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BACKGROUND The PCEA membership includes approximately 233 employees, comprised of numerous classifications. The classifications include but are not limited to clerical positions, police dispatchers, recreation employees, planners, engineers and maintenance employees in the streets, support services and utilities divisions. The most recent Memorandum of Understanding (MOU) with the PCEA covered the period April 1, 2013 through March 31, 2016. Representatives of the City met and conferred with representatives of PCEA and developed a successor agreement with a three-year term ending March 31, 2019. DISCUSSION In accordance with the Meyers-Milias-Brown Act, the parties are required to meet and confer in good faith over items covered within the scope of representation, including wages, hours and other terms and conditions of employment. The significant results of the negotiations include: Term of Agreement: The expiration date of the proposed MOU is March 31, 2019, approximately three (3) years from the date the document becomes operationally effective. The term of this contract covers the same time period as the recently expired MOU. Wage Adjustments: Historically, the two primary factors considered in wage adjustment discussions are: market data obtained from neighboring agencies that are similar in size and perform similar services, and the consumer price index (CPI), which reflects the general cost-of-living increase in the San Francisco-Oakland-San Jose area (approximately 2.9% in February 2016). The proposed contract includes three separate wage adjustment of 3% effective April 2016, April 2017 and April 2018. Benefits: Modifications to benefits include the following: Deferred Compensation: All PCEA employees considered "Classic Members" by CaIPERS have a 2.7%@55/single highest year retirement formula with the City. All PCEA employees under PEPRA reform receive a benefit formula of 2% @62, based on the average of the highest three years' earnings. In view of this adjustment, and in an effort to provide employees with more post retirement saving options, the MOU includes a 0.5% City contribution to PCEA employees' deferred compensation program effective July 2017. Currently, approximately 68% of PCEA members contribute to the deferred compensation program without a City contribution or match. This contribution is not subject to CaIPERS contributions, and does not impact other personnel expenses that are calculated based on salary. Page 2 of 4