60,660 retirement benefit per year. Supplemental 10 -year MOU — Retirement Only. Each employee group with employees receiving the 2.5% at 55 retirement plan would have to agree (1) not to negotiate to change the employee- funded nature of the plan; and (2) not to negotiate to change the 2.5% at 55 PERS plan itself between July 1, 2007 and,June 30, 2017. Health Benefit Increases. Cafeteria plan increases of $100 per employee per month starting in January 2008; another $100 per employee per month starting in January 2009, and another $75 per employee per month starting in January 2010. MERP contributions paid by the employer would rise from $1.50 per month for the roughly 85 employees who have fully converted to MERP and have five years of service $2.50 per month for each of these employees (note: number of eligible employees converting will grow over time). Holidays. For December 2007, the planned half -day holiday on Monday, December 24'" and on Monday, December 31'� would become full -day holidays. No other holiday changes are proposed. Certification Pay. Some employees would be eligible for a flat -rate sum of money annually (up to $200 for a Public Works Certificate, for instance) and for a 1% to 5% salary increase on an ongoing basis if (a) the employee is in a job classification making him or her eligible for this "certification pay;" and (b) if the Department Director agrees that the certification is beneficial to that job classification as it serves the city. Why this MOU proposal? Recruitment and Retention Newport Beach competes with other public agencies and with the private sector for our employees (both to recruit them and to retain them). The City draws from a labor pool consisting mostly of people with relevant experience who are residents of Orange County, western Riverside County, and Long Beach. Human Resources agencies discuss an impending "human capital crisis" that will affect the nations' workforce in the next several years. This crisis stems from the large number of aging "baby boomers" in the population and the smaller number of young people who follow behind Misc. MOUs September 11, 2007 Page 5 them. A recent State personnel report states that there are more than 70 million baby boomers in the workforce versus about 40 million in the next generation. This aging national workforce is affecting the government employee candidate pool at a faster rate than within the private sector because government employees tend to be older than employees in the private sector. Statistics show that in the next five years, the State of California will struggle to replace 34% of its workforce. Some factors that contribute to this crisis in government are: • Past employment patterns (growth /downsizing, hiring freezes, early retirement buyouts); • Declining appeal of public service; • Lower retirement eligibility than private sector; • Regulations that hamper the retaining or rehiring of older employees; and • Cut -backs in training that have depleted the qualified candidates. Acquiring and retaining high - quality talent is critical to our efficiency, effectiveness and to the service that we provide to the citizens. As the job market becomes more competitive we will also need to be more selective in our choices, since poor hiring decisions can produce long- term negative effects (high training and development costs, high turnover costs, low morale, and worst yet, poor customer service). Recruitment is one of the activities that impacts most critically on the performance of a service organization. We experience difficulty in filling some of our positions, with this twist: we have been able to attract many well - qualified candidates and dozens of job applications (if not hundreds) at the entry level. But when we look for the more experienced professional or management level people, sometimes the applications come up short Some of the comments we have heard and some of the challenges we face in attracting and retaining employees are: • Newport Beach's cost of living is high and employees can't afford to live here, which requires them to commute; • Neighboring communities are expensive to live in as well, causing some employees to reside in the Inland Empire and elsewhere; • Commutes are challenging particularly during the summer months; • Cost of gasoline to commute is high; • Working conditions are unappealing and space is cramped; and • Some employee benefits, including retirement, are low compared to other competitor cities. More about How Retirement Benefits Impact Recruitment/Retention. As some of the key Orange County cities that we compete with move to a higher benefit level to attract and retain employees, our 2% at 55 retirement benefit can discourage candidates from those cities from applying for positions here (they would lose the service credit upgrade at their current agency). With several more cities moving to enhanced retirement programs, we can assume we will have more difficulty retaining current employees as experienced employees will be tempted to move to a city that has an enhanced retirement program prior to retirement. Chart 1 shows how retirement benefits for non - safety employees compare with other local agencies. Misc. A40Us September 11, 2007 Page 6 Chart 1 — Retirement Benefits in Other Nearby Agencies This Agenda Item. If approved by the City Council, this agenda item would authorize the Mayor to execute a number of MOUs (attached) — generally, the MOUs are as follows: • A new 3 -year MOU between the City and CEA • A new 3 -year MOU between the City and Prof -Tech • A new 3 -year MOU between the City and League • A supplemental MOU (relating to the 2.5% at 55 PERS Plan) that amends the current MOU between the City and PEA accordingly; • A supplemental MOU (relating to the 2.5% at 55 PERS Plan) that amends the current MOU between the City and FFA accordingly; and Up to five separate supplemental MOUs that extend — for a 10 -year duration — the proposed 2.5% at 55 PERS plan such that employee groups agree not to negotiate for a different plan and agree not to negotiate to amend the employee -paid nature of the 2.5% at 55 plan. Funding Availabilitv: Funding for these proposed changes- is included in the adopted FY 2007 -08 City Budget — therefore a budget amendment is not required to accomplish the changes. Chart 2 is an estimate of the costs of each element of the MOU package, at least for FY 2007 -08: Anaheim 2.7 at 55 Mission Viejo 2.7 at 55 Orange 2.7 at 55 Irvine 2.7 at 55 Santa Ana 21 at 55 pending Jan 2009 La Palma 2.7 at 55 Los Alamitos 2.7 at 55 OCFD (non - safety) 2.7 at 55 San Juan Capistrano 2.7 at 55 Costa Mesa 2.5 at 55 pending Fountain Valley 2.5 at 55 Garden Grove 2.5 at 55 Laguna Beach 2.5 at 55 pending 2010 RSM 2.5 at 55 Santa Marg H2O Dist 2.5 at 55 Brea 2.0 at 55 Dana Point 2.0 at 55 Fullerton 2.0 at 55 Huntington Beach 2.0 at 55 Newport Beach 2.0 at 55 Lake Forest 2.0 at 55 Tustin 2.0 at 55 Seal Beach 2.0 at 55 This Agenda Item. If approved by the City Council, this agenda item would authorize the Mayor to execute a number of MOUs (attached) — generally, the MOUs are as follows: • A new 3 -year MOU between the City and CEA • A new 3 -year MOU between the City and Prof -Tech • A new 3 -year MOU between the City and League • A supplemental MOU (relating to the 2.5% at 55 PERS Plan) that amends the current MOU between the City and PEA accordingly; • A supplemental MOU (relating to the 2.5% at 55 PERS Plan) that amends the current MOU between the City and FFA accordingly; and Up to five separate supplemental MOUs that extend — for a 10 -year duration — the proposed 2.5% at 55 PERS plan such that employee groups agree not to negotiate for a different plan and agree not to negotiate to amend the employee -paid nature of the 2.5% at 55 plan. Funding Availabilitv: Funding for these proposed changes- is included in the adopted FY 2007 -08 City Budget — therefore a budget amendment is not required to accomplish the changes. Chart 2 is an estimate of the costs of each element of the MOU package, at least for FY 2007 -08: Misc. MOUs September 11, 2007 Page 7 Chart 2 — Cost Estimate of Proposed MOU Changes, FY 2007 -08 Salaries $ 1,013,202 — 2% retroactive to July 2007 FY 2007 -08 City Operating Budget $ 172,334,677 — 2.5% in Jan 2008 0.74% Retirement $ - - 2.5% at 55 Plan - effective 1.1 -08 Medical Benefit — MERP ($1.50 to $2.50tmonth) $ 4,190 -- Cafeteria (s100tmo more in January 2008) $ 252,600 Certification Pay (rough estimate) $ 7,000 2 Half -Day Holidays $ 120,924 ' Total Value of Proposed Changesl $ 1,397,916 Total Cash Value of Proposed Changes 1 $ 1,279,9921' FY 2007 -08 City Operating Budget $ 172,334,677 Cash Value % of City Operating Budget 0.74% ' Holiday estimate represents value of benefit, not cost. City budget already includes funding for hours worked. Prepared and Submitted by: - in� Dav Ciff Assistant City Manager Attachments: City -CEA MOU (new) City- Prof/Tech MOU (new) City- League MOU (new) Supplemental MOU - City PEA Supplemental MOU - City-FFA 10 -year Retirement Plan/Employee -Paid Nature MOU Agenda Item No. 4 September 11, 2007 MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF NEWPORT BEACH AND NEWPORT BEACH CITY EMPLOYEES ASSOCIATION This MEMORANDUM OF UNDERSTANDING (hereinafter referred to as "MOU") is entered into with reference to the following: PREAMBLE 1. The Newport Beach City Employees Association ("NBCEA"), a recognized employee organization, affiliated with UPEC -LIUNA 777, and the City of Newport Beach ( "City'), a municipal corporation and charter city, have been meeting and conferring, in good faith, with respect to wages, hours, fringe benefits and other terms and conditions of employment. 2. NBCEA representatives and City representatives have reached a tentative agreement as to wages, hours and other terms and conditions of employment for the period from July 1, 2007 to June 30, 2010 and this tentative agreement has been embodied in this MOU. 3. This MOU, upon approval by NBCEA and the' Newport Beach City Council, represents the total and complete understanding and agreement between the parties regarding all matters within the scope of representation. SECTION 1. — General Provisions A. Recognition In accordance with the provisions of the Charter of the City of Newport Beach, the Meyers Milias Brown Act of the State of California and the provisions of the Employer's /Employee Labor Relations Resolution No. 7173, the City acknowledges that NBCEA is the majority representative for the purpose of meeting and conferring regarding wages, hours and other terms and conditions of employment for all employees in those classifications specified in Exhibit "A" or as appropriately modified in accordance with the Employer /Employee Resolution. All other classifications and positions not specifically included within Exhibit "A" are excluded from representation by NBCEA. B. Duration of Memorandum 1. Except as specifically provided otherwise, any ordinance, resolution or action of the Qty Council necessary to implement this MOU shall be considered effective as of July 1, 2007. This MOU shall remain in full force and effect until June 30, 2010, and the provisions of this MOU shall continue after the date of expiration of this MOU in the event the parties are meeting and conferring on a successor MOU. 2. The terms and conditions of this MOU shall prevail over conflicting provisions of the Newport Beach City Charter, the ordinances, resolutions and policies of the City of Newport Beach, and federal and state statutes, rules and regulations which either specifically provide that agreements such as this prevail, confer rights which may be waived by any collective bargaining agreement, or are, pursuant to decisional or statutory law, superseded by the provisions of an agreement similar to this MOU. C. Release Time 1. Three NBCEA officers designated by the NBCEA shall collectively be granted 120 hours paid release time maximum, annually, for the conduct of NBCEA business. Such time shall be exclusive of actual time spent in collective bargaining and shall be scheduled at the discretion of the NBCEA officer. Every effort will be made to schedule this time to avoid interference with City operations. 2. Release time designees shall be identified annually and notice shall be provided to the City. Release time incurred shall be reported regularly in the form and manner prescribed by the City. 3. Activities performed on release time shall include representation of members in rights disputes; preparation for collective bargaining activities, and distribution of NBCEA written communication in the work place. D. Employee Data and Access The City shall provide NBCEA a regular list of all unit members including name, department, and job title. NBCEA designated officers shall be entitled to solicit membership from new employees at their work site. This solicitation shall be made from the RELEASE TIME FOR NBCEA OFFICERS total, and shall be scheduled in a manner that is not disruptive to departmental operations. Department heads may determine appropriate 2 times for new employee contact, but they cannot reasonably deny such contact. E. Conclusiveness With the exception of a separate MOU covering retirement issues, this MOU contains all of the covenants, stipulations, and provisions agreed upon by the parties. Therefore, for the life of this MOU, neither party shall be compelled, and each party expressly waives its rights to request the other to meet and confer concerning any issue within the scope of representation except as expressly provided herein or by mutual agreement of the parties. No representative of either party has the authority to make, and none of the parties shall be bound by, any statement, representation or agreement reached prior to the execution of this MOU and not set forth herein. F. Modifications Any agreement, alteration, understanding, variation, or waiver or modification of any of the terms or provisions of this MOU shall not be binding upon the parties unless contained in a written document executed by authorized representatives of the parties. G. Permanent Part-Time Emplovees City permanent part-time employees are recognized to have due process rights, in particular Skelly rights, as provided to regular employees. Membership in NBCEA by part-time employees does not confer on same recognition as a labor organization for purposes of collective bargaining. H. Agency Shop 1. Unit employees, by majority vote, have elected for an Agency Shop provision. 2. The Association shall comply with all statutory and legal requirements regarding agency shop, should it be approved through the election process. This will include all requisite procedures for appeals, record - keeping, establishment of the service fee amount; designating acceptable charities pursuant to Section 3502.5 of the Government Code, etc. 3. Complying with agency shop provisions shall not be a condition of employment. Enforcement shall be the responsibility of the Association; utilizing appropriate civil procedures. The City will cooperate with Association efforts to achieve enforcement. 3 4. The collection of Association dues and /or service fees shall continue to be handled through the payroll deduction process. 5. The Association and UPEC -LIUNA 777 agree to defend, indemnify and hold harmless the City for its action pursuant to this section. SECTION 2. — Compensation A. Sala Effective the pay period beginning June 23, 2007, salaries shall be increased by 2 %. Effective the pay period beginning December 22, 2007, salaries shall be increased by 2.5 %. Effective the pay period beginning June 21, 2008, salaries shall be increased by 2.5 %. Effective the pay period beginning June 20, 2009, salaries shall be increased by 4 %. B. Normal Overtime 1. Definitions a. Miscellaneous Employee - An employee designated as a miscellaneous member of the Public Employees Retirement System (PERS). b. Normal Overtime — Normal overtime for miscellaneous employees is defined as any scheduled hours worked in excess of the basic work week. For the purposes of this section, the basic work week is 40 hours, or as determined by the Department Director and approved by the City Manager which occurs between a fixed and regularly recurring period of 168 hours - 7 consecutive 24 hour periods - beginning at 0001 on Saturday and ending at midnight the following Friday. C. Hours Worked - Hours worked are defined as hours which employees are required to be performing their regular duties or other duties assigned by the City. al d. Incidental Overtime - Incidental overtime is any extension of the basic work shift of less than 1/10 of an hour that is non - recurrent. 2. Compensation Normal overtime for all non - exempt employees shall be paid at one - and -one -half (1 -1/2) times the hourly rate of the employee's bi- weekly salary rate. Reporting of overtime on payroll forms will be as prescribed by the Administrative Services Director. Incidental overtime is not compensable. 3. Overtime Pay Calculations During Week Includina Holidav(s) For the purpose of calculating overtime, holidays occurring during the regular work week will count as time worked. The floating holiday is excluded from this provision. C. Standby Duty 1. Defined a. To be ready to respond immediately to calls for service; b. To be reachable by telephone; C. To remain within a specified distance from his /her work station; and d. To refrain from activities which might impair the employee's ability to perform his /her assigned duties. 2. Compensation Standby duty shall be compensated at the rate of one (1) hour of overtime compensation for each eight (8) hours of such duty. Standby duty on holidays shall be compensated at the rate of two (2) hours of overtime compensation for each (8) hours of standby duty. Should the employee be required to return to work while on standby status, the provisions pertaining to compensation for call -back pay shall apply for the actual period of time the employee is in a work status. 5 D. Call -Back Dutv Defined Call -back duty requires the employee to respond to a request to return to his /her work station after the normal work shift has been completed and the employee has left his /her normal work station. Those periods of overtime which had been scheduled by the Department Director prior to the end of the normal work shift are not considered call -back duty. 2. Compensation All personnel eligible for overtime pay shall be guaranteed two (2) hours pay, or pay for one - and - one -half (1 -1/2) times the number of hours worked, whichever is greater. Reporting of overtime on payroll forms will be prescribed by the Administrative Services Director. E. Accumulation of Compensatory Time Off City employees represented by the NBCEA and classified as non - exempt may receive compensatory time off, in lieu of cash, as compensation for overtime hours worked. Compensatory time shall be calculated at the rate of one and one half hours for each hour of overtime worked beyond the 40 hour limit of the work week. Compensatory time is to be granted only when the employer and employee agree that the application of "comp time" is a desirable substitute for the payment of cash for overtime. Call -back time may be converted to comp time with supervisor approval. Employees may accumulate up to eighty (80) hours of compensatory time. Any hours in excess of eighty (80) will be paid off. Accumulation in excess of the eighty (80) hours may be approved at the discretion of the Department Director. F. Night Shift Differential Unit members shall receive a night shift differential of $1.00 per hour; payable for each hour worked after 5:00 pm. G. Incentive Shift for Library Members For CEA members in the Library Services Department, the Sunday work shift will be considered an "incentive" shift. Unit members working on Sunday who work five hours but less than eight will receive eight hours incentive pay at the regular hourly rate. This article is not to be construed as to impact on other City rules. H. Court Time Employees who are required to appear in Court during their off -duty hours in connection with City business shall receive overtime compensation for the number of hours they spend in court, with a minimum of two (2) hours of such compensation. I. Acting Pav NBCEA employees will be eligible to receive "acting pay' only after completing 80 consecutive hours in the higher classification. Acting pay is 107.5% of the employee's base pay rate. Once the minimum hours requirement has been satisfied, acting pay will be granted for all hours worked above 40 hours beginning with the 4151 hour worked in the higher classification. P. Certificate Pay No later than sixty (60) days following the ratification of this Memorandum of Understanding, the City and Association will meet to develop a certificate pay proposal for non - required job related certificates beneficial to City operations. L. Bi- lingual Pav Upon determination of the Department Director that an employee's ability to speak, read and /or write in Spanish contributes to the Department providing better service to the public, the employee shall be eligible to receive one hundred fifty ($150.00) dollars per month in bi- lingual pay. The certification process will confirm that the employee is fluent at the street conversational level in speaking, reading and /or writing Spanish. Employees certified shall receive bi- lingual pay the first full pay period following certification. Additional languages may be certified for compensation pursuant to this section by the Department Director with the concurrence of the Human Resources Director. SECTION 3. — Leaves A. Flex Leave 7 Members shall accrue Flex leave at the following rates: Years of Continuous Accrual per Annual Service Pav Period /Hrs Days 1 but less than 5 5.54 18 5 but less than 9 6.15 20 9 but less than 12 6.77 22 12 but less than 16 7.69 25 16 but less than 20 8.31 27 20 but less than 25 8.92 29 25 and over 9.54 31 During the first six months of employment, new permanent full -time employees shall not accrue paid leave. At the completion of six months of employment, six (6) months of accrued flex leave will be placed in the employees account. Employees who are assigned to an 88 hour schedule per pay period will accrue time in proportionate amounts. Note: If an employee becomes sick in the first six months of employment, the City will advance up to six (6) months of potentially accrued flex leave time to be used for illnesses only. If employee terminates employment prior to six months, the City will subtract the pay equivalent of the number of flex leave days advanced from the employees final check. Any flex leave time advanced during the first six months of employment will be subtracted from the six (6) months of accrual placed in the employees account upon completion of six months employment. 1. Limit on Accumulation Employees may accrue flex leave up to an accumulated total equal to seventy eight (78) times the member's bi- weekly accrual rate. Any flex leave earned in excess of this level will be paid on an hour for hour basis in cash (spill over pay) at the employee's hourly rate of pay. Members hired prior to July 1, 1996 shall be paid for earned flex leave in excess of the maximum permitted accrual at the member's hourly rate of pay provided that they have utilized at least eighty (80) hours of flex leave the previous calendar year. Employees accruing at the 16 years of continuous service level or above shall be required to use 120 hours of flex leave the previous calendar year. Employees who have not utilized the required amount of leave the prior calendar year shall not be eligible to accrue time above the maximum accrual limit. L. A Employees first hired, or rehired by the City subsequent to July 1, 1996 shall not be eligible for flex leave spill over pay and shall not be entitled to accrue flex leave in excess of the flex leave accrual threshold. 2. Method of Use Flex leave may not be taken in excess of that actually accrued and in no case, except for illness, may it be taken prior to the completion of an employee's initial probationary period. The Department Director shall approve all requests for flex leave taking into consideration the needs of the Department, and whenever possible the seniority and wishes of the employee. Flex leave may be granted on an hourly basis. Any fraction over an hour shall be charged to the next full hour. Vacation Leave This section applies only to those Regular full -time Employees hired on or before January 1, 1990 and who have elected not to enroll in the Flex Leave program. Basis for Accrual /Full -Time Employees Employees entitled to vacation leave- with -pay shall accrue such leave based on years of continuous service and the number of hours in a normal work week for the position to which they are assigned in accordance with the following schedule: Years of Continuous Accrual per Service pay period /hrs 0 but less than 5 3.38 5 but less than 9 3.99 9 but less than 12 4.61 12 but less than 16 5.22 16 but less than 20 5.84 20 but less than 25 6.46 25 and over 7.07 2. Limit on Accumulation C. Accrual of vacation days in excess of those earned for two years of continuous service is not permitted past December 31st of each year with the following exception: with approval of the Department Director, an employee may accrue vacation days in excess of the two -year limit provided all such excess accumulation is taken by March 31st of the following year. 3. Method of Use Vacation may not be taken in excess of that actually accrued. The Department Director shall schedule and approve all vacation leaves for employees taking into consideration the needs of the Department, and whenever possible, the seniority and wishes of the employee. Vacation leave may be granted on an hourly basis. Sick Leave This section applies only to those Regular full -time Employees hired on or before January 1, 1990 and who have elected not to enroll in the Flex Leave program. 1. Basis for Accrual /Full -time Emolovees Employees entitled to sick leave -with -pay shall accrue such leave based on years of continuous service and the number of hours in a normal work week for the position to which they are assigned in accordance with the following schedule: Normal Work Week 40 hours Service Time Monthly Accrual 0 -1 year 4 hours 1 -2 years 5 hours 2 -3 years 6 hours 3-4 years 7 hours 4+ 8 hours 2. Method of Use a. General Sick leave may not be taken in excess of that actually accrued. T Sick leave may be granted on an hourly basis. b. Approval Sick leave may be granted only at the direction of or with the approval of the Department Director and only for the purposes defined in Section 11.2A of the Employee Policy Manual. 3. Sick Leave Conversion Employees who at the end of the calendar year have an accrued level of sick leave equal to or greater than the full value of 50 months of accrued sick leave, and who have used six or less days of sick leave during that calendar year will be permitted (only once per year) to convert up to six (6) days of sick leave to either salary or paid vacation at the value of 50% (maximum value of 3 days per year). Eligible sick leave days converted to cash shall be at the employee's option. Eligible sick leave days converted to paid vacation shall require the approval of the Department Director. This is true for only those employees who are under the old Sick Leave Policy. D. Holidav Leave Subject to the provisions herein, the following days shall be observed as paid holidays by all employees in permanent positions and other personnel whose work assignments, in the judgment of the Department Director require their presence on the job. For each designated holiday, except the Floating. Holidays, such excepted personnel shall receive an equivalent number of hours of paid leave or equivalent pay whichever in the judgment of the Department Director best serves the interest of the Department. Independence Day Labor Day Veteran's Day Thanksgiving Day Friday following Thanksgiving Christmas Eve Christmas New Year's Eve . New Year's Day Washington's Birthday Memorial Day Martin Luther King Day Floating Holiday 11 July 4 1 gt Monday in Sept. November 11 4w Thurs. in November Last'' /2 of working day December 25 Last ''Y2 of working day January 1 3' Monday in February Last Monday in May 3"t Monday in January July 1st - 1 day In 2007 only, Christmas Eve and New Years Eve will be observed as full day holidays. Holidays listed above (except the floating holiday) occurring on a Saturday shall be observed the preceding Friday. Holidays occurring on a Sunday shall be observed the following Monday. 1. Holiday pay will be paid only to employees who work their scheduled day before and scheduled day after a holiday or are on authorized leave (e.g. approved vacation or sick leave that has been reviewed and approved by the Department Director). 2. Newly hired employees will be eligible to receive full pay for scheduled holidays, without a waiting period. E. Bereavement Leave The necessary absence from duty by an employee having a regular or probationary appointment, because of the death or terminal illness in his/her Immediate Family. For the purposes of this section, Immediate Family shall mean father and mother (including step), brother, sister, wife, husband, child, grandparents and the Employee's spouse's father, mother, brother, sister, child and grandparents. F. Leave Sellback Twice annually, employees shall have the option of selling back on an hour for hour basis, accrued flex or vacation leave. In no event shall the flex or vacation leave balance be reduced below one hundred and sixty (160) hours. SECTION 4. — Frinue Benefits A. Insurance 1. Benefits Information Committee The City has established a Benefits Information Committee (BIC) composed of one representative from each employee association group and up to three City representatives. The Benefits Information Committee has been established to allow the City to present data regarding carrier and coverage options, the cost of those options, appropriate coverage levels and other health programs. The 12 purpose of the BIC is to provide each employee group with information about health insurance /programs and to receive timely input from associations regarding preferred coverage options and levels of coverage. 2. Medical Insurance The City has implemented an IRS qualified Cafeteria Plan. The City contribution toward the Cafeteria Plan shall be $774. In addition, the City shall contribute the minimum CalPERS participating employee's contribution towards medical insurance. Employees shall have the option of allocating Cafeteria Plan contributions towards the City's existing medical, dental and vision insurance /programs. The City and the Newport Beach City Employees Association will cooperate in pursuing additional optional benefits to be available through the Cafeteria Plan. Any unused Cafeteria Plan funds shall be payable to the employee as taxable cash back. Employees shall be allowed to change coverages in accordance with plan rules and during regular open enrollment periods. Effective the pay period beginning December 22, 2007, the City's contribution towards the Cafeteria Plan will increase to $874 (plus the minimum CalPERS participating employee's contribution). Effective the pay period beginning December 20, 2008, the City's contribution towards the Cafeteria Plan will increase to $974 (plus the minimum CalPERS participating employee's contribution). Effective the pay period beginning December 19, 2009, the City's contribution towards the Cafeteria Plan will increase to $1,049 (plus the minimum CalPERS participating employee's contribution). NBCEA members who do not want to enroll in any medical plan offered by the City must provide evidence of group medical insurance coverage, and execute an opt -out agreement releasing the City from any responsibility or liability to provide medical insurance coverage on an annual basis. 3. Dental Insurance The existing or comparable dental plans shall be maintained as part of the City's health plan offerings as agreed upon by the BIC. 13 X 4. Vision Insurance The existing or a comparable vision plan shall be maintained as part of the City's plan offerings as agreed upon by the BIC. Additional Insurance Proarams 1 2. IRS Section 125 Flexible Spendina Account Section 125 of the Internal Revenue Code authorizes an employee to reduce taxable income for payment of allowable expenses such as child care and medical expenses. An Association member may request that medical, child care and other eligible expenses be paid or reimbursed by the Section 125 Plan out of the employee's account. The base salary of the employee will be reduced by the amount designated by the employee for reimbursable expenses. Disabilitv Insurance The City shall provide disability insurance to following provisions: Weekly Benefit Maximum Benefit Minimum Benefit Waiting Period Short-term (STD) and Long -term (LTD) all regular full time employees with the 66.67% gross weekly wages $10,000 /month $50 30 Calendar Days Employees shall not be required to exhaust accrued paid leaves prior to receiving benefits under the disability insurance program. Employees may not supplement the disability benefit with paid leave once the waiting period has been exhausted. Concurrent with the commencement of this program, employees assumed responsibility for the payment of the disability insurance cost in the amount of one (1.0 %) percent of base salary. Simultaneously, the City increased base wages by one (1.0 %) percent. 14 3. Life Insurance The City shall provide life insurance for all regular full -time employees in $1,000 increments equal to one times the employee's annual salary up to a maximum of $50,000. At age 70 the City -paid life insurance is reduced by 50% of the pre -70 amount. This amount remains in effect until the employee terminates from City employment. C. Employee Assistance Program City shall provide an Employee Assistance Program (EAP) through a properly licensed provider. Association members and their family members may access the EAP subject to provider guidelines. D. . Retirement Benefit 1. Existing Benefits The City contracts with PERS to provide retirement benefits for its employees. The retirement formula is the 2% @ 55, calculated on the basis of the best/highest year. The City pays both the employee and the employer contribution, but the City reports the value of the Employer Paid Member Contribution (EPMC), so the employees will have the benefit of the EPMC in their retirement formula calculations. In addition, the City contracts for the 4t" Level 1959 Survivors Insurance Benefit, $500 Lump Sum Death Benefit, Sick Leave Credit, Military Service Credit, 2% Cost of Living Adjustment and the pre - retirement option settlement 2 death benefit (Section 21548). 2. Separate MOU Pursuant to a separate MOU between the City and Association the City will implement the 2.5 % @55 retirement formula, effective January 1, 2008. E. LIUNA Supplemental Pension The City shall contribute, on behalf of each unit member, one and one half percent (1.5 %) of base salary into the LIUNA Supplemental Pension Fund. The City's sole obligation is to forward the agreed upon amount to the fund. The City is not responsible for, nor does it make any representation regarding the payment of benefits to unit members. 15 Effective January 1, 2007, the City increased the base salary of all members by 1.5 %, and then deducted that same amount as a mandatory employee contribution. For tax purposes, the contributions, although designated employee contributions, are being paid by the employer in lieu of contributions by the employee. The contributions are deemed "picked - up" and treated as employer contributions, thereby excluding the employee's gross income until distributed. Employees cannot opt out of the "pick -up," or receive the contributed amounts directly instead of having them paid to the plan. Participation at the same level will continue to be mandatory for members of the Association. In accordance with correspondence received from a legal expert retained by the City, this amount will not be taxable, except for Medicare. Minor changes to other compensation related items that are calculated from base salary will also result from this administrative change. The Association agrees with the procedural change, and acknowledges that members who leave City employment prior to vesting in the LIUNA pension plan will still have no right to return of amounts contributed, or other recourse against the City concerning LIUNA. The Association and LIPEC -LIUNA 777 agree to defend, indemnify and hold harmless the City for its actions pursuant to this section. F. Retiree Medical Benefit 1. Background In 2005, the City and all Employee Associations agreed to replace the previous "defined benefit" retiree medical program with a new "defined contribution" program. The process of fully converting to the new program will be ongoing for an extended period. During the transition, employees. and (then) existing retirees have been administratively classified into one of four categories. The benefit is structured differently for each of the categories. The categories are as follows: a. Category 1 - Employees newly hired after January 1, 2006. b. Category 2 - Active employees hired prior to January 1, 2006, whose age plus years of service as of January 1, 2006 was less than 50 (46 for public safety employees). c. Category 3 - Active employees hired prior to January 1, 2006, whose age plus years of service was 50 or greater (46 for public safety employees) as of January 1, 2006. 16 d. Category 4 - Employees who had already retired from the City prior to January 1, 2006, and were participating in the previous retiree medical program. 2. Program Structure This is an Integral Part Trust (IPT) Medical Expense Reimbursement Program Plan (MERP). a. For employees in Category 1, the program is structured as follows: Each employee will have an individual MERP account for bookkeeping purposes, called his or her "Employee Account." This account will accumulate contributions to be used for health care expense after separation. All contributions to the plan are either mandatory employee contributions or City paid employer contributions, so they are not taxable to employees at the time of deposit. Earnings from investment of funds in the account are not taxable when posted to the account. Benefit payments are not taxable when withdrawn, because the plan requires that all distributions be spent for specified health care purposes. Contributions will be in three parts. Part A contributions (mandatory employee contributions): 1% of Salary. Part B contributions (employer contributions): $1.50 per month for each year of service plus year of age (updated every January 1st based on status as of December 31st of the prior year). Effective January 2008, this contribution will increase to $2.50 per month. Part C contributions (leave settlement as determined by Association): The Association will determine the level of contribution for all employees it represents, subject to the following constraints. All employees within the Association must participate at the same level, except that Safety members and Non- safety members within an Association may have different levels. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City, 17 or cashing out leave at any other time, would have the cash equivalent of 50% of the amount that is cashed out added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Individual employees would not have the option to deviate from this breakout. The Association has decided to participate in Part C contributions at the level of zero percent (0 %) flex and sick. This amount may be changed, on a go forward basis, as part of a future meet and confer process. However, the participation level must be the same for all employees within the Association except that Safety members and Non - safety members within an Association may have different levels. Additionally, the purpose and focus of these changes should be toward long -term, trend type adjustments. Due to IRS restrictions regarding "constructive receipt," the City will impose restrictions against frequent spikes or drops that appear to be tailored toward satisfying the desires of a group of imminent retirees. Spillover pay is not eligible for Part C contributions. Nothing in this section restricts taking leave for time off purposes. Sick leave balances may also be included in the MERP Part C contributions, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule, which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out' at 800, and specifies that sick leave hours are "cashed out' on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation /flex leave participation, and thresholds must be separately identified by the Association. Part A contributions may be included in PERS compensation. Part B and Part C contributions will not be included in PERS compensation. Part A contributions begin upon enrollment in the program and are credited to each MERP Employee Account each pay period. Eligibility for Part B contributions is set at five years of vested City employment. At that time, the City will credit the first five years worth of Part B contributions into the Employee Account (interest does not accrue during that period). Thereafter, contributions are made bi- weekly. Part C deposits, if any, will be made at the time of employment separation. in Each Employee has a, right to reimbursement of medical expenses (as defined below) from the Plan until the Employee Account balance is zero. This right is triggered upon separation. If an employee leaves the City prior to five years employment, only the Part A contributions and Part C leave settlement contributions, if any, will be in the MERP Employee Account. Such an employee will not be entitled to any Part B contributions. The exception to this is a full -time employee, participating in the program, who leaves the City due to industrial disability during the first five years of employment. In such cases, the employee will receive exactly five years worth of Part B contributions, using the employee's age and compensation at the time of separation for calculation purposes. This amount will be deposited into the employee's MERP account at the time of separation. Distributions from MERP Employee Accounts are restricted to use for health insurance and medical care expenses after separation, as defined by the Internal Revenue Code Section 213(d) (as explained in IRS Publication 502), and specified in the Plan Document. In accordance with current IRS regulations and practices, this generally includes premiums for medical insurance, dental insurance, vision insurance, supplemental medical insurance, long term care insurance, and miscellaneous medical expenses not covered by insurance for the employee and his or her spouse and legal dependents — again only as permitted by IRS Publication 502. Qualification for dependency status will be determined by guidelines in IRC 152. If used for these purposes, distributions from the MERP accounts will not be taxable. Cash withdrawal for any other purpose is prohibited. Under recent IRS Revenue Ruling 2005 -24, any balance remaining in the Employee Account after the death of the employee and his or her spouse and /or other authorized dependents (if any) must be forfeited. That particular MERP Employee Account will be closed, and any remaining funds will become general assets of the plan. The parties agree that the City's Part B contributions during active employment constitute the minimum CalPERS participating employer's contribution towards medical insurance after retirement. The parties also agree that, for retirees selecting a CalPERS medical plan, or any other plan with a similar employer contribution requirement, the required City contribution will be withdrawn from the retiree's MERP account. b. For employees in Category 2, the program is the same as for those in Category 1, with the following exception: in In addition to the new plan contributions listed above, current employees who fully convert to the new plan will also receive a one- time City contribution to their individual MERP accounts that equates to $100 per month for every month they contributed to the previous "defined benefit" plan, to a maximum of 15 years (180 months). This contribution will be made only if the employee retires from the City and at the time of retirement. No interest will be earned in the interim. Employees in Category 2 who had less than five years service with the City prior to implementation of the new program will only receive Part B contributions back to January 1, 2006 when they reach five years total service. c. For employees in Category 3, the program is the same as for those in Category 2, with the following exception: For employees in this category, the City will make no Part B contributions while the employees are still in the active work force. Instead, the City will contribute $400 per month into each of their MERP accounts after they retire from the City, to continue as long as the employee or spouse is still living. Each employee will contribute a flat $100 per month to the plan for the duration of their employment to partially offset part of this expense to the City. The maximum benefit provided by the City after retirement is $4,800.00 per year, accruing at the rate of $400.00 per month. There is no cash out option for these funds, and they may not be spent in advance of receipt. Employees in this category will also receive an additional one -time City contribution of $75 per month for every month they contributed to the previous plan prior to January 1, 2006, up to a maximum of 15 years (180 months). This contribution will be made to the MERP account at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. d. For employees (retirees) in Category 4. the structure is very similar to the previous retiree medical program, except that there is no cost share requirement, and the $400 City contribution after retirement can be used for any IRS authorized purpose, not lust City insurance premiums. Effective July 1, 2006, a MERP account has been opened for each retiree in this category, and the City will contribute $400 per month to each account as long as the retiree or spouse remains living. 20 3. Administration Vendors have been selected by the City to administer the program. The contract expense for program -wide administration by the vendor will be paid by the City. However, specific vendor charges for individual account transactions that vary according to the investment actions taken by each employee, such as fees or commissions for trades, will be paid by each employee. The City's Deferred Compensation Committee, or its successor committee, will have the authority to determine investment options that will be available through the plan. 4. Value of Benefit For all purposes, including compensation comparisons, the Retiree Medical Program shall be valued at 1 % of salary on which PERS retirement is based (Part A); plus .25% of other compensation (Part B). G. Tuition Reimbursement NBCEA members attending accredited community colleges, colleges, trade schools or universities may apply for reimbursement of one hundred percent (100 %) of the actual cost of tuition, books, fees or other student expenses for approved job — related courses. Maximum tuition reimbursement for employees shall be $1,400 per fiscal year. Reimbursement is contingent upon the successful completion of the course. Successful completion means a grade of "C" or better for undergraduate courses and a grade of "B" or better for graduate courses. All claims for tuition reimbursement require the approval of the Human Resources Director. SECTIONS. — Miscellaneous A. Reductions in Force /Layoffs The provisions of this section shall apply when the City Manager determines that a reduction in the work force is warranted because of actual or anticipated reductions in revenue, reorganization of the work force, a reduction in municipal services, a reduction in the demand for service or other reasons unrelated to the performance of duties by any specific employee. Reductions in force are to be accomplished, to the 21 extent feasible, on the basis of seniority within a particular Classification or Series and this Section should be interpreted accordingly. DEFINITIONS "Layoffs" or "Laid Off' shall mean the non - disciplinary termination of employment. 2. "Seniority" shall mean the time an employee has worked in a Classification or Series calculated from the date on which the employee was first granted permanent status in the current Classification or any Classification within the Series, subject to the following: a. Credit shall be given only for continuous service subsequent to the most recent appointment to permanent status in the Classification or Series; and b. Seniority shall include time spent on industrial leave, military leave, and leave of absence without pay, but shall not include time spent on any other authorized or unauthorized leave of absence. 3. "Classification" shall mean one or more full time positions identical or similar in duties not including part-time, seasonal or temporary positions. Classification within a Series shall be ranked according to pay (lowest ranking, lowest pay). 4. "Series" shall mean two or more classifications within a Department which require the performance of similar duties with the higher ranking classification(s) characterized by the need for less supervision by superiors, more difficult assignments, more supervisory responsibilities for subordinates. The City Manager shall determine those classifications following a meet and consult process which constitute a Series.. 5. "Bumping Rights ", "Bumping" or "Bump" shall mean (1) the right of an employee, based upon. seniority within a series to bump into a lower ranking classification within the same series, (2) to be followed by, an employee being permitted to bump into a classification within a different series. The latter bumping shall be based upon unit wide seniority and shall be limited to a classification in which the employee previously held regular status. 22 No employee shall have the right to bump into a classification for which the employee does not possess the minimum qualifications such as specialized education, training or experience. PROCEDURE In the event the City Manager determines to reduce the number of employees within a classification, the following procedures are applicable: 1. Temporary and probationary employees within any classification shall, in that order, be laid off before permanent employees. 2. Employees within a classification shall be laid off in inverse order of seniority; 3. An employee subject to layoff in one classification shall have the right to bump a less senior employee in a lower ranking classification within a series. An employee who has bumping rights shall notify the Department Director within three (3) working days after. notice of layoff of his /her intention to exercise bumping rights. 4. In the event two or more employees in the same classification are subject to layoff and have the same seniority, the employees shall be laid off following the Department Director's consideration of established performance evaluations. NOTICE Employees subject to lay -off shall be given at least thirty (30) days advance notice of the layoff or thirty (30) days pay in lieu of notice. In addition, employees laid off will be paid for all accumulated paid leave, holiday leave (if any), and accumulated sick leave to the extent permitted by the Employee Policy Manual. REEMPLOYMENT Permanent and probationary employees who are laid off shall be placed on a Department re- employment list in reverse order of layoff. The re- employment list shall expire in 18 months. In the event a vacant position occurs in the classification which the employee occupied at the time of layoff, or a lower ranking classification within a series, the employee at the top of the Department re- employment list shall have the right within seven (7) days of written notice of appointment. Notice shall be deemed given 23 when personally delivered to the employee or deposited in the U.S. Mail, first class postage prepaid, and addressed to the employee at his or her last known address. Any employee shall have the right to refuse to be placed on the re- employment list or the right to remove his or her name from the re- employment list by sending written confirmation to the Human Resources Director. SEVERANCE If an employee is laid off from their job with the City, for economic reasons, the City will grant severance pay in an amount equal to one week of pay for every full year of continuous employment service to the City of Newport Beach up to ten (10) weeks of pay. B. Transfer and Reassignments The City acknowledges that before arriving at a final decision involving the transfer or reassignment of work schedules of those employees represented by the NBCEA, the seniority and preference of the employee is taken into consideration. C. Promotional Preference Where no less than 2 unit members achieve top three ranking on a certified eligible list, selection to the position shall be made with preference given to the unit members so qualified. Position vacancy announcements for all available City positions shall be distributed in a manner that reasonably assures unit members access to the announcements. D. 9/80 (or 4/10) Scheduling Plan The City agrees to maintain flex - scheduling where it is currently operating successfully and additionally to put in place a 9/80 (or 4/10) schedule, on a test basis (excluding the Library) for the balance of the life of the MOU. This test will be conducted at the discretion of the Department Director. The program will have proven itself to be successful if it costs the same or less than the present 5/40 program, and if the service levels for the 9/80 (or 4/10) schedules are the same or better as they are on the present 5/40 program. The program will be evaluated individually by work group, and should a problem involving service reductions or increases in cost materialize, the Department Director will meet with the work group to resolve the problem. If the Department Director and the work group disagree on the solution, the City Manager will consider both sides of the issue and resolve the dispute. Final evaluation of the success/failure of the 24 9/80 (or 4/10) schedule test will be conducted by the Department Director, and his /her determination shall be final. E. Labor Management Committee Committees shall meet quarterly on an annual schedule; names of participating unit members shall be announced to management no less than 5 working days before the scheduled meeting; cancellation for cause shall be rendered by the canceling party no less than 48 hours prior to the scheduled meeting; canceled meetings shall be rescheduled to take place within 5 working days of the canceled meeting; committees shall be departmental; they may be combined in the interests of efficiency with other such committees; City participants shall include appropriate department or division heads outside the unit; the purpose of the committees shall be to resolve conflict and exchange information; a unit staff person may attend meetings; meetings shall be scheduled to last no less than one hour; grievances in process shall not be subject to resolution in meetings; matters properly dealt with in negotiations may be discussed but no agreements shall be effected on same in committee. Meetings shall be on work time. The Committees shall include a Library Committee with two unit members participating; and three additional Committees, one of which shall meet in each quarter of the year on a continuing rotational basis. 1. Building/Planning /Engineering: Minimum representation shall include one NBCEA member and one management. representative. 2. Finance: Minimum representation shall include two NBCEA members and two management representatives. 3. All other City departments: Minimum representation shall include three NBCEA members and three management representatives. The City and NBCEA agree that initial committee establishment will require good faith effort to effect the spirit of this agreement. F. Discipline - Notice of Intent Employees who are to be the subject of substantial punitive discipline for any misconduct or negligence shall be entitled to prior written notice of intent to discipline at least seven (7) calendar days prior to the imposition of the actual penalty. This written notice shall contain a description of the event or conduct which justifies the imposition of discipline. The notice shall also include the specific form of a discipline intended, and the 25 employee shall be offered the opportunity to a hearing before their Department Director prior to the imposition of the penalty. This procedure will only be applied in cases of substantial punitive discipline. It shall be understood that a disciplinary penalty equal to an unpaid suspension of three (3) days or greater shall be substantial. All other discipline resulting in less than a three (3) day suspension will be considered non - substantial and will not be subject to the aforementioned procedure. This understanding is not intended to in any way reduce the rights of employees to due process. Employees who have become the subject to discipline and who believe that the penalty is not justified shall have access to the grievance procedure as established in the Employee - Employer Resolution #7173. G. Grievance Procedure Step 1: A grievance may be filed by any employee on his /her own behalf, or jointly by a group of employees, or by a Recognized Employee Organization. Within ten (10) calendar days of the event giving rise to a grievance, the grievant shall present the grievance in writing to the immediate supervisor. Grievances not presented within the time period shall be considered resolved. The supervisor shall meet with the grievant to settle grievance and give a written answer to the grievant within seven (7) calendar days from receipt of the grievance by the supervisor. When the immediate supervisor is also the department head the grievance shall be presented in Step 2. Step 2: If the grievance is not resolved in Step 1, the grievant may, within fourteen (14) calendar days from his/her receipt of the supervisor's answer, forward the grievance to the department head for consideration. Answer to the grievance shall be made in writing by the department head, after conferring with the grievant, within fourteen (14) calendar days from receipt of the grievance. Step 3: If the grievance is not resolved in Step 2, appeal to Step 3 may be made by the grievant within ten (10) calendar days from the receipt of the department heads answer, through the representative of his /her Recognized Employee Organization who may request a meeting with the City Representative to resolve the grievance. Following the meeting, i answer shall be made by the City Representative, in writing, to the representative within twenty -one (21) calendar days. Step 4: Mediation - If the grievance is not resolved after Step 3, as an alternative to proceeding directly to Step 5, the grievance may be submitted to mediation. A request for mediation may be presented in writing to the Human Resources Director within seven (7) calendar days from the date a decision was rendered at Step 3. As soon as practicable thereafter, or as otherwise agreed to by the parties, a mediator shall hear the grievance. A request for mediation will automatically suspend the normal processing of a grievance until the mediation process is completed. The mediation process shall be optional, and any opinion expressed by the mediator shall be informal and shall be considered advisory. Step 5: Within 20 calendar days of receipt of a grievance denial at step three, the grievant may file the grievance, in writing, with the Civil Service Board. At the next regularly scheduled meeting of the Civil Service Board, the grievance shall be heard, using Civil Service Board De Novo procedures. Within 20 calendar days of the hearing, the Civil Service Board shall issue its findings and conclusions to the parties at interest. Within 7 calendar days of the issuance of Civil Service Board findings and conclusions, the City Manager shall affirm, modify or revoke the Board's decision. The City Manager's decision shall be considered exhaustive of administrative remedies. Performance evaluation ratings and written reprimands are excluded from this Step Four grievance process, and shall be dealt with as currently provided in the Discipline Code. H. Probation 1. Probationary Period Newly hired employees shall serve a twelve (12) month probationary period. The probationary period for promoted employees shall be six (6) months. Newly hired employees shall become eligible for their first step increase after twelve (12) months. All other City rules regarding step increases shall remain unchanged. 27 2. Failure of Probation (a) New Probation An employee on new probation may be released at the sole discretion of the City at any time without right of appeal or hearing, except as provided in (c), below. (b) Promotional Probation An employee on promotional probation may be failed at any time without right of appeal or hearing, except as provided in (c), below, and except that failing an employee on promotional probation must not be arbitrary, capricious or unreasonable. An employee who fails promotional probation shall receive a performance evaluation stating the reason for failure of promotional probation. When an employee fails his or her promotional probation, the employee shall have the right to return to his or her former class provided the employee was not in the previous class for the purpose of training for a promotion to a higher class. When an employee is returned to his or her former class, the employee shall serve the remainder of any uncompleted probationary period in the former class. If the employee's former class has been deleted or abolished, the employee shall have the right to return to a class in his or her former occupational series closest to, but no higher than, the salary range of the class which the employee occupied immediately prior to promotion and shall serve the remainder of any probationary period not completed in the former class. (c) Probationary Release An employee who alleges that his or her probationary release was based on discrimination by the City, may submit a grievance within ten (10) days after receipt of the Notice of Failure of Probation. 28 Salary on Reclassification The City will amend its Employee Policy Manual to provide for a minimum salary increase of five percent (5 %) upon reclassification (not to exceed the maximum of the new salary range). J. Safety Shoes A Safety shoe allowance in the amount of $125 shall be provided to each Print Shop and Mailroom employee on an annual basis. The present policy and practices regarding the supply and maintenance of safety shoes shall remain in place except for the following changes as they apply to the accelerated wear provisions. If the soles of the safety shoes wear out within a year, the employee should present the shoes to his /her supervisor. If the supervisor agrees that the soles are worn out, he will authorize the employee to purchase a new pair of shoes at City expense. If the supervisor judges that the uppers are in good condition, he will authorize the employee to have the shoes resoled at City expense. K. Service Awards For the purpose of determining service awards, if an employee has been employed by the City on more than one occasion, non - consecutive time will be considered as part of total service. Prior to system implementations, an employee is required to individually notify the awards committee of all of the service time. L. Employee Handbook There will be a consolidation of documents to be given to each employee. This consolidation will be comprised of Employee Policy Manual, related Departmental Rules and Regulations; Employee /Employer Resolutions and a copy of Memorandum of Understanding. More information may be included. M. Direct Deposit All employees shall participate in the payroll direct deposit system. 29 N. Deferred Compensation The City agrees to, through a joint City - Employee Committee, explore the possible addition of additional deferred compensation providers during the term of this agreement. O. Separability Should any part of this MOU or any provision herein contained be rendered or declared invalid, by reason of any existing or subsequently enacted Legislation, or by decree of a Court of competent jurisdiction, such invalidation of such part or portion of this MOU shall not invalidate the remaining portion hereto, and same shall remain in full force and effect; provided, however, that should provisions of this MOU relating to any schedule adjustment be declared invalid, City agrees to provide alternative benefits agreeable to NBEL, to employees, which will cause such employees to receive the same amount of money as they would have received had such provision not been declared invalid. Signatures are on the next page. 30 Executed this day of 2007 NEWPORT BEACH CITY EMPLOYEES ASSOCIATION CITY OF NEWPORT BEACH By: Mayor ATTEST: By: City Clerk APPROVED AS TO FORM: Robin Clauson, City Attorney Teresa Craig, President Paul Bechely, Negotiation Team 31 EXHIBIT A CITY EMPLOYEES ASSOCIATION Administrative Assistant Buyer Cultural Arts/Grant Coordinator Department Assistant Fiscal Clerk Senior Fiscal Clerk Fiscal Specialist Graphics & Printing Specialist Harbor Resources Specialist Inventory Analyst Librarian I Librarian II Librarian II, (Mariners) Librarian III Librarian IV Library Assistant Library Clerk I Library Clerk II Senior Library Clerk License Inspector Mail Processing Clerk Mail Processing Clerk, Sr. Marketing Specialist Office Assistant Printing Services Supervisor Public Works Specialist Recreation Coordinator Recreation Coordinator, Assistant Records Specialist Senior Recreation Leader II 32 MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF NEWPORT BEACH AND NEWPORT BEACH EMPLOYEES LEAGUE This MEMORANDUM OF UNDERSTANDING (hereinafter referred to as "MOU ") is entered into with reference to the following: PREAMBLE 1. The NEWPORT BEACH EMPLOYEES LEAGUE ( "NBEL "), a recognized employee organization, and the City of Newport Beach ( "City'), a municipal corporation and charter city, have been meeting and conferring, in good faith, with respect to wages, hours, fringe benefits and other terms and conditions of employment. 2. NBEL representatives and City representatives have reached agreement as to wages, hours and other terms and conditions of employment for the period from July 1, 2007 to June 30, 2010 and this agreement has been embodied in this MOU. 3. This MOU, upon approval by NBEL and the Newport Beach City Council, represents the total and complete understanding and agreement between the parties regarding all matters within the scope of representation. SECTION 1. — General Provisions A. Recognition City hereby confirms its prior certification of NBEL as the recognized employee organization for the employees in the Construction and Maintenance Unit, and agrees to meet and confer and otherwise deal exclusively with NBEL on all matters within the scope of representative pertaining to said employees as authorized by law. B. Duration of Memorandum 1. Except as specifically provided otherwise, any ordinance, resolution or action of the City Council necessary to implement this MOU shall be considered effective as of July 1, 2007. This MOU shall remain in full force and effect until June 30, 2010, and the provisions of this MOU shall continue after the date of expiration of this MOU in the event the parties are meeting and conferring on a successor MOU. 1 2. The terms and conditions of this MOU shall prevail over conflicting provisions of the Newport Beach City Charter, the ordinances, resolutions and policies of the City of Newport Beach, and federal and state statutes, rules and regulations which either specifically provide that agreements such as this prevail, confer rights which may be waived by any collective bargaining agreement, or are, pursuant to decisional or statutory law, superseded by the provisions of an agreement similar to this MOU. C. Release Time 1. Three NBEL officers designated by the NBEL shall collectively be granted 120 hours paid release time maximum, annually, for the conduct of NBEL business. Such time shall be exclusive of actual time spent in collective bargaining and shall be scheduled at the discretion of the NBEL officer. Every effort will be made to schedule this time to avoid interference with City operations. 2. Release time designees shall be identified annually and notice shall be provided to the City. Release time incurred shall be reported regularly in the form and manner prescribed by the City. 3. Activities performed on release time shall include representation of members in rights disputes; preparation for collective bargaining activities, and distribution of NBEL written communication in the work place. D. Emplovee Data and Access The NBEL will be provided on a regular basis with a listing of all unit members. The listing will include name, department, and job title. Information concerning the NBEL prepared by the NBEL will be provided to new field employees at the time of orientation. NBEL officials shall be entitled to solicit membership from field employees who are not members or who are new City employees assigned to a field department. E. Scope 1. All present written rules and current established practices and employees' rights, privileges and benefits that are within the scope of representation shall remain in full force and effect during the term of this MOU unless specifically amended by the provisions of this MOU. 2. The practical consequences of a Management Rights decision on wages, hours, and other terms and conditions of employment shall be subject to the grievance procedures. OA 3. Pursuant to this MOU, the City reserves and retains all of its inherent exclusive and non — exclusive managerial rights, powers, functions and authorities ( "Management Rights ") as set forth in Resolution No. 7173. Management Rights include, but are not limited to, the following: (a) the determination of the purposes and functions of City Departments; (b) the establishment of standards of service; (c) to assign work to employees as deemed appropriate; (d) the direction and supervision of its employees; (e) the discipline of employees; (f) the power to relieve employees from duty for lack of work or other legitimate reasons; (g) to maintain the efficiency of operations; (h) to determine the methods, means and personnel by which operations are to be conducted; (i) the right to take all necessary actions to fulfill the Department's responsibilities in the event of an emergency; and (j) the exercise of complete control and discretion over the manner of organization, and the appropriate technology, best suited to the performance of departmental functions. The practical consequences of a Management Rights decision on wages, hours, and other terms and conditions of employment shall be subject to the grievance procedures. F. Conclusiveness With the exception of a separate MOU covering retirement issues, this MOU contains all of the covenants, stipulations, and provisions agreed upon by the parties. Therefore, for the fife of this MOU, neither party shall be compelled, and each party expressly waives its rights to request the other to meet and confer concerning any issue within the scope of representation except as expressly provided herein or by mutual agreement of the parties. No representative of either party has the authority to make, and none of the parties shall be bound by, any statement, representation or agreement reached prior to the execution of this MOU and not set forth herein. G. Modifications Any agreement, alteration, understanding, variation, or waiver or modification of any of the terms or provisions of this MOU shall not be binding upon the parties unless contained in a written document executed by authorized representatives of the parties. H. Agencv Shop 1. Unit employees,. by majority vote, have elected for an Agency Shop provision. 2. The Association shall comply with all statutory and legal requirements regarding agency shop, should it be approved through the election process. This will include all requisite procedures for appeals, record- keeping, establishment of the service fee amount; designating acceptable charities pursuant to Section 3502.5 of the Government Code, etc. 3. Complying with agency shop provisions shall not be a condition of employment. Enforcement shall be the responsibility of the Association; utilizing appropriate civil procedures. The City will cooperate with Association efforts to achieve enforcement. 4. The collection of Association dues and /or service fees shall continue to be handled through the payroll deduction process. 5. NBEL agree to defend, indemnify and hold harmless the City for its action pursuant to this section. SECTION 2. — Compensation WIMM=J Effective the pay period beginning June 23, 2007, salaries shall be increased by 2 %. Effective the pay period beginning December 22, 2007, salaries shall be increased by 2.5 %. Effective the pay period beginning June 21, 2008, salaries shall be increased by 2.5 %. F1 3 Effective the pay period beginning June 20, 2009, salaries shall be increased by 4 %. In addition to the increases set forth above, the Equipment Operator I salary shall be increased by 5 %, effective June 23, 2007. Overtime 1. Definitions (a) Miscellaneous Employee - An employee designated as a miscellaneous member of the Public Employees Retirement System (PERS). (b) Overtime - Normal overtime is defined as any scheduled hours worked in excess of the basic work week. For the purposes of this section, the basic work week is 40 hours, or as determined by the Department Director and approved by the City Manager which occurs between a fixed and regularly recurring period of 168 hours - 7 consecutive 24 hour periods - beginning at 0001 on Saturday and ending at midnight the following Friday (or as otherwise designated by the City Manager). (c) Incidental Overtime - Incidental overtime is any extension of the basic work shift of less than 1/10 of an hour that is non - recurrent. (d) Hours Worked - Hours worked are defined as hours which employees are required to be performing their regular duties or other duties assigned by the City. 2. Comaensation Normal overtime for all non - exempt employees shall be paid at one -and- one -half (1 -1/2) times the hourly rate of the employee's bi- weekly salary rate. Reporting of overtime on payroll forms will be as prescribed by the Administrative Services Director. Incidental overtime is not compensable. 3. Overtime Pay Calculations During Week Including Holidav(s) For the purpose of calculating overtime, holidays and pre - scheduled vacation or flex leave occurring during the regular work week will count as time worked. The floating holiday is excluded from this provision. 5 C. Standby Duty 1. Defined (a) To be ready to respond immediately to calls for service; (b) To be reachable by telephone; (c) To remain within a specified distance from his/her work station; and (d) To refrain from activities which might impair the employee's ability to perform his/her assigned duties. 2. Compensation Standby duty shall be compensated at the rate of one (1) hour of overtime compensation for each eight (8) hours of such duty. Standby duty on holidays shall be compensated at the rate of two (2) hours of overtime compensation for each (8) hours of standby duty. Should the employee be required to return to work while on standby status, the provisions pertaining to compensation for call -back pay shall apply for the actual period of time the employee is in a work status. D. Call -Back Dutv 1. Defined Call -back duty requires the employee to respond to a request to return to his/her work station after the normal work shift has been completed and the employee has left his/her normal work station. Those periods of overtime which had been scheduled by the Department Director prior to the end of the normal work shift are not considered call -back duty. 2. Compensation All personnel on call back duty eligible for overtime pay shall be guaranteed two (2) hours pay, or pay for one - and - one -half (1 -1/2) times the number of hours worked, whichever is greater. E. Accumulation of Compensatory Time Off City employees represented by the NBEL may receive compensatory time off, in lieu of cash, as compensation for overtime hours worked. Compensatory time shall be calculated at the rate of one and one half C.1 hours for each hour of overtime worked beyond the 40 hour limit of the work week. Compensatory time is to be granted only when the employer and the employee agree that the application of "Comp Time" is a desirable substitute for the payment of cash for overtime. Call -back time may be converted to comp time with supervisor approval. Employees may accumulate up to eighty (80) hours of Compensatory Time. Any hours in excess of eighty (80) will be paid off. Accumulation in excess of the eighty (80) hours may be approved at the discretion of the Department Director. F. Night Shift Differential The City agrees to pay $1 per hour night shift differential for Employees working a regularly scheduled work shift of which four or more hours are worked between the hours of 5p.m. and 5a.m. Overtime worked as an extension of an assigned day shift shall not qualify an employee for night shift differential. The differential pay is paid only for hours actually worked. In accordance with this provision, City agrees to pay $.50 per hour night shift differential to automotive shop mechanics for hours worked after 5:00 p.m. G. Differential Pay for One Man Packer The differential pay for the operation of a one man packer shall be 18 %. H. Acting Pav NBEL employees will be eligible to receive "acting pay" only after completing 80 consecutive hours in the higher classification. Acting pay is 107.5% of the employee's base pay rate. Once the minimum hours requirement has been satisfied, acting pay will be granted for all hours worked above 40 hours beginning with the 41 st hour worked in the higher classification. Certification Pav Annual payment for State or governing body certification to be as follows for those League represented employees holding valid and current certification in areas indicated below on November 15th of each year: 1. Water or Wastewater Operator - Grade 1- $110 Grade II - $220 Grade III - $330 Grade IV - $440 2. Backflow Certification - $220 3. Qualified Applicator Certificate - $110. for each category up to a maximum of $330. 4. Smog License - $275 5. Fire Mechanic State Level I - $110 6. Fire Mechanic State Level II - $220 7. Certified Arborist - $110 8. ASE Certification - $55 and $220 for possessing a current ASE Master Truck Technician and $220 for possessing a current ASE Master Automobile Technician certification. 9. Commercial Drivers License, Class A - $220 10. Commercial Drivers License, Class B - $165 11. Public Works Certificates* I and II $200 (each). *18 -20 Jr. College units each. J. Court Time Employees who are required to appear in Court during their off -duty hours in connection with City business shall receive overtime compensation for the number of hours they spend in court, with a minimum of two (2) hours of such compensation. n SECTION 3. - Leaves A. Flex Leave NBEL members shall accrue Flex leave at the following rates: Years of continuous Accrual per Annual Service pay period /hrs Days 1 but less than 5 5.54 18 5 but less than 9 6.15 20 9 but less than 12 6.77 22 12 but less than 16 7.69 25 16 but less than 20 8.31 27 20 but less than 25 8.92 29 25 and over 9.54 31 During the first six months of employment, new full -time employees shall not accrue flex leave. At the completion of six months of employment six (6) months of flex leave will be placed in the employee's account. Note: If an employee becomes sick in the first six months of employment, the City will advance up to six (6) months of flex leave time to be used for illnesses only. If employee terminates employment prior to six months, the City will subtract the pay equivalent of the number of paid leave days advanced from the employee's final check. Any flex leave time advanced during the first six months of employment will be subtracted from the six (6) months of accrual placed in the employees account upon completion of six months employment. 2. Limit on Accumulation Employees may accrue flex leave up to an accumulated total equal to seventy eight times (78) the member's bi- weekly accrual rate. Any paid leave earned in excess of this level will be paid on an hour for hour basis in cash (spill over pay) at the employee's hourly rate of pay. Members hired prior to July 1, 1996 shall be paid for earned flex leave in excess of the maximum permitted accrual at the members hourly rate of pay provided that they have utilized at least eighty (80) hours of flex leave the previous calendar year. Employees who have not utilized the required amount of leave the prior calendar year shall not be eligible to accrue time above the maximum accrual limit. Employees first hired, or rehired by the City subsequent to July 1, 1996 shall not be eligible for flex leave spill over pay and shall not be entitled to accrue flex leave in excess of the flex leave. accrual threshold. 3. Method of Use Flex leave may not be taken in excess of that actually accrued and in no case, except for illness, may it be taken prior to the completion of an employee's initial probationary period. The Department Director shall approve all requests for flex leave taking into consideration the needs of the Department, and whenever possible the seniority and wishes of the employee. Flex leave may be granted on an hourly basis. Vacation Leave This section applies only to those Regular Full -time Employees hired on or before January 1, 1990 and who have elected not to enroll in the Flex Leave program. 1. Basis for Accrual /Full -Time Employees Employees entitled to vacation leave- with -pay shall accrue such leave based on years of continuous service and the number of hours in a normal work week for the position to which they are assigned in accordance with the following schedule: Years of Accrual per pay Continuous period hrs 0 but less than 5 3.38 5 but less than 9 3.99 9 but less than 12 4.61 12 but less than 16 5.22 16 but less than 20 5.84 20 but less than 25 6.46 25 and over 7.07 2. Limit on Accumulation Accrual of vacation days in excess of those earned for two years of continuous service is not permitted past December 31st of each year with the following exception: with approval of the Department Director, an employee may accrue vacation days in excess of the two -year limit provided all such excess accumulation is taken by March 31st of the following year. m C. 3. Method of Use Vacation may not be taken in excess of that actually accrued. The Department Director shall schedule and approve all vacation leaves for employees taking into consideration the needs of the Department, and whenever possible, the seniority and wishes of the employee. Vacation leave may be granted on an hourly basis. Any fraction over an hour shall be charged to the next full hour. Sick Leave This section applies only to those Regular Full -time Employees hired on or before January 1, 1990 and who have elected not to enroll in the Flex Leave program. 1. Basis for accrual Full -time, regular employees shall accrue sick leave based on the number of hours in a normal work week for the position to which they are assigned in accordance with the following schedules: Normal Work Week 40 hours Service Time Monthly Accrual 0 -1 year 4 hours 1 -2 years 5 hours 2 -3 years 6 hours 3-4 years 7 hours 4+ 8 hours 2. Method of Use (a) General Sick leave may not be taken in excess of that actually accrued. Sick leave may be granted on an hourly basis. 11 (b) Approval Sick leave may be granted only at the discretion of or with the approval of the Department Director and only for the purposes defined in Section 11.2 of the Employee Policy Manual. 3. Sick Leave Conversion Employees who at the end of the calendar year have an accrued level of sick leave equal to or greater than the full value of 50 months of accrued sick leave, and who have used six or less days of sick leave during that calendar year will be permitted (only once per year) to convert up to six (6) days of sick leave to either salary or paid vacation at the value of 50% (maximum value of 3 days per year). Eligible sick leave days converted to cash shall be at the employee's option. Eligible sick leave days converted to paid vacation shall require the approval of the Department Director. D. Holiday Leave Subject to the provisions herein, the following days shall be observed as paid holidays by all employees in permanent positions and other except those personnel whose work assignments, in the judgment of the Department Director require their presence on the job. For each designated holiday, except the Floating Holiday, such excepted personnel shall receive an equivalent number of hours of paid flex leave or equivalent pay whichever in the judgment of the Department Director best serves the interest of the Department. Independence Day Labor Day Veteran's Day Thanksgiving Day Friday following Thanksgiving Christmas Eve Christmas New Year's Eve New Year's Day Washington's Birthday Memorial Day Martin Luther King Day Floating Holiday July 4 1st Monday in Sept. November 11 4th Thurs. in November Last 1/2 of working day December 25 Last 1/2 of working day January 1 3rd Monday in February Last Monday in May 3rd Monday in January July 1 st - 1 day In 2007 only, Christmas Eve and New Year's Eve will be observed as full day holidays. 12 Holidays listed above (except the floating holiday) occurring on a Saturday shall be observed the preceding Friday. Holidays occurring on a Sunday shall be observed the following Monday. (Half day .holidays shall be observed prior to the observed holiday). 2. Holiday Pay Eligibility NBEL agrees that members scheduled to work 44 hours and 36 hours during a two -week schedule will, when a holiday occurs during a work schedule, receive eight (8) hours pay for said holiday. Following are the limitations on eligibility for Holiday Pay: (a) Holiday Pay will be paid only to employees who work their scheduled day before and scheduled day after a holiday, or are on authorized leave (e.g. approved vacation, or sick leave, that has been approved by the Department Director). (b) Newly hired employees will be eligible to receive full pay for scheduled holidays, without a waiting period. E. Bereavement Leave. The provisions of the Bereavement Leave Policy applicable to affected employees shall be as follows: 1. Defined The necessary absence from duty by an employee having a regular or probationary appointment, because of the death or terminal illness in his /her Immediate Family. For the purposes of this section, Immediate Family shall mean father and mother (including step), brother, sister, wife, husband, child, grandparents and the Employee's spouse's father, mother, brother, sister, child and grandparents. 2. Maximum Allowed Such leave shall be limited to five (5) working days per incident. F. Leave Sellback Twice annually, employees shall have the option of selling back on an hour for hour basis, accrued flex or vacation leave. In no event shall thaflex or vacation leave balance be reduced below one hundred and sixty (160) hours. 13 SECTION 4. — Frinne Benefits A. Health Insurance 1. Benefits Information Committee City has established a Benefits Information Committee (BIC) composed of one representative from each employee association group and up to three City representatives. The Benefits Information Committee has been established to allow the City to present data regarding carrier and coverage options, the cost of those options, appropriate coverage levels and other health programs. The purpose of the BIC is to provide each employee group with information about health insurance /programs and to receive timely input from associations regarding preferred coverage options and levels of coverage. 2. Medical Insurance The City has implemented an IRS qualified Cafeteria Plan. The City contribution toward the Cafeteria Plan shall be $774. In addition, the City shall contribute the minimum CalPERS participating employers contribution towards medical insurance. Employees shall have the option of allocating Cafeteria Plan contributions towards the City's existing medical, dental and vision insurance /programs. The City and the Newport Beach Employees League will cooperate in pursuing additional optional benefits to be available through the Cafeteria Plan. Any unused Cafeteria Plan funds shall be payable to the employee as taxable cash back. Employees shall be allowed to change coverage in accordance with plan rules and during regular open enrollment periods. Effective the pay period beginning December 22, 2007, the City's contribution towards the Cafeteria Plan will increase to $874 (plus the minimum CalPERS participating employers contributions). Effective the pay period beginning December 20, 2008, the City's contribution towards the Cafeteria Plan will increase to $974 (plus the minimum CalPERS participating employers contribution). Effective the pay period beginning December 19, 2009, the City's contribution towards the Cafeteria Plan will increase to $1,049 (plus the minimum CalPERS participating employers contribution). NBEL members who do not want to enroll in any medical plan offered by the Qty must provide evidence of group medical insurance coverage, and 14 3. II execute an opt -out agreement releasing the City from any responsibility or liability to provide medical insurance coverage on an annual basis. Dental Insurance The existing or comparable dental plans shall be maintained as part of the City's health plan offerings as agreed upon by the Benefits Information Committee. Vision Insurance The existing or comparable vision plan shall be maintained as part of the City's health plan offerings as agreed upon by the Benefits Information Committee. B. Additional Health Insurance /Programs 1 IRS Section 125 Flexible Spending Account Section 125 of the Internal Revenue Code authorizes an employee to reduce taxable income for payment of allowable expenses such as child care and medical expenses. An Association member may request that medical, child care and other eligible expenses be paid or reimbursed by the Section 125 Plan out of the employee's account. The taxable salary of the employee will be reduced by the amount designated by the employee for reimbursable expenses. 2. Disability Insurance The City shall provide disability insurance to all regular full time employees with the following provisions: Weekly Benefit Maximum Benefit Minimum Benefit Waiting Period 66.67% gross weekly wages $10,000 /month $50 30 Calendar Days Employees shall not be required to exhaust accrued paid leaves prior to receiving benefits under the disability insurance program. Employees may not supplement the disability benefit with paid leave once the waiting period has been exhausted. 15 Concurrent with the commencement of this program, employees assumed responsibility for the payment of the disability insurance cost in the amount of one (1%) percent of base salary. Simultaneously, the City increased base wages by one (1 %) percent. 3. Life Insurance The City shall provide life insurance for all regular full -time employees in $1,000 increments equal to one times the employee's annual salary up to a maximum of $50,000. At age 70 the City -paid life insurance is reduced by 50% of the pre -70 amount. This amount remains in effect until the employee terminates from City employment. C. Employee Assistance Program City shall provide an Employee Assistance Program (EAP) through a properly licensed provider. Association members and their family members may access the EAP subject to provider guidelines. D. The Retirement Benefit 1. Existing Benefits The City contracts with PERS to provide retirement benefits for its employees. The retirement formula is the 2% @ 55, calculated on the basis of the best/highest year. The City pays both the employee and the employer contribution, but the City reports the value of the Employer Paid Member Contribution (EPMC), so the employees will have the benefit of the EPMC in their retirement formula calculations. In addition, the City contracts for the 4t' Level 1959 Survivor Insurance Benefit, $500 Lump Sum Death Benefit, Sick Leave Credit, Military Service Credit, 2% Cost of Living Adjustment and the Pre - Retirement Option 2 Death Benefit (Section 21548). 2. Separate MOU. Pursuant to a separate MOU between the City and Association the City will implement the 2.5 % @55 retirement formula, effective January 1, 2008. 16 E. Retiree Medical Benefit 1. Background In 2005, the City and all Employee Associations agreed to replace the previous "defined benefit" retiree medical program with a new "defined contribution" program. The process of fully converting to the new program will be ongoing for an extended period. During the transition, employees and (then) existing retirees have been administratively classified into one of four categories. The benefit is structured differently for each of the categories. The categories are as follows: a. Category 1 - Employees newly hired after January 1, 2006. b. Category 2 - Active employees hired prior to January 1, 2006, whose age plus years of service as of January 1, 2006 was less than 50 (46 for public safety employees). c. Category 3 - Active employees hired prior to January 1, 2006, whose age plus years of service was 50 or greater (46 for public safety employees) as of January 1, 2006. d. Category 4 - Employees who had already retired from the City prior to January 1, 2006, and were participating in the previous retiree medical program. 2. Program Structure This is an Integral Part Trust (IPT) Medical Expense Reimbursement Program Plan (MERP). a. For employees in Cateqory 1, the program is structured as follows Each employee will have an individual MERP account for bookkeeping purposes, called his or her "Employee Account." This account will accumulate contributions to be used for health care expense after separation. All contributions to the plan are either mandatory employee contributions or City paid employer contributions, so they are not taxable to employees at the time of deposit. Earnings from investment of funds in the account are not taxable when posted to the account. Benefit payments are not taxable when withdrawn, because the plan requires that all distributions be spent for specified health care purposes. Contributions will be in three parts. Part A contributions (mandatory employee contributions): 1 % of Salary 17 Part B contributions (employer contributions): $1.50 per month for each year of service plus year of age (updated every January 1st based on.status as of December 31st of the prior year). Effective January 2008, this contribution will increase to $2.50 per month. Part C contributions (leave settlement as determined by Association): The Association will determine the level of contribution for all employees it represents, subject to the following constraints. All employees within the Association must participate at the same level, except that Safety members and Non - safety members within an Association may have different levels. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City, or cashing out leave at any other time, would have the cash equivalent of 50% of the amount that is cashed out added to the MERP, on a pre-tax basis. The remaining 50% would be paid in cash as taxable income. Individual employees would not have the option to deviate from this breakout. The Association has decided to participate in Part C contributions at the level of zero percent (0 %) flex and sick leave. This amount may be changed, on a go forward basis, as part of a future meet and confer process. However, the participation level must be the same for all employees within the Association except that Safety members and Non - safety members within an Association may have different levels. Additionally, the purpose and focus of these changes should be toward long -term, trend type adjustments. Due to IRS restrictions regarding "constructive receipt," the City will impose restrictions against frequent spikes or drops that appear to be tailored toward satisfying the desires of a group of imminent retirees. Spillover pay is not eligible for Part C contributions. Nothing in this section restricts taking leave for time off purposes. Sick leave balances may also be included in the MERP Part C contributions, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule, which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and specifies that sick leave hours 18 are "cashed out" on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacationtflex leave participation, and thresholds must be separately identified by the Association. Part A contributions may be included in PERS compensation. Part B and Part C contributions will not be included in PERS compensation. Part A contributions begin upon enrollment in the program and are credited to each MERP Employee Account each pay period. Eligibility for Part B contributions is set at five years of vested City employment. At that time, the City will credit the first five years worth of Part B contributions into the Employee Account (interest does not accrue during that . period). Thereafter, contributions are made bi- weekly. Part C deposits, if any, will be made at the time of employment separation. Each Employee has a right to reimbursement of medical expenses (as defined below) from the Plan until the Employee Account balance is zero. This right is triggered upon separation. If an employee leaves the City prior to five years employment, only the Part A contributions and Part C leave settlement contributions, if any, will be in the MERP. Employee Account. Such an employee will not be entitled to any Part B contributions. The exception to this is a full -time employee, participating in the program, who leaves the City due to industrial disability during the first five years of employment. In such cases, the employee will receive exactly five years worth of Part B contributions, using the employee's age and compensation at the time of separation for calculation purposes. This amount will be deposited into the employee's MERP account at the time of separation. Distributions from MERP Employee Accounts are restricted to use for health insurance and medical care expenses after separation, as defined by the Internal Revenue Code Section 213(d) (as explained in IRS Publication 502), and specified in the Plan Document. In accordance with current IRS regulations and practices, this generally includes premiums for medical insurance, dental insurance, vision insurance, supplemental. medical insurance, long term care insurance, and miscellaneous medical expenses not covered by insurance for the employee and his or her spouse and legal dependents — again only as permitted by IRS Publication 502. Qualification for dependency status will be determined by guidelines in IRC 152. If used for these purposes, distributions from the MERP accounts will not be taxable. Cash withdrawal for any other purpose is prohibited. Under recent IRS Revenue Ruling 2005 -24, any balance remaining in the Employee Account after the death of the employee and his or her spouse and /or other authorized dependents (if any) must be forfeited. That particular MERP 19 Employee Account will be closed, and any remaining funds will become general assets of the plan. The parties agree that the City's Part B contributions during active employment constitute the minimum CalPERS participating employer's contribution towards medical insurance after retirement.. The parties also agree that, for retirees selecting a CalPERS medical plan, or any other plan with a similar employer contribution requirement, the required City contribution will be withdrawn from the retiree's MERP account. b. For employees in Cateaory 2. the program is the same as for those in Cateaory 1. with the following exception: In addition to the new plan contributions listed above, current employees who fully convert to the new plan will also receive a one -time City contribution to their individual MERP accounts that equates to $100 per month for every month they contributed to the previous "defined benefit" plan, to a maximum of 15 years (180 months). This contribution will be made only if the employee retires from the City and at the time of retirement. No interest will be earned in the interim. Employees in Category 2 who had less than five years service with the City prior to implementation of the new program will only receive Part B contributions back to January 1, 2006 when they reach five years total service. c. For emplovees in Category 3, the program is the same as for those in Cateaory 2. with the following exception: For employees in this category, the City will make no Part B contributions while the employees are still in the active work force. Instead, the City will contribute $400 per month into each of their MERP accounts after they retire from the City, to continue as long as the employee or spouse is still living. Each employee will contribute a flat $100 per month to the plan for the duration of their employment to partially offset part of this expense to the City. The maximum benefit provided by the City after retirement is $4,800 per year, accruing at the rate of $400 per month. There is no cash out option for these funds, and they may not be spent in advance of receipt. Employees in this category will also receive an additional one -time City contribution of $75 per month for every month they contributed to the previous plan prior to January 1, 2006, up to a maximum of 15 years (180 months). This contribution will be made to the MERP account at the time of 20 retirement, and only if the employee retires from the City. No interest will be earned in the interim. d. For employees (retirees) in Cateaory 4. the structure is very similar to the previous retiree medical program, except that there is no cost share requirement. and the $400 Citv contribution after retirement can be used for any IRS authorized purpose, not lust City.insurance premiums. Effective July 1, 2006, a MERP account has been opened for each retiree in this category, and the City will contribute $400 per month to each account as long as the retiree or spouse remains living. 3. Administration Vendors have been selected by the City to administer the program. The contract expense for program -wide administration by the vendor will be paid by the City. However, specific vendor charges for individual account transactions that vary according to the investment actions taken by each employee, such as fees or commissions for trades, will be paid by each employee. The City's Deferred Compensation Committee, or its successor committee, will have the authority to determine investment options that will be available through the plan. 4. Value of Benefit For all purposes, including compensation comparisons, the Retiree Medical Program shall be valued at 1% of salary on which PERS retirement is based (Part A); plus .25% of other compensation (Part B). F. Tuition Reimbursement NBEL members attending accredited community colleges, colleges, trade schools or universities may apply for reimbursement of one hundred percent (100 %) of the actual cost of tuition, books, fees or other student expenses for approved job — related courses. Maximum tuition reimbursement for employees shall be $1,400 per fiscal year. Reimbursement is contingent upon the successful completion of the course. Successful completion means a grade of "C" or better for undergraduate courses and a grade of "B" or better for graduate courses. All claims for tuition reimbursement require the approval of the Administrative Services Director. 21 SECTIONS. Miscellaneous/Working Conditions A. Reductions in Force /Layoffs The provisions of this section shall apply when the City Manager determines that a reduction in the work force is warranted because of actual or anticipated reductions in revenue, reorganization of the work force, a reduction in municipal services, a reduction in the demand for service or other reasons unrelated to the performance of duties by any specific employee. Reductions in force are to be accomplished, to the extent feasible, on the basis of seniority within a particular Classification or Series and this Section should be interpreted accordingly. DEFINITIONS "Layoffs" or "Laid Off' shall mean the non - disciplinary termination or employment. 2. "Seniority" shall mean the time an employee has worked in a Classification or Series calculated from the date on which the employee was first granted permanent status in the current Classification or any Classification within the Series, subject to the following: (a) Credit shall be given only for continuous service subsequent to the most recent appointment to permanent status in the Classification or Series; and (b) Seniority shall include time spent on industrial leave, military leave, and leave of absence without pay, but shall not include time spent on any other authorized or unauthorized leave of absence. 3. "Classification" shall mean one or more full time positions identical or similar in duties not including part-time, seasonal or temporary positions. Classifications within a Series shall be ranked according to pay (lowest ranking, lowest pay). 4. "Series" shall mean two or more classifications within a Department which require the performance of similar duties with the higher ranking classification(s) characterized by the need for less supervision by superiors, more difficult assignments and more supervisory responsibilities for subordinates. The City Manager shall determine those classifications following a meet and consult process which constitute a Series. 22 5. 'Bumping Rights ", 'Bumping" or "Bump" shall mean (1) the right of an employee, based upon seniority within a series to bump into a lower ranking classification within the same series, (2) to be followed by, an employee being permitted to bump into a classification within a different series. The latter bumping shall be based upon unit wide seniority and shall be limited to a classification in which the employee previously held regular status. No employee shall have the right to bump into a classification for which the employee does not possess the minimum qualifications such as specialized education, training or experience. PROCEDURE The General Services Department will select employees for layoff by straight seniority department wide. This means department management has total control of position elimination and personnel reassignment within ranks, but the layoffs shall be on a straightforward 'last hired -first fired" basis. The layoff system for the Utilities Department shall operate the same department -wide seniority as does the General Services Department, with the exception of the Electrical and Telecommunications sections. Because of the highly specialized skills and training of the personnel in these sections, these sections shall be treated as unique and individual unto themselves. In the event the City Manager determines to reduce the number of employees within a classification, the following procedures are applicable: 1. Temporary and probationary employees within any classification shall, in that order, be laid off before permanent employees. 2. Employees within a classification shall be laid off in inverse order of seniority. 3. An employee subject to layoff in one classification shall have the right to bump a less senior employee in a lower ranking classification within a series. An employee who has bumping rights shall notify the Department Director within three (3) working days after notice of layoff of his /her intention to exercise bumping rights. 4. In the event two or more employees in the same classification are subject to layoff and have the same seniority, the employees shall be laid off following the Department Director's consideration of established performance evaluations. 23 REEMPLOYMENT Permanent and probationary employees who are laid off shall be placed on a Department re- employment list in reverse order of layoff. The re- employment list shall expire in 18 months. In the event a vacant position occurs in the classification which the employee occupied at the time of layoff, or a lower ranking classification within a series, the employee at the top of the Department re- employment list shall have the right within seven (7) days of written notice of appointment. Notice shall be deemed given when personally delivered to the employee or deposited in the U.S. Mail, first class postage prepaid, and addressed to the employee at his or her last known address. Any employee shall have the right to refuse to be placed on the re- employment list or the right to remove his or her name from the re- employment list by sending written confirmation to the Human Resources Director. SEVERANCE If an employee is laid off from their job with the City, for economic reasons, the City will grant severance pay in an amount equal to one week of pay for every full year of continuous employment service to the City of Newport Beach up to ten (10) weeks of pay. NOTICE Employees subject to lay -off shall be given at least thirty (30) days advance notice of the layoff or thirty(30) days pay in lieu of notice. In addition, employees laid off will be paid for all accumulated paid leave, holiday leave, (if any), and accumulated sick leave to the extent permitted by the Personnel Resolution. B. Non - Discrimination City and NBEL agree that there will be no discrimination by either party or by any of their agents against any employee because of his/her membership or non- membership in NBEL, or because of his/her race, creed, color, national origin, religious belief, political affiliation, sex, sexual orientation or age. C. Promotional Preference Where no less than two (2) unit members achieve top three ranking on a certified eligible list, selection to the position shall be made with preference given to the unit members so qualified. The Human Resources Department shall be responsible for insuring that a position vacancy announcement for all available City positions be distributed in a manner that reasonably assures unit members access to the announcements. The Human Resources Department shall oversee all testing procedures. 24 Any employee who has achieved "regular status" may request assignment to any lateral or lower classification, and that employee may be transferred into that classification without competitive testing if both of the following conditions have been satisfied: 1. The employee meets the minimum qualifications of the classification; and, 2. The Department Director approves of the transfer. D. 9/80 Schedulinq Plan The City agrees to maintain flex - scheduling where it is currently in place in the Utilities Department and General Services Department. The Building Maintenance, Parks Maintenance, and Beach Maintenance crews will be placed on the 5/40 schedule including the Memorial Day and Labor Day weekends, or any portion of time between these Holidays at the discretion of the General Services Director. The City reserves the right to amend the program as needed to mitigate any operational problems which may arise due to budgetary cutbacks, personnel cuts or shortages, service level complaints, or any other operational reason. Should an operational problem involving service reductions or increases in cost materialize, the Department Director will notify the Association and the employees affected work group of the problem in writing, supported with cause. The Association and /or the employees of the affected work group, will in turn have up to ten (10) working days to respond and schedule a meeting with the Department Director. The purpose of the meeting is to propose a solution to the problem. The Department Director will consider the proposed solution and respond, in writing, within five (5) working days. If the Department Director and the work group disagree on the solution, the Association and /or employees of the affected work group will have up to five (5) working days to appeal the Department Director's decision to the City Manager, who will consider both sides of the issue and resolve the dispute, in a written decision within ten (10) days after the aforementioned meeting. E. Labor Management Committee Committees shall meet on an as needed basis; names of participating unit members shall be announced to management no less than 5 work days before the scheduled meeting; cancellation for cause shall be rendered by the canceling party no less than 48 hours prior to the scheduled meeting; canceled meetings shall be rescheduled to take place within 5 working days of the canceled meeting; committees shall be departmental; they may be combined in the interests of efficiency with other such committees; City participants shall include appropriate department or division heads outside the unit; the purpose of the committees shall be to resolve conflict and exchange information; a unit staff 25 person may attend meetings; meetings shall be scheduled to last no less than one hour; grievances in process shall not be subject to resolution in meetings; matters properly dealt with in negotiations may be discussed but no agreements shall be effected on same in committee. Meetings shall be on work time. F. Discipline - Notice of Intent 1. Employees who are to be the subject of substantial punitive discipline for any misconduct or negligence shall be entitled to prior written notice of intent to discipline at least seven (7) calendar days prior to the imposition of the actual penalty. This written notice shall contain a description of the event or conduct which justifies the imposition of discipline. The notice shall also include the specific form of a discipline intended, and the employee shall be offered the opportunity to a hearing before their Department Director prior to the imposition of the penalty. This procedure will only be applied in cases of substantial punitive discipline. It shall be understood that a disciplinary penalty equal to an unpaid suspension of three (3) days or greater shall be substantial. All other discipline resulting in less than a three (3) day suspension will be considered non - substantial and will not be subject to the aforementioned procedure. This understanding is not intended to in any way reduce the rights of employees to due process. Employees who have become the subject to discipline and who believe that the penalty is not justified shall have access to the grievance process as established in the Employee - Employer Resolution #7173. G. Grievance Procedure Step 1: A grievance may be filed by any employee on his /her own behalf, or jointly by a group of employees, or by a Recognized Employee Organization. Within ten (10) calendar days of the event giving rise to a grievance, the grievant shall present the grievance in writing to the immediate supervisor. Grievances not presented within the time period shall be considered resolved. The supervisor shall meet with the grievant to settle grievance and give a written answer to the grievant within seven (7) calendar days from receipt of the grievance by the supervisor. When the immediate supervisor is also the department head the grievance shall be presented in Step 2. Step 2: If the grievance is not resolved in Step 1, the grievant may, within fourteen (14) calendar days from his /her receipt of the supervisor's answer, 26 forward the grievance to the department head for consideration. Answer to the grievance shall be made in writing by the department head, after conferring with the grievant, within fourteen (14) calendar days from receipt of the grievance. Step 3: If the grievance is not resolved in Step 2, appeal to Step 3 may be made by the grievant within ten (10) calendar days from the receipt of the department heads answer, through the representative of his/her Recognized Employee Organization who may request a meeting with the City Representative to resolve the grievance. Following the meeting, answer shall be made by the City Representative, in writing, to the representative within twenty -one (21) calendar days. Step 4: Mediation - If the grievance is not resolved after Step 3, as an alternative to proceeding directly to Step 5, the grievance may be submitted to mediation. A request for mediation may be presented in writing to the Human Resources Director within seven (7) calendar days from the date a decision was rendered at Step 3. As soon as practicable thereafter, or as otherwise agreed to by the parties, a mediator shall hear the grievance. A request for mediation will automatically. suspend the normal processing of a grievance until the mediation process is completed. The mediation process shall be optional, and any opinion expressed by the mediator shall be informal and shall be considered advisory. Step 5: Within 20 calendar days of receipt of a grievance denial at step three, the grievant may file the grievance, in writing, with the Civil Service Board. At the next regularly scheduled meeting of the Civil Service Board, the grievance shall be heard, using Civil Service Board De Novo procedures. Within 20 calendar days of the hearing, the Civil Service Board shall issue its findings and conclusions to the parties at interest. Within 7 calendar days of the issuance of Civil Service Board findings and conclusions, the City Manager shall affirm, modify or revoke the Boards decision. The City Manager's decision shall be considered exhaustive of administrative remedies. Additionally, the City and NBEL agree to expand the grievance procedure as it relates to performance evaluations and written reprimands, permitting them to be appealed to the 5th step of the grievance procedure. H. Probationary Period Newly hired employees shall serve a twelve (12) month probationary period. The probationary period for promoted employees shall be six (6) months. 27 Newly hired employees shall become eligible for their first step increase after twelve (12) months. All other City rules regarding step increases shall remain unchanged. Failure of Probation 1. New Probation An employee on new probation may be released at the sole discretion of the City at any time without right of appeal or hearing, except as provided in Subsection 3, below. 2. Promotional Probation (a) An employee on promotional probation may be failed at any time without right of appeal or hearing, except as provided in Subsection 3, below, and except that failing an employee on promotional probation must not be arbitrary, capricious or unreasonable. (b) An employee who fails promotional probation shall receive a performance evaluation stating the reason for failure of promotional probation. (c) When an employee fails his or her promotional probation, the employee shall have the right to return to his or her former class provided the employee was not in the previous class for the purpose of training for a promotion to a higher class. When an employee is returned to his or her former class, the employee shall serve the remainder of any uncompleted probationary period in the former class. (d) If the employee's former class has been deleted or abolished, the employee shall have the right to return to a class in his or her former occupational series closest to, but no higher than, the salary range of the class which the employee occupied immediately prior to promotion and shall serve the remainder of any probationary period not completed in the former class. 3. Probationary Release An employee who alleges that his or her probationary release was based on discrimination by the City, may submit a grievance within ten (10) days after receipt of the Notice of Failure of Probation. 28 J. Accident Reportina The City will require that all traffic collisions involving City vehicles shall be reviewed by the traffic division supervisor of the Newport Beach Police Department to prevent any unnecessary reports from being forwarded to the DMV. Also, the vehicle accident review board will evaluate the supervisor's field report prior to making its preventable/non - preventable determination. K. Iniury Prevention Program (IPP) Until such time as the Injury Prevention Program (IPP) is fully developed the following understandings apply: The City will indemnify and hold harmless from civil and criminal prosecution NBEL members for any liability which might arise out of the City's IPP (mandated by S6198). Once the program has been fully developed and implemented, the IPP will come into full force and effect. 2. The City will take into consideration the adequacy of training prior to issuing discipline or depreciated performance evaluations to employees who have been determined to be in non - compliance to the City's IPP. 3. The City agrees to identify, at the beginning of each department's IPP the individuals who are ultimately responsible for the administration of the plan. 4. The City agrees to incorporate representatives of the NBEL on the IPP safety committees in all departments where the NBEL has representation obligations. 5. The City agrees to include representatives from the NBEL in a meet and consult role, as part of the process which will be employed for the incorporation of changes in the IPP. Safety Shoes The present policy and practices regarding the supply and maintenance of safety shoes shall remain in place except for the following changes as they apply to the accelerated wear provisions. If the soles of the safety shoes wear out within a year, the employee should present the shoes to his/her supervisor. If the supervisor agrees that the soles are worn out, he will authorize the employee to purchase a new pair of shoes at City expense. If the supervisor judges that the uppers are in good condition, he will authorize the employee to have the shoes resoled at City expense. 29 M. Uniforms It shall be understood by the NBEL and its members that employees who report for work either "out of uniform" or in "dirty" or "otherwise substandard" uniforms will be sent home without additional prior notice and without pay. Such incidents shall further be documented and regularly repeated violations of the uniform standards will subject the employee to progressive discipline up to and including dismissal for negligence and /or misconduct. Employees represented by the NBEL will be permitted to wear specified and approved shorts as part of the City approved optional uniform. The shorts must be dark blue in color, the inseam must be no less than 4 and 1/2 inches after shrinkage. They must be worn in combination with the standard City uniform shirt of the optional (golf style) City uniform shirt, and they must be worn with either white or blue socks. The optional uniform shall be considered proper and acceptable year round. Department Directors may make individual exceptions to this optional uniform agreement through the establishment of Departmental Policy in the interest of reasonable safety considerations. N. Voluntary Training Program The Department shall, when the need for additional or replacement individuals possessing a commercial driver's license is anticipated, establish a voluntary training program that will allow employees to qualify for the license. O. In- Service Supervisory and Safetv Training The City will continue its program of providing supervisory and motivational training for Supervisors and Crew Chiefs. The program, will if possible, be expanded to include non - supervisory personnel wherever practical. The equipment operator training program will continue on an as needed basis. Course subject matter may include, but not limited to: interpersonal working relationships, public service, performance evaluation techniques, employee counseling and discipline, harassment avoidance, defensive driving, substance abuse, skills and safety methods and procedures, and wellness. P. Clean-Up Time When necessary, each employee shall be permitted up to fifteen (15) minutes of paid City time at the end of each work shift to perform work related job site and personal clean -up and to put away tools and equipment. The amount of clean- up time shall be limited to the actual needs of the employee. 30 Q. Rest Periods Employees shall be allowed rest period of fifteen (15) minutes during each four (4) consecutive hours of work. Such rest periods shall be scheduled in accordance with the requirements of the Department, but in no case shall rest periods be scheduled within one (1) hours of the beginning of the ending of a work shift or lunch period. The City may designate the location or locations at which rest periods may be taken. Rest periods shall be considered hours worked and employees may be required to perform duties, if necessary. R. Service Awards For the purposes of determining service awards, if an employee has been employed by the City on more than one occasion, non - consecutive time will be considered as part of total service. Prior to system implementation, an employee is required to individually notify the awards committee of all of the service time. S. Emplovee Handbook There will be a consolidation of documents to be given to each employee. This consolidation will be comprised of the Employee Policy Manual, related Departmental Rules and Regulations; Employee /Employer Resolutions and a copy of this Memorandum of Understanding. More information may be included. T. Direct DeDOSit All newly hired employees shall participate in the payroll direct deposit system. U. Salary on Reclassification The City will amend its Employee Policy Manual to provide for a minimum salary increase of five (5 %) percent upon reclassification (not to exceed the maximum of the new salary range). V. Duration The terms of this MOU are to remain in full force and effect from the first pay period of fiscal year 2007 -2008 through the last pay period of fiscal year 2009- 2010. Proposals for the succeeding MOU must be submitted on or before March 1, 2010 in accordance with Section 13, Timetable for Submission of Requests of the Employer - Employee Relations Resolution. Upon adoption of a resolution approving this MOU and the terms hereof by the City Council of the City of 31 Newport Beach, this MOU shall be in force and effect as of the first day of the first pay period of fiscal year 2007 -2008. W. Separability Should any part of this MOU or any provision herein contained be rendered or declared invalid; by reason of any existing or subsequently enacted Legislation, or by decree of a Court of competent jurisdiction, such invalidation of such part or portion of this MOU shall not invalidate the remaining portion hereto, and same shall remain in full force and effect; provided, however, that should provisions of this MOU relating to any schedule adjustment be declared invalid, City agrees to provide alternative benefits agreeable to NBEL, to employees, which will cause such employees to receive the same amount of money as they would have received had such provision not been declared invalid. Signatures are on the next page. 32 Executed this day of By: Mayor ATTEST: City Clerk 2007: NEWPORT BEACH EMPLOYEES LEAGUE 0 M 0 0 M APPROVED AS TO FORM: City Attorney Tim Morell, President James Randal, Vice President Patrick Newett, Secretary Darren Foster, Treasurer Larry Lykins, Staff 33 EXHIBIT A CLASSIFICATIONS COVERED UNDER THE NEWPORT BEACH EMPLOYEES LEAGUE BARGAINING UNIT Auto Paint & Body Mechanic Automotive Parts Buyer Automotive Stock Clerk Beach Maintenance Supervisor Carpenter Concrete Finisher Concrete Maintenance Crew Chief Concrete Supervisor Electrician . Electrical Services Crew Chief Electrical Services Supervisor Equipment Maintenance Supervisor Equipment Mechanic Equipment Mechanic II Equipment Mechanic, Senior Equipment Operator I Equipment Operator II Facilities Maintenance Worker I Facilities Maintenance Worker II Facilities Maintenance. Crew Chief Facilities Maintenance Supervisor Groundsworker I Groundsworker II Irrigation Specialist Maintenance Worker I Maintenance Worker II Park Maintenance Crew Chief Park Maintenance Supervisor Parking Lot Crew Chief Parking Lot Supervisor Parking Meter Serviceworker Parking Meter Supervisor Pest Control Technician Refuse Supervisor Refuse Worker I Refuse Worker II Senior Services Van Driver Sign & Paint Shop Technician 34 Storm Drain /Street Sweeping Crew Chief Storm Drain /Street Sweeping Supervisor Street Maintenance Crew Chief Street Maintenance Supervisor Traffic Painter Transfer Station Operator Transfer Station Crew Chief Tree Maintenance Services Technician Utilities Crew Chief Utilities Equipment Specialist Utilities SCADA Coordinator Utilities SCADA Technician Utilities Specialist Utilities Supervisor Utilities Video Technician Water Production Operator Water Production Coordinator Water Production Supervisor 35 MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF NEWPORT BEACH AND NEWPORT BEACH PROFESSIONAL AND TECHNICAL EMPLOYEES ASSOCIATION This MEMORANDUM OF UNDERSTANDING (hereinafter referred to as "MOU ") is entered into with reference to the following: PREAMBLE 1. The Newport Beach Professional and Technical Employees Association ( "NBPTEA "), a recognized employee organization, affiliated with UPEC -LIUNA 777, and the City of Newport Beach ( "City"), a municipal corporation and charter city, have been meeting and conferring, in good faith, with respect to wages, hours, fringe benefits and other terms and conditions of employment. 2. NBPTEA representatives and City representatives have reached a tentative agreement as to wages, hours and other terms and conditions of employment to apply to all affected employees for the period of July 1, 2007 through June 30, 2010. Said employees desire to reduce their agreement to writing, and to present such agreement, in the form of this MOU, to the city Council of the City of Newport Beach for approval. 3. This MOU, upon approval by NBPTEA and the Newport Beach City Council, represents the total and complete understanding and agreement between the parties regarding all matters within the scope of representation. SECTION 1. — General Provisions A. Recognition In accordance with the provisions of the Charter of the City of Newport Beach, the Meyers - Milias -Brown Act of the State of California and the provisions of the Employer's /Employee Labor Relations Resolution No. 7173, the City acknowledges that NBPTEA is the majority representative for the purpose of meeting and conferring regarding wages, hours and other terms and conditions of employment for all employees in those classifications specified in Exhibit "A" or as appropriately modified in accordance with the Employer /Employee Resolution. All other classifications and positions not specifically included within Exhibit "A" are excluded from representation by NBPTEA. 1 B. Duration of Memorandum 1. Except as specifically provided otherwise, any ordinance, resolution or action of the City Council necessary to implement this MOU shall be considered effective as of July 1, 2007. This MOU shall remain in full force and effect until June 30, 2010, and the provisions of this MOU shall continue after the date of expiration of this MOU in the event the parties are meeting and conferring on a successor MOU. 2. The terms and conditions of this MOU shall prevail over conflicting provisions of the Newport Beach City Charter, the ordinances, resolutions and policies of the City of Newport Beach, federal and state statutes, rules and regulations which either specifically provide that agreements such as this prevail, confer rights which may be waived by any collective bargaining agreement, or are, pursuant to decisional or statutory law, superseded by the provisions of an agreement similar to this MOU. C. Release Time 1. Three NBPTEA officers designated by the NBPTEA shall collectively be granted 120 hours paid release time maximum, annually, for the conduct of NBPTEA business. Such time shall be exclusive of actual time spent in collective bargaining and shall be scheduled at the discretion of the NBPTEA officer. Every effort will be made to schedule this time to avoid interference with City operations. 2. Release time designees shall be identified annually and notice shall be provided to the City. Release time incurred shall be reported regularly in the form and manner prescribed by the City. 3. Activities performed on release time shall include representation of members in rights disputes; preparation for collective bargaining activities, and distribution of NBPTEA written communication in the work place. D. Scope 1. All present written rules and current established practices and employees' rights, privileges and benefits that are within the scope of representation shall remain in full force and effect during the term of this MOU unless specifically amended by the provisions of this MOU. 2 2. The practical consequences of a Management Rights decision on wages, hours, and other terms and conditions of employment shall be subject to the grievance procedures. 3. Pursuant to this MOU, the City reserves and retains all of its inherent exclusive and non — exclusive managerial rights, powers, functions and authorities ( "Management Rights ") as set forth in Resolution No. 7173. Management Rights include, but are not limited to, the following: (a) the determination of the purposes and functions. of City Departments; (b) the establishment of standards of service; (c) to assign work to employees as deemed appropriate; (d) the direction and supervision of its employees; (e) the discipline of employees; (f) the power to relieve employees from duty for lack of work or other legitimate reasons; (g) to maintain the efficiency of operations; (h) to determine the methods, means and personnel by which operations are to be conducted; (i) the right to take all necessary actions to fulfill the Department's responsibilities in the event of an emergency; and Q) the exercise of complete control and discretion over the manner of organization, and the appropriate technology, best suited to the performance of departmental functions. The practical consequences of a Management Rights decision on wages, hours, and other terms and conditions of employment shall be subject to the grievance procedures. E. Conclusiveness With the exception of a separate MOU covering retirement issues, this MOU contains all of the covenants, stipulations, and provisions agreed upon by the parties. Therefore, for the life of this MOU, neither a. party shall be compelled, and each party expressly waives its rights to request the other to meet and confer concerning any issue within the scope of representation except as expressly provided herein or by mutual agreement of the parties. No representative of either party has the authority to make, and none of the parties shall be bound by, any statement, representation or agreement reached prior to the execution of this MOU and not set forth herein. F. Modifications Any agreement, alteration, understanding, variation, or waiver or modification of any of the terms or provisions of this MOU shall not be binding upon the parties unless contained in a written document executed by authorized representatives of the parties. G. Employee Data and Access The NBPTEA will be provided on a regular basis with a listing of all unit members. The listing will include name, department, and job title. Information concerning the NBPTEA prepared by the NBPTEA will be provided to new employees at the time of orientation. NBPTEA officials shall be entitled to solicit membership from employees who are not members. SECTION 2. — Compensation A. Salary Effective the pay period beginning June 23, 2007, salaries shall be increased by 2 %. Effective the pay period beginning December 22, 2007, salaries shall be increased by 2.5 %. Effective the pay period beginning June 21, 2008, salaries shall be increased by 2.5 %. Effective the pay period beginning June 20, 2009, salaries shall be increased by 4 %. 4 B. Normal Overtime 1. Definitions (a) Miscellaneous Employee - An employee designated as a miscellaneous member of the Public Employees Retirement System (PERS). (b) Overtime - Normal overtime is defined as any scheduled hours worked in excess of the basic work week. For the purposes of this section, the basic work week is 40 hours, or as determined by the Department Director and approved by the City Manager which occurs between a fixed and regularly recurring period of 168 hours - 7 consecutive 24 hour periods - beginning at 0001 on Saturday and ending at midnight the following Friday. (c) Hours Worked - Hours worked are defined as hours which employees are required to be performing their regular duties or other duties assigned by the City. (d) Incidental Overtime - Incidental overtime is any extension of the basic work shift of less than 1/10 of an hour that is non - recurrent. 2. Compensation Normal overtime for all non - exempt employees shall be paid at one -and- one -half (1 -1/2) times the hourly rate of the employee's bi- weekly salary rate. Reporting of overtime on payroll forms will be as prescribed by the Administrative Services Director. Incidental overtime is not compensable. 3. Overtime Pay Calculations During Week Including Holidav(s) For the purpose of calculating overtime, holidays occurring during the regular work week will count as time worked. The floating holiday is excluded from this provision. C. Call -Back Dutv 1. Defined Call back duty requires the employee to respond to a request to return to his/her work station after the normal work shift has been 5 completed and the employee has left his/her normal work station. Those periods of overtime which had been scheduled by the Department Director prior to the end of the normal work shift are not considered call -back duty. 2. Compensation All personnel eligible for overtime pay shall be guaranteed two (2) hours pay, or pay for one - and - one -half (1 -1/2) times the number of hours worked, whichever is greater. Reporting of overtime on payroll forms will be prescribed by the Administrative Services Director. D. Accumulation of Compensatory Time Off City employees represented by the NBPTEA and classified as non- exempt may receive compensatory time off, in lieu of cash, as compensation for overtime hours worked. Compensatory time shall be calculated at the rate of one and one half hours for each hour of overtime worked beyond the 40 hour limit of the work week. Compensatory time is to be granted only when the employer and employee agree that the application of "comp time" is a desirable substitute for the payment of cash for overtime. Call -back time may be converted to comp time with supervisor approval. Employees may accumulate up to eighty (80) hours of Compensatory Time. Any hours in excess of eighty (80) will be paid off. Accumulation in excess of the eighty (80) hours may be approved at the discretion of Department Director. E. Night Shift Differential The City agrees to pay $1 per hour night shift differential for Employees working a regularly scheduled work shift of which four or more hours are worked between the hours of 5 p.m. and 5 a.m. Overtime worked as an extension of an assigned day shift shall not qualify an employee for night shift differential. The differential pay is paid only for hours actually worked. F. Associate Civil Engineer and Junior Civil Enaineer Employees in the class of Associate Civil Engineer and Junior Civil Engineer who are registered by the State of California shall receive an additional compensation of five (5 %) percent of base pay per month. I G. Urban Forester Employees in the class of Urban Forester who maintain an arborist and applicator certificate shall receive additional compensation in the amount of Four Hundred ($400) Dollars annually, to be paid in January of each year. H. City Archaeologist Employees who meet the City's minimum qualifications for City Archaeologist shall receive additional compensation in the amount of Four Hundred ($400) Dollars annually, to be paid in July of each year. Minimum qualifications for this pay are as follows: (a) Bachelor's or graduate degree in anthropology, archaeology, history or a related field, with specialized training in archaeology; (b) Three years of field experience on archaeology_ sites and /or field related work in archaeology; and (c) Listing in the Certified Archaeologists Register maintained by Orange County or Registered Professional Archaeologist listing by RPA. Certificate Pav Individuals in the classifications of Building Inspector (l,ll, Senior and Principal), Construction Inspection Supervisor and Residential Building Records Inspector shall be eligible for Certificate Pay of 1% per certification, to a maximum of 5 %. The following ICC and other certifications shall be eligible, if kept current by the employee: Certified Building Inspector Combination Dwelling Inspector Certified Electrical Inspector Certified Plumbing Inspector Certified Mechanical Inspector Certified Plans Examiner Certified Accessibility /Usability Specialist Individuals in the classification of Public Works Inspector and Senior Public works Inspector shall be eligible for Certificate Pay of 1% per certification, to a maximum of 5 %. The following ICC and other certifications shall be eligible, if kept current by the employee: Certified Building Inspector Certified Electrical Inspector Certified Plumbing Inspector Certified Mechanical Inspector Reinforced Concrete Special Inspector Structural Masonry Special Inspector Pre - stressed Concrete Special Inspector Structural Steel & Welding Special Inspector Certificate of Construction Inspection for Traffic Signals and Highway Lighting PADI Certified Open Water Scuba Diver No later than sixty (60) days following the ratification of this Memorandum of Understanding, the City and Association will meet to develop an expanded certificate pay program for non - required job related certificates beneficial to City operations. Payment for any single additional certificate(s) will not exceed two percent (2 %). The overall five percent (5%) maximum will remain unchanged. J. Court Time Employees who are required to appear in Court during their off -duty hours in connection with City business shall received overtime compensation for the number of hours they spend in court, with a minimum of two (2) hours of such compensation. K. Acting Pav NBPTEA employees will be eligible to receive "acting pay" only after completing 80 consecutive hours in the higher classification. Acting pay is 107.5% of the employee's base pay rate. Once the minimum hours requirement has been satisfied, acting pay will be granted for all hours worked above 40 hours beginning with the 41st hour worked in the higher classification. L. Bi- lingual Pav Upon determination of the Department Director that an employee's ability to speak, read and /or write in Spanish contributes to the Department providing better service to the public, the employee shall be eligible to receive One Hundred Fifty ($150.00) Dollars per month in bi- lingual pay. The certification process will confirm that the employee is fluent at the street conversational level in speaking, reading and /or writing Spanish. W Employees certified shall receive bi- lingual pay the first full pay period following certification. Additional languages may be certified for compensation pursuant to this section by the Department Director with the concurrence of the Human Resources Director. M. Assignment Pay An employee appointed by the Planning Director to regularly perform the duties of the Zoning Administrator as set forth in the Zoning Code shall be provided temporary assignment pay at five percent (5 %) above the employee's base pay, to be paid on an hourly basis. This assignment pay is temporary and will cease once the employee is no longer performing the duties of the Zoning Administrator. An Assistant Planner appointed by the Planning Director to regularly perform the lead duties at the Plan Check Counter shall be provided temporary assignment pay at five (5 %) percent above the employee's base pay, paid on an hourly basis. This assignment pay will cease once the employee is no longer performing the duties of the lead person at the Plan Check Counter. SECTION 3 - Leaves A. Flex Leave Members shall accrue Flex leave at the following rates: Years of Continuous Accrual per Annual Service Pay Period /Hrs Days 1 but less than 5 5.54 18 5 but less than 9 6.15 20 9 but less than 12 6.77 22 12 but less than 16 7.69 25 16 but less than 20 8.31 27 20 but less than 25 8.92 29 25 and over 9.54 31 During the first six months of employment, new permanent full -time employees shall not accrue paid leave. At the completion of six months of employment, six (6) months of accrued flex leave will be placed in the E employees account. Employees who are assigned to an 88 hour schedule per pay period will accrue time in proportionate amounts. Note: If an employee becomes sick in the first six months of employment, the City will advance up to six (6) months of potentially accrued flex leave time to be used for illnesses only. If employee terminates employment prior to six (6) months, the City will subtract the pay equivalent of the number of flex leave days advanced from the employee's final check. Any flex leave time advanced during the first six (6) months of employment will be subtracted from the six (6) months of accrual placed in the employees account upon completion of six months employment. 1. Limit on Accumulation Employees may accrue flex leave up to an accumulated total equal to seventy eight (78) times the member's bi- weekly accrual rate. Any flex leave earned in excess of this level will be paid on an hour for hour basis in cash (spill over pay) at the employee's hourly rate of pay. Members hired prior to July 1, 1996 shall be paid for earned flex leave in excess of the maximum permitted accrual at the member's hourly rate of pay provided that they have utilized at least eighty (80) hours of flex leave the previous calendar year. Employees accruing at the 16 years of continuous service level or above shall be required to use 120 hours of flex leave the previous calendar year to receive such excess pay. Employees who have not utilized the required amount of leave the prior calendar year shall not be eligible to accrue time above the maximum accrual limit. Employees first hired, or rehired by the City subsequent to July 1, 1996 shall not be eligible for flex leave spill over pay and shall not be entitled to accrue flex leave in excess of the flex leave accrual threshold. 2. Method of Use Flex leave may not be taken in excess of that actually accrued and in no case, except for illness, may it be taken prior to the completion of an employee's initial probationary period. The Department Director shall approve all requests for flex leave taking into consideration the needs of the Department, and whenever possible the seniority and wishes of the employee. m B. Vacation Leave This section applies only to those Regular Full time Employees hired on or before January 1, 1990 and who have elected not to enroll in the Flex Leave program. 1. Basis for Accrual /Full -Time Employees Employees entitled to vacation leave -with -pay shall accrue such leave based on years of continuous service and the number of hours in a normal work week for the position to which they are assigned in accordance with the following schedule: Years of Continuous Accrual per Pay Service Period /Hrs 0 but less than 5 3.38 5 but less than 9 3.99 9 but less than 12 4.61 12 but less than 16 5.22 16 but less than 20 5.84 20 but less than 25 6.46 25 and over 7.07 2. Limit on Accumulation Accrual of vacation days in excess of those earned for two years of continuous service is not permitted past December 31st of each year with the following exception: with approval of the Department Director, an employee may accrue vacation days in excess of the two -year limit provided all such excess accumulation is taken by March 31 st of the following year. 3. Method of Use Vacation may not be taken in excess of that actually accrued. The Department Director shall schedule and approve all vacation leaves for employees taking into consideration the needs of the Department, and whenever possible, the seniority and wishes of the employee. iil C. Sick Leave This section applies only to those Regular Full time Employees hired on or before January 1, 1990 and who have elected not to enroll in the Flex Leave program. 1 2. 3. Basis for Accrual /Full -time Employees Employees entitled to sick leave with pay shall accrue sick leave based on the number of hours in a normal work week for the position to which they are assigned in accordance with the following schedules: Service Time Monthly Accrual Accrual 0 -1 year 4 hours 1 -2 years 5 hours 2 -3 years 6 hours 3-4 years 7 hours 4+ 8 hours Method of Use (a) General Sick leave may not be taken in excess of that actually accrued. (b) Approval Sick leave may be granted only at the direction of or with the approval of the Department Director and only for the purposes defined in Section 11.2 of the Employee Policy Manual. Sick Leave Conversion Employees who at the end of the calendar year have an accrued level of sick leave equal to or greater than the full value of 50 months of accrued sick leave, and who have used six or less days of sick leave during that calendar year will be permitted (only once per year) to convert up to six (6) days of sick leave to either salary or paid vacation at the value of 50% (maximum value of 3 days per year). Eligible sick leave days converted to cash shall be at the 12 0 employee's option. Eligible sick leave days converted to paid vacation shall require the approval of the Department Director. Holidav Leave Subject to the provisions herein, the following days shall be observed as paid holidays by all employees in permanent positions and other personnel whose work assignments, in the judgment of the Department Director require their presence on the job. For each designated holiday, except the Floating Holiday, such excepted personnel shall receive an equivalent number of hours of paid leave or equivalent pay whichever in the judgment of the Department Director best serves the interest of the Department. Independence Day Labor Day Veteran's Day Thanksgiving Day Friday following Thanksgiving Christmas Eve Christmas New Years Eve New Years Day Washington's Birthday Memorial Day Martin Luther King Day Floating Holiday July 4 1st Monday in September November 11 4th Thurs. in November Last 1/2 of working day December 25 Last 1/2 of working day January 1 3rd Monday in February Last Monday in May 3rd Monday in January July 1't - 1 day In 2007 only, Christmas Eve and New Years Eve will be observed as full day holidays. 1. Holidays listed above (except the floating holiday) occurring on a Saturday shall be observed the preceding Friday. Holidays occurring on a Sunday shall be observed the following Monday. (Half day holidays shall be observed prior to the observed holiday). 2. In addition, for all employees an additional 8 hours of floating holiday will be added to his /her vacation or flex leave accumulated total on the first pay period in July each year. 13 E. Bereavement Leave 1. Defined The necessary absence from duty by an employee having a regular or probationary appointment, because of death or terminal illness in his /her Immediate Family. For the purposes of this section, Immediate Family shall mean father and mother (including step), brother, sister, wrfe, husband, child, grandparents and the Employee's spouse's father, mother, brother, sister, child and grandparents. 2. Maximum Allowed Such leave shall be limited to five (5) working days per incident. F. Leave Sellback Twice annually, employees shall have the option of selling back on an hour for hour basis, accrued flex or vacation leave. In no event shall the flex or vacation leave balance be reduced below one hundred and sixty (160) hours. SECTION 4. — Frinae Benefits A. Insurance 1. Benefits Information Committee City has established a Benefits Information Committee (BIC) composed of one representative from each employee association group and up to three City representatives. The Benefits Information Committee has been established to allow the City to present data regarding carrier and coverage options, the cost of those options, appropriate coverage levels and other health programs. The purpose of the BIC is to provide each employee group with information about health insurance /programs and to receive timely input from associations regarding preferred coverage options and levels of coverage. 2. Medical Insurance 14 The City has implemented an IRS qualified Cafeteria Plan. The City contribution toward the Cafeteria Plan shall be $774. In addition, the City shall contribute the minimum CalPERS participating employer's contribution towards medical insurance. Employees shall have the option of allocating Cafeteria Plan contributions towards the City's existing medical, dental and vision insurance/programs. The City and the Newport Beach Professional and Technical Employees Association will cooperate in pursuing additional optional benefits to be available through the Cafeteria Plan. Any unused Cafeteria Plan funds shall be payable to the employee as taxable cash back. Employees shall be allowed to change coverages in accordance with plan rules and during regular open enrollment period. Effective the pay period beginning December 22, 2007, the City's contribution towards the Cafeteria Plan will increase to $874 (plus the minimum CalPERS participating employer's contribution). Effective the pay period beginning December 20, 2008, the City's I ontribution towards the Cafeteria Plan will increase to $974 (plus the minimum CalPERS participating employer's contribution). Effective the pay period beginning December 19, 2009, the City's contribution towards the Cafeteria Plan will increase to $1,049 (plus the minimum CalPERS participating employer's contribution). NBPTEA members who do not want to enroll in any medical plan offered by the City must provide evidence of group medical insurance coverage, and execute an opt -out agreement releasing the City from any responsibility or liability to provide medical insurance coverage on an annual basis. 3. Dental Insurance The existing or comparable dental plans shall be maintained as part of the City's health plan offerings as agreed upon by the Benefits Information Committee. 4. Vision Insurance 15 f. The existing or a comparable vision plan shall be maintained as part of the City's health plan offerings as agreed upon by the Benefits Information Committee. Additional Insurance Programs 1. IRS Section 125 Flexible SDendina Account Section 125 of the Internal Revenue Code authorizes an employee to reduce taxable income for payment of allowable expenses. such as child care and medical expenses. An Association member may request that medical, child care and other eligible expenses be paid or reimbursed by the Section 125 Plan out of the employee's account. The base salary of the employee will be reduced by the amount designated by the employee for reimbursable expenses. 2. Disabilitv Insurance The City shall provide disability insurance to following provisions: Weekly Benefit Maximum Benefit Minimum Benefit Waiting Period Short-term (STD) and Long -term (LTD) all regular full time employees with the 66.67% gross weekly wages $10,000 /month 30 Calendar Days Employees shall not be required to exhaust accrued. paid leaves prior to receiving benefits under the disability insurance program. Employees may not supplement the disability benefit with paid leave once the waiting period has been exhausted. Concurrent with the commencement of this program, employees assumed responsibility for the payment of the disability insurance cost in the amount of one (1.0 %) percent of base salary. Simultaneously, the City increased base wages by one (1.0 %) percent. EEP 3. Life Insurance The City shall provide life insurance for all regular full -time employees in $1,000 increments equal to one times the employee's annual salary up to a maximum of $50,000. At age 70 the City- paid life insurance is reduced by 50% of the pre -70 amount. This amount remains in effect until the employee terminates from City employment. C. Employee Assistance Program City shall provide an Employee Assistance Program (EAP) through a properly licensed provider. Association members and their family members may access the EAP subject to provider guidelines. D. The Retirement Benefit 1. Benefit The City contracts with PERS to provide retirement benefits for its employees. The retirement formula is the 2% @ 55, calculated on the basis of the best/highest year. The City pays both the employee and the employer contribution, but the City reports the value of the Employer Paid Member Contribution (EPMC), so the employees will have the benefit of the EPMC in their retirement formula calculations. In addition, the City contracts for the 4th Level 1959 Survivors Insurance Benefit, $500 Lump Sum Death Benefit, Sick Leave Credit, Military Service Credit, 2% Cost of Living Adjustment, and the pre- retirement option settlement 2 death benefit (Section 21548). 2. Separate MOU Pursuant to a separate MOU between the City and Association the City will implement the 2.5 % @55 retirement formula, effective January 1, 2008. E. LIUNA Supplemental Pension The City shall contribute, on behalf of each unit member, one and one half percent (1.5 %) of base salary into the LIUNA Supplemental Pension Fund. The City's sole obligation is to forward the agreed upon amount to the fund. The City is not responsible for, nor does it make any representation regarding, the payment of benefits to unit members. 17 Effective January 1, 2007, the City increased the base salary of all members by 1.5 %, and then deducted that same amount as a mandatory employee contribution. For tax purposes, the contributions, although designated employee contributions, are being paid by the employer in lieu of contributions by the employee. The contributions are deemed "picked - up" and treated as employer contributions, thereby excluding the employee's gross income until distributed. Employees cannot opt out of the "pick -up," or receive the contributed amounts directly instead of having them paid to the plan. Participation at the same level will continue to be mandatory for members of the Association. In accordance with correspondence received from a legal expert retained by the City, this amount will not be taxable, except for Medicare. Minor changes to other compensation related items that are calculated from base salary will also result from this administrative change. The Association agrees with the procedural change, and acknowledges that members who leave City employment prior to vesting in the LIUNA pension plan will still have no right to return of amounts contributed, or other recourse against the City concerning LIUNA. The Association and UPEC -LIUNA 777 agree to defend, indemnify and hold harmless the City for its actions pursuant to this section. F. Retiree Medical Benefit 1. Background In 2005, the City and all Employee Associations agreed to replace the previous "defined benefit" retiree medical program with a new `defined contribution" program. The process of fully converting to the new program will be ongoing for an extended period. During the transition, employees and (then) existing retirees have been administratively classified into one of four categories. The benefit is structured differently for each of the categories. The categories are as follows: a. Category 1 - Employees newly hired after January 1, 2006. b. Category 2 - Active employees hired prior to January 1, 2006, whose age plus years of service as of January 1, 2006 was less than 50 (46 for public safety employees). c. Category 3 - Active employees hired prior to January 1, 2006, whose age plus years of service was 50 or greater (46 for public safety employees) as of January 1, 2006. 18 d. Category 4 - Employees who had already retired from the City prior to January 1, 2006, and were participating in the previous retiree medical program. 2. Program Structure This is an Integral Part Trust (IPT) Medical Expense Reimbursement Program Plan (MERP). a. For employees in Category 1, the program is structured as follows: Each employee will have an individual MERP account for bookkeeping purposes, called his or her `Employee Account." This account will accumulate contributions to be used for health care expense after separation. All contributions to the plan are either mandatory employee contributions or City paid employer contributions, so they are not taxable to employees at the time of deposit. Earnings from investment of funds in the account are not taxable when posted to the account. Benefit payments are not taxable when withdrawn, because the plan requires that all distributions be spent for specified health care purposes. Contributions will be in three parts. Part A contributions (mandatory employee contributions): 1% of Salary. Part B contributions (employer contributions): $1.50 per month for each year of service plus year of age (updated every January 1St based on status as of December 31St of the prior year). Effective January 2008, this contribution will increase to $2.50 per month. Part C contributions (leave settlement as determined by Association): The Association will determine the level of contribution for all employees it represents, subject to the following constraints. All employees within the Association must participate at the same level, except that Safety members and Non - safety members within an Association may have different levels. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the 19 City, or cashing out leave at any other time, would have the cash equivalent of 50% of the amount that is cashed out added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Individual employees would not have the option to deviate from this breakout. The Association has decided to participate in Part C contributions at the level of zero percent (0 %) flex and sick leave. This amount may be changed, on a go forward basis, as part of a future meet and confer process. However, the participation level must be the same for all employees within the Association except that Safety members and Non - safety members within an Association may have different levels. Additionally, the purpose and focus of these changes should be toward long -term, trend type adjustments. Due to IRS restrictions regarding "constructive receipt," the City will impose restrictions against frequent spikes or drops that appear to be tailored toward satisfying the desires of a group of imminent retirees. Spillover pay is not eligible for Part C contributions. Nothing in, this section restricts taking leave for time off purposes Sick leave balances may also be included in the MERP Part C contributions, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule, which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and specifies that sick leave hours are "cashed out' on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation /flex leave participation, and thresholds must be separately identified by the Association. Part A contributions may be included in PERS compensation. Part B and Part C contributions will not be included in PERS compensation. Part A contributions begin upon enrollment in the program and are credited to each MERP Employee Account each pay period. Eligibility for Part B contributions is set at five years of vested City employment. At that time, the City will credit the first five years worth of Part B contributions into the Employee Account (interest does not accrue during that period). Thereafter, contributions are made bi- weekly. Part C deposits, if any, will be made at the time of employment separation. 20 Each Employee has a right to reimbursement of medical expenses (as defined below) from the Plan until the Employee Account balance is zero. This right is triggered upon separation. If an employee leaves the City prior to five years employment, only the Part A contributions and Part C leave settlement contributions, if any, will be in the MERP Employee Account. Such an employee will not be entitled to any Part B contributions. The exception to this is a full - time employee, participating in the program, who leaves the City due to industrial disability during the first five years of employment. In such cases, the employee will receive exactly five years worth of Part B contributions, using the employee's age and compensation at the time of separation for calculation purposes. This amount will be deposited into the employee's MERP account at the time of separation. Distributions from MERP Employee Accounts are restricted to use for health insurance and medical care expenses after separation, as defined by the Internal Revenue Code Section 213(d) (as explained in IRS Publication 502), and specified in the Plan Document. In accordance with current IRS regulations and practices, this generally includes premiums for medical insurance, dental insurance, vision insurance, supplemental medical insurance, long term care insurance, and miscellaneous medical expenses not covered by insurance for the employee and his or her spouse and legal dependents — again only as permitted by IRS Publication 502. Qualification for dependency status will be determined by guidelines in IRC 152. If used for these purposes, distributions from the MERP accounts will not be taxable. Cash withdrawal for any other purpose is prohibited. Under recent IRS Revenue Ruling 2005 -24, any balance remaining in the Employee Account after the death of the employee and his or her spouse and /or other authorized dependents (if any) must be forfeited. That particular MERP Employee Account will be closed, and any remaining funds will become general assets of the plan. The parties agree that the City's Part B contributions during active employment constitute the minimum CalPERS participating employer's contribution towards medical insurance after retirement. The parties also agree that, for retirees selecting a CalPERS medical plan, or any other plan with a similar employer contribution requirement, the required City contribution will be withdrawn from the retiree's MERP account. 21 b. For emMovees in Category 2, the program is the same as for those in Category 1. with the following exception: In addition to the new plan contributions listed above, current employees who fully convert to the new plan will also receive a one- time City contribution to their individual MERP accounts that equates to $100 per month for every month they contributed to the previous "defined benefit" plan, to a maximum of 15 years (180 months). This contribution will be made only if the employee retires from the City and at the time of retirement. No interest will be earned in the interim. Employees in Category 2 who had less than five years service with the City prior to implementation of the new program will only receive Part B contributions back to January 1, 2006 when they reach five years total service. c. For employees in Category 3. the program is the same as for those in Category 2, with the following exception: For employees in this category, the City will make no Part B contributions while the employees are still in the active work force. Instead, the City will contribute $400 per month into each of their MERP accounts after they retire from the City, to continue as long as the employee or spouse is still living. Each employee will contribute a fiat $100 per month to the plan for the duration of their employment to partially offset part of this expense to the City. The maximum benefit provided by the City after retirement is $4,800per year, accruing at the rate of $400per month. There is no cash out option for these funds, and they may not be spent in advance of receipt. Employees in this category will also receive an additional one -time City contribution of .$75 per month for every month they contributed to the previous plan prior to January 1, 2006, up to a maximum of 15 years (180 months). This contribution will be made to the MERP account at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. d. For emplovees (retirees) in Category 4 the structure is very similar to the previous retiree medical program, except that there is no cost share requirement, and the $400 Citv contribution after retirement can be used for anv IRS authorized purpose, not lust City insurance premiums. 22. Effective July 1, 2006, a MERP account has been opened for each retiree in this category, and the City will contribute $400 per month to each account as long as the retiree or spouse remains living. 3. Administration Vendors have been selected by the City to administer the program. The contract expense for program -wide administration by the vendor will be paid by the City. However, specific vendor charges for individual account -transactions that vary according to the investment actions taken by each employee, such as fees or commissions for trades, will be paid by each employee. The City s Deferred Compensation Committee, or its successor committee, will have the authority to determine investment options that will be available through the plan. 4. Value of Benefit For all purposes, including compensation comparisons, the Retiree Medical Program shall be valued at 1% of salary on which PERS retirement is based (Part A); plus .25% of other compensation (Part B). G. Tuition Reimbursement NBPTEA members attending accredited community colleges, colleges, trade schools or universities may apply for reimbursement of one hundred percent (100 %) of the actual cost of tuition, books, fees or other student expenses for approved job — related courses. Maximum tuition reimbursement for employees shall be $1,400 per fiscal year. Reimbursement is contingent upon the successful completion of the course. Successful completion means a grade of "C" or better for undergraduate courses and a grade of 'B" or better for graduate courses. All claims for tuition reimbursement require approval. SECTION 5. - Miscellaneous/Workina Conditions A. Reductions in Force /Lavoffs The provisions of this section shall apply when the City Manager determines that a reduction in the work force is warranted because of actual or anticipated reductions in revenue, reorganization of the work 23 force, a reduction in municipal services, a reduction in the demand for service or other reasons unrelated to the performance of duties by any specific employee. Reductions in force are to be accomplished, to the extent feasible, on the basis of seniority within a particular Classification or Series and this Section should be interpreted accordingly. DEFINITIONS 1. "Layoffs" or "Laid Off' shall mean the non - disciplinary termination or employment. 2. "Seniority" shall mean the time an employee has worked in a Classification or Series calculated from the date on which the employee was first granted permanent status in the current Classification or any Classification within the Series, subject to the following: (a) Credit shall be given only for continuous service subsequent to the most recent appointment to permanent status in the Classification or Series; and (b) Seniority shall include time spent on industrial leave, military leave, and leave of absence without pay, but shall not include time spent on any other authorized or unauthorized leave of absence. 3. "Classification" shall mean one or more full time positions identical or similar in duties not including part -time, seasonal or temporary positions. Classification within a Series shall be ranked according to pay (lowest ranking, lowest pay). 4. "Series" shall mean two or more classifications within a Department which require the performance of similar duties with the higher ranking classification(s) characterized by the need for less supervision by superiors, more difficult assignments, more supervisory responsibilities for subordinates. The City Manager shall determine those classifications following a meet and consult process which constitute a Series. 5. "Bumping Rights ", "Bumping" or "Bump" shall mean (1) the right of an employee, based upon seniority within a series to bump into a lower ranking classification within the same series, (2) to be followed by, an employee being permitted to bump into a classification within a different series. The latter bumping shall be 24 based upon unit wide seniority and shall be limited to a classification in which the employee previously held regular status. No employee shall have the right to bump into a classification for which the employee does not possess the minimum qualifications such as specialized education, training or experience. PROCEDURE In the event the City Manager determines to reduce the number of employees within a classification, the following procedures are applicable: 1. Temporary and probationary employees within any classification shall, in that order, be laid off before permanent employees. 2. Employees within a classification shall be laid off in inverse order of seniority. 3. An employee subject to layoff in one classification shall have the right to bump a less senior employee in a lower ranking classification within a series. An employee who has bumping rights shall notify the Department Director within three (3) working days after notice of layoff of his /her intention to exercise bumping rights. 4. In the event two or more employees in the same classification are subject to layoff and have the same seniority, the employees shall be laid off following the Department Director's consideration of established performance evaluations. NOTICE Employees subject to lay -off shall be given at least thirty (30) days advance notice of the layoff or thirty (30) days pay in lieu of notice. In addition, employees laid off will be paid for all accumulated paid leave, holiday leave (if any), and accumulated sick leave to the extent permitted by the Employee Policy Manual. REEMPLOYMENT Permanent and probationary employees who are laid off shall be placed on a Department re- employment list in reverse order of layoff. The re- employment list shall expire in 18 months. In the event a vacant position occurs in the classification which the employee occupied at the time of layoff, or a lower ranking classification within a series, the employee at the top of the Department re- employment list shall have the right within seven (7) days of written notice of appointment. Notice shall be deemed given when personally delivered to the employee or deposited in the U.S. Mail, first class postage prepaid, and addressed to the employee at his or her last known address. Any employee shall have the right to refuse to be placed on the re- employment list or the right to remove his or her name from the re- employment list by sending written confirmation to the Human Resources Director. SEVERANCE If an employee is laid off from their job with the City, for economic reasons, the City will grant severance pay in an amount equal to one week of pay for every full year of continuous employment service to the City of Newport Beach. B. Promotional Preference Where no less than 2 unit members achieve top three ranking on a certified eligible list, selection to the position shall be made with preference given to the unit members so qualified. Position vacancy announcements for all available City positions shall be distributed in a manner that reasonably assures unit members access to the announcements. C. 9/80 Scheduling Plan The City agrees to maintain flex - scheduling where it is currently operating successfully. D. Labor Management Committee The City will work with NBPTEA leadership, through its managers, to establish labor- management committees departmentally whenever it is mutually determined it is appropriate to do so. E. Grievance Procedure Any employee or group of employees may file a grievance regarding the interpretation or application of the "Employer- Employee Relations Resolution" (RESOLUTION NO. 7173), this MOU, or of rules and regulations, adversely affecting an employee's wages, hours, or conditions of employment. A grievance shall be filed according to the following procedure: PIR Step 1: A grievance may be filed by any employee on his /her own behalf, or jointly by a group of employees, or by a Recognized Employee Organization. Within ten (10) calendar days of the event giving rise to a grievance, the grievant shall present the grievance in writing to the immediate supervisor. Grievances not presented within the time period shall be considered resolved. The supervisor shall meet with the grievant to settle grievance and give a written answer to the grievant within seven (7) calendar days from receipt of the grievance by the supervisor. When the immediate supervisor is also the department head the grievance shall be presented in Step 2. Step 2: If the grievance is not resolved in Step 1, the grievant may, within fourteen (14) calendar days from his /her receipt of the supervisor's answer, forward the grievance to the department head for consideration. Answer to the grievance shall be made in writing by the department head, after conferring with the grievant, within fourteen (14) calendar days from receipt of the grievance. Step 3: If the grievance is not resolved in Step 2, appeal to Step 3 may be made by the grievant within ten (10) calendar days from the receipt of the department heads answer, through the representative of his /her Recognized Employee Organization who may request a meeting with the City Representative to resolve the grievance. Following the meeting, answer shall be made by the City Representative, in writing, to the representative within twenty -one (21) calendar days. Step 4: Mediation - If the grievance is not resolved after Step 3, as an alternative to proceeding directly to Step 5, the grievance may be submitted to mediation. A request for mediation may be presented in writing to the Human Resource Director within seven (7) calendar days from the. date a decision was rendered at Step 3. As soon as practicable thereafter, or as otherwise agreed to by the parties, a mediator shall hear the grievance. A request for mediation will automatically suspend the normal processing of a grievance until the mediation process is completed. The mediation process shall be optional, and any opinion expressed by the mediator shall be informal and shall be considered advisory. Step 5: If the grievance is not resolved in Step 3 (or Step 4), appeal to Step 5 may be made by the grievant within 20 calendar days of receipt of the City Representative's answer. The grievant may, through the 27 representative of his /her Recognized Employee Organization request, in writing, a hearing before the Civil Service Board. At the next regularly scheduled meeting of the Civil Service Board the grievance shall be heard, using Civil Service Board DeNovo procedures. Within 20 calendar days of the hearing the Civil Service Board shall issue its findings and conclusions to the parties at interest. Within 7 calendar days of the issuance of Civil Service Board findings and conclusions the City Manager shall affirm, modify or revoke the Board's decision. The City Manager's decision shall be considered exhaustive of administrative remedies. F. Probation Probationary Period Newly hired employees shall serve a twelve (12) month probationary period. The probationary period for promoted employees shall be six (6) months. Newly hired employees shall become eligible for their first step increase after twelve (12) months. All other City rules regarding step increases shall remain unchanged. 2. Failure of Probation (a) New Probation An employee on new probation may be released at the sole discretion of the City at any time without right of appeal or hearing, except as provided in (c), below. (b) Promotional Probation An employee on promotional probation may be failed at any time without right of appeal or hearing, except as provided in (c), below, and except that failing an employee on promotional probation must not be arbitrary, capricious or unreasonable. An employee who fails promotional probation shall receive a performance evaluation stating the reason for failure of promotional probation. r�7 When an employee fails his or her promotional probation, the employee shall have the right to return to his or her former class provided the employee was not in the previous class for the purpose of training for a promotion to a higher class. When an employee is returned to his or her former class, the employee shall serve the remainder of any uncompleted probationary period in the former class. If the employee's former class has been deleted or abolished, the employee shall have the right to return to a class in his or her former occupational series closest to, but no higher than, the salary range of the class which the employee occupied immediately prior to promotion and shall serve the remainder of any probationary period not completed in the former class. (c) Probationary Release An employee who alleges that his or her probationary release was based on discrimination by the City, may submit a grievance within ten (10) days after receipt of the Notice of Failure of Probation. G. Salary on Reclassification The City will amend its Employee Policy Manual to provide for a minimum salary increase of five (5 %) percent upon reclassification (not to exceed the maximum of the new salary range). H. Employee Handbook There will be a consolidation of documents to be given to each employee. This consolidation will be comprised of the Employee Policy Manual, related Departmental Rules and Regulations; Employee /Employer Resolutions and a copy of this Memorandum of Understanding. More information may be included. Direct Deposit All employees shall participate in the payroll direct deposit system. J. Separability Should any part of this MOU or any provision herein contained be rendered or declared invalid, by reason of any existing or subsequently enacted Legislation, or by decree of a Court of competent jurisdiction, such invalidation of such part or portion of this MOU shall not invalidate the remaining portion hereto, and same shall remain in full force and effect; provided, however, that should provisions of this MOU relating to any schedule adjustment be declared invalid, City agrees to provide alternative benefits agreeable to NBPTEA, to employees, which will cause such employees to receive the same amount of money as they would have received had such provision not been declared invalid. Executed this day of NEWPORT BEACH PROFESSIONAL AND TECHNICAL EMPLOYEES ASSOCIATION CITY OF NEWPORT BEACH By: Mayor ATTEST: By: City Clerk APPROVED AS TO FORM: City Attorney Mike Wojciechowski, President Paul Bechely, Negotiation Team Io EXHIBIT A Professional and Technical Classes Accountant Accountant, Senior Building Inspector I Building Inspector II Building Inspector, Senior Building Inspector, Principal Buyer, Senior Civil Engineer Civil Engineer, Associate Civil Engineer, Sr. Junior Civil Engineer City Surveyor Code & Water Quality Enforcement Officer Code & Water Quality Enforcement Trainee Community Watch. Volunteer Coordinator /Marine Refuse Supervisor Construction Inspection Supervisor Emergency Services Assistant Engineering Technician Engineering Technician, Senior Fire Information Systems Coordinator GIS Analyst GIS Coordinator GIS Technician Harbor Resources Supervisor Harbor Resources Technician I Harbor Resources Technician II Information Technology Applications Analyst Information Technology Applications Analyst, Senior Information Technology Applications Coordinator Information Technology Operations Coordinator Information Technology Specialist Information Technology Specialist, Senior Information Technology Technician Library Information Systems Coordinator Management Assistant Permit Technician Permit Technician, Trainee Permit Counter Supervisor Planning Technician Planner, Assistant Planner, Associate Planner, Senior 31 Public Works Inspector I Public Works Inspector 11 Public Works Inspector, Senior Residential Building Records Inspector Revenue Auditor Subtrade Plans Examiner Survey Instrument Worker Telecom /Network Coordinator Telecom Specialist Traffic Engineering Technician Urban Forester Water Conservation Coordinator 32 SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF NEWPORT BEACH AND THE CITY EMPLOYEE ASSOCIATION This Supplemental Memorandum of Understanding (MOU) sets forth the agreement between the City of Newport Beach (City) and City Employee Association (Association) for the implementation of the California Public Employees Retirement System 2.5% @ 55 retirement formula. The City and Association agree as follows: 2. The 2.5% @ 55 retirement program will be implemented on January 1, 2008. Plan options will remain unchanged. 3. Concurrently, the entire 3.42% cost of the plan change (2.42% employer and 1% employee) will be added to the employee's rate pursuant to California Retirement Code Section 20516. This will bring the total employee contribution to 10.42 %. The City will continue to pay 7% towards the employee share. Employees will pay the balance on a pre -tax basis pursuant to IRS Code Section 414(h)(2). 4. Implementation of this agreement requires the affirmative vote of a majority of the City's Miscellaneous Retirement Plan Members. If this does not occur, the City and Association will reopen negotiations on retirement issues only. 5. All other matters within the scope of representation are covered in the Memorandum of Understanding between the City and Association dated July 1, 2007 through June 30, 2010 and successor Memoranda. 6. Should any part of this MOU or any provision herein contained be rendered or declared invalid, by reason of any existing or subsequently enacted Legislation, or by decree of a Court of competent jurisdiction, such invalidation of such part or portion of this MOU shall not invalidate the remaining portion hereto, and same shall remain in full force and effect. The City and Association will meet and confer on those portions of the MOU found invalid. 7. The term of this Supplemental MOU will be for 10 years, from July 1, 2007 through June 30, 2017. Neither party shall attempt to amend the provisions contained herein during this 10 -year term. Signatures are on the next page. Executed this day of NEWPORT BEACH CITY EMPLOYEES ASSOCIATION 0 Teresa Craig, President 0 Paul Bechely, Negotiation Team CITY OF NEWPORT BEACH By: Mayor ATTEST: By: City Clerk APPROVED AS TO FORM: City Attorney yl /r %07 --�zt,3 -- -77�- `f Newport Beach City Council 3300 Newport Boulevard Newport Beach,CA Re: 9/11/07 Newport Beach Retirement and Health Care Benefits Richard A. Nichols 519 Iris Avenue Corona del Mar, 92625 September 11, 2007 Ref: 907NBRtrmnt&HlthCr Retirement Benefits Most retirement benefits have been: Defined Benefit- A contractual commitment to pay a certain amount each year. Defined Contribution- An agreement to pay benefits from a pot of employer and employee contributions. There is no legal commitment to pay forever, whatever the costs. When the funds run out the contributions are zero. Many of our large corporations and private businesses, have gone bankrupt and or have reorganized in order to lose this defined benefit retirement and/or health care commitment. 900/6 of the nations 16 million public service workers have a binding commitment to receive defined benefit contributions. 65% are slated to receive continued health benefits. Retirement Health Care benefits are estimated as high as $100K/ covered worker. The Government Accounting Standards Board, GASB, now requires larger state and local plans to estimate unfunded liability. The problem is the GASB cannot force sate and local plans to do so. Cato Institute estimated, in a survey of 16 state and 11 local governments that the average accrued liability of $135K for every covered worker. This debt was about 3 times the conventional debt of these cities. This unfunded debt should be estimated and is now being taken into account in rating new bonds issued by such public agencies. San Diego recently passed generous retirement benefits and found their ability to issue new bonds at all was questioned. We would like to see a Financial Report as called out by GASB for our Retirement & Health Plans and particularly we would like to see discussed the handling of retroactive liability and how these provisions are applied to retirees. Supervisor Moorlach also asked a good question, can the Council commit the electorate to new tax without a vote of the people. Finally, there is no discussion of health care costs now or how we are handling them for retired personnel in the future. Sincerely, Richard Nic110 907 N B Rtrmnt& H Ith Csts Program Ave Slry$K Yrs Wkd Safety Personnel 3% 50 85.5 25 Full Time, NonSfty 2.505 $9.264 25 Present w /FD+ Pers *Slry Ret$K/Yr Sm72 -RA PrsRt% PrsRt% K$/yr 64.125 1410.75 23.212 .25.366 16.266 43.29 735.93 14.182 14.182 6.139 /' Published by AMERICAN INSTITUTE for ECONOMIC RESEARCH RESEARCH REPORTS Great Barrington, Massachusetts 01230 www.aier.org Vol. L XXIV No. 10 June 4, 2007 Retiree Health Benefits: Dancing with the 800 -Pound Gorilla* The twin trends of an aging population and rising health care costs have long been pointing toward an escalating problem: the ballooning cost'of retiree health benefits. In the private sector, businesses are shifting costs to their workers and retirees. But in the public sector, benefits remain exceptionally generous. Their future cost to taxpayers is an enormous liability — unfunded and, until now, largely hidden from the public. A new accounting rule will soon require state and local governments to disclose this cost. The sticker shock could create pressure to cut benefits or set aside reserves to pay for them. But political pressures being what they are, it is just as likely that taxpay- ers, having finally been given the bill, will be left to pay it. The year 2006 saw two major revi- sions in the Hiles governing retirement benefits for American workers. The first and more publicized overhaul was the Pension Protection Act. Its net effect will likely be to hasten the shift by pri- vate- sector companies away from tra- ditional defined - benefit pensions to ever more reliance on defined - contribution plans, such as 401(k)s. The second change has now begun to hit the public sector, specifically state and local governments. Here, tra- ditional pensions remain the norm, a binding commitment made to nearly 90 percent of the sector's 16 million workers. And here, also in contrast to the private sector, generous retiree health benefits remain the order of the day. Some 65 percent of state -local employees are slated to. receive con- tinued health insprance upon retire- ment, a far larger share than for pri- vate- sector workers. The potential costs to taxpayers of the health care benefits that have been promised to retired public- sector work- ers have long been hidden, even as they have ballooned along with the rising cost *17tis article is by Dr. R.D. Name, an AIER Visiting Research Fellow. of health care. Now, however, state and local governments are being required, for the first time ever, to disclose their estimated cost. The price tag may be remarkably high —more than $100,000 per covered worker, according to initial estimates. This is partly because government work- ers often "retire" when they are rela- tively young, in their 50s or even their 40s. Thus the benefits must be paid for decades. Moreover, unlike pension funds, these liabilities are rarely if ever backed up by reserve funds (because no law requires it), thus it costs govem- ment officials almost nothing np -front to promise generous.future benefits. From theirperspective, it's cheaper than paying higher wages, generosity is costless, and they'll be out of office when the bills came due. Requiring public disclosure of this hidden liability will highlight its enor- mity. It has also made clear that paying for retiree health care could drain tax-. dollars away from other public services or require higher taxes. How did state and local benefits plans get into this fix? Partly because govern- ments require far less oversight of their own civil service retirement plans than they require of private- sector plans. 53 The Regulatory Vacuum Retirement benefits for state and lo- cal workers include pensions, which are overwhelmingly of the traditional, de- fined-benefit variety, and health insur- ance. Our focus here is on the second category, but it may help to take a brief look at pensions first, to get some idea of how lax the regulatory environment has been. Some six million state and local gov- emment retirees are now drawing pen- sions. The average annual pension has reached $20,000 —and in individual cases can exceed six figures. Not only are such pensions often generous, they are also fiw from Congress's reach. The state-local domain is exempt from many of the laws that govern the private sec- tor, including the Pension Protection Act of 2006. Nor is there effective oversight (in terms of enforcement) by any single agency monitoring accounting stan- dards. As an actuary with a national ac- counting firm observes of state and lo- cal pension practices,'°rhere's no over- sight; there's no requirements; there's no enforcement." The Government Accounting Stan- dards Board (GASB, pronounced gaz- be), an independent board, is respon- sible for proposing retirement -plan ac- counting standards for states and lomh- ties to follow. But GASB is a toothless tiger, because it lacks enforcement pow- ers or even the ability to speak out about dubious practices. In a telling historical footnote, in 1994 GASB gave carte blanche to state and local governments to prick virtually whatever accounting practices served their purposes: Its own director at the time was so appalled that he wrote a 10 -page dissenting tote. He pointed out that the absence of clear guidelines was an invitation for state and local govern- ments to finagle the books. GASB's weak oversight was high- lighted by a recent pension-fiord scan- dal in San Diego --and the inability of GASB to publicize the problem. Brought in to clean up the mess, former SEC head Arthur Levitt concluded.in 2006 that city officials had deliberately fudged the books to cover up deficits in its pension funds, and criminal charges have been filed. Well before that, GASB had come to the same conclusion. Ac- cordingly, when asked to sign off on such shady practices, GASB refused. But its charter prohibited it from criti- cizing or even publicly commenting on San Diego's tricky practices. Instead, the outside world learned of the scandal only after a whistle - blower from the pension board sounded an alarm. It is width[ this environment, marked by a lack of oversight and the ease of making promises someone else will have to pay for, that retiree health in- surance benefits have been lavishly con - ferre"uu not financed And unlike their, pension commitments, state and local plans have had no obligation even to disclose the future cost of retiree health benefits. 77m $I Trt7Hon Surprise Now that has changed. Last year, in a surprising;. move, GASB decided to shine a spotlight, on unfunded retiree health benefits: Specifically, it now re- quires larger state and Iced plans to come clean by estimating-and disclos- ing their estimated' future costs, begin- ning this year. GASB cannot force state and Iced plans to do so. But many states require their benefit plans to adhere to GASB's guidelines. The new rule does not require that state and local plans fund retiree health benefits. It simply requires thatthe casts be made public. The hope is that greater transparency will eventually lead to greater accountability, both in promis- ing and in funding these benefits. The costs that will be disclosed un- der the new rule led economist Richard Mattoon of the Federal Reserve Bank of Chicago to describe retiree health benefits as `The 800 Pound Gorilla in the Room. ", In other words, the newly disclosed liabilities am a huge unfunded liability that can no.longer be ignored., . How big is the price.tag? Estimating.. the cog is difficult - after alt, nobody knows what health care will look like, let alone cost, 20 years from now. Pry liminary estimates range from $700 bil- lion to'$IA:trillion The latter figure, from the Cato Institute, is [rased on a survey of unfunded health costs in 16 state and 11 local governments, which found an average accrued liability of $135,000 for every covered worker. Cato points out that this estimate dwarfs the conventional debt of state and local governments, which.reached $568 billion in 2005. This raises another issue. Unfunded health benefits constitute a kind of hid- den debt that properly should be taken into account when rating a municipality's ability to meet its obli- gations. Until now, bond - rating agen- cies such as Moody's, Standard and Poor, and Fitch have paid little atten- tion to this looming liability, partly be- cause they lacked firm data. They are taking a keen interest in the new esti- mates, however, and high unfunded costs could potentially influence their ratings. The specter of spiraling un- funded health benefits could lead to rat - ings downgrades and higher interest costs. -or, as in San Diego's pension scandal, the inability to float new bond issues at all. One Solution: Cap the Liability It is legally difficult for employers to wriggle out of promised pension ben- efits, but retiree health care benefits are different. The courts have consistently ruled that workers do nothave the same legal claim to them. Given the legal green light, private-sector, employers have already cut back sharply on such benefits; as their costs in the public sec- tor become known, they may offer a vulnerable target for cutbacks. Another option would be to emulate private companies and close such ben- efits to new tires, a tactic known as'9ier- ing." Pro inises made to the existing population of retirees and workers could be left untouched, while new employ- ees would get less generous benefits. However, this sort of gradualist ap- proach would still leave some state and local plans facing enormous unfunded liabilities. A more creative solution to over- promised retiree health benefits can be gleaned from a plan already introduced by Goodyear Tire and Rubber Co. In an accord reached with the-United .Steel- workers union, Goodyear has agreed to pay $1 billion into a trug find to cover future benefits, with the union essen- tially controlling the plan. The net ef- fect is to cap .Goodyear s:liability,.and thereby eliminate uncertainty (and re- 6 y sponsibility) for the company as to the size of future health care obligations. This innovation, known as a "volun- tary employees beneficiaries associa- tion' (VEBA), is also being considered by Detroit's Big Three car companies and the United Auto Workers union. A "Big Three VEBA" would entail pay- ments by the companies of perhaps $65 billion (or about two - thirds of the $95 billion the Big Three owe retirees in health benefits) to the UAW. The union would then manage the retiree health plan itself. (The financial burden of retiree health benefits was central to Daimler Chrysler's May 2007 "sale" of Chrysler to Cerberus. The latter, a private-equity company, in effect paid Daimler noth- ing for Chrysler beyond the promise to Like on the company's $18 billion com- mitment to retiree health care.) The goal for the Big Three would be to cut in half the estimated $30- per -hour labor cost disadvantage they face vis -it- vis Japanese companies operating with U.S. plants but free of heavy burdens for retiree benefits. Maybe a similar arrangement could be worked out in the public sector. Are such unions as the American Federa- tion of State, County, and Municipal Employees likely to cooperate in any such experiment? Perhaps we should stay tuned to what the UAW decades to do. Both unions have reputations for militancy, but they may yet conclude that fresh arrangements are called for in the current competitive climate. A key difference, however,, is that businesses in the private sector are sub- ject to the discipline of the marker. If t heir costs continually exceed their rev - t fiiw daisq�ed`eiate t&rfprWuctive ac- tivity, they lose money and eventually go out of business. By contrast, state and local governments face no such pressure. Nor do they face the same regulatory oversight as private busi- nesses. ('fhe latest eye - rolling example: lawmakers in Texas have just proposed a bill that would allow government bod- ies in that state to ignore the new dis- closure rules for retiree health, care costs.) Free of proper oversight, elected officials can winfrieads by raising ben - efitawithout worrying about paying the bill. When the bill eventually comes due, they will probably have left office (tak- ing along their own generous retirement pages), and it will be left to tazpay- ers to decide how to pay it. 0 .