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BACKGROUND The Livermore-Pleasanton Firefighters Local 1974 represents approximately 115 employees in the following job classifications: Firefighter, Firefighter-Paramedic, Fire Engineer, Fire Captain, Fire Inspector, Hazardous Materials Coordinator and Hazardous Materials Inspector. The most recent Memorandum of Understanding (MOU) between the Livermore-Pleasanton Fire Department Joint Powers Authority and International Association of Firefighter, Local 1974 (Local) expired on July 31, 2007. In accordance with the Agreement between Livermore and Pleasanton creating the Livermore- Pleasanton Fire Department (LPFD), the Joint Powers Authority Board and the City Councils of Livermore and Pleasanton are the appropriate agencies to approve labor agreements with represented employees. Representatives of the partner cities met and conferred with representatives of the Local and developed a successor agreement covering the period August 1, 2007 through July 31, 2010. The key elements of the tentative agreement are as follows: DISCUSSION Term of Agreement: Three (3) years starting August 1, 2007 through July 31, 2010. Wage Adjustments: 4% wage increase effective the first pay period of August for all classifications. Work Schedule: Effective January 1, 2008 for aone-year trial period, the parties agreed to implement a "2x4" work schedule in which Fire suppression personnel will work 2 consecutive 24-hour shifts, followed by 4 days off. The change in work schedule does not alter the number of hours worked by an employee assigned to Fire suppression over the course of a year. A Task Force composed of Local and management representatives will be established to refine performance indicators, evaluate and monitor the schedule, and report annually to the City Managers of Livermore and Pleasanton. Medical Insurance Reform for Active Employees: Amends the medical insurance benefit by increasing the co-payments for doctor's visit and prescription drugs for all plans to better align them with industry standards. Further the MOU provides that future increases in the contributions made by the LPFD toward the cost of medical premiums will be based on the dollar increase in the lowest cost HMO plan, rather than the premium for the Kaiser Health plan. In the third year of the agreement, the LPFD organization (Livermore and Pleasanton) will pick up an increase of no more than 15% of the medical premium. Under the terms of the 2001-2007 MOU, the LPFD paid the full cost of the Kaiser family premium, which has averaged more than 15% annually. This new limit will cap the City's future exposure. Medical Insurance Reform for Retired Employees: Establishes that for employees who retire after January 1, 2008, their health benefit plan design would be the same as the active employees with respect to co-payments. In addition, they will receive annual increases towards premiums in an amount equal to the dollar increase provided to active employees. Under the 2001-2007 MOU, the LPFD increased their annual allotment for retiree medical insurance in an amount equal to the increase in the Kaiser premium for an employee and eligible dependent. The changes in this benefit, over the long term, will reduce the LPFD's long term liability for providing retiree medical insurance. Page 3 of 4