HomeMy WebLinkAbout11/18/2008, C7 - MANAGEMENT EMPLOYEES' COMPENSATION cou not
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CITY OF SAN LUIS OBISPO
FROM: Monica Irons, Director of Human Resources
PREPARED BY:Rachael Hendricks, Human Resources Analyst
SUBJECT: MANAGEMENT EMPLOYEES' COMPENSATION
CAO RECOMMENDATION
Adopt a resolution approving management compensation through December 31, 2009.
DISCUSSION
Background
The City's management group includes 75 employees; 12 department heads (including two
appointed officials) and 63 other management employees. Since these employees are
unrepresented, there are no negotiations, as there are for the City's other regular employees.
Instead, compensation and benefits for management employees are set by resolution. The
resolution is developed from discussions with a management committee representing this group
and a recommendation from the CAO to the Council. The current Management Compensation
Resolution expires December 31, 2008.
In discussing management compensation, the committee considered scheduled salary increases in
other City bargaining units, changes in the Consumer Price Index (CPI), salary and benefit
changes in comparison and local cities, the local and national economies, and the City's long-
term fiscal health. At present, all five bargaining units in the City (Police, Police management,
Fire, Battalion Chiefs, and the general employees) have in place longer-term agreements that
include a five percent cost of living increase in 2009. Many management employees directly
supervise those in the general employee group and cost of living increases are typically similar
between the groups to maintain a reasonable difference between supervisors and direct reports.
Upon review, 2009 management cost of living increases in comparison and local cities are in the
range of three to six percent. Increases in that range will keep pace with the Consumer Price
Index (CPI), as the August Los Angeles CPI increased 4.2% while the August San Francisco-
Oakland CPI increased 5.1%. However, several cities have not yet addressed 2009 management
compensation as their resolutions do not expire until spring 2009.
Proposed Resolution
Much consideration was given to the City's fiscal health and current economic challenges. With
these fiscal uncertainties in mind, staff recommends a one-year resolution providing a two
Management Employees' Compensation Resolution Page 2
percent cost of living increase effective January 8, 2009, and no other changes to management
compensation or benefits. This proposal is considerably less than CPI and the amount budgeted
for management compensation as noted below; but will help maintain wage competitiveness with
comparison cities as well as reasonable distance between supervisory and general unit salaries.
FISCAL IMPACT
The proposed compensation package is within the Council parameter. The cost of the 2% salary
increase is approximately $189,000 for the 2009 calendar year or $94,500 for the remainder of
fiscal year 2008-09 (January 2009 through June 2009). This amount is 37% less than the 2008-
09 budget for management compensation and represents 1.8% of total compensation for the
management employees.
ALTERNATIVE
Do not approve the resolution and direct staff to work with the management committee on an
alternative and return to Council at a later date. This action is not recommended, as the resolution
is consistent with the Council's previous direction.
ATTACHMENT
Resolution with Exhibit"A" Management Fringe Benefits
GAagenda reports\2008Wanagement Comp 2009.doc
Attachment
Page 1 of 2
RESOLUTION NO. (2008 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
REVISING MANAGEMENT COMPENSATION FOR MANAGEMENT EMPLOYEES
SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLICT
WHEREAS, the City Council is committed to a comprehensive policy that strengthens the
recruitment and retention of highly qualified and effective management employees (including
appointed officials); and
WHEREAS, the City Council wishes to provide an appropriate compensation package for
its management employees;
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Luis
Obispo hereby revises management compensation as follows:
SECTION 1. Management compensation will continue for a one-year term commencing
January 1, 2009.
SECTION 2. The City agrees to adjust management salary ranges and salaries of
management employees 2% on January 8, 2009.
SECTION 3. The City shall continue to provide management employees certain fringe
benefits as set forth in Exhibit"A", fully incorporated by reference.
SECTION 4. The Director of Finance and Information Technology shall adjust the
appropriate accounts to reflect the compensation changes.
Upon motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of ,
2008.
ATTEST:
Attachment
Page 2 of 2
Audrey Hooper, City Clerk Mayor David F. Romero
APPROVED AS TO FORM:
Jonathan P. Lowell, City Attorney
G:\RESOLUTIONS AND ORDINANCES\2008\Management Compensation 2008.DOC C�,//
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EXHIBIT"A"
Page 1 of 5
APPOINTED OFFICIALS AND MANAGEMENT FRINGE BENEFITS 2009
Section A Medical, Dental, Eve Care
The City shall establish and maintain medical, dental and eye care insurance plans for coverage
by department head and management employees and their dependents. The City reserves the
right to choose the method of insuring and plans to be offered.
The City has elected to participate in the PERS Health Benefit Program pursuant to the Public
Employees' Medical and Hospital Care Act(PEMHCA) with the "unequal contribution option"
at the PERS minimum contribution rates, $97.00 per month for active employees and $72.75 for
retirees as of January 1, 2008. The City's contribution toward retirees shall be increased by 5%
per year of the City's contribution for the active employees until such time as contributions for
employees and retirees are equal.
Employees with proof of medical insurance elsewhere are not required to participate in the
medical insurance plan and may receive the unused portion of the City's contribution(after
dental and vision insurance is deducted) in cash in accordance with the City's cafeteria plan.
Those employees will be assessed $16.00 per month to be placed in the Retiree Health Insurance
Account. This account will be used to fund the City's contribution toward retiree premiums and
the City's costs for the Public Employees' Contingency Reserve Fund and Administrative Costs.
However, there is no requirement that these funds be used exclusively for this purpose, nor any
guarantee that they will be sufficient to fund retiree health costs, although they will be used for
employee benefits.
Employees will be required to participate in the City's dental and vision plans at the employee-
only rate. Should they elect to cover dependents in the City's dental and vision plans, they may
do so, even if they do not have dependent coverage for medical insurance.
Employees shall participate in term life insurance of$4,000 through payroll deduction as a part
of the cafeteria plan.
Section B Cafeteria Plan Contribution
The City's contribution to the Cafeteria Plan for regular, full-time employees will be set using
the procedure outlined below.
Within 30 days of receipt of health insurance premiums from medical, dental, and vision
insurance providers, the City will set the cafeteria contribution using the following
methodology.
One hundred percent of the combined premiums for the lowest cost Health Maintenance
Organization (HMO) medical plan available in San Luis Obispo County to employees
covered by this resolution, the Dental Preferred Option (DPO) dental plan, and the vision
plan; but not less than 80% of the combined premiums for the lowest cost Preferred
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Resolution No. (2008 Series) EXHIBIT"A"
Management Fringe Benefits 2009 Page 2 of 5
Provider Option (PPO) medical plan available in San Luis Obispo County to employees
covered by this resolution, the DPO dental plan, and the vision plan.
New employees who elect not to be covered under a City medical plan will receive a
$200 cafeteria contribution. Employees hired prior to August 31, 2008 who opt out of
the City medical plan will receive $790 per month unless they choose to enroll
themselves and/or their dependents in a City provided medical plan. At that time, they
will receive the greater of$790 per month or the current cafeteria contribution.
Less than full-time management employees shall receive a prorated share of the City's
contribution.
The City agrees to continue its contribution to the cafeteria plan for two (2) pay periods in the
event that an employee has exhausted all paid time off due to an employee's catastrophic illness.
Section C Life.and Disability Insurance
The City shall provide the following special insurance benefits in recognition of management
responsibilities:
1. Long-term disability insurance providing 66 2/3% of gross salary(maximum benefit
$5,500 per month)to age 65 for any sickness or accident, subject to the exclusions in
the long-term disability policy, after a 30-day waiting period.
2. In addition to $4,000 term life insurance purchased by the employee through the
cafeteria plan, $100,000 term life insurance for department heads and $50,000 tern
life insurance for management employees, including accidental death and
dismemberment.
Section D Retirement
The City shall provide the California Public Employees' Retirement System's (CalPERS) 2.7%
at 55 plan to all eligible employees including the amendments permitting conversion of unused
sick leave to additional retirement credit, the 1959 survivor's benefit(Level Four), one year final
compensation, and pre-retirement Option 2 death benefit.
The Police and Fire Chiefs shall receive the same retirement benefits as sworn personnel in their
departments.
The City agrees to pay the employee's contribution to Ca1PERS (8% for miscellaneous, 9% for
safety). These amounts paid by the City are employee contributions and are paid by the City to
satisfy the employee's obligation to contribute the current percentage of salary to Ca1PERS. An
employee has no option to receive the contributed amounts directly instead of having them paid
by the City to Ca1PERS on behalf of the employee. It is further understood and agreed that the
GAagenda reports\2008\Management Fringe Benefits.doc /I �7 6
Resolution No. (2008 Series EXHIBIT"A"
Management Fringe Benefits 2009 Page_3 of 5
payment of the employee's CaIPERS contribution is made subject to I.R.S. approval and
reporting procedures.
The City shall report as salary all Employer-Paid Member Contributions (EPMC) to Ca1PERS
for the purposes of retirement credit in accordance with Government Code Section 20636 (c) (4).
Section E Supplemental Retirement
The City shall contribute I% of salary for management employees and 2% of salary for
department heads to a defined contribution supplemental retirement plan established in
accordance with sections 401 (a) and 501 (a) of the Internal Revenue Code of 1986 and
California Government Code sections 53215-53224.
Section F Vacation
Vacation leave is governed by section 2.36.440 of the Municipal Code, except that it may be
taken after the completion of the sixth calendar month of service since the benefit date. Vacation
leave shall be accrued as earned each payroll period provided that not more than twice the annual
rate may be carried over to a new calendar year.
However, if the City Administrative Officer determines that a department head has been unable
to take vacation due to the press of City business, the City Administrative Officer may approve a
two-month extension of maximum vacation accrual. The City Administrative Officer may,
within two years of appointing a department head, increase the rate of vacation accrual to a
maximum of 120 hours per year.
Vacation schedules for management employees shall be based upon the needs of the City and
then, insofar as possible, upon the wishes of the employee. A department head may not deny a
management employee's vacation request if such denial will result in the loss of vacation accrual
by the employee, except that, a department head may approve a two-month extension of
maximum vacation accrual. However, in no event shall more than one such extension be granted
in any calendar year.
Department Head and management employees are eligible, once annually in December, to
request payment for up to 40 hours of unused vacation leave provided that an employee's overall
performance and attendance practices are satisfactory.
Section G Administrative Leave
Department heads shall be granted up to 80 hours of administrative leave per calendar year.
Department heads shall have the option of taking such leave as additional paid leave or receiving
cash for up to 80 hours at year end upon approval of the City Administrative Officer.
Management employees shall be granted up to 48 hours of administrative leave per calendar
year.
G:\agenda reports\2008\Management Fringe Benefits.doc �7,
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Resolution No. (2008 Series)- EXHIBIT"A"
Management Fringe Benefits 2009 Page 4 of 5
Administrative leave hours shall be pro-rated when a department head or management employee
is appointed or leaves employment during the calendar year. The employee's final check will be
adjusted to reflect the pro-rated hours.
Department Heads and Managers are considered exempt from the overtime provisions of the Fair
Labor Standards Act(FLSA) and not eligible for overtime payment. In general, management
employees are expected to work the hours necessary to successfully carry out their duties and
frequently must return to work or attend meetings and events outside their normal working
hours. However, when specifically authorized by the department head due to extraordinary
circumstances, a management employee may receive overtime payment of time and one-half for
hours worked above and beyond what would be considered normal work requirements during an
emergency event lasting at least eight(8) hours.
Section H Holidays
Department heads and management employees shall receive 11 fixed plus 2 floating holidays per
year. The floating holidays shall be accrued on a semi-monthly basis and added to the vacation
accrual.
Section I Sick Leave
Sick leave is governed by section 2.36.420 of the Municipal Code. An employee may take up to
16 hours per year of sick leave if required to be away from the job to personally care for a
member of his/her immediate family as defined in Section 2.36.420. This may be extended to 40
hours per year if the family member is part of the employee's household and to 56 hours if a .
household family member is hospitalized and the employee submits written verification of such
hospitalization. If the family member is a child, parent or spouse, an employee may use up to 48
hours annually to attend to the illness of the child, parent or spouse, instead of the lesser
maximums above, in accordance with Labor Code Section 233.
In conjunction with existing leave benefits, department head and management employees with
one year of City service who have worked at least 1,280 hours in the previous year may be
eligible for up to 12 weeks of Family/Medical Leave in accordance with the federal Family and
Medical Leave Act and the California Family Rights Act.
Sick leave may be used to be absent from duty due to the death of a member of the employee's
immediate family as defined in Section 2.36.420, provided such leave shall not exceed forty
working hours for each incident. The employee may be required to submit proof of relative's
death before being granted sick leave pay. False information concerning the death or
relationship shall be cause for discharge.
Upon termination of employment by death or retirement, a percentage of the dollar value of the
employee's accumulated sick leave will be paid to the employee, or the designated beneficiary or
beneficiaries according to the following schedule:
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Resolution No. (2008 Series)--' EXHIBIT"A"
Management Fringe Benefits 2009 Page 5 of 5
(A) Death—25%
(B) Retirement and actual commencement of Ca1PERS benefits:
(1) After ten years of continuous employment— 10%
(2) . After twenty years of continuous employment— 15%
Section J Workers' Compensation Leave
An employee who is absent from duty because of on-the-job injury in accordance with State
workers' compensation law and is not eligible for disability payments under Labor Code Section
4850 shall be paid the difference between his/her base salary and the amount provided by
workers' compensation law during the first ninety (90) business days of such temporary
disability absence. Eligibility for workers' compensation leave requires an open workers'
compensation claim.
Section K Vehicle Assignment
For those department heads who require the use of an automobile on a regular 24-hour basis to
perform their normal duties, the City will, at City option,provide a City vehicle or an appropriate
allowance for the employee's use of a personal automobile. The use of a personal automobile
for City business will be eligible for mileage reimbursement in accordance with standard City
policy.
Section L Layoffs
In accordance with Section 2.36.320 of the Personnel Rules, the City Council of San Luis Obispo
shall determine when and in what position classifications layoffs are to occur.
Section M Appointed Officials
The fringe benefits outlined in this exhibit for department heads apply to appointed officials,
except where they have been modified by council resolution..
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