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HomeMy WebLinkAboutStaff ReportCITY OF NATIONAL CITY MEMORANDUM DATE: April 19, 2011 TO: Honorable Mayor and City Council FROM: Stacey Stevenson, Director of Human Resources SUBJECT: Staff Report — Related to Resolution of the City Council of National City authorizing the City Manager to implement a one-time incentive based voluntary separation program for eligible executive and management employee classifications of the City of National City (excluding public safety command classifications, effective March 30, 2011, including a designated period for two years additional service credit under the provisions Government Code Section 20903, with the disclosure of the costs to provide this benefit in compliance. with Government Code Section 7507. Background For the past five years, under the direction of the City Manager, City divisionsand departments have been engaged in managed attrition and realignment. As vacancies occur, division and department heads are tasked with making every effort to accommodate the duties of that vacant position through such means as the use of technology, reassignment to existing staff and regional partnering. If after such review there is still a desire to fill the vacancy, an employee run committee, the Position Review Committee, conducts a review and makes a recommendation to the City Manager as to whether or not the position should be back filled. In balance, divisions and departments have been merged to create a synergistic effect, allowing for the continuation of productivity with reduced staff resources. As part of a comprehensive package to address the City's budget constraints, on June, 8, 2010, the City Council approved the initiation of an Employee Voluntary Separation Program: By the October 20, 2010 closure of the program window, 24 employees were separated from the City. The 24 employees were members of the Confidential, Firefighters' Association, Municipal Employees' Association or Police Officers' Association employee groups. For the past three months, the City Manager's Office and the Finance Department have been engaged in a detailed review of the current fiscal year budget as well as next fiscal year's. Throughout the review process, there has been a concerted effort to reduce expenditures and identify areas of savings and revenue. At this point in the process, projections estimate the structural deficit for fiscal year 2011/2012 to be $4 million. If the State of California moves Honorable Mayor and City Council Staff Report to Enact an Incentive Based Voluntary Separation Program April 19, 2011 Page 2 forward with the Governor's budget proposals such as the elimination of redevelopment agencies, the projected deficit will grow. This staff report seeks authorization to enact a second round of the Employee Voluntary Separation Program, this time targeted to specific job classifications that will allow the City Manager to achieve further savings through additional mergers and consolidation of divisions and departments. The City Manager has met one on one with the incumbents of every recommended classification, providing an overview of the current budget forecast and a preview of this program request. Discussion Using the June, 2010 program as a model, staff brings forward the following proposed program terms: A. RETIREMENT INCENTIVE PROGRAM Any eligible employee who has been approved by the City Manager to voluntarily retire from the City between March 31, 2011 and June 28, 2011 shall receive two additional years of service credit with the California Public Employee Retirement System (Ca1PERS). Employees are eligible for this program if they have completed at least five (5) full years of service in a full- time, benefitted, career position, are at least 50 years of age and eligible to retire through CaIPERS within the defined window period. B. VOLUNTARY SEPARATION PROGRAM Any eligible employee who is approved to voluntarily resign from the City between March 31, 2011 and June 28, 2011 shall receive a cash incentive. The cash incentive for individual employees will equal $5,000 plus $1,000 for each year of service with the City of National City as of the employee's effective date of separation. The proposed list of classifications eligible to participate in this round is composed of classifications from the management and executive ranks, excluding Fire and Police command positions (Assistant Police Chief, Director of Emergency Services, Police Chief), with the intent of maximizing savings and increasing the City Manager's ability to further consolidate the organization. The positions noted for exclusion from the program are essential to maintaining a command structure sufficient to ensure the overall efficiency and effectiveness of the two subject departments. As such, if the positions are vacated, they would, in probability, need to be backfilled. The combined costs of paying the employee incentive (purchase of two years of service credit or cash out), recruiting replacement personnel and the salaries and benefits of the new hires would likely exceed any savings: Thus, the cost of the incumbents in these three classifications participating in the program would negate any savings from the separations. Honorable Mayor and City Council Staff Report to Enact an Incentive Based Voluntary Separation Program April 19, 2011 Page 3 Recommendation 1. Authorize the City Manager to implement the proposed Voluntary Separation Program for the specific job classifications contained in Attachment la (excludes Fire and Police command staff). 2. In the alternative, authorize the City Manager to implement the proposed Voluntary Separation Program for the specific job classifications contained in Attachment lb (includes fire and police command staff). Economic Impact In order to achieve cost savings, the program is primarily limited to employees in positions where retirement or separation can result in the reduction of a position or an ancillary position. Employees in positions that would have to be retained or refilled may not be eligible, at the discretion of the City Manager. If every employee that is eligible to participate under option A above does so, the cost of the purchase of service credit is estimated to be $1,008,501 (for eligible list la) or $1,114,544 (for eligible list lb) amortized over 20 years, with payments beginning in two years. The true cost is dependent on which employees actually participate. Applying current census data and historic data, the actual purchase of service cost is estimated to be closer to $393000 (rounded), amortized over 20 years for a net increase in annual payment of 0.26% or $29,700 (rounded). The total program cost is estimated to be $298,600 in the current fiscal year (representing estimated leave accrual payouts and option B payments), $32,000 in fiscal year 2012 (representing health care and retiree medical contributions) and $40,400 in fiscal year 2013 (the fiscal year 2013 figure represents the amortized PERS premium increase and retiree medical contributions). The estimated savings in salary and benefits is $1,182,462. Again, the actual costs and savings are depending on .ch employees actually choose to separate. ENSON ATTACHMENT la EMPLOYEE VOLUNTARY SEPARATION PROGRAM MARCH, 2011 ELIGIBLE CLASSIFICATIONS (Alphabetical Order) Assistant City Manager Building Official City Engineer City Manager City Librarian Community Development Executive Director Community Development Manager Community Services Director Director of Public Works Equipment Maintenance Supervisor Facilities Maintenance Supervisor Financial Services Officer Housing Programs Manager Human Resources Director Management Analyst I Management Analyst III Management Information Systems Manager Nutrition Program Manager Park Superintendent Police Support Services Manager Principal Engineer Principal Planner Records Management Officer Senior Accountant Senior Assistant City Attorney Street Maintenance & Wastewater Superintendent Traffic Engineer ATTACHMENT 1 b EMPLOYEE VOLUNTARY SEPARATION PROGRAM MARCH, 2011 ELIGIBLE CLASSIFICATIONS (Alphabetical Order) Assistant City Manager Assistant Police Chief Building Official City Engineer City Manager City Librarian Community Development Executive Director Community Development Manager Community Services Director Director of Emergency Services Director of Public Works Equipment Maintenance Supervisor Facilities Maintenance Supervisor Financial Services. Officer Housing Programs Manager Human Resources Director Management Analyst I Management Analyst III Management Information Systems Manager Nutrition Program Manager Park Superintendent Police Chief Police Support Services Manager Principal Engineer Principal Planner Records Management Officer Senior Accountant Senior Assistant City Attorney Street Maintenance & Wastewater Superintendent Traffic Engineer