REPORT TO THE CITY COUNCIL June 4, 2020 FROM: JEFFREY CARDELL, Director Personnel Services Department SUBJECT ..Title Consideration of and the Provision of Direction Regarding Suspension of Unit 2 Merit Increases and a Sixty-Day Hiring Freeze in the City Council's, City Attorney's and City Clerk's Offices ..Body RECOMMENDATION Staff recommends that the City Council discuss and provide direction to the City Attorney and City Clerk to suspend granting merit increases for Unit 2 employees and institute a hiring (new hires and promotions) and reclassification freeze in the same offices for at least sixty days, which the City Manager will implement. This will provide the time necessary to assess the impacts of the COVID-19 world-wide pandemic on the City's FY 2020 and FY 2021 budgets and emergency reserve fund, ensure consistency with how other Unit 2 employees are treated and will provide the opportunity to demonstrate leadership to the other bargaining groups in the event the City is required to seek concessions or institute layoffs. EXECUTIVE SUMMARY In light of the COVID-19 world-wide pandemic and the impact on the City's General Fund by the current shelter in place order, staff recommends that Council direct the City Attorney and Clerk to delay the granting of Unit 2 merit increases and implement a sixty-day hiring freeze, which the City Manager will implement. BACKGROUND Council was made aware on April 23rd that FY20-21 projected General Fund revenues are being impacted, approximately $39 million by the end of Fiscal Year 2021, by the current shelter in place order and closure of non-essential businesses. Consequently, the Council directed staff to look at every opportunity to find cost savings to prevent reduction in services. While the availability of additional resources from the Federal Government to address the revenue shortfall is yet to be determined, it is also unclear at this time if the demand for City services will be reduced such that layoffs in certain classifications will be required. The City Attorney has prepared three Unit 2 merit increase Employee Action Forms and has provided the documents to the Personnel Services Department for processing. The amount of increase recommended ranges from 2.5% to 9.5%. Given the direction from Council regarding every opportunity to find cost savings to prevent reductions in service, such increases would be in contradiction with that direction. Bargaining unit representatives have been advised by the City Manager that, given several uncertainties, the City is not in a position to discuss changes in compensation anytime soon, but that we would certainly be willing to meet at a mutually convenient date and time. In addition, in recognition of the uncertain financial future, the City Manager has instituted a suspension of all Unit 2 merit increases and a sixty-day hiring freeze to minimize the impact of any reductions in compensation or staffing that may be required. It is recommended that the City Council implement the same course of action for their offices, as well as the City Attorney's and City Clerk's offices. In so doing, the Council ensures consistency in the treatment of the employees in Unit 2 and further demonstrates that the City Council is willing to lead by example as well. It is further recommended that this direction be revisited before the sixtieth day of the hiring freeze to ascertain the financial condition of the City and determine what course of action is would be prudent at that time. ENVIRONMENTAL FINDINGS By the definition provided in the California Environmental Quality Act Guidelines Section 15378 this item does not qualify as a "project" as defined by the California Environmental Quality Act. LOCAL PREFERENCE Local preference does not apply to this matter. FISCAL IMPACT General Fund dollars would not be spent at this time on any Unit 2 merit increases or the hiring of employees for the duration of a hiring freeze.