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City Council Staff Report
June 19, 2012
ITEM
Resolution of the City. Council of the City of National City approving a compensation plan for
members of the Executive and Management groups to include: a cost of living adjustment of four
percent; an adjustment in the City's contribution to employee health care to $1,200; the addition
of a two percent bilingual pay differential for eligible employees; authorizing the City Manager
to grant up to an additional four percent merit increase; an upward adjustment in the Executive
and Management salary bands; and the addition of a new Executive classification titled Director
of Administrative Services.
BACKGROUND
The City of National City workforce is comprised of six primary employee work groups:
Executive, Management, Confidential, Municipal, Public Safety Fire and Public Safety Police.
Municipal and Public Safety are formally recognized collective bargaining groups. As such, the
wages, hours, terms and conditions of employment for employees represented by these three
groups are negotiated through collective bargaining and governed by collective bargaining
agreements commonly referred to as Memoranda of Understanding. The Confidential employee
group is an informal employee association that has been granted limited authority to negotiate
wages, hours, terms and conditions of employment. The authority to negotiate with all three
groups is delegated to the City Manager and her negotiating team by the City Council.
The Executive and Management employee groups do not negotiate wages, hours, terms and
conditions of employment. Instead such wages, hours, terms and conditions of employment are
determined at the discretion of the City Council and the City Manager, in compliance with any
applicable State and Federal labor laws.
Through collective bargaining, over the past eleven years, employees represented by National
City formal and informal employee associations have negotiated both concessions, such as
employee contributions to the pension fund, and unpaid work furloughs; as well as modest
enhancements to wages and benefits, based on the cost of living. Through all such negotiations,
team members of both sides of the negotiation table recognized the need to further the goal of
fiscal sustainability for the City. During that same time period, Executive and Management
employee groups have also picked up employee contributions to the pension fund while
maintaining a status quo (flat) benefits package and a relatively flat salary package. All groups
have been reduced through managed attrition.
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Staff Report — Executive and Management Compensation.Plan
June 19, 2012
The purpose of this report is to review the compensation package established for the Executive
and Management employee groups, focusing on data. Based on the information contained herein,
the report further seeks the authority to adjust said package.
For your consideration is a review of current and historic data related to compensation and
benefits for members of the Executive and Management employee groups. As background to the
numeric data provided herein, brief narrative sections are provided for context. For the remainder
of this report, the term Management will be used to denote the collective Executive and
Management groups.
DISCUSSION
As referenced above, one of the avenues to fiscal sustainability for National City has been in the
form of employee concessions. The City Manager's pledge to have Management employees lead
by example has been manifested through:
• One salary increase in a ten year period
• An employee contribution to the pension fund (PERS) of 3% for Executives and 2% for
Management in 2009
• A full 8% employee contribution to PERS for Executives and Management in 2011 (8%
represents the full employee contribution required by PERS)
• No increase in the City's contribution to health care coverage since 2002
• No increase in auto allowance since 2002
Suspension of professional training and memberships since 2008
Addition of vacation leave accrual cap for Executives effective January, 2012
No bilingual pay (except the Police Department)
Compensation
A compensation history for members of the Executive and Management groups for the time
period 2002 to present (as shown in the table below) demonstrates the adherence to that pledge.
In that span of time, the two groups under discussion received two salary increases. In comparing
the number of increases granted to Management employees verses other employee groups, the
following was found:
Executive & Management
Confidential
FFA
MEA
POA
8 (an additional increase is scheduled for July, 2012)
10 (an additional increase is scheduled for July,
2013)
8 (an additional increase is scheduled for July, 2012)
14 (additional salary surveys to be conducted in
August, 2012 and 2013)*
*Salaries are based on local market
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Staff Report — Executive and Management Compensation Plan
June 19, 2012
Attached tables provide detailed data by group (Attachments 1 and 2).
As a result of the above, Executive and Management employees saw a reduction in take home
pay when they reached the full employee eight percent (8%) contribution to retirement July 1,
2011.
In fiscal year 2000, the City Council re-established the Managerial Compensation Plan for
Executive and Management employees. The Plan calls for executive and management positions
to be surveyed annually in order to update the City's salary bands and benefits to the county-
wide average based on local cities. The last known record of such a survey and such an
adjustment is 2002. In conjunction with this report, the current executive level positions were
benchmarked against the other local cities, comparing actual salarieswith the following
findings:
City Clerk
City Librarian
City Engineer
Director of Emergency Svcs
Human Resources Director
Police Chief
Public Works Director
CDC Executive Director
$7,658
$9,050
$10,369
$10,413
$10,106
$12,273
$9,636
$11,288
25.25%
21.39%
13.63%
28.43%
20.59%
17.89%
29.07%
6.71
26.73%
24.45%
18.17%
30.46%
22.87%
19.87%
31.49%
111111111111111
NOTES:
1. The CDC Executive Director was benchmarked against both hybrid redevelopment directors (with responsibility for
Redevelopment as well as other areas) and pure Redevelopment Director positions, respectively
2. The Director of Emergency Services was benchmarked against Fire Chiefs
While cities have historically benchmarked against other cities, recently comparisons have been
made between cities and other relevant local markets such as water and school districts. In
comparing the executive level staff to the local water district, the Sweetwater Authority over a
four year period, the following was found:
2008
2009
2010
2011
2012
n/a
Between 3% and 6%
COLA (average of 5%)
n/a
under discussion
2.2% COLA
3.3% COLA
2.0% COLA
2.0% COLA
3.3% COLA
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Staff Report Executive and Management Compensation Plan
June 19, 2012
Health care
Under the current compensation plans, the City contributes towards the cost of medical and
dental coverage for employees covered by one of the City's plans. The amount contributed to an
individual employee is dependent on the employee group to which he/sheis a member. Members
of the Management group receive a flat dollar contribution. Members of the Confidential, FFA,
MEA and POA (represented) employee groups receive a percentage of the cost of the lowest
priced medical and dental plans. As such, every time the premiums increase, the City's
contributions increase for those groups.
Current City Contributions to Health Care by Group
Executive
Management
Confidential
Represented
$750
$625
Employee Only: $602.11
Employee +1: $602.11
Employee +Fam: $1,029.81
Employee Only: $466.86
Employee +1: $755.39
Employee +Fam: $1,056.11
*Represented includes FFA, MEA and POA
Attached table lists increases by group (Attachment 3).
In the eleven (11) benefit years from 2002 through 2012, the City's premiums for medical care
(the largest portion of the cost of health care) increased in ten (10) out of eleven (11) times. The
one year without a rate increase, 2009, is attributable to unblending the active employees and
early retirees that year otherwise; the City would have experienced a rate increase in all eleven
years. The contribution given to some employee groups such as Management employees has not
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Staff Report - Executive and Management Compensation Plan
June 19, 2012
kept pace with the cost of health care. As such, members of these flat contribution groups are
experiencing larger and larger out of pocket expenses, thus reducing total compensation and
further reducing take home pay. In consulting with health care providers and the City's employee
benefits broker, this upward trend in health care costs is projected to continue over the next
decade. For the purposes of budgeting and fiscal sustainability, a flat contribution to health care
is certainly an appropriate approach. However, such flat contributions should be revisited
periodically for adjustment. At present, the City's benefits program is "upside down" with
employees earning higher health care benefits than their supervisors and managers.
Bilingual Pay
The disparity in the allocation of salary and health care increases is leading to compression
issues between management positions and staff. Further adding to the inequity is the bilingual
pay benefit. Employees represented by the Confidential, Municipal and Safety groups are
eligible to receive bilingual pay:
Confidential
Municipal
Public Safety - Fire
Public Safety - Police
$50 per pay period
$50 •er .ay •eriod
2% of base salary
2% of base salary (Sergeants & Lieutenants)
3% of base salary (Police Officers & Senior Officers)
Individuals requesting bilingual pay must demonstrate that there is both a need for the skill and
fluency in the language.
National City is a very diverse community with a significant population of individuals that speak
other languages such as Spanish and Tagalog as their primary or sole language. While
Management level employees have taken on greater day to day operational responsibilities (due
to reductions in staffing), including the need to converse directly with residents, the only two
Management level positions currently eligible to receive bilingual pay are the Police Chief and
Assistant Police Chief.
Organizational Structure
In July, 2011, the City Manager began moving the City toward a consolidated organization
consisting of five (5) primary departments. Today, those five (5) primary departments are
Administrative Services, Community Services, Engineering, Fire and Police. On May 10, 2012,
the City Manager requested that the Civil Service Commission create a new position entitled
Director of Administrative Services to oversee the Administrative Services Department with
responsibility for directing the work of Finance (including Purchasing), Human Resources
(including Risk Management) and Management Information Systems. Having reviewed the
request, the Commission unanimously approved both the recreation of the Executive level
position and its exemption from classified service. The creation of this classification will not
result in an increase in employees.
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Staff Report Executive and Management Compensation Plan
June 19, 2012
The salary band established for the position is $67,721 - $142,774
RECOMMENDATION
As a result of managed attrition, the number of Management employees has been significantly
reduced since 2004. Since 2004, through managed attrition, 22 Management positions have been
eliminated, saving the City more than $2.6 million. As discussed above, the compensation plan
for Management positions has been held relatively flat, with an actual reduction in take home
compensation (resulting from increased pension contributions and increases in out of pocket
health care costs). At the same time, members of this group have taken on greater spans of
control and increases in work load resulting from the consolidation of work units, divisions and
departments necessary to achieve the staffing reductions (through managed attrition) with no
reductions in services to the community or productivity.
In recognition of: the disparity in compensation history between Management employees and.
other groups, the disparity between the compensation of Management employees and the local
market; and the significant reduction in the number of Management positions, the following
recommendation is made:
Approve an amendment to the Management compensation plan to include the following:
1. Effective with the first full pay period in July, 2012
a. Authorize the City Manager to grant a four percent (4%) cost of living adjustment
to existing Management employees
b. Authorize the City Manager to grant an additional base salary increase of up four
percent (4%) to Management employees based on merit
c. Increase the flat contribution to health care to $1,200 per month for Management
employees
d. Authorize the addition of a two percent (2%) bilingual pay differential for eligible
Management employees
2. Approve the Executive and Management salary schedules, including the upward
adjustment of said schedules and the inclusion of the newly created Director of
Administrative Services:
FISCAL IMPACT
The fiscal impact of the above recommendation is projected to be $325,070.02, the cost of which
will be paid out of the adopted budgets of each employee's funding department/funding source.
Attachments:
1. Compensation History — Executives and Managers
2. Summary of Compensation Adjustments (by employee group)
3. History of City Contribution — Health and Dental Insurance, 2002 — 2012
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Staff Report — Executive and Management Compensation. Plan
June 19, 2012
4. Executive Compensation Schedule
5. Management Compensation Schedule
6. Report to Civil Service: Creation of New Classification — Director of Administrative
Services