REPORT TO COUNCIL
SUBJECT
Title
Adopt Two Resolutions: (1) Setting the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Management, Sunnyvale Employees’ Association/International Federation of Professional and Technical Engineers Local 21 (SEA/IFPTE Local 21), Confidential, and Service Employees International Union (SEIU) Employees and Annuitants (Retirees); and (2) Amending the City’s Salary Resolution to Reflect Representation by Service Employees International Union (SEIU) of Certain Casual/Temporary Positions and Modify the City’s Contribution to Medical Insurance for Management, SEA/IFPTE Local 21, and SEIU Employees
Report
BACKGROUND
The Department of Human Resources periodically recommends amendments to the Salary Resolution to incorporate necessary updates and changes resulting from recently negotiated Memoranda of Understanding (MOUs) or other policy requirements. This report presents for Council consideration a resolution to amend certain sections of the City’s Salary Resolution to reflect changes needed to comply with Assembly Bill (AB) 1484 and to make changes to the 2026 employer contribution rates to health plans. Employers that offer healthcare plans under the Public Employees’ Medical and Hospital Care Act (PEMHCA) are required to adopt a resolution stating the amount of the employer contribution toward the employees’ and retirees’ medical plans annually or when there are changes in a bargaining unit agreement affecting contribution amounts paid by the City.
EXISTING POLICY
In accordance with Article 8 of PEMHCA, the City’s contract with CalPERS provides that the City’s contribution towards medical insurance (and the effective date of said contribution) be the same for active employees and retirees.
Council Policy 7.3.1 Legislative Management - Goals and Policies, Goal 7.3D: Maintain a quality work force, consistent with state and federal laws, City Charter, and adopted policies in order to assure that City services are provided in an effective, efficient, and high-quality manner.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and 15378(b)(5) in that it is a fiscal and governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
DISCUSSION
This report makes recommendations to amend certain sections of the City’s Salary Resolution to reflect changes to the Salary Resolution to incorporate necessary updates required by PEMHCA and changes to SEIU represented-positions required by AB 1484, codified in Government Code section 3507.7 and effective January 1, 2024.
Medical Contribution Changes for 2026
The City’s healthcare is administered through the California Public Employees’ Retirement System (CalPERS). CalPERS healthcare is regulated by the Public Employees’ Medical and Hospital Care Act (PEMHCA), which requires participating agencies to adopt a resolution stating the employer contribution amount toward the employees’ and retirees’ medical plans. The City also updates the Salary Resolution with the new employer contribution amounts.
The existing Memoranda of Understanding for the SEA/IFPTE Local 21 and the SEIU bargaining units provide for annual increases in the City’s contribution toward medical coverage for active employees. The total City medical and cafeteria contribution for SEA/IFPTE Local 21 is 85% (54% for SEIU) of the average family-level monthly premium for the Blue Shield Access+ HMO and Kaiser medical plans. This amount is then allocated 49% to the City medical contribution and 51% to the cafeteria contribution. However, any increase in the City medical contribution shall not exceed 5% from the prior year. For employees in the Sunnyvale Managers Association (SMA) and Unclassified Unrepresented Managers, Article 5.505 of the Salary Resolution provides that, effective January 1 of each year, the City’s contribution for medical coverage for active management employees shall be no less than the highest City contribution for any of the represented employee groups. Therefore, based on the changes for the 2026 CalPERS health plan rates, the City contribution rates for employees and retirees must also be increased.
These changes will impact the monthly per-employee City Cafeteria costs as follows:
• For SEA/IFPTE Local 21, an increase of $149.26 to $1,521.44.
• For SEIU, an increase of $99.44 to $1,063.70 (including vision cost as negotiated in the MOU)
• For management employees, an increase of $383.14 to $3,120.76.
As a result of these increases, and to meet the PEMHCA regulations that require the City’s medical contribution to be the same amount for employees and retirees, the City’s contribution to CalPERS for retiree medical coverage needs to be increased. Effective January 1, 2026, the City’s PEMHCA monthly contribution for medical coverage for retirees from SEA/IFPTE Local 21, Confidential, and Management will be $1,221.60, an increase of $58.18 per retiree per month. The City’s monthly contribution for medical coverage for SEIU retirees will be $679.12, an increase of $32.34 per retiree per month.
Changes to Comply with AB 1484
The City is also updating the Salary Resolution to reflect changes made to certain Casual/Temporary positions. AB 1484 requires public employers to designate casual, seasonal, or temporary employees who perform work equivalent to regular City staff to be represented by a bargaining unit upon the request of the recognized employee organization representing permanent employees who perform the same or similar type of work.
In May 2024, Service Employees International Union (SEIU) Local 521, which represents permanent/regular part-time positions, notified the City that it was exercising its representation rights related to all temporary and casual positions that meet the criteria of AB 1484. Although regular part-time positions represented by SEIU receive benefits that the City and SEIU previously negotiated, AB 1484 does not confer those benefits on the newly added Casual/Temporary positions.
Regular part-time employees represented by SEIU receive pay and benefits as outlined in the SEIU Memorandum of Understanding, however, union designation alone does not confer benefits or regular status to the Casual/Temporary positions newly added to the SEIU unit. Casual/Temporary positions perform work on a more limited basis and under the Charter are considered Unclassified. Therefore, Casual/Temporary positions do not receive the same benefits and leave entitlements as Classified Regular and Regular Part-Time employees, except where explicitly stated. Compensation and benefits for Casual/Temporary employees have historically been addressed in the Salary Resolution and Administrative Policy, and there are no significant changes proposed at this time as a result of SEIU representation. .
However, updates to the Salary Resolution are recommended to clarify that benefits in sections pertaining to Regular SEIU positions do not apply to Casual/Temporary employees represented by SEIU, unless stated otherwise:
• Section 1.000 Pay Plan Schedules
• Section 1.050 Retroactive Payment - Separated/Retired Employees
• Section 3.550 Military Reservists - Extension of Benefits and Supplemental Salary
• Section 3.950 Employee Emergency Leave Relief Fund
• Section 5.100 Uniforms
o Changes to this section would apply to Casual/Temporary employees who are CalPERS Classic members
• Section 5.210 Safety Glasses
o Safety glasses shall be provided to Casual/Temporary employees if required on the job.
• Section 5.220 Safety Footwear
o Casual/Temporary employees are not eligible for the safety footwear allowance, but are eligible for reimbursement up to the amount of the allowance.
• Section 5.300 Training Assistance
• Section 5.500 Health Insurance - Eligibility and Effective Dates
• Section 5.505 City Contribution - Medical Insurance
• Section 5.506 City Contribution - Dental Insurance
• Section 5.507 City Contribution - Vision Insurance
• Section 5.515 City Contribution - Cafeteria Benefits Plan
• Section 5.520 Maximum City Contribution - Health Insurance
• Section 5.562 Commuter Transportation Benefits
• Section 6.300 Deferred Compensation
• Section 7.100 Hourly Rates
o Pay rate placement for Casual/Temporary employees is described in the City Administrative Policy.
• Section 7.120 Merit Increase - Non-Management
• Section 7.170 Grant Funded Employment
SEIU was notified of the proposed changes, provided the opportunity to meet and confer, and has agreed to the proposed language changes.
FISCAL IMPACT
For the amendment to the City’s contribution for CalPERS Medical Insurance, the current year increase of approximately $3.9 million (depending upon staff enrollment) is within the assumptions used in the FY 2025/26 Adopted budget, with future year impacts incorporated into the 20-year Resource Allocation Plan.
There is no fiscal impact for the changes regarding Casual/Temporary positions. There are no changes to the salary table or additional benefits being granted.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Adopt Two Resolutions: (1) Setting the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Management, Sunnyvale Employees’ Association/International Federation of Professional and Technical Engineers Local 21 (SEA/IFPTE Local 21), Confidential, and Service Employees International Union (SEIU) Employees and Annuitants (Retirees); and (2) Amending the City’s Salary Resolution to Reflect Representation by Service Employees International Union (SEIU) of Certain Casual/Temporary Positions and Modify the City’s Contribution to Medical Insurance for Management, SEA/IFPTE Local 21, and SEIU Employees.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
__ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Kristin Armbruster, Human Resources Manager
Reviewed by: Tina Murphy, Director of Human Resources
Reviewed by: Matt Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Resolution Setting Employer’s 2026 Contribution under PEMHCA
2. Resolution Amending the Salary Resolution