Loading...
HomeMy WebLinkAbout05-08-2012 c1 grand jury response 2012 vacation sick leavecounci laGEnba REpout CITY O F SAN L U I S O B I S P O FROM : Charles Bourbeau, Director of Finance & Information Technolog y Monica Irons, Director of Human Resource s Prepared By :Debbie Malicoat, Finance Manage r SUBJECT : RESPONSE TO 2012 GRAND JURY REPORT ON VACATION AND SIC K LEAVE ACCUMULATION PA Y RECOMMENDATIO N Direct the City Manager to submit the letter of response to the report on behalf of the City Council , as required by the Grand Jury. DISCUSSION In February 2012, the San Luis Obispo County Grand Jury issued a report that analyzed issue s associated with employee vacation and sick leave in the seven cities in San Luis Obispo Count y (Attachment 1). The report focused on accumulation of sick and vacation leave and the associate d liability this presents for each of the cities : Grand Jury Finding s The Grand Jury's report concluded that some cities are not in compliance with their own personne l rules, regulations and policies related to vacation and sick leave accumulation . It also conclude d that several jurisdictions have "excessive accumulated vacation time that places the city in financia l jeopardy due to unfunded liability ." In addition, the Grand Jury found that "in some jurisdiction s personnel rules and regulations have not been updated ...and they do not reflect current practices ." As it relates specifically to the City of San Luis Obispo, the Grand Jury report states : "The City o f San Luis Obispo is well within its policy guidelines for vacation accumulation, and vacation tim e appears to be well managed ." The report requires that the City respond to the Grand Jury and the Presiding Judge on Findings 1,2 and 10 as well as Recommendations 1, 2, 9 and 10 by May 30, 2012 . To meet the deadline, staff has prepared the following responses to the report contingent on Council review and concurrence . Response to Grand Jury Findings and Recommendation s Finding 1.There is substantial unused accumulated vacation time in all jurisdictions in San Luis Obispo County. The City agrees with the Grand Jury finding . Based on the information reported, all jurisdictions i n San Luis Obispo County, including the City of San Luis Obispo, appear to have substantial unuse d accumulated vacation time . Meeting Date May 8,201 2 Item Number C 1 Response to 2012 Grand Jury Report on Vacation and Sick Leave Page 2 Finding 2.With the exception of the Cities of Grover Beach and Arroyo Grande,all jurisdictions in San Luis Obispo County allow unlimited accrual of sick leave . All jurisdictions but one , however, have a policy allowing the buy back or payoff of accumulated sick leave either annually o r upon leaving city employment . The City of San Luis Obispo does allow unlimited accrual of sick leave . However, the City of Sa n Luis Obispo does not pay out any sick leave to employees who leave city employment prior t o retirement. The City does allow retiring employees to cash out a portion of their sick leave base d on the applicable rules in place for their bargaining group . Finding 10 .Most jurisdictions do not update their personnel rules and regulations after MOUs ar e developed with each bargaining unit . All personnel rules are incorporated into any new MOUs, bu t personnel rules are not always updated accordingly . It is an accurate statement to say the City of San Luis Obispo does not update the Personnel Rule s and Regulations after a memorandum of agreement (MOA) is approved after bargaining in goo d faith with a represented employee group . The reasoning behind this is because in order to change o r update the Personnel Rules and Regulations the City must meet and confer (bargain) in good fait h with all affected represented employee groups (conceivably the same group or groups that the Cit y reached agreement with and thus initiated the update). Meeting and conferring with fiv e represented employee groups can be time-consuming . Further, the Personnel Rules and Regulation s are meant to provide City-wide guidance, while MOAs provide more specific detail on topics tha t may apply to a smaller segment of the City or of the represented employee group . If every MO A change was to be reflected in the Personnel Rules and Regulations, there wouldn't be a need for one or the other document . Recommendation 1. All jurisdictions should review their accumulated vacation time and implemen t steps to address future accumulation and payment of vacation time . The City of San Luis Obispo's policies and practices related to accumulated vacation time wer e developed after negotiating in good faith with employees and are aimed at balancing employee's needs for flexibility in accumulating and taking vacation time with the City's desire to manage th e liability . The City reviews all accumulated leave time, not just vacation accumulation, at leas t annually and works with employees to ensure compliance with the City's policies and variou s MOAs . As the Grand Jury notes, in the City of San Luis Obispo vacation time appears to be wel l managed . Recommendation 2 . All jurisdictions that do not update their personnel rules after implementin g new Memorandums of Understanding should update their personnel rules to reflect curren t practices . The City of San Luis Obispo does not believe its Personnel Rules and Regulations are in conflict with the MOAs for represented employee groups . The Personnel Rules and Regulations apply to al l City employees while an MOA applies to only the employees represented by that bargainin g unit . Further, if there is a conflict between the Personnel Rules and Regulations and the MOA, th e MOA prevails . As described under Finding 10 above, updating the Personnel Rules and Responseto2012 Grand JuryReporton Vacation and Sick Leave Page 3 Regulations requires the City to meet and confer with every represented employee group, a tim e consuming process . Recommendation 9 .All jurisdictions in the County should constantly monitor their accumulate d sick leave, vacation and compensatory time to ensure that they do not incur further unfunde d liabilities . The City of San Luis Obispo does monitor accumulated leave balances and has policies that hel p ensure that these liabilities are manageable . However, it is unrealistic to think that the City will not incur further unfunded liabilities . The balance of accumulated leave time is not a static number ; rather it increases and decreases as employees earn and use their accumulated time or leave cit y employment ; it is also based upon the wages earned by employees at the time of use or payout of unused leave,as appropriate . Further, it is quite common for there to be a two- to four-month la g between an employee who leaves the City and a replacement being hired, that frequently results i n salary savings sufficient to fund the exiting employee's leave pay out, if necessary . Recommendation 10 .All jurisdictions in the County should report annually to their citizens on th e status of vacation and sick leave accumulations, and compare them with the prior year to demonstrate how they are addressing the unfunded liability issue . We agree that citizens should be informed of the status and dollar amount of the City's compensated absences annually . The City of San Luis Obispo's liabilities for all compensate d absences (vacation, sick and compensatory time) are audited and reported each year in the City's Comprehensive Annual Financial Report (CAFR). Specifically, this information is contained i n Note 7 to the CAFR, which discusses long-term debt and liabilities . The schedules in the CAF R provide information about the prior year liability, the amount the liability has increased or decrease d during the fiscal year and the resulting ending liability balance . In addition, it provides an estimat e for the amount of the liability that the City believes will be due within one year . FISCAL IMPAC T There is no fiscal impact to the City resulting from the City's response to the Grand Jury Report . Staff will continue to monitor leave balances in accordance with City policies. ALTERNATIVE S If Council does not concur with the above responses, the Council should provide direction to staff as to how to revise the final response to the Grand Jury . Grand Jury Report on Vacation and Sick Leave Accumulation Pay City Council response to the Grand Jury's repor t L u i d .tibiA iJa I:ercrts a 1«J i 2-G.: Jc ~rana Jw y Resysr R;o l;AR-Gra. Jury. Attachment 1 GRAND JURY February 28, 201 2 CONFIDENTIA L Mayor Jan Marx and Council City of San Luis Obisp o 990 Palm S t San Luis Obispo CA9340 1 Dear Mayor Marx and Council : The San Luis Obispo County Grand Jury has completed the attached report titled "Pay Me Now or Pay Me Later ."This copy of the report is being provided to you two days in advance of it s public release,as required by California Penal Code §933 .05 (f), which states : A grand jury shall provide to the affected agency a copy of the portion of the grand jury report relating to that person or entity two working days prior to its public release and after the approval of the presiding judge. No officer,agency, department, or governin g body of a public agency shall disclose any contents of the report prior to the publi c release of the final report . Please check the last page of text of the report for the timing of your response, if any,as required by the Penal Code . Sections 933 through 933 .05 of the Penal Code are attached for your reference . Please keep in mind that this report must be kept confidential until its public release by th e Grand Jury . Norman A . Baxter, Foreperso n 2011-2012 San Luis Obispo County Grand Jury C1-4 PHONE : (805) 781-5188 • FAx : (805) 781-115 6 PO . Box 4910 SAX Leis O1 ;t5Yo :CALIFORNIA 9340 3 www.slocourts .net Attachment 1 Response to Grand Jury Report Form Report Title : Report Date : Authorized Responder : FINDING S •I (we) agree with the findings numbered : I (we) disagree wholly or partially with the findings numbered : (Attach a statement specifying any portions of the findings that are disputed ; include an explanation of the reasons .) RECOMMENDATION S Recommendations numbered have been implemented . (Attach a summary describing the implemented actions .) Recommendations numbered have not yet been implemented , but will be implemented in the future . (Attach a timeframe for the implementation .) • Recommendations numbered require further analysis . (Attach an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the officer or director of the agency or department being investigated or reviewed, includin g the governing body of the public agency when applicable . This timeframe shall not exceed six months from the date of publication of the grand jury report ) Recommendations numbered will not be implemente d because they are not warranted or are not reasonable . (Attach an explanation .) Date :Signed : Number of pages attached Revised February 2012 C1-5 Attachment 1 PAY ME NOW OR PAY ME LATE R CITY EMPLOYEE VACATION AND SICK LEAVE ACCUMULATION PA Y INTRODUCTIO N This report is a study of actual employee vacation and sick leave accumulation, and the rules an d regulations governing these accumulations, in each San Luis Obispo County municipality . ORIGI N This Grand Jury investigation resulted from a citizen complaint and was expanded to include al l cities in the County . PROCEDUR E The Grand Jury obtained information for this report from the following sources : 1.Personnel Rules and Regulations from all seven cities in San Luis Obispo County 2.All Memorandums of Understanding' (MOUs) from all seven cities . Memorandum s were for all bargaining units2 in each jurisdiction ;they identify vacation,sick leave and overtime policies in each city, unit by unit . 3.A record of each city employee, identifying his or her accumulated sick leave, vacation and overtime 'Memorandum of Understanding is an understanding reached as aresult of meeting and conferring on hours, wage s and working conditions pursuant to California law . z Bargaining units are police and fire safety personnel, management employees, confidential (at will and exemp t employees, usually working for management personnel) and miscellaneous employees,who are usually non-safety personnel, e .g ., parks, building, planning . Page 1 C1-6 Attachment 1 4.Calculations of the potential unfunded liability 3 for vacation time in each jurisdiction , based upon current data submitte d 5.Follow-up communication with a city if there was any question about the data received 6.Calculations of accumulated vacation time at a conservative $35 per hour based upo n when the documentation was received by the 2011-2012 Grand Jury NARRATIVE CITY OF ARROYO GRAND E Each employee unit has a different amount of maximum accumulated time that can be carried fo r vacation and sick leave. Vacation time can vary from 200 to 225 hours, except for management personnel who can accumulate up to 750 hours of vacation time . The City requires al l employees to use at least 80 hours of vacation time annually after one year of service . The Grand Jury found that there is only one employee who has exceeded the maximum amoun t of vacation time allowed ; that person was grandfathered in when the rules were changed . The City allows up to 480 hours of accumulated sick leave . Annually, an employee has th e option of being paid 25% of his/her unused sick leave for the preceding twelve months . In lie u of payment,an employee may opt to transfer 25% of his/her unused sick leave to vacation credit . Overall, the City has 83 full and part-time employees with a total of 7,232 hours of accumulate d vacation time on its books and only one employee who exceeds the allowable accumulated time . The employee average is about 87 hours or 11 days of vacation . The City currently has an unfunded liability for accumulated vacation time in the amount o f $253,120 . As a result, the City appears to be managing its leave time very well . Unfunded liability is the payment owing for accumulated vacation time at a future date when an employee leave s the city, and is paid out of general operating funds available to the city at the time of payout . Usually, final payments are at a rate of pay higher than that being earned at the time the vacation was accumulated. Page 2 C1-7 Attachment 1 CITY OF ATASCADER O The City of Atascadero has a policy limiting vacation accrual, but has not enforced its ow n policy for over 20 years, thereby causing a major problem for the City. The City's policy clearl y states, "Employees shall cease to accumulate vacation once their accrued vacation balance ha s reached two (2) times their annual accrual rate ." On October 25, 2011, the City Attorney provided a legal analysis to the City Council regardin g restrictions on accrual of vacation, general principles and past practices, and submitted th e following options for the City Council to consider : • Maintain existing practic e •Revise Personnel Rules to reflect current practice s •Begin enforcing current rules, which would require a meet and confer process wit h employee bargaining unit s •Allow employees to take time off and enforce the vacation cap gradually •Create a new Personnel Rule for vacation accrua l The City Attorney developed these options for the City Manager and the City Council to help resolve this problem. As of this writing, however,no action has been taken by the City Council. The City of Atascadero has unlimited accrual of sick leave and a "Stay Well" bonus program . Once eligible, an employee may opt to receive a pay-off equal to one-third of the unused annual allotment of sick leave . The City does not pay off accumulated sick leave when an employee leaves the City, with the exception of Mid-management personnel . Mid-management personne l are entitled to receive payment at their hourly rate for one-half of their accumulated sick leave . The City of Atascadero currently has 116 employees with 25,352 hours of accumulated vacatio n time on its books and unfunded liability for accumulated vacation time of $887,320 . Th e average accumulated vacation time per employee is more than 218 hours or approximately 2 7 days, which is the second highest total in the County . Page 3 C1-8 Attachment 1 The City is managing its vacation time poorly and has built up a significant unfunded liability as a result . CITY OF GROVER BEAC H Employees may earn up to 280 hours of vacation time a year, depending upon how long the y have been with the City . The City has a "Buy Back" program for vacation when accumulatio n exceeds 60% of the authorized time allowed . Employees may be paid a maximum of 80 hours o f compensation for vacation accumulation in any calendar year . This approach minimize s unfunded liability . Employees with less than five years with the City may accumulate a maximum of 20 days, whil e employees with five to ten years may accumulate up to 25 days . Employees with over ten years with the City may accumulate a maximum of 34 days . Any vacation exceeding this amount wil l be forfeited, unless approved by the City Administrator in advance. Management and Confidential unit employees may accumulate up to 632 hours of vacation time , depending on how many years they have worked for the City , Sick leave may be accumulated up to 2,000 hours, and management personnel may be paid a maximum of 672 hours upon leaving city employment . However, effective with new contracts , the sick leave buy back policy has been suspended . Some accumulated sick leave may b e applied to the Public Employee Retirement System (PERS), depending on the existing contract s at the time of retirement . At present, the City has a total of 55 employees with 10,496 hours of accumulated vacation time on its books and unfunded liability for accumulated vacation time in the amount of $367,360 . The relatively high unfunded liability may cause some concern,as the average vacatio n accumulation per employee is 190 hours or about 24 days . However, it appears as if the City i s Page 4 C1-9 Attachment 1 managing its accumulated vacation time quite well ; it addresses the issue on an annual basis i n an effort to limit its liability . CITY OF MORRO BA Y The City of Morro Bay has a vacation accumulation policy ranging from 10 to 20 days per year . Employees may carry forward one year of their maximum allowable annual accumulation o f vacation time. There is a "buy back" program for some employees when they exceed th e maximum allowable accrual time . The City has a policy that once an employee reaches the maximum vacation accumulation, th e employee may not continue to accrue vacation time . However, City records indicate that severa l employees appear to have more time on the books than allowed by City rules and regulations . The City Manager is authorized to grant approval to exceed the maximum allowable accrual o f vacation, but it is not known if such approval has been granted officially . Management and Confidential Unit employees may accumulate up to 400 hours of vacation time . The Grand Jury noted that twelve employees have over 300 hours of accumulated vacation time , four employees have over 400 hours and two employees have in excess of 600 hours . The City has no limit on sick leave accumulation and there is a pay-off policy between 25% and 35% of sick leave accumulation when the employee leaves City employment, depending upo n the bargaining unit . The City has a total of 98 full and part-time employees with total accumulated vacation time o f 14,766 hours and unfunded liability for accumulated vacation time of $516,810 . The average vacation accumulation per employee is about 151 hours or 19 days . The City appears to be managing accrued vacation time reasonably well, but it does have som e long-time employees who may cause a financial problem when they leave City employment . Page 5 C1-10 Attachment 1 CITY OF PASO ROBLE S The City of Paso Robles has a policy governing how many vacation hours an employee ma y accumulate on an annual basis . This accumulation is based upon time in service and ranges fro m 80 to 160 hours, except for Management and Confidential Unit employees who may accrue up t o 200 hours . In the City's Personnel Rules, under Section 16.02 (c), however, the policy states : "At no time may an employee have a total balance of vacation days in excess of one-and-one-half times it s current, annual accrual rate . Excess vacation accrued in this manner shall be lost if not take n within 60 days of the date the maximum accumulation is reached ." The Grand Jury found that 67 of 165 City employees, or 40%, exceed the maximum vacatio n allowed, even though the City has a policy of paying off vacation time up to one week per year , if the employee has at least three weeks of vacation accumulated . It is obvious that the City doe s not follow its own vacation accrual policy . The Grand Jury investigation revealed that the City has an enormous problem of accumulate d vacation time and related unfunded liability .The largest accumulation is among the Polic e Department and Management and Confidential Unit employees, the two highest paid units in th e City. This situation magnifies the problem because the cost of payout per employee in these tw o unitsexceeds the cost of payout per employee in the Miscellaneous Unit (non-safety personnel). Currently, the City has 47,045 total hours of accumulated vacation on its books and unfunde d liability for accumulated vacation time of $1,646,575 because it does not enforce its maximu m vacation accumulation policy . The 165 City employees have an average of 285 accumulate d vacation hours or more than 36 days per employee, which is the highest accumulation in the County. In contrast, the City of San Luis Obispo has 50,429 hours on its books for 345 employees,for an average time accumulated vacation time of only 18 .25 days per employee . Page 6 C1 11 Attachment 1 The City of Paso Robles has unlimited accrual of sick leave, as do most of the cities in th e county. The Grand Jury also noted that the City of Paso Robles appears to have a set of personnel rule s and regulations that has not been updated since 1989 . As a result, there may be significan t outdated policies and procedures that require a thorough review by the City Council and staff . CITY OF PISMO BEAC H In the City of Pismo Beach, vacation time varies with the employee bargaining unit . Generally , employees can receive up to 20-22 days, depending upon time with the city,and may accrue u p to 44 days or two times the employee's annual accrual rate . The City has no cap on accumulated sick leave accruals ; however, payment of accrued sick leave cannot exceed 480 hours . Some time may be converted to the retirement system, depending upo n the existing city contract with PERS . The City has a total of 85 employees with 8,691 accumulated vacation hours and unfunded liability for accumulated vacation time of $304,185 . Although this number may seem to b e cause for concern, the City of Pismo Beach has no employees who exceed the maximu m allowed . The City averages about 103 hours of accumulated time or about 13 days pe r employee . Vacation time appears to be well managed . CITY OF SAN LUIS OBISPO In the City of San Luis Obispo, vacation can be accrued up to two times the annual rate allowed for an employee . Depending upon the bargaining unit, the City may buy back from an employee up to 80 hours of vacation time annually , The City of San Luis Obispo has unlimited accumulation of sick leave and can pay of f Miscellaneous Unit employees between 10%and 15% of their accumulation, after an employe e Page 7 C1-12 Attachment 1 has 20 years with the City . Fire and Police personnel can receive up to 30% payment of thei r accumulation, depending upon time with the City . There are so many variations on buy back of time, accrual rates and other forms of compensatio n that analysis of vacation time is the most meaningful . The City of San Luis Obispo has a total of 50,740 hours of accumulated vacation time and unfunded liability for accumulated vacation time of $1,775,900 . With 345 employees, however , the City has an average accumulated vacation time of only 147 hours or approximately 18 day s per employee . The City of San Luis Obispo is well within its policy guidelines for vacation accumulation and vacation time appears to be well managed . Page 8 C1-13 Attachment 1 SUMMARY TABLES The two tables below summarize the vacation accrual issues that each municipality in San Lui s Obispo County must manage .The first table shows the amount of unfunded liability for vacatio n accrual by city in the County . Table 1 :Summary of Unfunded Liability for Vacation Accrua l City Unfunded Liability fo r Vacation Accrua l Arroyo Grande $253,120 Atascadero $887,320 Grover Beach $367,360 Morro Bay $516,81 0 Paso Robles $1,646,57 5 Pismo Beach $304,185 San Luis Obispo $1,775,900 Note : Dates of the amount of unfunded liability vary by city . All calculations of accumulated vacatio n time are based upon when the documentation was submitted to the 2011-2012 Grand Jury in mi d 2011, at an average cost of $35 per hour . The second table shows the average vacation accrual in hours per employee by city in th e County . Table 2 :Summary of Average Vacation Accrual per Employe e City Average Vacatio n Accrual -Hours per Employee Arroyo Grande 8 7 Atascadero 21 8 Grover Beach 19 0 Morro Bay 15 1 Paso Robles 28 5PismoBeach102 San Luis Obispo 14 7 Page 9 C1-1 4 Attachment 1 CONCLUSIO N After a review of the vacation and sick leave policies of the cities in San Luis Obispo County , and a review of accumulated vacation time for employees, it is apparent that some cities are no t in compliance with their own personnel rules, regulations and policies . Several jurisdictions have excessive accumulated vacation time that places the city in financia l jeopardy due to unfunded liability. Employees have been allowed to accumulate excessiv e vacation time, either as a result of poor management practices or the inability of management to allow vacation time off for employees . It is obvious that several jurisdictions have, or will have,a considerable problem in paying off accumulated vacation time . Almost all accumulated time is paid off at a higher rate than when i t was earned, which adds an additional financial burden on all cities . It is also clear that in some jurisdictions personnel rules and regulations have not been update d for some time. As a result, they do not reflect current practices . Some jurisdictions appear to use employee agreements in lieu of updating their personnel rules and regulations ; they incorporate the agreements into the personnel rules by reference . It is very difficult for an individual who is not familiar with a particular jurisdiction to understand employee benefits fully by reviewing only the Personnel Rules . All Memorandum s of Understanding should be reviewed,as well . Page 10 C1-15 Attachment 1 FINDING S There is substantial unused accumulated vacation time in all jurisdictions in San Lui s Obispo County. 2.With the exception of the Cities of Grover Beach and Arroyo Grande, all jurisdictions i n San Luis Obispo County allow unlimited accrual of sick leave . All jurisdictions but one , however, have a policy allowing the buy back or payoff of accumulated sick leave eithe r annually or upon leaving city employment . 3.The City of Paso Robles, with only 165 employees, has more than 47,000 hours o f accumulated vacation on its books and an enormous unfunded liability of $1,646,575 . 4.The City of Paso Robles has a policy stating that no employee can exceed one-and-one- half times their annual accumulation or they will lose their vacation time . 5.The City of Paso Robles is in gross violation of its own policies governing accumulate d vacation time ; 40% of City employees exceed the stated policy . 6.The City of Paso Robles has not updated its personnel rules and regulations since 1989 . 7.The City of Atascadero has admittedly and blatantly violated its own policies on vacatio n time for more than 20 years . 8.The City of Atascadero has not acted to date on any policy changes related to it s accumulated vacation problem, in spite of the recommendations of the City Attorney . 9.The City of Morro Bay has 12 employees with over 300 hours of accumulated vacatio n time and is in violation of its own policies, in some cases . Page 1'1 C1-16 Attachment 1 10 . Most jurisdictions do not update their personnel rules and regulations after MOUs ar e developed with each bargaining unit . All personnel rules are incorporated into any ne w MOUs, but personnel rules are not always updated accordingly . RECOMMENDATION S 1.All jurisdictions should review their accumulated vacation time and implement steps t o address future accumulation and payment of vacation time . 2.All jurisdictions that do not update their personnel rules after implementing ne w Memorandums of Understanding should update their personnel rules to reflect curren t practices . 3.The City of Paso Robles should review and update its Personnel Rules and Regulations . 4.The City of Paso Robles should take immediate steps to stop additional vacatio n accumulation in violation of its own policies . In order to reduce its unfunded liability, the City of Paso Robles should consider a multi - year program to pay off accumulated vacation time . 6.The Atascadero City Council should immediately address the recommendations made b y their City Attorney for dealing with the problem of maximum allowable vacation time , implement one of the recommendations and adhere to it . 7.The City of Atascadero should consider a multi-year program to pay off accumulate d vacation time and sick leave, and thereby reduce its unfunded liability . The City of Morro Bay should enforce its policies with regard to accumulation o f vacation time in excess of allowable time . Page 12 C1-17 Attachment 1 9.All jurisdictions in the County should constantly monitor their accumulated sick leave , vacation and compensatory time to ensure that they do not incur further unfunde d liabilities . 10.All jurisdictions in the County should report annually to their citizens on the status o f vacation and sick leave accumulations, and compare them with the prior year t o demonstrate how they are addressing the unfunded liability issue . COMMENDATION S The Cities of Arroyo Grande, Pismo Beach and San Luis Obispo are managing their accumulate d vacation time extremely well . REQUIRED RESPONSE S All cities are required to respond to Findings 1, 2 and 10, and Recommendations 1, 2, 9, and 10 . The responses shall be submitted to the Presiding Judge of the San Luis Obispo County Superio r Court by May 30, 2012 . Please provide a paper copy and an electronic version of all responses to the Grand Jury . The City of Paso Robles is required to respond to Findings 1-6 and 10, and Recommendation s 1-5, 9 and 10 . The responses shall be submitted to the Presiding Judge of the San Luis Obisp o County Superior Court by May 30, 2012 .Please provide a paper copy and an electronic versio n of all responses to the Grand Jury . The City of Atascadero is required to respond to Findings 1, 2, 7, 8, and 10, an d Recommendations 1, 2, 6, 7, 9, and 10 . The responses shall be submitted to the Presiding Judg e of the San Luis Obispo County Superior Court by May 30, 2012 .Please provide a paper copy and an electronic version of all responses to the Grand Jury . Page 13 C1-18 Attachment 1 The City of Morro Bay is required to respond to Findings 1, 2, 9, and 10, an d Recommendations 1, 2 and 8-10 . The responses shall be submitted to the Presiding Judge of th e San Luis Obispo County Superior Court by May 30, 2012 . Please provide a paper copy and an electronic version of all responses to the Grand Jury . The mailing addresses for delivery are : Presiding Judge Grand Jury Presiding Judge Barry T. LaBarbera Superior Court of Californi a 1050 Monterey Street San Luis Obispo, CA 93408 San Luis Obispo County Grand Jury P .O . Box 491 0 San Luis Obispo, CA 93402 The email address for the Grand Jury is : GrandJury@co .slo .ca.us Page 14 C1-1 9 Attachment 1 (2) The respondent disagrees wholly or partially with the finding , in which case the response shall specify the portion of the findin g that is disputed and shall include an explanation of the reasons therefor . (b) For purposes of subdivision (b) of Section 933, as to eac h grand jury recommendation, the responding person or entity shal l report one of the following actions : (1)The recommendation has been implemented, with a summar y regarding the implemented action . (2)The recommendation has not yet been implemented, but will b e implemented in the future, with a timeframe for implementation : (3)The recommendation requires further analysis, with a n explanation and the scope and parameters of an analysis or study, an d a timeframe for the matter to be prepared for discussion by th e officer or head of the agency or department being investigated o r reviewed, including the governing body of the public agency whe n applicable . This timeframe shall not exceed six months from the dat e of publication of the grand jury report. (4)The recommendation will not be implemented because it is no t warranted or is not reasonable, with an explanation therefor . (c) However, if a finding or recommendation of the grand jur y addresses budgetary or personnel matters of a county agency or department headed by an elected officer, both the agency o r department head and the board of supervisors shall respond i f requested by the grand jury, but the response of the board o f supervisors shall address only those budgetary or personnel matter s over which it has some decisionmaking authority . The response of th e elected agency or department head shall address all aspects of th e findings or recommendations affecting his or her agency o r department . (d) A grand jury may request a subject person or entity to come before the grand jury for the purpose of reading and discussing th e findings of the grand jury report that relates to that person o r entity in order to verify the accuracy of the findings prior to thei r release . (e) During an investigation, the grand jury shall meet with th e subject of that investigation regarding the investigation, unless th e court, either on its own determination or upon request of th e foreperson of the grand jury, determines that such a meeting would b e detrimental. (f) A grand jury shall provide to the affected agency a copy of the portion of the grand jury report relating to that person o r entity two working days prior to its public release and after th e approval of the presiding judge . No officer, agency, department, o r governing body of a public agency shall disclose any contents of th e report prior to the public release of the final report . C1-20 Attachment 1 California Penal Cod e 933 . (a) Each grand jury shall submit to the presiding judge of th e superior court a final report of its findings and recommendation s that pertain to county government matters during the fiscal o r calendar year. Final reports on any appropriate subject may b e submitted to the presiding judge of the superior court at any time during the term of service of a grand jury . A final report may b e submitted for comment to responsible officers, agencies, o r departments, including the county board of supervisors, whe n applicable, upon finding of the presiding judge that the report is i n compliance with this title . For 45 days after the end of the term , the foreperson and his or her designees shall, upon reasonabl e notice, be available to clarify the recommendations of the report . (b)One copy of each final report, together with the response s thereto, found to be in compliance with this title shall be placed o n file with the clerk of the court and remain on file in the office o f the clerk . The clerk shall immediately forward a true copy of th e report and the responses to the State Archivist who shall retain tha t report and all responses in perpetuity . (c)No later than 90 days after the grand jury submits a final report on the operations of any public agency subject to it s reviewing authority, the governing body of the public agency shal l comment to the presiding judge of the superior court on the finding s and recommendations pertaining to matters under the control of th e governing body, and every elected county officer or agency head fo r which the grand jury has responsibility pursuant to Section 914 .1 shall comment within 60 days to the presiding judge of the superio r court, with an information copy sent to the board of supervisors, o n the findings and recommendations pertaining to matters under th e control of that county officer or agency head and any agency o r agencies which that officer or agency head supervises or controls . In any city and county, the mayor shall also comment on the finding s and recommendations . All of these comments and reports shal l forthwith be submitted to the presiding judge of the superior cour t who impaneled the grand jury . A copy of all responses to grand jur y reports shall be placed on file with the clerk of the public agenc y and the office of the county clerk, or the mayor when applicable, an d shall remain on file in those offices . One copy shall be placed o n file with the applicable grand jury final report by, and in th e control of the currently impaneled grand jury, where it shall b e maintained for a minimum of five years . (d)As used in this section "agency" includes a department . 933 .05 . (a) For purposes of subdivision (b) of Section 933, as t o each grand jury finding, the responding person or entity shal l indicate one of the following : (1) The respondent agrees with the finding . C1-21 Attachment 2 city of san Luis osisp o 990 Palm Street • San Luis Obispo, CA 9340 1 May 9, 201 2 Presiding Judge Barry T . LaBarbera Superior Court of Californi a 1050 Monterey Stree t San Luis Obispo, CA 9340 8 Subject : Grand Jury Report — City Employee Vacation and Sick Leave Accumulation Pa y Dear Judge LaBarbera: This letter is in response to the San Luis Obispo County Grand Jury Report on City Employee Vacatio n and Sick Leave Accumulation Pay : "Pay Me Now or Pay Me Later". The report commended the City o f San Luis Obispo for managing its accumulated vacation time extremely well . In addition, the Grand Jur y Report required a response to three findings and four recommendations . The City of San Luis Obispo's responses are presented in the following sections . Finding 1. There is substantial unused accumulated vacation time in all jurisdictions in San Luis Obispo County . The City agrees with the Grand Jury finding . Based on the information reported, all jurisdictions in Sa n Luis Obispo County, including the City of San Luis Obispo, appear to have substantial unuse d accumulated vacation time . Finding 2. With the exception of the Cities ofGrover Beach and Arroyo Grande,all jurisdictions in San Luis Obispo County allow unlimited accrual of sick leave. All jurisdictions but one, however, have a policy allowing the buy back or payoff of accumulated sick leave either annually or upon leaving city employment. The City of San Luis Obispo does allow unlimited accrual of sick leave . However, the City of San Luis Obispo does not pay out any sick leave to employees who leave city employment prior to retirement . The City does allow retiring employees to cash out a portion of their sick leave based on the applicable rules in place for their bargaining group . Finding 10. Most jurisdictions do not update their personnel rules and regulations after MOUs are developed with each bargaining unit . All personnel rules are incorporated into any new MOUs, bu t personnel rules are not always updated accordingly It is an accurate statement to say the City of San Luis Obispo does not update the Personnel Rules an d Regulations after a memorandum of agreement (MOA) is approved after bargaining in good faith with a represented employee group . The reasoning behind this is because in order to change or update the Personnel Rules and Regulations the City must meet and confer (bargain) in good faith with all affecte d represented employee groups (conceivably the same group or groups that the City reached agreement wit h and thus initiated the update). Meeting and conferring with five represented employee groups can be C1-22 Attachment 2 Grand Jury Response Page2 time-consuming . Further, the Personnel Rules and Regulations are meant to provide City-wide guidance , while MOAs provide more specific detail on topics that may apply to a smaller segment of the City or o f the represented employee group . If every MOA change was to be reflected in the Personnel Rules and Regulations, there wouldn't be a need for one or the other document . Recommendation I. Alljurisdictions should review their accumulated vacation time and implement step s to address future accumulation and payment of vacation time. The City of San Luis Obispo's policies and practices related to accumulated vacation time wer e developed after negotiating in good faith with employees and are aimed at balancing employee's needs for flexibility in accumulating and taking vacation time with the City's desire to manage the liability . Th e City reviews all accumulated leave time, not just vacation accumulation, at least annually and works with employees to ensure compliance with the city's policies and various MOAs . As the Grand Jury notes an d we agree, in the City of San Luis Obispo vacation time appears to be well managed . Recommendation 2.All jurisdictions that do not update their personnel rules after implementing new Memorandums of Understanding should update their personnel rules to reflect current practices. The City of San Luis Obispo does not believe their Personnel Rules and Regulations are in conflict wit h the MOAs for represented employee groups . The Personnel Rules and Regulations apply to all Cit y employees while an MOA applies to only the employees represented by that bargaining unit . Further, if there is a conflict between the Personnel Rules and Regulations and the MOA, the MOA prevails . A s described under Finding 10 above, updating the Personnel Rules and Regulations requires the City t o meet and confer with every represented employee group ; a time consuming process that would be counte r to the bargaining with a specific employee group that provided the impetus to updating the Personne l Rules and Regulations in the first place . Recommendation 9.All jurisdictions in the County should constantly monitor their accumulated sick leave, vacation and compensatory time to ensure that they do not incur further unfunded liabilities . The City of San Luis Obispo does monitor accumulated leave balances and has policies that help ensur e that these liabilities are manageable . However, it is unrealistic to think that the City will not incur furthe r unfunded liabilities . The balance of accumulated leave time is not a static number ; rather it increases an d decreases as employees earn and use their accumulated time or leave city employment ; it is also base d upon the wages earned by employees . Further, it is quite common for there to be a two to four month lag between an employee who leaves the City and a replacement being hired, that frequently results in salar y savings sufficient to fund the exiting employee's leave pay outs, if necessary . Recommendation 10.All jurisdictions in the County should report annually to their citizens on th e status of vacation and sick leave accumulations, and compare them with the prior year to demonstrat e how they are addressing the unfunded liability issue . We agree that citizens should be informed of the status and dollar amount of the City's compensate d absences annually . The City of San Luis Obispo's liabilities for all compensated absences (vacation, sick and compensatory time) are audited and reported each year in the City's Comprehensive Annual Financia l Report (CAFR). Specifically, this information is contained in Note 7 to the CAFR, which discusses long - term debt and liabilities . The schedules in the CAFR provide information about the prior year liability, th e amount the liability has increased and decreased during the fiscal year and the resulting ending liabilit y balance . In addition, it provides an estimate for the amount of the liability that the City believes will b e due within one year. C1-23 Attachment 2 Grand Jury Response Page 3 The City of San Luis Obispo appreciates the efforts and findings by the Grand Jury ; particularly that the City of San Luis Obispo is managing its accumulated vacation and sick leave balances extremely well . The City Council reviewed and approved this response at its regular meeting of May 2012 . Respectfully submitted , Katie Lichtig, City Manage r Cc : San Luis Obispo County Grand Jury C1-24