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BACKGROUND The Pleasanton City Employees Association /AFSCME Local 955 ( PCEA/AFSCME) represents 227 employees in various classifications throughout all City departments. The current Memorandum of Understanding (MOU) between the City of Pleasanton and PCEA/AFSCME expired on October 31, 2010. In accordance with the Meyers- Milias- Brown Act, representatives from both parties are expected to meet and confer in good faith to discuss items covered within the scope of representation such as wages, hours, and other terms and conditions of employment. The City's practice has been to present the matter in public session to allow for open discussion in two sessions. The first session provides an opportunity to introduce the matter and receive comments from the public prior to final consideration of the contract. All agreements reached between the parties during the meet and confer process are tentative until the contract is ratified by PCEA/AFSCME and approved by the City Council. The PCEA/AFSCME membership met on November 9 and ratified the contract. DISCUSSION Term of Agreement: The contract that recently expired covered the period from November 1, 2002 to October 31, 2010. A shorter contract allows the City greater flexibility to make adjustments should the economic environment change significantly. The proposed term of the contract ends on March 31, 2013. Wage Adjustments: The contract does not provide for a wage adjustment during the term of the contract. In 2010, the Firefighters Union (IAFF Local 1974) agreed to an extension of their contract by 17 months without salary increases; and the Management/Confidential groups have not received wage adjustments since 2008. The PCEA/AFSCME MOU continues this trend. Employee Contribution towards Pension Program: Employees that are not sworn (i.e. police or fire) are covered by the CaIPERS Miscellaneous Group, which is subject to an 8% employee contribution. Many years ago, Pleasanton agreed to pay the 8% contribution on behalf of employees in lieu of increasing salaries. With the cost of pension benefits increasing, the City has adopted a philosophy of negotiating with bargaining groups to share in the burden of the cost. Similar to the recent concession negotiated with the Firefighter's bargaining unit, members covered by PCEA/AFSCME will begin to contribute 2% towards the CaIPERS pension program with the newly negotiated agreement. The full 2% contribution is effective July 1, 2011 to commence with the next 2 -year budget cycle. The savings to the City from this concession is approximately $722,000 for the term of the contract. Revised Retiree Medical Elenefits for New Employees: Under the recently expired MOU, employees who were eligible to retire and collect retiree medical benefits received the two -party benefit for the duration of their lifespan. With the newly negotiated MOU, new employees hired after January 1, 2011 who retire from Pleasanton would receive only the single party benefit, rather than the two -party benefit. In addition, the medical benefit would terminate at age 65 when the retiree becomes Page 2 of 4