HomeMy WebLinkAboutStaff Report 07/11/2011 4.A A Ite'n i/ # -.A
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DATE: July 11, 2011
TO: Honorable Mayor and Members of the C'ty'Co cil
, 14480
FROM: John C. Brown, City Mango 4'
SUBJECT: Resolution Authorizing Lay off and Abolishment of Positions
RECOMMENDATION
It is recommended that the City Council adopt the attached resolution authorizing the lay off of:
Two (2) Community Services Officer positions, One (1) Police Records Assistant II position,
One (1) Public Works Inspector 1 position, and One (1) Office Assistant 2- Public Works
position; and the Abolishment of Two (2) Police Captain positions, effective July 27, 2011.
BACKGROUND
The City Council was provided an analysis of the City's projected financial position for the five
years beginning July 1, 2010 and ending June 30, 2015. That projection, as revised in February
2011 indicates that, unless expenditures are balanced with revenues in the early years of the
forecast period, an imbalance of approximately $2.2 million in FY 2011 -12 will increase to
approximately'$15.1 million in 2014 -15. The projection indicates that if approximately $3.6
million, representing FY 2011-2 and 2012 -13 deficits, is balanced during the first two years of
the forecast period, the General Fund can maintain balance through 2014-15. In March the City
Council authorized one additional offering of the PERS two year service credit enhancement
program, (the "golden handshake ") to provide .employees with an incentive to retire early and
vacate positions in order to generate salary savings. Staff also advised Council that other
positions vacating during FY 2010-11 would be held open and frozen, as another means of
achieving salary sayings.
On April 4, 2011 the Council directed staff to take further steps necessary to eliminate the $3.6
million imbalance in the development of the 2011 -12 budget, and to reduce an additional
$400,000 to begin to restore depleted General Fund reserves. Among the alternatives the
Council authorized staff to discuss with the City's employee bargaining units were:
® Eliminating Employee : Salary' Step Advancements for the forecast period.
® Eliminating Administrative leave payouts for management and mid - management
employees subject to 40 hour pay out limits.
® Increasing the employee share of health care premiums.
Agenda Review:
City Attorney Finance Director City Ma ger
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Continuing'to defer cost of living adjustments for AFSCME- represented employees
through the forecast period.
® Continuing the, furloughs in effect between December 2009 and June 2011, which
represented a 3.1 percent salary reduction.
® Some combination of the foregoing options, and a reduced workweek.
e Salary roll- backs; and/or
o Layoffs to reach the totals necessary to balance.
Council also indicated interest in bargaining a second tier for PERS'benefits for all new hires.
DISCUSSION
Staff has been meeting regularly with . employee bargaining units since early May, 2011 and as
recently as July 6, 2011. Key to these conversations have been discussions with the Petaluma
Firefighter's Association (Unit 7), which is protected by minimum staffing level provisions of
their bargained Memorandum of Understanding. As a result, discussions with this unit have
focused on concessions they might grant voluntarily, as a means of lessening negative impacts
on other bargaining units. Unit 7 has been collaborative during these discussions, and while no
final agreements have been, reached on a full package of concessions, the unit has agreed to
provide much - needed relief.from overtime costs during the six -week period estimated as
necessary to fill Fire positions vacated by those who exercised the option to take a golden
handshake.
Staff has also been employed in a continuous process of revising reduction targets, as additional
vacancies have presented themselves, as employees have exercised the option to accept the
golden handshakes, as revenue and cost projections were updated, and as opportunities presented
themselves to move staffing between funds. This latter effort has been ongoing, and has been
directly related to retirements and voluntary separations. Staff has also examined opportunities
to take advantage of reserves in other funds. All of these actions have been effective in drawing
closer to the overall reduction goal, but make difficult arriving at any concession target.
Understandably, employees have been reluctant to offer concessions until they could be provided
a firm number upon which they can base their consideration of options.. All bargaining units are
sharing in the cost of an independent analysis of the City's finances, presumably commissioned
to determine whether additional funding is available from other sources to provide relief to the
General fund.
Most bargaining groups asked to see a lay -off list prior to discussing any wage and benefit
concessions. This list was "backed into ", first applying against the $4 million reduction: target
the value of known golden handshakes, frozen vacancies, fund transfers, revenue adjustments,
and an estimate: of Unit 7 assistance. The cost of positions identified for lay -off represented the
balance necessary to reach the reduction target after all other adjustments were taken into
account. Positions subject to layoff were, in large measure, developed in cooperation with
management in the City's departments. Specific positions were offered up attempting to
preserve to the greatest degree possible, core service delivery in the various departments.
Distribution of these positions was sought across all City departments. Initially, the list totaled a
dozen positions. The number of positions identified for lay -off was not increased since it was
first developed, the goal being eliminating the list. Two positions, on the lay -off list took
advantage of the golden handshake, and are no longer present there.
As indicated , reduction target numbers have been refined over the past two months to account for
changing conditions. On the positive side, are the beneficial effects of employee retirements,
additional vacancies, and viable cost savings proposals. On the negative side have been
corrections to assumptions regarding the value of savings associated with specific vacancies, and
reductions in the estimate of Unit 7 concession assistance.
Two cost savings proposals forwarded by an affected employee and a division manager were
explored, appearr viable, and will be included in the budget presented to Council next month.
Together, these proposals provide nearly $190,000 in funding support. The, proposals fund three
positions that have been on the lay -off list, two Information Technology positions and a
Neighborhood Preservation Coordinator. The first two positions will be supported by
reallocating I.T. costs to the Water, Airport, Building, and Transit funds. These funds require
increased IT support due to purchasing new equipment and implementing new software
programs. The Neighborhood Preservation position can be paid for by allocating a portion of
salary to the Building fund for related work, and by increasing collections activity, associated
with past due, current, and, ongoing Administrative citations.
In addition to these proposals., retirements in positions in the Street fund provide an opportunity
to achieve a net General fund savings of approximately $250,000 per, year by transferring three
Parks Maintenance positions;,into the Street crew. An item considered ,earlier in your agenda for
July 11, 2011 equalizes pay between the two groups at a cost of approximately $9,900 per year,
in order to achieve the larger savings number. As your Council is aware, an additional proposal
to privatize Animal Shelter operations and the Animal Control function was discussed, which
upon initial consideration could,save approximately $150,000 per year: The proposal is not
forwarded at this time, as it requires more work before it is ready for your consideration, nor
does it appear to be something that can be implemented in the- timeframe necessary to be useful
in balancing the 2011 -12 budget or reducing the present lay -off list.
As indicated, savings assumptions have had to be revised, particularly those related to the share
of reductions: sought from Unit' 7. Together these: adjustments exceed $500,000 annually, and
had to. be made up -from other sources. These have included reducing reserves in Workers
Compensation, Liability, General Services, and Post Retirement Benefit funds. These reductions
bring some of these reserves to their lowest acceptable confidence levels, for tlose'with such
recommended levels. Application of these savings is amortized over a four -year period to
accomplish two goals' avoid the spike associated with one -time sources of support, and to
preserve the funds in the event liabilities exceed what has been retained. Together with revising
cost estimates for health benefit and long term disability premiums, these four sources together
are estimated to provide approximately $400,000 per year and in excess of $1.5' million over the
forecast period.
At the end of the fiscal year, 22 employees had taken advantage of the golden handshake.
Approximately 7 of those positions in the General Fund will he able to remain unfilled. Another
9.25 positions have been held vacant. Together with the other adjustments that have been
employed and combined with revised assumptions about Unit 7 contributions, the General fund
is approximately $450,000 per year short of the over-all reduction target. If this is left
uncorrected, it would leave the General fund approximately $1.8 million out of balance in 2014-
15, It does not appear at the present time that other alternatives 'can be relied upon to preserve
current staffing levels. The final lay -off list, presented for yourconsideration, reduces salary and
benefit costs by approximately $449,000 per year. Following is the list of positions
• recommended at this time for lay off or abolishment, due' to financial hardship. These
recommendations were all developed in association with departrnentmanagement and are
believed to provide the least negative impact to their respective organizations as any other
options that might, be exercised. To maintain the brevity of this report, rationale for including
these position on the lay -off list is not discussed in detail. Department heads or other
management staff will be available to answer any questions you may have regarding rationale at
your July 11, 2011 meeting.
® Two (2) Community Services Officer positions
® One (1) Police Records Assistant II position
® One (1) Public Works Inspector 1 position
® One (1) Office Assistant 2-Public Works position.
Also recommended is the abolishment of Two (2) Police Captain, positions. Action on these
positions is recommended effective July 27, 2011. '
With Council approval, a final round of lay -off notices will be provided to the affected
employees on July 12,,2011. Their representative bargaining units will then be engaged in
impact bargaining, , during'which the units will be able to offer options, including concessions, as
alternatives to the recommended action. It should be noted that, some of these positions may
exercise retreat rights into vacant positions that are currently held open and may allow members
of this group to retain employment. Such retreat would be at the employee's option.
This action is recommended at the present time to avoid the detrimental financial, effect that
corresponds to waiting longer to take action, and to facilitate the presentation of a budget to your
Council next month.
FINANCIAL IMPACTS
As indicated, the present value of these positions is approximately $449,000 per year. By way of
comparison, the same amount could be saved, in the General fund if all employees were to agree
to a 2.32 percent salary reduction, or if all employees except for Unit 7 were to agree to a 3.17
percent salary reduction. With regard to Unit 7, it should be noted that if no further concessions
are granted, the lay-off list, or equivalent salary reductions would need to be considerably larger
in order to maintain balance over the forecast period.
ATTACHMENTS
1. Resolution
Resolution No. 2011 N..C.S.
of the. City of Petalurna, California
PROVIDING FOR REORGANIZATION ;CONSISTING OF: LAYOFF OF
TWO COMMUNITY SERVICE OFFICER POSITIONS, ONE POLICE
RECORDS ASSISTANT II POSITION, ONE PUBLIC WORKS
INSPECTOR 1 POSITION, AND ONE OFFICE ASSISTANT 2- PUBLIC
WORKS; POSITION, AND ABOLISHMENT OF TWO POLICE CAPTAIN
POSITIONS, EFFECTIVE JULY 27, 2011, DUE TO LACK OF FUNDS
WHEREAS, the City Council was provided an analysis of the City's projected financial
position for the five years, beginning July .1, 2010 and ending. June 30, 2015, which projection, as
revised in February, 2011 indicates that, unless expenditures, are balanced with revenues in the
early years of the forecast period, an imbalance of approximately $2.2 million in FY 2.011 -12
will increase to approximately $15..1 million in 2014 -15; and
WHEREAS, the projected financial position indicates that if approximately $3.6 million,
representing FY 2011-2 and 2012 -13 deficits, is balanced during the first two years of the
forecast period, the General Fund can remain balanced throughout 2014-15; and
WHEREAS, in March, 2011 the City Council authorized one additional offering of the
California Public Employment Retirement System ("PERS") two year service credit
enhancement program, (the "golden handshake ") to provide employees with an incentive to
retire early and vacate positions in order to generate salary savings; and
WHEREAS, staff also advised the City Council that other positions being vacated
during FY 2010 -11 would be held open and frozen, as another means of achieving salary
savings; and
WHEREAS, on April 4, 2011, the City Council directed staff to take further steps
necessary to eliminate. the S3:6 million imbalance in the development of the 2011 -12 budget, and
to reduce an additional $400,000 to begin to restore depleted General Fund reserves, and
authorized discussion with employee bargaining units concerning a number of proposals for
saving General Fund costs, including various proposed employee concessions and possible lay
offs; and
. WHEREAS, staffhas been meeting regularly with various of the bargaining units since
early May, 2011 and as recently as July 6, 2011; and
WHEREAS, staff has been employed in a continuous process of revising reduction
targets, as additional vacancies have presented themselves, as employees have exercised the
option to accept the golden handshakes, as revenue and cost projections were updated, and as
opportunities presented themselves to move staffing between funds; and
WHEREAS, all of these actions have been effective in drawing closer to the overall
reduction goal, but make difficult arriving at any concession target; and
•
WHEREAS, two cost savings proposals forwarded were explored and will be included
in the 2011 -12 budget presented to Council, that togetherprovide funding for three positions
which are no longer on the lay-off list, (two Information Technology positions and a
Neighborhood Preservation Coordinator); and
WHEREAS, in addition to these proposals, retirements in positions in the Street fund
provide an opportunity to achieve a:net General fund savings of approximately $250,000 per
year by transferring three Parks Maintenance positions into the Street crew; and
WHEREAS, savings assumptions have been e revised, and were augmented from other
sources, including reducing reserves in Workers Compensation, Liability, General Services, and
Post Retirement Benefit funds; and
WHEREAS, taking into account all of the adjustments that have been employed, the
General fund remains approximately $450,000 per year short of the overall reduction target,
which shortage, if left uncorrected, would leave the General fund approximately $1.8 million out
of balance in 2014 -15; and
WHEREAS, it does not appear at the present time that other alternatives can be relied .
upon to preserve all presently: held positions; and
WHEREAS, the .final lay -off list, presented for City Council consideration, reduces
salary and benefit costs by approximately $449,000 per year, and consists of the following list of
positions developed in association with department management to provide the least negative .
impact to City operations as compared with other options that might be exercised:
■
o Layoff of two (2) Community Service Officer positions
o Layoff of one (1) Police Records Assistant II position
of one Public Work's Inspector 1 `position
o L Lay ayoff f of of one (1) (1) Office Assistant 2- Public Works position
o .Abolishment of two (2) Police Captain . positions; .
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Petaluma as follows:
1. Due to lack of funds, reorganization consisting of:
a) layoff of two (2) Community Services Officer positions, one (1) Police
Records Assistant. II position, one (1,) Public Works Inspector 1 position,
and one (1) Office Assistant 2- Public Works position; and
•
b) the abolishment of two(2) Police Captain positions; such reorganization to
be effective July 27, 20.1.1, is authorized.
2. Said reorganization consisting of layoffs and position abolishment shall occur in
accordance with applicable memoranda of understanding, compensations plans
and personnel rules.
Under thepower?and authority conferred upon this Council by the Charter of said City.
REFERENCE: 1 hereby certify the- foregoing Resolution was introduced and Approved as to
adopted by the,Council of the City of Petaluma at a Regular form:
meeting on the ;1 1 ` day of July, 201 1, by the following vote:
City Attorney
AYES:
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST
City Clerk Mayor
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