TITLE:
title
ADOPTION OF SIDE LETTER OF AGREEMENTS FOR THE COSTA MESA FIREFIGHTERS ASSOCIATION AND THE COSTA MESA FIRE MANAGEMENT ASSOCIATION FOR TEMPORARY UPGRADE PAY AND ADOPTION OF SALARY RESOLUTION FOR EXECUTIVE EMPLOYEES TO INCLUDE COMPENSATION ADJUSTMENTS FOR THE CITY MANAGER AND ASSISTANT CITY MANAGER.
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DEPARTMENT: CITY MANAGER’S OFFICE- HUMAN RESOURCES DIVISION
PRESENTED BY: KASAMA LEE, HUMAN RESOURCES MANAGER
CONTACT INFORMATION: KASAMA LEE, HUMAN RESOURCES MANAGER (714) 754-5169
RECOMMENDATION:
recommendation
Staff recommends the City Council:
1. Approve and Adopt Side Letter between the City of Costa Mesa and Costa Mesa Firefighters Association (CMFA) (Attachment 1).
2. Approve and Adopt Side Letter between the City of Costa Mesa and Costa Mesa Fire Management Association (CMFMA) (Attachment 2).
3. Approve and Adopt Resolution Number 2026-XX updating the compensation and benefits for Executive Employees (Attachment 3).
4. Authorize the City Manager and members of the City’s Negotiation Team to execute the Side Letter documents.
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BACKGROUND:
CMFA and CMFMA
The Fire Department currently provides “Move Up” pay for Firefighters, Fire Engineers, Fire Captains and Battalion Chiefs when they are assigned to perform duties of a higher level classification. For example, a Firefighter may temporarily “move up” to the Fire Engineer position if the Fire Engineer position is temporarily vacant due to a call out, leave of absence or vacancy. During this “move up” assignment, the Firefighter is performing all of the functions of the Fire Engineer position while assigned. “Move up” assignment pay is paid at 5% above the employee’s base salary for all hours worked in the assignment and qualifies as “Temporary Upgrade Pay” and is reported as special compensation for “Classic” members.
Language updates are required in reference to “move up pay” to provide clarity and to comply with Public Employees’ Retirement Law (PERL) and the Government Code, Title 2 of the California Code of Regulations (CCR).
Executive Employees
On December 2, 2025, the City Council approved the City Manager’s employment agreement. Section 4(a) of the agreement provides that the City Manager’s salary shall be automatically adjusted to ensure that it remains a minimum of 10% higher than the highest-paid executive team member below the City Manager in rank.
Staff is recommending an adjustment to the Assistant City Manager salary range to address salary compaction with the Police Chief and Fire Chief salary ranges and to maintain appropriate internal relationships among the City’s executive-level positions.
As a result of the proposed adjustment to the Assistant City Manager salary range in addition to the recent 3.5% cost-of-living adjustments in July 2026 for all Executive employees, an adjustment to the City Manager’s salary is also necessary to ensure compliance with the City Manager’s employment agreement.
ANALYSIS:
CMFA and CMFMA Side Letters
Pursuant to Government Code section 20636 “compensation earnable” for CalPERS “Classic Members” is defined as the pay rate and special compensation of the member. Government Code section 20636(c) further specifies that special compensation includes any payment received for special skills, knowledge, abilities, work assignment, workdays or hours, or other wok conditions.
California Code of Regulations section 571 also requires all items of special compensation be contained in a written labor policy or agreement that has been adopted by the employer’s governing body and include the conditions for payment for the special compensation item and cannot reference another document in lieu of disclosing the item of special compensation.
“Move up” pay is reportable as “Temporary Upgrade Pay” and has been negotiated in good faith with the City’s bargaining units. The current MOU for Costa Mesa Firefighters Association (CMFA) and the Costa Mesa Fire Management Association (CMFMA) expire on June 30, 2027. Rather than wait for the MOU to expire to update the language, staff is recommending to include language updates that comply with the CalPERS regulations in a side letter in order to avoid special compensation from being removed from an employee’s retirement benefit. The Human Resources Division collaborated with each unit regarding updated language, which resulted in a Side Letter for CMFA and CMFMA (Attachment 1 and 2).
Executive Employees Salary and Benefits Resolution
Prior to the salary adjustments implemented for the Police Chief and Fire Chief in July 2025, the salary differential between these classifications and the Assistant City Manager was 2.18%. Following the July 2025 adjustments, the differential was reduced to 0.18%, resulting in significant salary compaction between the Assistant City Manager and the City’s two public safety department directors.
To address this compaction and maintain an appropriate internal salary relationship among the City’s executive-level classifications, staff recommends increasing the Assistant City Manager salary range by 2% percent. This adjustment would restore the 2.18% salary differential that existed prior to the July 2025 adjustments and maintain appropriate alignment between the Assistant City Manager compared to the Police Chief and Fire Chief classifications.
Currently, the City Manager’s salary is approximately 7.22% higher than the current Assistant City Manager salary range, which is below the 10% minimum differential required by the agreement. Based on the proposed Assistant City Manager salary range adjustment, staff recommends increasing the City Manager’s salary by 4.64% to maintain the required 10% differential and ensure compliance with the terms of the employment agreement.
The Executive salary and benefits resolution also includes various language updates to comply with CalPERS regulations.
ALTERNATIVES:
The parties to the side letter agreements and recommendations considered a variety of issues in the context of good faith negotiations in accordance with Government Code section 3500, et seq. (Meyer-Milias-Brown Act). Alternatives for the side letters need not be considered as a result of collaborative efforts expended.
The City Council may choose not to approve the proposed salary range adjustment for the Assistant City Manager and the corresponding salary adjustment for the City Manager. However, this alternative would not address the existing salary compaction between the Assistant City Manager, Police Chief, and Fire Chief classifications. Additionally, the City would need to ensure that the City Manager’s salary complies with the terms of the employment agreement.
The City Council may also direct staff to consider alternative salary adjustments or provide additional direction regarding executive-level salary alignment.
FISCAL REVIEW:
There is no fiscal impact for the CMFA and CMFMA side letters as the letters clarify existing practices and procedures for compliance with CalPERS regulations. The FY 2026-27 estimated fiscal impact for the salary adjustment is $6,955 for the Assistant City Manager’s and $16,561 for the City Manager. These adjustments can be absorbed within the City Manager’s current FY 2026-2027 budget in the General Fund (Fund 101).
LEGAL REVIEW:
The City’s special counsel, Liebert Cassidy Whitmore (LCW), and City Attorney’s Office have reviewed the agreements, resolutions and this report and approved them as to form.
CITY COUNCIL GOALS AND PRIORITIES:
The proposed Agreements and classification adjustments support the City’s Strategic Plan Goals to Recruit and Retain High Quality Staff and Strengthen the Public’s Safety and Improve the Quality of Life.
CONCLUSION:
Staff recommends the City Council:
1. Approve and Adopt Side Letter between the City of Costa Mesa and CMFA (Attachment 1).
2. Approve and Adopt Side Letter between the City of Costa Mesa and CMFMA (Attachment 2).
3. Approve and Adopt Resolution Number 2026-XX updating the compensation and benefits for Executive Employees (Attachment 3).
4. Authorize the City Manager and members of the City’s Negotiation Team to execute the Side Letter documents.