Your 2003-2009 Unit 9 MOU

Your PECG Bargaining Team and the Department of Personnel Administration (DPA), representing Governor Davis, reached agreement on a new Memorandum of Understanding (MOU) or contract covering all Unit 9 employees.  The MOU was approved by the Legislature in AB 977 and was signed by Governor Davis.  As discussed in more detail below, for 12 months, beginning in October 2003, the 5% pay raise which began in July will be suspended; employees will stop paying 5% to PERS; and employees will earn one day of personal leave per month to be used as vacation or cashed out later.  In January 2004, the state will pick up most (but not all) of the health plan premium increase, and, from that point forward, will base its contribution on a formula, rather than an annually negotiated dollar amount.  Other significant provisions include layoff mitigation language and a contracting out joint Labor/Management Committee. 

The MOU provides that beginning in 2005, employees will begin receiving pay raises to achieve pay parity with California’s larger local agencies, a long-sought PECG goal.  PECG and DPA have reached agreement on an annual salary survey of those agencies which determines the lag at various levels.  A portion of the lag will be eliminated each year based on annual updates in the survey.  By July 2008, the lag will be eliminated and full pay parity with those agencies will be achieved! 

The Legislature, which must authorize or appropriate funds for pay increases each year, balked at agreeing this far in advance to raises two to five years from now which will be based on an updated survey.  Thus, in passing the bill approving the MOU, they specified that the updated survey must be submitted to the Legislature for its consideration each year, beginning in 2005, before they make the decision to appropriate the funding. 

This additional requirement for specific legislative review during the term of an MOU is unique, but so is a five-year contract with substantial pay raises in the later years.  Whether this legislative review in the later years will cause a problem in receiving the pay raises as agreed in the MOU remains to be seen. 

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THE DETAILS

In the Short Term . . .

Beginning in October 2003, the 5% salary increase received in July will be suspended for 12 months.  (For retirement and overtime purposes, compensation will be calculated as if the reduction had not taken place.)  To offset this, the employee contribution to PERS (approximately 5%) will also be suspended for 12 months.  In addition, employees will earn one day of personal leave per month for 12 months which can be taken as vacation or retained to be cashed out in the future.  Then, 12 months later, the 5% pay raise is restored and the employees resume making contributions to PERS. 

Pay Parity

For many years, PECG has been seeking to achieve pay parity with local agencies, whose Engineers’ salaries are considerably higher than state salaries.  PECG has worked with DPA to reach agreement on an annual salary survey which determines the amount of the salary lag at various levels (entry, licensed journey, and supervisory). 

Beginning in July 2005, pay increases will be provided to begin closing this gap by one-fourth of the lag per year for four years, based on annual updates in the DPA survey.  DPA may not change the agencies or classifications surveyed.  In July 2008, the entire salary lag reflected in the survey at that time will be eliminated and full pay parity with local agency Engineers and related professionals will have been achieved!  (This assumes that the Legislature appropriates the necessary funds for the raises each year.) 

Health Benefits

The state pays 100% of the vision care premium and 75% of the dental plan premium, which will continue.  However, the state’s contribution to health plans is negotiated every year and, in recent years, has gradually shrunk as a percentage of the entire premium cost. 

Under the new agreement, beginning in January 2004, the state will pay 80% of the average premium for the four most-used health plans for employees and dependents.  This means the state will pay most (but not all) of the premium increase in January 2004.  Then, in January 2006 the state’s contribution will increase to 85% of the premium for employees, remaining at 80% of the additional premium for dependents. 

What does this mean in dollars and cents?  In 2003, the state contributes $226/$450/$589 toward the premium for employee only/employee plus one/family.  This increases to $250/$514/$661 when the premiums increase in January 2004.  Thereafter, when premiums are raised, the state’s payment will increase based on the new formula.  

Layoff Mitigation

Agreeing to suspending the pay raise for 12 months (which is offset by also suspending the employee contribution to PERS) saves the state money.  The MOU specifies that these savings “shall first be applied to mitigate layoffs” in Unit 9 in the current fiscal year.  This doesn’t guarantee that layoffs won’t occur, but it will appreciably reduce them.  Some departments postponed layoffs scheduled for late 2003. 

Contracting Out

The contract establishes a policy “to hire, utilize and retain Unit 9 employees before resorting to the use of private contractors,” with some exceptions.  A joint Labor/Management Committee will analyze the cost effectiveness and other factors in contracts for Engineering and related services.  The MOU provision requires that departments planning to contract out these services will provide PECG and the Committee with Requests for Proposals  and other documentation for proposed contracts before they are awarded so the advisability of contracting can be analyzed and determined. 

Other Issues

Five years is a long time to lock up everything in a contract.  The MOU addresses this in two ways. 

First, if other units receive increases in travel reimbursement (meals, lodging, mileage, etc.), transit passes, overtime meals, the rural subsidy program, or several other specified items, Unit 9 employees will receive the same increases. 

Secondly, beginning in 2006, PECG (but not the state) can choose to reopen negotiations on up to four issues. 

Also, mentoring leave has been extended to cover participation in Habitat for Humanity, regional engineering fair judging throughout the state, and the Sacramento Regional Science and Engineering Fair. 

Most other sections of the MOU -- Recruitment and Retention Differentials, Vacation, Holidays, etc. -- continue without change.    

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THE SALARY SURVEY BEHIND UNIT 9 PAY PARITY

The new Unit 9 MOU provides that by 2008, salary parity with California's larger local agencies will be achieved.  This will be based on the Department of Personnel Administration (DPA) survey of salaries in those agencies, updated annually.

The current salaries for Unit 9 employees lag substantially behind their counterparts in those agencies.  The MOU provides for elimination of that lag in stages beginning in 2005 until the lag is totally eliminated in 2008.  This is subject to legislative consideration each year.

The current version of the salary survey upon which this MOU section is based is shown below.  DPA and PECG will work together to update this survey each year.  The agencies and classifications surveyed will only change if DPA and PECG agree to do so.  The salaries to achieve parity resulting from this survey are a minimum; PECG and DPA can negotiate salaries above that level if they agree to do so.