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BACKGROUND Management and confidential employees are currently comprised of 65 classifications and 71 employees. Consistent with the City's practice each year, staff is bringing forward for Council consideration recommendations regarding the compensation and benefits for the City's management and confidential employees. DISCUSSION In accordance with the Meyers - Milias -Brown Act, 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. As the management and confidential employees are not represented by a Union, and therefore not covered under a collective bargaining agreement, negotiations are not appropriate. Instead staff is making the following recommendation for wage adjustments and an amendment to the Management/Confidential Employee Performance Compensation Plan: 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 the consumer price index (CPI), which reflects the general cost -of- living increase in the San Francisco - Oakland -San Jose area (approximately 2.5% in June 2016). The proposed wage adjustment of 3% is consistent with market, CPI and the City's internal equity with labor. Benefits: Modifications to benefits include the following: Deferred Compensation: All non -sworn management and confidential "Classic Members" under CaIPERS currently possess a 2.7 % @55 retirement formula based on the single highest year of earnings. With the passage of PEPRA effective January 2013, non -sworn management and confidential employees new to the CaIPERS system receive a benefit of 2% @62 based on the average of the highest three years' earnings. In view of these adjustments, and in an effort to provide employees with more post retirement saving options, the City began contributing .5% of base wages into a deferred compensation plan in January 2016. The proposed amendment to the Management and Confidential Employee Performance Compensation Plan includes an additional 0.5% City contribution to employees' deferred compensation program effective January 14, 2017 for a total City contribution of 1%. These contributions are not subject to CaIPERS contributions, and do not impact other personnel expenses that are calculated based on salary. Page2of3