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ARTICLE IV 4.0 SALARIES 4.1 Basic Compensation Plan. There is hereby established a basic compensation plan for all members of the Santa Ana Police Officers Association who are now employed or will in the future be employed in any of the designated classifications of employment listed in this MOU and its attachments. 4.2 Salary Schedule. The basic salary schedule, attached hereto in a matrix format as Exhibit "A", and made a part hereof as though set forth in full herein, provides numerous salary rate ranges, each comprised of five (5) steps or rates of pay. The respective rate ranges are identified by a three (3) digit number. The steps within each range are identified by the letters "A" through "E" inclusive, with the "A" step being the lowest step in the range. The purpose of each step and the length of service required for advancement to the next higher step within a particular salary rate range is summarized as follows: Step A Normal beginning pay rate Step B Automatic Increase — After 6 months' service in next lower step. Also optional hiring rate Step C Automatic Increase — After 12 months' service in next lower step. Also maximum hiring rate Step D Automatic Increase—After 12 months' service in next lower step. Step E Merit Rate — After 12 months' service in next lower step. Specific regulations governing advancement within salary rate ranges are set forth in Section 4.8 of this MOU. The assignment of classes to salary rate ranges is listed in the City's salary schedule and class and compensation plan as periodically amended. During the term of this MOU, it is the City's intent to eliminate the salary matrix and create a salary schedule. The parties acknowledge and agree that elimination of the salary matrix and implementation of the salary schedule is a meet and confer issue. Once the City is ready to move forward with elimination of the salary matrix and creation of the salary schedule, it will provide its proposal to the Association and the parties will promptly meet and confer and no change will be made until the negotiations process has been completed. The parties acknowledge that such a change will require modification to language in several provisions of this MOU. 4.3 Salary Adjustments. Although there are some retroactive compensation adjustments included in this 2018- 2021 MOU, all compensation adjustments provided for in this MOU shall apply only to those employees who are employed on the day in which the City Council approves this MOU. This applies to compensation adjustments in any Article of this MOU. Effective in the pay period, which includes July 1, 2018, the base salary of employees 65D-16