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HomeMy WebLinkAbout2C, Non-Union Wage Adjustment EN HILLS Request for Council Review 2C Prepared By: Patrick Klaers,City Administrator Work Session Date: March 21,2011 Non-Union Wage Adjustment Discussion Topic: Discuss 2011 Cost of Living Increase (COLA) for all non-union employees. SupportiIIt!Documents: 1. Part of the August 16, 2010 Council Work Session minutes. 2. Memo from Sue Iverson on COLA impact on the General Fund. EN HILLS MEMORANDUM DATE: March 21, 2011 TO: Mayor& City Councilmembers FROM: Patrick Klacrs, City Administrat o SUBJECT: Non-Union Wage Adjustment Background During 2011 budget discussions, the Council generally agreed that it would include money in the Contingency Fund for employee wage adjustments and that the Council would discuss the details of "how much" after the Union contract was settled. We now are at that point in time, as last Monday the Council approved the Union contract proposal. Discussion Attached is a memo from the Director of Finance and Administrative Services, Sue Iverson, regarding the impact to the General Fund for various wage adjustment options for the regular non-union City employees. Also attached is a section of the August 16, 2010, Council Work Session meeting minutes when wages were discussed. Please note that the 2011 Contingency Fund is budgeted at$20,211. As you know, the Union (8 employees in Public Works) settled for a zero Cost of Living Adjustment (COLA) increase for 2011 and for a 1% COLA increase in 2012. Part of the rationale for the zero increase in 2011 was because in 2010, when they were in the 3rd year of a 3-year contract, they received a 3% COLA increase. (This contract was completed in late 2007 when there was no recession in sight.) In 2010, when the Union received their 3% COLA increase, all the non-union employees (15 employees) did not get any increase for COLA. In conversations with Councilmembers, this 2010 union/non-union wage adjustment discrepancy is what the Council wants to try to "correct" in 2011. This possibility was discussed during the Union contract negotiations so that there would be no surprises after a settlement was reached. Recommendation After evaluating our internal relationships and hearing about COLA adjustments in a few of our neighboring communities, I am recommending that the Council approve a 1% COLA increase effective January 1 st and a 1% COLA increase effective July 1 st for all regular non-union City employees. Requested Action Staff is looking for direction from the Council in order to put this topic on the March 28th City Council agenda. Attachmcnts Part of the August 16, 2010, Council Work Session minutes Memo from Sue Iverson on COLA impact on the General Fund ARDEN HILLS CITY COUNCIL WORK SESSION—AUGUST 16 2010 3 2.A Library Proposal Update (continued) Councilmember Grant questioned if the City had received any further information on potential - operating costs. City Administrator Klaers indicated the City has not. He stated the timing of the FPAC meeting would be tight for passing along information to the Library Board. A special Council meeting may need to be called to review the information within the proper timeline. He added that the Council should discuss whether or not they were interested in using TIF for Presbyterian Homes if the library was not included in the redevelopment. Mayor Harpstead stated TIF had to be used for construction or infrastructure, specific to property improvements, and the potential for TIF was there. He indicated the total content of the proposed development would determine his decision, as TIF could not be used for operating expenses for the Library. The overall mix of the development may justify the use of TIF when looking at the project in total. Councilmember Holden explained the facility was being utilized every day and because it was old does not mean it needs to be replaced. Councilmember Holmes questioned what further information was needed from Presbyterian Homes. City Administrator Klaers stated a pro forma from Ehlers was in the works and Ehlers would be present at the FPAC meeting. Councilmember Grant suggested staff work to gather as much information as possible to get the process started. Mayor Harpstead agreed and requested staff begin gathering the necessary information. B. 2011 BudgetlCIP Finance Director Iverson presented the City Council with the 2011 Budget. She reviewed the overall changes from the 2010 budget noting there was an additional staff person added to the finance department and interns into administration. The City has a great deal of clean up work and the interns have been effective in completing these tasks and they also have helped to get rid of audit findings with timely reconciliations. Overall, the recent personnel changes made to staff resulted in a $19,000 increase in the budget. Insurance rates would be back to the City at the end of August or early September. She expected the rates to be favorable. The budget reflected a 10% increase for benefits, but this may be reduced. Finance Director Iverson reviewed the budget further explaining a 1% increase in COLA for 2011 would impact the general fund by about $10,000 and about $6,000 in special funds. Mayor Harpstead questioned if the finance staff member would be a one year deal or on-going. ARDEN HILLS CITY COUNCIL WORK SESSION—AUGUST 16, 2010 4 2.B 2011 Budget/CIP (continued) Finance Director Iverson stated this could be tried for one year, but would be an ongoing need of the City_ Mayor Harpstead questioned if the personnel changes included Terry and Pat. Finance Director Iverson indicated this was the case and the budget also reflected the new hire of a Community Development Director_ Councilmember Holden questioned how the administrative interns would be funded. Finance Director Iverson explained this was a line item and was budgeted in administration. Mayor Harpstead asked if there would be any change in the administrative interns from 2010 to 2011. Finance Director Iverson projected there would be a $4,000 reduction in intern expenses for finance with an$8,000 increase in administration. City Administrator Klaers indicated staff was not certain how the Council felt about increases in wages or benefits. He noted the union contract with Public Works would need to be negotiated. He hoped to reach a three year contract with the union. He suggested the Council consider the increases made by surrounding communities before establishing any increase. Finance Director Iverson stated the budget reflected a 3% COLA increase at this time. However, she recommended the Council take the wage increases and put there into a contingency fund until this percentage was finalized and staffing was decided. Councilmember Holden questioned who would handle the union negotiations. City Administrator Klaers stated he would negotiate with the union, and stated in the past he has used a consultant to assist with negotiations as this keeps things neutral and professional. Mayor Harpstead asked when the negotiations would take place. City Administrator Klaers estimated this would take place in several months, and he would make a recommendation to Council prior to the negotiations on how Staff wishes to proceed. Councilmember Holmes asked, based on the current numbers and personnel changes, if the levy would have to increase 4-5%. ARDEN HILLS CITY COUNCIL WORK SESSION—AUGUST 16 2010 5 2.B 2011 Budget/CIP (continued) Finance Director Iverson explained there was a proposed levy increase of 3.4% with all budget increases as stated within the budget book at this time. The number would decrease if the Council made decreases. Mayor Harpstead suggested the Council now address the total budget, since the personnel issues have been discussed. Councilmember Grant stated he did not recall discussing additional personnel for the finance department. Finance Director Iverson indicated this had not yet been discussed by the Council as a group, but several Councilmembers had discussions with her and the City Administrator. The numbers were included just to show the Council how it would affect the budget. Councilmember Holden suggested the additional finance staff member as this department seemed to be behind. She felt the additional staff would greatly benefit the City and allow this department to catch up. Mayor Harpstead explained he would be reluctant to add another staff member to this department. He felt neighboring cities had similar finance systems and a joint powers arrangement could be established to share one half of the position. He questioned how many hours the current interns were working. Finance Director Iverson indicated one intern works about 40 hours per week while the other works between 10-20 hours per week. City Administrator Klaers stated the finance department did have a need in the short term, but long term the City may not have the need. He suggested the Council consider a one year contract for this position. Councilmember Holmes suggested the Personnel Committee discuss this further and potentially put Sue into a Finance Director/Assistant City Administrator position for the City. Councilmember Holden asked who was completing human resource tasks at this time. Finance Director Iverson indicated she was handling human resources. City Administrator Klaers stated there was no one individual that handled all of the human resources at this time. He indicated the Deputy Clerk did not have the experience necessary to complete all of the Human Resource tasks. Typically the City Administrator does .not handle these tasks but makes recommendations to Council. Currently Sue is the only one with the experience and skill set to supervise these functions. Councilmember McClung commented he was uncomfortable with this discussion in that this issue should have come before the Council prior to the budget discussion. He felt an organizational chart of the City should be reviewed further. ARDEN HILLS CITY COUNCIL WORK SESSION—AUGUST i 6 2010 6 2.B 2011 Budget/CIP(continued) Mayor Harpstead felt the budget timing was convenient for this personnel discussion, but he was - reacting to the job title versus the needed head count. He wanted to be assured that the City Administrator was driving the personnel recommendations. City Administrator Klaers felt the finance intern was a valuable asset to the City and has experience with the City. The thought was to keep him on board for one more year. He stated he would like to see the work load caught up and this could be reevaluated for next year's budget. Councilmember Holden commented there was a need in the finance department if they had 50+ hours of interns per week. City Administrator Klaers stated the Personnel Committee was going to discuss the organizational chart and staffing of City Hall further. Mayor Harpstead suggested the COLA increases and additional staff be put into a contingency fund for the time being. Councilmember Holden and Councilmember Grant were in favor of a 2% COLA increase. Councilmember Holmes was in favor of a 3% increase. Councilmember McClung had not considered an increase and did not have a comment but he was not in favor of 3%_ Mayor Harpstead suggested staff proceed with a 2% COLA increase in the budget for the time being. He then proposed the Council further discuss the 2011 budget. Councilmember Holden questioned how the Park Special Revenue fund would be affected with the potential Hazelnut Park acquisition. Finance Director Iverson explained the Park Special Revenue fund held all park dedications and the PIR fund would assist with all other park expenses. She noted the PIR budget had $360,000 as a placeholder for Hazelnut Park for 2011. Mayor Harpstead asked if the Parks Department had any other outstanding grants. Park and Recreation Manager Olson stated the City was awaiting reimbursement for the Safe Routes to School trail. No additional grants have been applied for. Councilmember Grant questioned what the Cable Revenue funds were spent on. Finance Director Iverson indicated this was used for audio/visual items, the website, and providing information to the public. She stated there was a healthy balance in this account. EN HILLS MEMORANDUM DATE: March 17, 2011 TO: Patrick Klaers, City Administrator FROM: Sue Iverson, Director of Finance and Administrative Services SUBJECT: COLA Analysis for 2011 In the 2011 Budget process we put$20,211 in the General Fund Contingency for salary increases as we did not have the union contract settled. Since we have now settled the union contract for the years 2011 —2012, we now know that the increase for union employees will be 0% for 2011. You have asked me what the impact on the budget would be for a 1% increase retro to January 1, 2011 followed by a 1% increase on July 1, 2011 for the non-union employees. You have also asked what the impact on the budget would be for a 1.5% increase retro to January 1, 2011 for the non-union employees. The effect of a 1% increase on January 1 s and July 1"would be as follows: General Fund 1%Jan 1 $ 6,108 1%Jul 1 3,548 Total Increase $ 9,656 The effect of a 1.5% increase on January 1st would be: General Fund Jan 1 $ 9,502 Total $ 9,502 In effect, either way it amounts to a 1.5% increase for the year, but the advantages of the first option (1% on January 15t and 1% on July lst) would be that it adjusts the pay scales for non- union employees to "catch-up" for what happened last year when the union employee got a 3% increase and the non-union employees got 0%. This would result in the non-union employees' pay scales only 1%behind the union's at the end of the year. Memo Patrick Klaers COLA Analysis for 2011 2 A similar increase next year would, in effect, "catch up" the non-union employee's pay scales to the union scales, as a 1% increase on January I" and another 1% increase on July 1" would increase the pay scales by 2% by the end of 2012 which would make up for the 1% they would still be behind.