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07-21-2020 - AGENDA ITEM 06 CONSIDERATION OF RESOLUTION ADOPTING TERMS AND CONDITIONS OF EMPLOYMENT FOR EMPLOYEES IN THE WEST COVINA POLICE OFFICERS’ ASSOCIATION (WCPOA)AGENDA ITEM NO. 6 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: July 21, 2020 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: CONSIDERATION OF RESOLUTION ADOPTING TERMS AND CONDITIONS OF EMPLOYMENT FOR EMPLOYEES IN THE WEST COVINA POLICE OFFICERS' ASSOCIATION (WCPOA) RECOMMENDATION: That the City Council adopt the following Resolution: RESOLUTION NO.2020-74 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ADOPTING THE SIDE LETTER OF AGREEMENT BETWEEN THE CITY AND THE WEST COVINA POLICE OFFICERS' ASSOCIATION (WCPOA) BACKGROUND: The West Covina Police Officers' Association (WCPOA) MOU is scheduled to expire on June 30, 2021. However, on January 30, 2020, the World Health Organization declared the novel coronavirus, COVID-19, outbreak a "public health emergency of international concern." On March 11, 2020, the World Health Organization elevated the public health emergency to the status of a pandemic. In California, Governor Gavin Newsom declared a State of Emergency on March 4, 2020. On the same date, Los Angeles County declared a local emergency and a local health emergency. The City of West Covina declared a local emergency on March 16, 2020. On March 19, 2020, Governor Newsom issued Executive Order N-33-20, mandating all individuals living in the State of California to stay at home or at their place of residence except as needed to maintain the continuity of operations of the federal critical infrastructure sectors. On the same date, the Los Angeles County Public Health Officer issued a Safer at Home Order for the Control of COVID-19, ordering, among other things, the immediate closure of (1) non -essential retail businesses, (2) indoor malls and shopping centers, including all stores therein regardless whether they are essential or non -essential businesses, and (3) indoor and outdoor playgrounds for children, except for those located in childcare centers. As a result of the State and County stay-at-home orders, the City has experienced a decline in economic activity, which has impacted the City's revenues. City staff estimates a potential loss of $2.8 million in General Fund revenues for Fiscal Year (FY) 2019-20 and a continuing loss of $2.1 million in General Fund revenues in FY 2020-21. In addition to the economic impacts from the COVID-19 pandemic, over the past five years, the City's General https://destinyhosted.com/print_ag_memo.Gfm?seq=864&rev_num=1&mode=6demal&reloaded=true&id=93782 1/3 11/25/2020 Print Staff Report Fund reserves have continued to decline — in FY 2014-15, the unassigned fund balance was $20,531,695, in FY 2015-16, the unassigned fund balance was $15,032,389, in FY 2016-17, the unassigned fund balance was $14,119,078, in FY 2017-18, the unassigned fund balance was $11,979,653, in FY 2018-19, the unassigned fund balance was $9,884,913, and for FY 2019-20, the unassigned fund balance is projected to be $8,147,406. These reserves are insufficient to fully absorb the loss in revenue that will occur due to the COVID-19 pandemic. The City has also faced challenges in delivering a balanced budget in recent years. For example, to deliver a balanced budget for FY 2019-20, the City had to make significant cuts in expenditures, including layoffs of City employees, contracting out Building & Safety and Engineering functions, and not funding vacancies in City positions. Due to the financial condition of the City, which has been exacerbated by the COVID-19 pandemic, the City Council unanimously declared a fiscal emergency on May 19, 2020. In declaring the fiscal emergency, the City Council authorized the City Manager to take any and all actions necessary to address the fiscal emergency, including reviewing and making changes to service agreements. Unfortunately, as outlined above, the City has faced significant fiscal challenges in recent years, which challenges were not foreseeable at the time the City entered into the MOU with the WCPOA. The COVID-19 pandemic, which effectively shut down the economy, was also not foreseeable at the time the City entered into the MOU. Due to this "irresistible, superhuman cause", which is expected to result in a loss to the City of approximately $2.8 million in General Fund revenues in the current fiscal year alone and which exacerbated the City's financial condition such that the City declared a fiscal emergency, the City is unable to perform its contractual obligations pursuant to the MOU. The City must stabilize its cash flow. The City is unable to determine when it will recover from the financial impacts of the pandemic and be in financial position to enable it to resume performance. The City Manager sent an all staff memorandum to City employees on April 29, 2020 and May 19, 2020 summarizing the City's need to address its unforeseen emergency costs and strained financial position. On May 15, 2020, the Los Angeles County Department of Auditor -Controller ("County Auditor -Controller") notified the City that due to delayed payments of property taxes due to the COVID-19 pandemic, the City's May 20, 2020 property tax remittance will be less than expected. On the same date, the County Auditor -Controller notified the Successor Agency that due to delayed payments of property taxes due to the COVID-19 pandemic, the Successor Agency's June 1, 2020 property tax remittance will be less than expected; and the City's General Fund reserves are insufficient to fully absorb the anticipated loss in revenue that will occur from the COVID-19 pandemic. DISCUSSION: Between May 20, 2020 and July 21, 2020, representatives of the City met with representatives of the West Covina Police Officers' Association to discuss the City's unforeseen fiscal emergency and the need to immediately stabilize the City's cash flow through immediate cost savings measures through the reduction of personnel and benefits costs. The West Covina Police Officers' Association put forth proposals on reduction of personnel and benefits costs and reached agreement with the City to change the terms and conditions of their current MOU in order to assist the City during this unprecedented time. Such reductions assist the City in immediately stabilizing the City's cash flow through immediate cost savings measures. LEGAL REVIEW: The City's Labor Attorney, LCW, has reviewed and approved the Resolution as to form. Prepared by: Helen Tran, HR/Risk Management Director Fiscal Impact FISCAL IMPACT: https://destinyhosted.com/print_ag_memo.Gfm?seq=864&rev_num=1&mode=6demal&reloaded=true&id=93782 2/3 11/25/2020 Print Staff Report Anticipated cost savings is approximately $375,000 in benefits reduction suspension. Attachments Attachment No. 1 - Resolution 2020-74 Attachment No. 1 - Exhibit "A" - Side Letter of Agreement (WCPOA) CITY Achieve Fiscal Sustainability and Financial Stability COUNCIL GOALS & OBJECTIVES: https://destinyhosted.com/print_ag_memo.Gfm?seq=864&rev_num=1&mode=6demal&reloaded=true&id=93782 3/3 ATTACHMENT NO. 1 RESOLUTION NO. 2020-74 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ADOPTING THE SIDE LETTER OF AGREEMENT BETWEEN THE CITY AND THE WEST COVINA POLICE OFFICERS' ASSOCIATION (WCPOA) WHEREAS, on May 19, 2020, the City Council declared a fiscal emergency through the adoption of Resolution No. 2020-46; and WHEREAS, in declaring the fiscal emergency, the City Council directed the City Manager to take any and all actions necessary to address the fiscal emergency, including, but not limited to, measures relating to personnel and benefit costs, operations, and reductions in service levels, and reviewing and negotiating changes to labor agreements, service agreements, and franchise agreements, to the extent permitted by law; and WHEREAS, the City of West Covina, hereinafter referred to as the "City," and the West Covina Police Officers' Association, hereinafter referred to as the "Association," have met and conferred in accordance with the Meyers -Mi li as-B rown Act and Government Code § 3500 to address the City's fiscal emergency, and the appropriate personnel -related cost savings measures needed to address the fiscal emergency; and WHEREAS, the City and the Association have memorialized the agreement in a written side letter of agreement, which is attached hereto as Exhibit "A". NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA HEREBY RESOLVES AS FOLLOWS: SECTION 1. The Side Letter of Agreement between the City and the Association, attached hereto as Exhibit 'A," is hereby approved. SECTION 2. The City Manager is authorized to sign the Side Letter of Agreement. SECTION 3. The City Clerk shall certify to the adoption of this resolution and shall enter the same in the book of original resolutions and it shall become effective immediately. APPROVED AND ADOPTED this 21 st day of July, 2020. Tony Wu Mayor ATTACHMENT NO. 1 APPROVED AS TO FORM ATTEST Thomas P. Duarte Lisa Sherrick City Attorney Assistant City Clerk I, LISA SHERRICK, ASSISTANT CITY CLERK of the City of West Covina, California, do hereby certify that the foregoing Resolution No. 2020-74 was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof held on the 21 st day of July, 2020, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: Lisa Sherrick Assistant City Clerk EXHIBIT A SIDE LETTER OF AGREEMENT Attachment No. 1 - Exhibit "A" SIDE LETTER OF AGREEMENT TO THE MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF WEST COVINA AND WEST COVINA POLICE OFFICERS' ASSOCIATION THIS SIDE LETTER OF AGREEMENT ("Agreement") memorializes an agreement entered into between the City of West Covina ("City") and the West Covina Police Officers' Association ("WCPOA") (collectively "Parties") with respect to the following: WHEREAS, the Parties entered into a Side Letter Agreement to the Memorandum of Understanding (MOU) with a term of January 1, 2017 to June 30, 2021; and WHEREAS, the Parties agree that the amendments set forth in this side letter agreement shall be incorporated into the MOU; and WHEREAS, all other terms and conditions of the MOU shall remain in full force and effect. NOW THEREFORE, the Parties have agreed to amend the MOU as follows 1. "Suspend" as used throughout this Agreement shall mean that the stated benefits will not be provided during the term stated, i.e. through January 14, 2021. After January 14, 2021, the suspended benefits will resume. 2. Section 12, PERS Employee's Contribution — Paid by Employee shall be modified and replaced with the following: The Employee shall pay the entire nine percent (9%) member contribution to the Public Employees' Retirement System (PERS). The Employee who does not qualify as a "New Member" shall pay, via payroll deduction, an additional three percent (3%) of compensation earnable towards the employer contribution pursuant to cost sharing in accordance with Government Code Section 20516(f). Thus, the total employee contribution shall be twelve percent (12%). As soon as practical, the City shall amend the CaIPERS contract so that cost sharing will be by contract amendment under Government Code section 20516(a) so that the additional 3% cost sharing identified above will be switched from cost sharing under Government Code section 20516(f) to Government Code section 20516(a). When cost sharing by contract amendment becomes effective under Government Code section 20516(a), cost sharing under Government Code section 20516(f) shall immediately cease. In accordance with IRS Code section 414(h)(2), the cost sharing will then be treated as a pre-tax deduction. The Employee who qualifies as a "New Member" shall pay 50% of the applicable normal cost as their member contribution (California Government Code Section 7522.30(c)). In the event that 50% of the applicable normal cost member contribution falls below twelve percent (12%) of compensation earnable, the "New Attachment No. 1 - Exhibit "A" Member" Employee shall pay the difference between 12% of compensation earnable and 50% of the applicable normal cost member contribution pursuant to cost sharing in accordance with Government Code Section 20516(f). As soon as practical, the City shall amend the CalPERS contract so that cost sharing will be by contract amendment under Government Code section 20516(a) so that the additional cost sharing identified above will be switched from cost sharing under Government Code section 20516(f) to Government Code section 20516(a). When cost sharing by contract amendment becomes effective under Government Code section 20516(a), cost sharing under Government Code section 20516(f) shall immediately cease. In accordance with IRS Code section 414(h)(2), the cost sharing will then be treated as a pre-tax deduction. The Parties agree that should the MOU expire without a successor agreement in place, the cost sharing contribution as described above shall continue. 3. Section 14, Deferred Compensation — Suspend through January 14, 2021 the City/employer contribution of up to $50 per month to Deferred Compensation. Employees shall still be able to participate in the voluntary benefit contribution by the employee only during the suspension period. 4. Section 23 (F), Sick Leave, Sick Leave Annual Payoff Program — There will be a one-time suspension of the cashing out of up to sixty (60) hours of sick leave in November of 2020. This benefit will be reinstated and employees shall be able to cash out up to sixty (60) hours of sick leave in the next cash out period in November of 2021. 5. Section 23 (E), Sick Leave, Sick Leave Pay -Off Upon Termination shall be modified and replaced with the following: The City shall contract with CalPERS for the Credit for the Unused Sick Leave option under Government Code section 20965. Employees, upon retirement, shall be required to first use all accumulated and unused sick leave for PERS service credit. Any accumulated and unused sick leave remaining after the purchase of service credit of one year (e.g. 2080 hours) shall be paid at one- third (1/3) of their accumulated or unused sick leave up to a maximum of four hundred (400) hours. Employees who die or voluntarily terminate prior to retirement shall not be required to first convert accumulated and unused sick leave for PERS service credit. Thus employees who die or voluntarily terminate prior to retirement shall be paid at one-third (1/3) of their accumulated or unused sick leave up to a maximum of four hundred (400) hours. However, there is no eligibility of pay out for unused sick leave for employees dying or terminating prior to three (3) years of full-time employment with the City. Attachment No. 1 - Exhibit "A" FOR THE WCPOA AND CITY OF WEST COVINA: I agree on behalf of the WCPOA: I agree on behalf of the City: MAtt owman WCPOA President —7/20 /2C.) Date David Carmany City Manager Date