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Upland council adopts side letters to fix CalPERS findings, approves payments for past educational incentives
Summary
The City Council adopted four side letters to correct Memoranda of Understanding language after a CalPERS compliance review, approving a one-time cost estimated at $125,000–$190,000 to provide educational incentive pay to employees for a two-year review period.
The Upland City Council on Monday adopted four side letters to previously approved memoranda of understanding after an employer compliance review by the California Public Employees’ Retirement System (CalPERS) found inconsistencies in how educational incentive pay was reported and applied.
Assistant City Manager Steven Parker told the council the action responds to two CalPERS observations from a May 9, 2024 employer compliance review. “The item before you today is adopting four side letters that would be in response to a CalPERS review, and their findings,” Parker said, summarizing the agency’s findings and the city’s recommended corrections.
CalPERS concluded that (1) language about reporting educational incentive pay did not provide the eligibility CalPERS requires for certain employees hired before July 1, 2022, and (2) language in some MOUs created inconsistent classes across bargaining-unit members by limiting eligibility to employees at “step 4 or above,” a restriction CalPERS said made the incentive ineligible to be pensionable. Parker said the recommended side letters will correct the MOU language so the negotiated benefits match the parties’ intent and CalPERS requirements.
Council heard two main remedy options: retroactively remove the pensionable character of incentives for retirees who already received them, or extend the benefit to employees who had not negotiated it previously. Parker said the city chose a narrower remedial approach that provides the educational incentive pay for the review period (July 1, 2021, through June 30, 2023) to roughly 65 employees to satisfy CalPERS and avoid reducing benefits already paid to retirees.
Parker told the council the one-time cost to cover those 65 employees is estimated between $125,000 and $190,000; he said the cost is expected to be covered by the city’s existing vacancy allowance or by a general-fund surplus for the current fiscal year. He also said the MOUs already have been corrected on a go-forward basis so no ongoing cost is anticipated.
Council Member Bridal moved to adopt the four side letters; Council Member Garcia seconded. The motion passed unanimously.
The council record shows the action corrects the language for both the Upland Police Management Association and the Upland Police Officers Association MOUs covering the affected years. City staff said letters were being sent to separated and retired employees where needed to collect information to finalize individual calculations.
The council did not take additional policy direction; staff will implement the side letters and complete the calculations and notifications required to process the payments.
