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are provided by small operating units or a single individual, decisions will need to be made regarding evaluating the potential for employee reductions in one operation in order to maintain service in another. However, as a direct result of our employees' willingness to take on additional workloads; the soft freeze will most likely remain successful for at least the immediate future. Finally, recently there have been public comments implying that personnel reductions have reduced service levels. However, the contrary is true. Service levels have been retained and no programs have been eliminated due to the hiring freeze. Rather, as indicated, employees have worked effectively to operate with less support while continuing to fully address service needs. Again, with every position lost to attrition, City management engages in a thoughtful process to determine whether positions should be filled or should responsibilities be redistributed amongst existing employees. This has also fostered greater efficiencies City -wide. 2. Controlling Salary Increases The City's pay plan for represented employees is based on a five step salary schedule assigned to each specific job classification, e.g. police officer, fire fighter, building inspector. The principle behind this pay system, which is generally universal in the public sector, is to provide for a consistent process and amount of salary adjustment across each personnel classification reflecting the additional value that a more qualified /tenured employee brings to the organization. Notwithstanding these adjustments, once an employee reaches the fifth step of the salary schedule, which is typically accomplished after four years of employment, an employee's pay is no longer adjusted except for any "cost of living" adjustment negotiated through the collective bargaining process. Due to the tenure of most current City employees, approximately 84% of the City's employee base is at the top salary step for their represented classification. As a result, to achieve cost containment, the City has recently secured a tentative agreement with the PCEA that assumes a 0% increase for PCEA employees through March 31, 2013. (Also note that, the PCEA did not receive a salary adjustment in 2010.) In addition, on March 14, 2010, firefighters agreed to 17 months of 0% increases. And finally, for the last two years management employees and department directors have also agreed to 0% salary adjustments. The obvious impact of this approach is the stabilization of the City's payroll costs. Assuming pay adjustments normally track COLA changes, which has been approximately 1% over the past year, obtaining labor agreements without adjustments to salaries results in savings of approximately $520,000, of which approximately $340,000 is for PCEA/AFSCME, department directors, middle management, and confidential employees. 3. Modification to Employee Medical/ Health Care Costs Pleasanton employees receive health care benefits as part of their employment. Health care benefits are provided to current City employees and the City makes contributions Page 5 of 9