Title
Adoption of Resolution Approving Letter of Understanding between the Alameda Police Officers’ Association and the City of Alameda. (Human Resources 10025060)
Body
To: Honorable Mayor and Members of the City Council
From: Adam Politzer, Interim City Manager
EXECUTIVE SUMMARY
As a contracting agency of the California Public Employees’ Retirement System (CalPERS), the City of Alameda (City) is subject to statutory and regulatory requirements that govern whether compensation is reportable for pension calculation purposes. The Public Employees’ Retirement Law (PERL), the Public Employees’ Pension Reform Act of 2013 (PEPRA), and the California Code of Regulations (CCR) require that contracting agencies must accurately reflect information related to compensation items in approved documentation. For compensation paid in addition to base salary, this must include the relevant intent, eligibility criteria, and conditions of payment.
Through a compliance review for one Alameda Police Officers’ Association (APOA) member, CalPERS identified reported compensation that did not comply with the PERL. The Letter of Understanding makes clarifications in order to bring the related language into compliance.
APOA members have ratified this agreement.
BACKGROUND
The City received a determination letter dated July 15, 2025, stating that compensation used in the pension calculation for one APOA member was not compliant and, therefore, would be excluded. The excluded compensation related to retention pay, and additional compensation for working on holidays as a part of employees’ regular schedule. These compensation items were excluded because the supporting language in the APOA memorandum of understanding (“MOU”) does not comply with the PERL.
In 2024, CalPERS reviewed and approved previous revisions made to retention pay language for multiple employee groups, including APOA. This led to the approval of a letter of understanding with APOA clarifying retention pay language. The subsequent APOA MOU effective July 1, 2025 to June 30, 2027 also included the revised language. However, the prior letter of understanding does not address CalPERS’ concerns at issue with the recent determination letter.
CalPERS determinations concerning labor policy or agreement language also extend to all employees subject to the APOA MOU. Therefore, clarifications to the APOA language must be approved or CalPERS will exclude related compensation from pension calculations for all APOA members, including the employee who was the subject of the recent determination.
DISCUSSION
All items of compensation which are reportable to CalPERS aside from salary are delineated in the exclusive list of special compensation items under Title 2 California Code Regulations (CCR) sections 571(a) and 571.1(b).
1. Retention Pay
The compensation in Section 11.10 of the APOA MOU referred to as retention pay most closely aligns with “longevity pay” special compensation under CCR section 571(a)(1) for classic members and CCR section 571.1(b)(1) for PEPRA members.
Longevity pay is defined in CCR section 571 as follows:
“Additional compensation to employees who have been with an employer, or in a specified job classification, for a certain minimum period of time exceeding five years.”
As mentioned above, the previous APOA letter of understanding was intended to fully address the conditions of payment and calculation for retention pay. However, the letter of understanding did not include an effective date. Consequently, CalPERS interpreted the approval date of September 24, 2024 as the effective date. As such, the determination of whether retention pay reported prior to September 24, 2024 is compliant would be based on older APOA language, which resulted in the compensation being excluded as noncompliant.
Additionally, as of the APOA MOU effective July 1, 2025 to June 30, 2027, new language was introduced concerning one-time lump sum retention payments.
The Letter of Understanding now being considered resolves the following three concerns: (1) establishing an effective date prior to September 24, 2024, (2) clarifying that the one-time lump sum retention payments are not compliant with the PERL, and (3) providing specific calculation clarifications for each retention pay level, as opposed to a generalized example.
2. Holiday Compensation
Compensation paid to employees for being scheduled to work on holidays as a part of their normal duties due to required scheduled staffing aligns with “Holiday Pay” special compensation under CCR section 571(a)(5) for classic CalPERS members and CCR section 571.1(b)(4) for PEPRA CalPERS members.
Holiday Pay is defined in CCR section 571, in pertinent part as follows:
“Additional compensation for employees who are normally required to work on an approved holiday because they work in positions that require scheduled staffing without regard to holidays. If these employees are paid over and above their normal monthly rate of pay for approved holidays, the additional compensation is holiday pay and reportable to PERS.”
The APOA MOU effective July 1, 2025 to June 30, 2027 does not explicitly identify eligibility criteria that aligns with the definition of Holiday Pay in the PERL. Specifically, the language did not identify that the compensation was paid due to required scheduled staffing resulting in being regularly scheduled to work on holidays, and the language did not include a specific list of approved holidays.
The Letter of Understanding now being considered makes clarifications that explicitly outline the eligibility criteria for receiving holiday compensation, and a defined list of approved holidays.
The City and APOA have agreed to the language clarifications included in the Letter of Understanding.
ALTERNATIVES/OPTIONS
City Council may consider a number of alternatives, including:
1. Approve the resolution as recommended. The City has met with APOA in good faith and reached with respect to the clarifying language.
2. Reject the resolution. Staff does not recommend this option as it would result in the exclusion of the compensation for APOA members, including the employee who is the subject of the recent CalPERS determination letter.
FINANCIAL IMPACT
Approving the Resolution would avoid the possibility of liability to the City as a result of having noncompliant compensation removed from pension calculations of retired APOA members.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a resolution approving the Letter of Understanding between APOA and the City concerning APOA MOU provisions related to retention pay and holidays.
Respectfully submitted,
Noelle White, Human Resources Director
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibit
1. Letter of Understanding between APOA and the City