Office of the Mayor City Hall

R1

All of the cities in the County need to implement measures that will control employee costs. As a starting point, each city should determine the percentage of savings required from the total compensation package to reach budget stability, and provide choices of wages and benefits in collective bargaining sessions for the unions to choose to achieve that percentage goal. Response 1: The recommendation has been implemented. CITY historically and currently has a balanced budget and a strategic plan to control employee compensation to avoid budget instability. Over the past ten years, CITY has maintained services without layoffs.

R2

Cities should not increase salaries and wages that are not supported by planned revenue increases. Cities should tie COLA increases to clear indicators and retain the ability to adjust or withhold based on current economic data. Response 2: The recommendation has been implemented. CITY has assessed expenses and revenues, and offers salary increases commensurate with strategic budget planning and economic indicators. 1 2

R3

Cities should negotiate step progressions from the current three and half years to seven years. Employees should not receive COLA increases while in step progression. Response 3: The recommendation is not current industry practice, but will be taken under advisement. The subject of pay increases are considered during the collective bargaining process. The feasibility of these combined recommendations will be considered in future negotiations.

R4

Cities should negotiate that employees assume some of these increased costs for their medical benefits. To contain medical costs cities should consider the following: A. Split monthly premiums between the city and the employee and increase the employee's share, if already cost splitting, and remove any employee caps. Response 4A: The recommendation has been implemented. CITY cost is fixed. Employee pays annual increases. B. Establish reasonable co-pays for doctors' visits, prescription drugs, and in-patient and out-patient hospital care. 2 3 Response 4B: The recommendation has been implemented. CITY purchases medical plan coverage from CaIPERS, and CalPERS regulates through its purchasing agreements the co-pays and related costs for medical services. The CITY investigated alternative medical benefit providers through a regional joint powers agreement with a medical benefit broker and found that cost for coverage was more expensive and provided less medical benefits for the employees. C. Prohibit an employee from being covered by both city-provided medical benefits and as a dependent of another city employee. Response 4C: CITY agrees with the finding. Employee may not have dual coverage with another CalPERS agency, and CalPERS retirement law paragraph 22843 sets forth how family members are covered. D. Reduce cash-in-lieu payments. Response 4D: The recommendation was implemented in 2005 for all groups. E. Introduce a new lower premium, high-deductible medical plan. Response 4E: The recommendation has been implemented. CITY purchases medical plan coverage from CaIPERS, and CalPERS regulates through its purchasing agreements the co-pays and related costs for medical services. The CITY investigated alternative medical benefit providers through a regional joint powers agreement with a medical benefit broker and found that cost for coverage was more expensive and provided less medical benefits for the employees.

R5b

Cities should thoroughly investigate reverting to prior pension formulas that were less costly. Response 5b: The recommendation was discussed this year during negotiations and will be addressed in 2012 negotiations.

R5c

To provide a meaningful, long-term solution, the cities should negotiate agreements to: 1) Institute a two-tier system for pension and retiree health care for new hires. 2) Increase the retirement age from 50 or 55 to 60 or 65. 3) Calculate current post-employment health care plans with health savings plan. 4) Replace current post-employment health care plans with health savings plans. Response 5c: The recommendation will be addressed in 2012 negotiations, especially a tier system with increased retirement age. Consideration will be given to the feasibility of negotiating the health savings plans in the future. In addition, we strongly recommend that the Grand Jury encourage CalPERS to offer more retirement options using age 60, 62 or 65. 4 5

R6a

Cities should renegotiate with the bargaining units to: 1) Reduce vacation time. 2) Reduce the number of holidays and/or personal days. 3) Cap sick leave and eliminate the practice of converting accumulated sick leave to cash or adding into their years of service for inclusion in their retirement benefit. Response 6a: Recommendation has not been implemented. CITY will consider the feasibility of this recommendation for future negotiations. All contracts are currently settled.

R6b

Cities should negotiate to substitute paid days off for unpaid days instead of imposing furloughs. For example, reduce paid holidays to major holidays only, consistent with private industry; and convert minor holidays to unpaid. Therefore, the public is not impacted by fewer services caused by furloughs, and the city saves the employee cost. Response 6b: Recommendation will not be implemented because it is not warranted. CITY has no furloughs. Public has not lost services.

R7a

Cities should research competitive hiring practices and alter the approach to determine fair wages and benefits for each city by using public and private sector data.

R7b

Cities should renegotiate salaries and wages using valid market comparisons and not only the current wage index. Cities should utilize more market-oriented compensation practices so that salaries can adjust as competition for labor changes. Cities should reduce entry-level compensation for positions for which there are many qualified applicants. Responses to 7a and 7b: Recommendation has not yet been implemented, but will be considered in preparation for future bargaining sessions. All contracts are currently settled.

R8a

Cities should explore outsourcing some functions and services to private industry. Cities should discuss the prospect with cities that are successfully doing this to determine best practices and areas for success. Cities should develop contract with measurable objectives, performance goals, and timelines. Response 8a: Recommendation has been implemented. Cupertino is a contract city in the areas of library, Sheriff Services and refuse. Fire and sewer services are performed by a special district and we have leased our water utility to a private company.

R8b

Cities should create partnerships with other cities, special districts and/or the County for services, such as payroll, human resources, animal control, police and fire. Cities should investigate sharing the cost of new information technology systems. 6 7 Response 8b: Recommendation has been implemented. Cupertino is a contract city in the areas of library, Sheriff Services and refuse. Fire and sewer services are performed by a special district and we have leased our water utility to a private company. In addition, we partner with other cities for animal control, disaster preparedness and training.

R9

Cities should analyze the functions performed by alljob classifications and make adjustments in the work force. Consolidate functions within the same group or a similar group. Reassign appropriate work to lower paid job classifications. Eliminate unnecessary functions. Response 9: Recommendation has been implemented. CITY's on-going practice is to analyze and consolidate positions as they become vacant. CITY also analyzes the cost of labor from outsourcing and from shared services with other agencies, thereby reducing payroll costs.

R11

Cities should consider holding well-publicized public hearings about the cities' goals of negotiations before negotiations begin, and again at the end of negotiations to report to citizens clearly what changes have been made in contracts. 7 8 Response 11: Recommendation has not yet been implemented, but will be considered in the future if so determined after further consideration by Council.

R12a

City council members and mayors sh'ould become better informed about the fiscal realities of their cities, long-term costs and commitments, and be cognizant of potential issues in labor agreements. Response 12a: Recommendation has been implemented. City Council is well aware of the fiscal realities and long-term costs and commitments and understands the implications of labor agreements.

R12b

City councils and mayors should direct city administrators to (re) negotiate collective bargaining agreements that reverse the escalation of employer costs through concessions, cost sharing, and a second tier for new employees. Response 12b: Recommendation has been implemented.

R12c

City councils and mayors should meet with the bargaining units to clearly outline the cities' financial health and show how employee costs are impacting the budget. Response 12c: Recommendation will not be implemented because it is not warranted. Management representatives meet and conferred with Council prior to negotiations and stay within Council directives. The negotiation team clearly outlines the City's financial health at the beginning of negotiations to the Council and all bargaining groups. 8 9

R12d

City councils and mayors should inform citizens of their plans for controlling unsustainable employee costs and remove politics from the equation. Response 12d: Recommendation has been implemented. This result has occurred during budget study sessions and Council meeting discussions.