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BACKGROUND The management and confidential employee group is currently comprised of 63 classifications and 76 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 amendments 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 3.9 percent in June 2018). The proposed control point adjustment of 3 percent is consistent with market, CPI and the City's internal equity with labor and also includes a pool of money to be made available as performance incentive pay. Benefits: Modifications to benefits include the following: The amended language, set forth in the Management/Confidential Employee Performance Compensation Plan for which Council approval is sought reads as follows: "9. Deferred Compensation The City shall provide a voluntary IRC 457 deferred compensation plan for management and confidential employees and a voluntary IRS 401A plan for management employees. The City may provide deferred compensation contributions for management and confidential employees. Any funds deposited in a deferred compensation plan under this provision belong to the employee, regardless of length of service or reason for separation. The City shall contribute one and one-half percent (1.5 percent) of the employee's base compensation into a 457 deferred compensation plan. Effective January 12, 2019, the City shall contribute an additional one-half percent (.5 percent) for a total of two percent (2 percent). City contributions are tax-deferred, and count towards the 457 annual maximum deferral as designated by the IRS. Employees without an existing 457 account with a City sponsored provider must Page 2 of 3