REPORT TO THE CITY COUNCIL October 23, 2014 FROM: Jeff Cardell, Director Personnel Services Department BY: Ken Phillips, Labor Relations Manager Personnel Services Department SUBJECT ..Title *** Approve a Side Letter of Agreement between the City of Fresno and Unit 1, represented by the International Union of Operating Engineers, Stationary Engineers, Local 39, amending the Memorandum of Understanding (MOU) provision on payment of health care premiums ..Body RECOMMENDATION It is recommended that Council approve the attached Side Letter of Agreement between the City and Unit 1, Local 39, implementing an MOU provision which provides for a change in the City payment of health and welfare premiums. EXECUTIVE SUMMARY The successor MOU between the City and Local 39 adopted by Council on May 15, 2014, contains a provision that allows renegotiation of the health and welfare benefit if a more favorable benefit is provided to another bargaining unit. Since that time, a number of units have included a more favorable benefit by capping the employee payment of the monthly premium at 30%. Approval of this Side Letter Agreement will not change the monthly City contribution for health insurance. However, any future increases for employees will be capped at 30% of the monthly premium. If the monthly premium for employees is at 30%, the City will pay 70%. BACKGROUND In 2013, the City paid 80% of the monthly health and welfare premium set by the City of Fresno Health and Welfare Trust for the majority of employees. The City contribution rate for new employees with a few bargaining units is 70% of the monthly premium. Through negotiations of successor MOUs, the City has been pursuing other cost sharing approaches for health and welfare premiums. In the current MOU, Local 39 agreed to a City contribution of 75% of the health and welfare premiums with future increases to be shared equally with 50% paid by the City and 50% paid by the employee. The MOU also contained a provision that allows renegotiation of the health and welfare benefit if a more favorable benefit is provided to another bargaining unit. Since the MOU with Local 39 was approved and implemented, Unit 2/Unrepresented Confidential Management, Unit 4/Police Basic, Unit 5/Fire Basic, Unit 9/Police Management, and Unit 14/Confidential Management have received a more favorable benefit. The improved benefit provides that the employee share of monthly health and welfare premiums will be capped at 30%. Should employees reach the cap of 30%, the City share will be 70%. Local 39 asked to renegotiate the benefit to include the cap on employee payments in accordance with the terms of the MOU. The parties agreed to the attached Side Letter of Agreement which implements the cap or maximum payment of 30% of the health and welfare premium by the employee effective November 1, 2014. The City Attorney's Office has reviewed and approved as to form the attached proposed Side Letter of Agreement. ENVIRONMENTAL FINDINGS Not applicable. LOCAL PREFERENCE Not applicable. FISCAL IMPACT There is no funding impact in the current fiscal year since the health and welfare premium is currently fixed through the end of the fiscal year. Attachment: Side Letter - Local 39 Health and Welfare Benefit 2014