AgendaQuick™

That the City Council:
A. APPROVE AND ADOPT RESOLUTION NO. CC 2026-____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING RESOLUTION NO. 6113 AND CC 2025-24 PERTAINING TO A COMPENSATION PLAN FOR GENERAL SERVICES EMPLOYEES' GROUP;

B. APPROVE AND ADOPT RESOLUTION NO. CC 2026-____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING RESOLUTION NO. 6113 AND CC 2025-25 PERTAINING TO A COMPENSATION PLAN FOR LA HABRA MUNICIPAL EMPLOYEES GROUP;

C. APPROVE AND ADOPT RESOLUTION NO. CC 2026-____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING RESOLUTION NO. CC 2025-30 PERTAINING TO A COMPENSATION PLAN FOR PROFESSIONAL EMPLOYEES GROUP

D. APPROVE AND ADOPT RESOLUTION NO. CC 2026-____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING RESOLUTION CC 2025-28 PERTAINING TO COMPENSATION FOR LA HABRA HOURLY PART-TIME EMPLOYEES;

E. APPROVE AND ADOPT RESOLUTION NO. CC 2026-____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING RESOLUTIONS NO. CC 2025-08, CC 2025-15, CC 2025-20, 6101 AND 6123 PERTAINING TO A COMPENSATION PLAN FOR MANAGEMENT, POLICE MANAGEMENT, AND EXECUTIVE MANAGEMENT EMPLOYEES;

F. APPROVE AND ADOPT RESOLUTION NO. CC 2026-____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING RESOLUTION NO. 2025-08 PERTAINING TO A COMPENSATION PLAN FOR EXECUTIVE MANAGEMENT EMPLOYEES;

G. Approve and authorize the execution of Amendment No. 1 to the Amended Employment Agreement for the Office of City Manager, dated June 16, 2025, between the City and Jim Sadro; and,

H. Approve the use of estimated salary savings within the adopted Fiscal Year 2025-2026 budget to fund the first-year cost of one-time lump sum pay adjustments.

The City’s current labor agreements with three of its employee bargaining groups will expire on June 30, 2026. Representatives from the bargaining groups and City Administration have met and conferred in good faith regarding salary, benefits, and other terms and conditions of employment. Tentative agreements for successor Memorandums of Understanding (MOU) have been reached with all these groups.

The General Services Employees' Group (General) has agreed to a new labor agreement with a two-year term starting on July 1, 2026, and ending on June 30, 2028. The bargaining unit representing the City's Field Services (Field Services) employees, the La Habra Municipal Employees Group, has agreed to a new labor agreement with a four-year term starting on July 1, 2026, and ending on June 30, 2030. The Professional Employees Group (Professional), which consists of employees working in the City's Child Development division, funded from state grants, agreed to a one-year contract term, starting on July 1, 2026, and ending on June 30, 2027. The City’s management employees are not represented as a bargaining unit and receive pay and benefit adjustments at the discretion of the City Council.

The key fiscal components and terms for each group are as follows:

GENERAL SERVICES EMPLOYEES' GROUP

Contract Term

Two years, starting on July 1, 2026, and ending on June 30, 2028.

Base Pay
General Services members, except for grant-funded Case Managers:

3% Cost of Living Adjustment (COLA), effective the first full pay period in July 2026.
2% COLA, effective the first full pay period in July 2027, and another 2% COLA, effective the first full pay period in January 2028.

Case Managers (grant funded):

3% COLA, effective the first full pay period in July 2026.
2% COLA, effective the first full pay period in July 2027, and another 2% COLA, effective the first full pay period in January 2028. It should be noted, however, that the FY 27-28 COLAs only take effect if the grant funding available for Case Manager positions remains at levels that are the same or higher than what is being budgeted for in FY 26-27.

One-Time Compensation

Full-time employees on the City’s payroll as of May 31, 2026, will receive a one-time lump-sum payment in the amount of $2,000 no later than June 30, 2026. Employees must still be employed by the City as of June 30, 2026.
Full-time employees on the City’s payroll as of May 31, 2027, will receive a one-time lump-sum payment in the amount of $1,500 no later than June 30, 2027. Employees must still be employed by the City as of June 30, 2027.

Cafeteria Health Insurance Contribution

The City will adjust its current monthly insurance contribution to the amounts indicated in the following table on each respective effective date. Monthly contributions are available on a use or lose basis.

Effective Date	Single	Two-party	Family
Dec. 1, 2026	$1,450	$1,900	$2,100
Dec. 1, 2027	$1,450	$1,950	$2,150

Opt Out Provision

The City will increase the health insurance opt-out amount by $15 to $325/month.

Deferred Compensation (457)

Effective the first full pay period in January 2027, the City agrees to provide a matching contribution, not to exceed $10 per month, to Employees' 457 Deferred Compensation Accounts. Effective the first full pay period in January 2028, this matching contribution will increase to an amount not to exceed $25 per month.

Personal Leave

Employees will receive 30 hours of personal leave each fiscal year.

Vacation Buy Back

Employees may buy back up to a maximum of eighty (80) hours of accrued vacation leave per fiscal year. Employees must use at least fifty percent (50%) of the number of vacation hours requested for buy-back as approved time off during that same fiscal year.

Sick Leave

Eliminate the Sick Leave Conversion option.

Cost Estimate of General Services Negotiated Pay and Benefits
If approved, the total increase in annual cost of the two-year MOU with the General Services Employees' Group is estimated to be approximately $425,262, allocated as follows:

FY2026-27:	$233,198
FY2027-28:	$192,064
Total:	$425,262

This estimated cost consists of both recurring costs and “one-time” costs apportioned between the General Fund and Non-General Fund budgets. The breakdown of these estimated costs, by fiscal year and funding source, is as follows:

SOURCE	FY 2026-2027	FY 2027-2028	TOTAL

General Fund
Recurring	$83,163	$73,589	$156,752
One-Time	$59,207	$44,405	$103,612
General Fund Total	$142,370	$117,994	$260,364

Non-General Fund
Recurring	$53,158	$45,817	$98,975
One-Time	$37,670	$28,253	$65,923
Non-General Fund Total	$90,828	$74,070	$164,898

All Funds
Recurring	$136,321	$119,406	$255,727
One-Time	$96,877	$72,658	$169,535

All Funds Total	$233,198	$192,064	$425,262

MUNICIPAL EMPLOYEES ASSOCIATION GROUP (FIELD SERVICES GROUP)

Contract Term

Four years, starting on July 1, 2026, and ending on June 30, 2030.

Salary Range Adjustment

The hourly base pay rates for Water Services Technician IV shall be set at a minimum of 6% above the Water Services Technician III base pay rates. This one-time range adjustment is to provide a more adequate differential in pay between these two Water Services Technician levels. Affected employees will be placed at a step on the new ranges that most closely aligns with their current pay.

Base Pay
Field Services Members (all unit employees, except for Sewer and Water Services Technician Series)

3% COLA, effective the first full pay period in July 2026
3% COLA, effective the first full pay period in July 2027
1.5% COLA, effective the first full pay period in July 2028, and another 1.5% COLA, effective the first full pay period in January 2029
1.5% COLA, effective the first full pay period in July 2029, and another 1.5% COLA, effective the first full pay period in January 2030

Sewer Services and Water Services Technician Series

4% COLA, effective the first full pay period in July 2026
4% COLA, effective the first full pay period in July 2027
2% COLA, effective the first full pay period in July 2028, and another 2% COLA, effective the first full pay period in January 2029
2% COLA, effective the first full pay period in July 2029, and another 2% COLA, effective the first full pay period in January 2030

One-Time Compensation

Full-time employees on City payroll as of May 31, 2026 will receive a one-time lump-sum payment in the amount of $2,000 no later than June 30, 2026. Employees must still be employed by the City as of June 30, 2026.
Full-time employees on City payroll as of May 31, 2027 will receive a one-time lump-sum payment in the amount of $1,000 no later than June 30, 2027. Employees must still be employed by the City as of June 30, 2027.
Full-time employees on City payroll as of May 31, 2028 will receive a one-time lump-sum payment in the amount of $1,000 no later than June 30, 2028. Employees must still be employed by the City as of June 30, 2028.
Full-time employees on City payroll as of May 31, 2029 will receive a one-time lump-sum payment in the amount of $1,000 no later than June 30, 2029. Employees must still be employed by the City as of June 30, 2029.

Cafeteria Health Insurance Contribution

The City will adjust its current monthly insurance contribution to the amounts indicated in the following table on each respective effective date. Monthly contributions are available on a use or lose basis.

Effective Date	Single	Two-party	Family
Dec. 1, 2026	$1,450	$1,900	$2,000
Dec. 1, 2027	$1,450	$1,950	$2,100
Dec. 1, 2028	$1,450	$2,000	$2,200
Dec. 1, 2029	$1,450	$2,050	$2,300

Safety Shoe Allowance

Effective the first full pay period in July 2026, the City will increase the safety shoe reimbursement allowance by $25 to a maximum of $325 per year.

Tool Allowance

Effective the first full pay period in July 2026, the City will increase the tool allowance by $100 to a maximum of $900 per year.

Homeless Encampment Clean-up Pay:

Employees in the following divisions who are identified and pre-assigned by their supervisors to assist with clearing homeless encampments will receive a one-time annual payment in the first pay period in December of each year of this contract. Homeless encampment pay will be in effect from July 1, 2026, through June 30, 2030. After the term of this MOU, this provision will be removed unless renegotiated.
- Streets and Refuse Division: $1,000
- Parks Division: $600
- Building Maintenance Division: $400

Bilingual Pay

Up to eight (8) employees, 2 per division (Water, Sewer, Streets, Parks), by seniority, may be eligible to receive bilingual pay of $175 per month for bilingual proficiency in Spanish or any other language approved by the Department Director and Director of Human Resources. Such designation shall be based on the operational needs of the City and the determination that bilingual skills are required for the effective performance of the position.

Vacation Buy Back

Employees may buy back up to a maximum of eighty (80) hours of accrued vacation leave per fiscal year. Employees must use at least fifty percent (50%) of the number of vacation hours requested for buy-back as approved time off during that same fiscal year.

Sick Leave

Eliminate the Sick Leave Conversion option.

Retiree Health Savings (RHS) Plan

Effective the first full pay period in January 2028, employees are required to contribute a minimum of $25 per month to their Retiree Health Savings accounts and the City agrees to provide a matching contribution of $25 per month. This benefit is mandatory participation by all group members.

Cost Estimate of Field Services Negotiated Pay and Benefits

If approved, the total increased annual cost of the four-year MOU with the Field Services group is estimated to be approximately $817,017, allocated as follows:

FY2026-2027:	$283,524
FY2027-2028:	$200,102
FY2028-2029:	$165,290
FY2029-2030:	$168,101
Total:	$817,017

This estimated cost consists of both recurring costs and “one-time” costs apportioned between the General Fund and Non-General Fund budgets. The breakdown of these estimated costs, by fiscal year and funding source, is as follows:

SOURCE	FY 2026-2027	FY 2027-2028	FY 2028-2029	FY 2029-2030	TOTAL

General Fund
Recurring	$57,260	$45,679	$34,748	$35,468	$173,155
One-Time	$37,146	$18,573	$18,573	$18,573	$92,865
General Fund Total	$94,406	$64,252	$53,321	$54,041	$266,020

Non-General Fund
Recurring	$127,944	$105,263	$81,382	$83,473	$398,062
One-Time	$61,174	$30,587	$30,587	$30,587	$152,935
Non-General Fund Total	$189,118	$135,850	$111,969	$114,060	$550,997

All Funds
Recurring	$185,204	$150,942	$116,130	$118,941	$571,217
One-Time	$98,320	$49,160	$49,160	$49,160	$245,800
All Funds Total	$283,524	$200,102	$165,290	$168,101	$817,017

PROFESSIONAL EMPLOYEES GROUP

At the time of negotiations with the Professional Employees Group, which is composed of staff in the City's grant funded Child Development Division, the City had not yet been notified by the State what the FY 26-27 grant funding marks would be, or what enrollment levels would be necessary for the City to be able to secure full annual grant funding. As a result, the City only negotiated for one-time compensation amounts that would be paid for, if approved, from FY 25-26 remaining available grant funds. The City and Professional group agreed to continue the existing labor agreement and reopen the agreement once the necessary financial and enrollment data is made available by the state.

Contract Term

One year, starting on July 1, 2026, and ending on December 31, 2027.
There is a re-opener to continue negotiations once grant funding and enrollment data is provided by the state. The following items will be subject to negotiation:
                        - Salary COLAs
                        - Cafeteria Health Insurance Contributions
                        - Benefits

One-Time Compensation

Prior to June 30, 2026, the City will provide a one-time lump sum payment of eight percent (8%) of base annual pay from grant funds to all full-time employees. Terms are below:
- Employees must still be employed by the City as of June 30, 2026
- Employees hired on or after June 17, 2026, will not be eligible for the lump sum payment.
- The calculation of the one-time pay adjustment will be as follows: base hourly rate x 2,080 hours x 0.08.

Cost Estimate of Professional Employees Negotiated Pay and Benefits

If approved, the total increase in annual cost of this one-year MOU is estimated at approximately $116,666. Costs associated with salary, benefits, and other terms and conditions of employment with employees in this group are fully funded by state program grants.

FY2025-2026: $116,666

This estimated cost consists of both recurring costs and “one-time” costs apportioned to the Non-General Fund budget. The breakdown of these estimated costs, by fiscal year and funding source, is as follows:

SOURCE	FY2026-2027
Non-General Fund
Recurring (at this time)	$0
One-Time	$116,666
Non-General Fund Total	$116,666

NON-REPRESENTED MANAGEMENT, PUBLIC SAFETY MANAGEMENT, AND EXECUTIVE MANAGEMENT

Base Pay

3% COLA, effective the first full pay period in July 2026.

One-Time Compensation

Full-time management employees who are on City payroll as of June 30, 2026, will receive a one-time lump-sum payment equal to two percent (2%) of base annual pay based on their salary in effect as of June 30, 2026.
The calculation of the one-time payment will be as follows: base hourly rate x 2,080 hours x 0.02.

Cafeteria Health Insurance Contribution

For Management and Police Management staff only, the City will adjust its current monthly insurance contribution to the amounts indicated in the following table on the effective date. Monthly contributions are available on a use or lose basis.

Effective	Single	Two-party	Family
Dec. 1, 2026	$1,450	$2,050	$2,250

Deferred Compensation (457 plan)
Effective the first full pay period in July 2026, the City will increase the Deferred Compensation matching contribution by $25, not to exceed $100 per pay period, to a management employee's 457 deferred compensation plan account.

Retiree Health Savings Plan
Management and Executive Management Only (Police Chief and Police Management have an existing RHS plan)

Effective the first full pay period in July 2026, the City will provide a Retiree Health Savings Plan match of $25 per pay period to Management employees.
Effective the first full pay period in July 2026, the City will provide a Retiree Health Savings Plan match of $50 per pay period to Executive Management employees.

City Manager Agreement
Mr. Sadro has been employed by the City since 2004, having held the positions of Finance Director, Director of Finance and Administrative Services, Assistant City Manager, and has held his current position of City Manager since 2014. Per the terms of the City Manager's current amended employment agreement, dated June 16, 2025, the City Manager's current annual salary is eligible for adjustment from $303,872 to $319,065, effective July 11, 2026, subject to City Council approval.

In addition, the City Council met in Closed Session to review Mr. Sadro’s performance and directed staff to prepare Amendment #1 (attached) to the City Manager's current amended employment agreement to provide for an increase in annual administrative leave. If approved by City Council, the City Manager "shall be credited with 120 hours of non-accruable administrative leave at the beginning of each fiscal year, which must be used by the end of that fiscal year or it will be forfeited".

Cost Estimate of Unrepresented Employees Proposed Pay and Benefits

If approved, the total increase in annual cost for non-represented Management, Public Safety Management, and Executive Management is estimated to be approximately $497,401 over the next fiscal year. This estimated cost consists of both recurring costs and “one-time” costs apportioned between the General Fund and Non-General Fund budgets. The breakdown of these estimated costs, by fiscal year and funding source, is as follows:

SOURCE	FY26-27
General Fund
Recurring	$169,114
One-Time	$85,243
General Fund Total	$254,357

Non-General Fund
Recurring	$179,154
One-Time	$63,890
Non-General Fund Total	$243,044

All Funds
Recurring	$348,268
One-Time	$149,133

All Funds Total	$497,401

If approved, the total cost of negotiated and proposed pay and benefit adjustments for all employee groups described in this report, including non-represented management staff, and including contractual adjustments to the City Manager’s compensation (subject to City Council approval), is estimated to be approximately:

FY2026-2027:	$1,130,789
FY2027-2028:	$392,166
FY2028-2029:	$165,290
FY2029-2030:	$168,101
Total:	$1,856,346

The breakdown of those costs is as follows:

SOURCE	FY 2026-2027	FY 2027-2028	FY 2028-2029	FY 2029-2030	TOTAL

General Fund
Recurring	$309,537	$119,268	$34,748	$35,468	$499,021
One-Time	$181,596	$62,978	$18,573	$18,573	$281,720
General Fund Total	$491,133	$182,246	$53,321	$54,041	$780,741

Non-General Fund
Recurring	$360,256	$151,080	$81,382	$83,473	$676,191
One-Time	$279,400	$58,840	$30,587	$30,587	$399,414
Non-General Fund Total	$639,656	$209,920	$111,969	$114,060	$1,075,605

All Funds
Recurring	$669,793	$270,348	$116,130	$118,941	$1,175,212
One-Time	$460,996	$121,818	$49,160	$49,160	$681,134
All Funds Total	$1,130,789	$392,166	$165,290	$168,101	$1,856,346

These costs include a contractual adjustment to the City Manager’s annual base pay, increasing it by $15,194, and an increase of 51 hours of Administrative Leave to a total of 120 hours per fiscal year, both of which are subject to City Council approval.

ED 9.1 – Balanced Fiscal Practices

Goal 4: RECRUITMENT, SELECTION & TRAINING OF EMPLOYEES

Objective A: Track and review employee compensation data and legislative issues to ensure compliance with applicable state laws and retain a competitive workforce

View Agenda Item

RECOMMENDATION:

DISCUSSION:

FISCAL IMPACT/SOURCE OF FUNDING:

GENERAL PLAN RELEVANCE/CITY COUNCIL GOALS & OBJECTIVES:

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