HomeMy WebLinkAboutStaff Report 3.B 06/01/2015Agenda Item #3.B
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DATE: June 1, 2015
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manager l
SUBJECT: Resolution Establishing the Living Wage Rate for Fiscal Year 2015 -2016
RECOMMENDATION
It is recommended the City Council adopt the Resolution Establishing the Living Wage Rate for
FY 2015/16 by increasing the Living Wage 2.7 %.
BACKGROUND
The Living Wage Ordinance was approved and adopted effective December 20, 2006. The
Ordinance established an initial wage of $11.70 per hour with an employer contribution of at least
$1.50 per hour per employee toward medical benefits, and $13.20 per hour without contribution
toward benefits.
Petaluma Municipal Code Chapter 8.36 (the Living Wage Ordinance), at Section 836.060(D)
provides that the initial rate:
"...be increased annually on July 1, in accordance with any increase due to a cost of living
adjustment for City employees, equal to the average cost of living adjustment (excluding
equity pay increases) for all City non - safety, non - management employees as of the date of
the most recent adjustment of the pay of non - safety, non - management employees, but no
more than the most recent December to December Consumer Price Index for San
Francisco - Oakland -San Jose (CPI -U), published by the Bureau of Labor Statistics ".
The Ordinance also provides that the City Council may review the impact of the cost of living
adjustment (COLA) on an annual basis to assess any potential adverse impact and may modify or
suspend adoption of a COLA otherwise allowed by this subsection. Pursuant to the Living Wage
Ordinance, any adjustment would be effective on July 1.
Last year, based on the December 2012 to December 2013 increase in the Consumer Price Index
for the San Francisco - Oakland -San Jose (CPI -U), the City Council adopted Resolution No. 2014-
080 N.C.S which increased the Living Wage rate by 2.6 percent effective July 1, 2014.
History of Living Wage Adjustments
LW Rate Medical LW Rate Effective % Increase
With Medical Contribution without
Contribution Rate Medical
Contribution
$11.70
$1.50
$13.20
12/20/2006
Established
None
$12.14
$1.50
$13.64
1/1/2008
3.30%
None
$12.46
$1.50
$13.99
7/1/2010
2.60%
$12.65
$1.50
$14.20
7/1/2011
1.50%
$13.02
$1.50
$14.61
7/1/2012
2.90%
$13.31
$1.50
$14.93
7/1/2013
2.2%
$13.66
$1.50
$15.32
7/1/2014
2.6%
$14.03
$1.50
$15.73
7/1/2015
2.7%
DISCUSSION
The December 2013 to December 2014 change in the CPI -U for the San Francisco - Oakland -San
Jose area is a 2.7 percent increase. If a COLA is approved, the Living Wage will increase to
$14.03 per hour with an employer contribution toward medical benefits and $15.73 per hour
without that contribution.
While the Ordinance provides that the Council may conduct an annual review of the Living Wage
to assess any potential adverse impact and may modify or suspend a COLA based on that review,
the Ordinance neither defines "adverse impact" nor dictates how a review must be conducted or
what factors should be taken into consideration. This provision was drafted to provide the Council
discretion to suspend COLA's for any reason the Council believes to be pertinent. In addition,
Section 8.36.050 (H), which governs waivers, indicates in part:
"The City Council may also waive the requirements of this chapter if a majority of its
members determines that an emergency exists which requires a waiver."
The Council has not relied upon, nor implemented this provision. Except for employees subject to
the Living Wage and the positions benchmarked to those positions, no new COLA adjustments
have been granted to any City employees since 2008, with the exception of AFSCME- represented
employees, whose last COLA adjustment was in 2011. There is no provision for employee cost of
living adjustments in the budget or financial forecast.
Increasing the Living Wage by 2.7% this year would affect 18 employees in Living Wage
positions, and approximately 31 employees in part time Recreation Services positions
benchmarked to living wage positions. Together, these positions represent a combined 2015/16
payroll of $404,355. This would increase $10,918, to $415,273, when the 2.7% COLA is applied.
FINANCIAL IMPACTS
Increasing the living wage by 2.7% will result in an estimated total increased cost to the City in
FY 2015 -2016 of $10,918 : $6,350 for Living Wage positions and $4,568 for benchmarked
part-time Recreation Services positions. The General Fund's share of this cost is $9,469.
ATTACHMENTS
1. Resolution— Setting the Living Wage for FY 2015 -2016
RESOLUTION SETTING THE CITY OF PETALUMA LIVING WAGE RATE
AT $14.03 PER HOUR WITH AN EMPLOYER CONTRIBUTION
TOWARD MEDICAL BENEFITS AND $15.73 PER HOUR
WITHOUT AN EMPLOYER CONTRIBUTION TOWARD MEDICAL BENEFITS,
FOR THE 2015 -2016 FISCAL YEAR
WHEREAS, the City Council of the City of Petaluma established a Living Wage
Required for Specified City- Funded Contracts and City Employees, by adopting Ordinance
No. 2256 N.C.S., effective December 20, 2006 ( "the Living Wage Ordinance "); and,
WHEREAS, the Living Wage Ordinance is codified at Chapter 8.36 of the City of
Petaluma Municipal Code; and,
WHEREAS, Municipal Code Section 8.36.060.D, provides that the Living Wage
rate shall be increased annually on July 1, in accordance with any increase due to a cost of
living adjustment for non - safety, non - management City employees, but no more than the
most recent December to December Consumer Price Index for San Francisco - Oakland -San
Jose (CPI -U); and,
WHEREAS, Section 8.36.060.D further provides that the City Council may
review the impact of the cost of living adjustment ( "COLA ") on an annual basis to assess
any potential adverse impact and may modify or suspend adoption of a COLA otherwise
allowed by the subsection; and,
WHEREAS, the initial Living Wage rate in 2006 was $11.70 per hour with an
employer contribution of at least $1.50 per hour per employee toward medical benefits and
$13.20 per hour without said contribution; and,
WHEREAS, the current Living Wage pursuant to Chapter 8.36 is $13.66 per hour
if a contribution of at least $1.50 per hour per employee is paid by the employer toward the
cost of medical benefits; and $15.32 per hour without said contribution toward medical
benefits; and,
WHEREAS, the December to December Consumer Price Index for San Francisco-
Oakland -San Jose (CPI -U) indicates an overall increase of 2.7% in Bay Area consumer
prices from December 2013 to December 2014.
NOW, THEREFORE, BE IT RESOLVED that pursuant to Petaluma Municipal
Code Section 8.36.060.D, the City Council adopts a 2.7% COLA adjustment to the Living
Wage and effective July 1, 2015 the Living Wage is $14.03 per hour with an employer
contribution toward medical benefits of at least $1.50 per hour per employee, and $15.73
per hour without said contribution.