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HomeMy WebLinkAboutStaff Report 4.B 09/11/2017Agenda Item #4.B z8 E5 DATE: September 11, 2017 TO: Honorable Mayor and Members of the City Council FROM: John C. Brown, City Manag�ri� SUBJECT: Resolution Approving the Fifth Amendment to the Employment Agreement with the City Manager RECOMMENDATION It is recommended that the City Council adopt the attached resolution approving the Fifth . Amendment to the At -Will Agreement for Employment of the City Manager, and Authorizing the Mayor to execute said Agreement. BACKGROUND The City Manager reports to the City Council, and is employed pursuant to an employment agreement. The Agreement dictates the Manager's compensation, benefits, and working conditions. In February 2008, the City Council approved an at -will employment agreement with the City Manager, effective April 1, 2008. The Agreement was amended three times between 2008 and 2016 to: correct a provision; implement a temporary 18- month, 3.1 percent pay cut; extend the term to June 30, 2019; and to specify all benefits rather than reference the Unit 8 Compensation Plan. The Agreement was amended again in August 2016 to clarify certain provisions, extend the term to August 31, 2021, increase annual Compensation and Dental Benefits consistent with those granted to other employee groups, and to modify Administrative Leave, Vacation Leave, and Health Benefits provisions to provide certain compensatory cost reductions. During FY 2016/17, the City Council approved changes to the agreements with AFSCME represented bargaining units (Units 1, 2, and 3) the Petaluma Professionals and Mid -level Management Association (Units 4, 9, and 11 - PPMMA), and senior level managers (Unit 8). These groups assumed a greater share of the City's cost of the PERS retirement program. The increased cost to employees was offset by adjustments to their base salaries. These bargaining units represent nearly the entirety of the "Miscellaneous" group of employees. The PERS retirement formula for these employees is 2 percent at age 55, 60, or 62, depending on hire date. This compares to the "Safety" group, whose formulas are 3 percent at age 50, 55, or 57, depending on hire date. Increases in the amount of contribution by individual employees to the PERS Employer Contribution were negotiated with the Miscellaneous bargaining groups. These employees agreed to assume 3% of the Employer Contribution, in addition to the 6.25 -7 percent Employee contribution they have always paid. This brings to 10 percent the total employee contribution for those hired prior to January 1, 2013, and 9.25% for those hired after that date. In exchange, these groups received a 3 percent base wage increase, to offset their out -of- pocket costs for the PERS pick -up. This results in a three - quarter of one percent (0.75 %) increase in employee wages, over the employee cost of the PERS pickup, reflecting the difference between taxable wages and pre -tax benefits. In addition to this pick -up, Units 1, 2, 3, 4, 9, and 11 also agreed to an additional pick -up of one percent in a subsequent year, for which their base wage will be increased 3/4 of one percent (.75 %). During 2016/17 bargaining, the City Council also agreed to increase Holiday leave from eight (8) to ten (10) hours per holiday, for AFSCME, PPMMA, and Unit 8 members, working a "4/10" schedule. The Council also agreed to increase Holiday leave from eight (8) to nine (9) hours per holiday for AFSCME, and PPMMA members working a "9/80" schedule. This did not increase City costs, but did provide these employees either 12 or 24 more hours per year of compensated leave. Prior to this change, these groups received eight (8) hours of holiday leave for either a nine or a ten -hour day, and were required to use other leave to cover the one or two remaining hours. The City Attorney, the City Clerk, and the City Manager constitute the remainder of the "Miscellaneous' group and have not negotiated a PERS contribution pick -up. All three work a "4/10" schedule, receive eight hours of Holiday leave, and use Vacation or Administrative leave to make up difference for a 10 -hour holidays. DISCUSSION The City Manager employment agreement dictates the City Council will conduct an annual evaluation of the City Manager's performance. The Agreement further provides the City Council can grant a merit -based adjustment, a cost -of- living adjustment, or both. This year, the Council evaluated my performance in July. Numeric and narrative evaluation was shared with me on July 17, 2017. A work plan on which, in part, my performance will be evaluated in 2018, was also discussed and agreed upon. A Council subcommittee, acting as the Council's labor negotiators, met with me to discuss proposed changes to the Agreement. The subcommittee discussed proposed changes with the City Council on July 17, 2017, and they are presented in this package for Council action. The Agreement provides an opportunity for merit and CPI -based increases. None were requested or offered, however, in recognition of the City's projected fiscal difficulties. Discussed with the Committee were a PERS pick -up, Holiday leave, and modifications to vision and disability benefit language to synchronize with the benefit package the City currently offers its employees. A proposed amendment to the Agreement was negotiated with the Council subcommittee, and was discussed by the subcommittee and other Council members on July 17, 2017. Proposed changes are detailed in the Fifth Amendment to the At -Will Agreement, incorporated as Exhibit A to the attached resolution. Changes from the Fourth Amended Agreement are in Sections 19, 9, 15, and 18, and in Item 11 of Exhibit 1 to the Agreement ( "Health Related Benefits "). These changes are summarized below: Section 19, Retirement, is changed to require the City Manager to pay three (3) percent of the City's contribution towards PERS retirement. This will increase the Manager's total share of costs from seven (7) to ten (10) percent of base wage. This change would be effective the first payroll following the adoption of a contract amendment with CalPERS, which is estimated to occur in January 2018. Section 9, Compensation, provides for a three (3) percent salary increase to offset the PERS pick -up required at Section 19. This will not be effective until the first payroll period following the adoption of a PERS contract amendment, but will increase the annual base wage to $222,810. As previously noted, this is not expected to occur until January 2018. Section 15, Administrative Leave, increases Administrative Leave accrual by 16 hours, from 96 to 112 per year. This is an increase of 16 hours per year; eight (8) hours per year less than the increase in Holiday leaved granted to other Miscellaneous group managers who work a 4/10 schedule. This reduction was offered to provide some offset to the net cost associated with the PERS pick -up. Holiday leave is not amended, and the City Manager must continue to use personal leave to buy two hours of each holiday during the year. The 16 hours granted in this section offsets the Manager's holidays through New Year's Day; the PERS pick -up is expected to go into effect during January 2018. Changes in Section 18, Disability, Health, and Life Insurance, synchronize the Manager's disability benefit to the same benefit that is available to all other city employees: 60% of annual earnings, to a maximum of $5,000 per month after being disabled for sixty (60) days, Changes to Exhibit 1, Item 11 synchronize the Manager's Vision benefits to those currently available to all City employees. FINANCIAL IMPACTS A cost difference exists between the value of the PERS pick -up and the proposed base wage increase. This reflects the difference between a taxable wage and a pre -tax benefit, and roll -up costs associated with increasing the base wage. Together, these changes result in an increase to total compensation of $128.16 per month, or approximately $1,557 annually. Benefit changes are part of a package of amendments that in the aggregate were cost neutral, or delivered cost savings to the City. As noted, the City Manager has requested eight (8) hours less additional leave time than was granted to other managers this past year. The value of those eight hours is currently $832, but will be $857 when the PERS pick -up is effective. ATTACHMENTS 1. Resolution 2. Exhibit A to Resolution — Fifth Amendment to At -Will Employment Agreement ATTACHMENT 1 Resolution No. 2017- N.C.S. of the City of Petaluma, California . A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING THE FIFTH AMENDEDMENT TO THE AT -WILL AGREEMENT FOR EMPLOYMENT OF CITY MANAGER AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT WHEREAS, CITY and City Manager (the Parties) entered an At -Will Agreement for Employment of City Manager dated February 7, 2008 and effective April 1, 2008; and, WHEREAS, the Agreement has been amended four times, to: correct and clarify certain provisions; implement a temporary 18 -month pay cut; specify all benefits rather than reference the Unit 8 Compensation Plan; increase annual Compensation; modify Administrative Leave, Vacation Leave, and Health Benefits provisions to provide certain compensatory cost reductions; and to extend the term of the Agreement; and WHEREAS, the Parties desire to amend the Agreement to require the City Manager to pick -up a three (3) percent share of the City's cost of his PERS retirement benefits, and to increase the Manager's base wage by three (3) percent, to $222,810; and WHEREAS, the PERS pick -up and base wage adjustment shall only be effective upon adoption of a contract amendment with CalPERS; and , WHEREAS, the Parties further desire to increase to 112 hours annually the City Manager's Administrative Leave accrual, and to provide the Manager with the same Disability and Vision coverages as is available for all other city employees; WHEREAS, the City Council and City Manager John C. Brown agree to the changes in the terms of Employment, Compensation, and Benefits relating to the position of City Manager as set forth in the Fifth Amendment to the At -Will Agreement for Employment of City Manager attached and incorporated herein as Exhibit A. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Petaluma hereby approves the Fifth Amendment to the At -Will Agreement for Employment of City Manager, attached as Exhibit A and incorporated herein by reference. BE IT FUTHER RESOLVED that the City Council of the City of Petaluma hereby authorizes the Mayor to execute said Agreement. 4 EXHIBIT A FIFTH AMENDMENT TO THE AT -WILL AGREEMENT FOR EMPLOYMENT OF CITY MANAGER This Amendment is made and entered into this day of September 2017, by and between the City of Petaluma, California, a charter city, ( "the CITY "') and John C, Brown ( "City Manager "). The City and the City Manager do hereby agree to amend the Agreement as provided: Section 9, "Compensation ", paragraph (a), is amended to read as follows: 9. Compensation: a. Base Salary. City agrees to pay City Manager an annual base salary of $216,320, payable in installments at the same time that the other employees of the CITY are paid. Effective the first payroll following the adoption of a contract amendment with Ca1PERS and concurrent with City Manager paying an additional three percent (3 %) towards PERS retirement, City Manager shall receive a 3% base wage increase and shall be paid an annual base salary of $222,810. 2. The introductory paragraph in Section 15, "Administrative Leave," and paragraph (a) in that same section, are amended to read as follows: 15. Administrative Leave. City Manager shall be credited with one hundred twelve (112) hours of administrative leave each fiscal year. a. Carry Forward of Leave. City Manager may carry forward up to forty (40) hours of unused administrative leave into the next fiscal year. City Manager may not maintain balances of more than one hundred and fifty two (152) hours in any fiscal year. Carry forward administrative leave may only be taken as paid time off, has no cash value, and shall not be included in the totals subject to payment under Section 5 (d). 3. Section I8, Disability, Health, and Life Insurance, paragraph (c), is amended to read as follows: 18. Disability, Health, and Life Insurance: C. CITY agrees to have in force and make required premium payments for City Manager's participation in the CITY's current group disability plan. Currently that Plan is provided through CIGNA, and replaces 60% of annual earnings, to a maximum of $5,000 per month after being disabled for sixty (60) days. 4. Section 19, "Retirement ", paragraph (f), is added to read as follows: 19. Retirement: f. Effective the first payroll following the adoption of a contract amendment with Ca1PERS, City Manager shall pay an additional three percent (3 %) towards PERS retirement. The City Manager is a "Classic" employee, and this three percent (3 %) is added to the current seven percent (7 %) employee share, for a total contribution of ten percent (10 %). The parties shall work collaboratively to expedite formal adoption of a contract amendment with Ca1PERS to reflect this cost - sharing agreement under which the employee is paying a portion of the employer contribution to PERS. 5. EXHIBIT 1, "HEALTH- RELATED BENEFITS ", Item 11, "Vision Insurance" is amended to read as follows: 11. Vision Insurance CITY shall provide a vision plan for City Manager and eligible dependents. The cost shall be paid for by the City. City Manager and his eligible dependents are eligible for eye exams every twelve (12) months with a twenty -five ($25.00) deductible. Frames are available every twelve (12) months with a maximum benefit of one - hundred - eighty dollars ($180.00), standard lenses are available every twelve months at 100 percent of cost; progressive lenses are available every 12 months with a $55 -175 co -pay, medically necessary contact lenses are available every 12 months at 100 percent of cost, and cosmetic contact lenses are available every twelve (12) months up to a maximum allowance of one hundred -eight dollars ($180). Except as otherwise stated herein, all other terms of the Agreement remain in full force and effect. CITY MANAGER CITY By: By: John C. Brown, City Manager David Glass, Mayor DATED: ATTEST: Claire Cooper, City Cleric APPROVED AS TO FORM: Eric W. Daily, City Attorney DATED: