08 Staff Report - Amending Fascial Year 2003-2004 Management Compensation Plan00
MEETING DATE: 01/20/04
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ITEM NO.
COUNCIL AGENDA REPORT
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DATE: January 15, 2004
TO: MAYOR AND TOWN OUNCIL
FROM: TOWN MANAGER
SUBJECT: ADOPT RESOLUTION AMENDING THE FISCAL YEAR 2003-2004
MANAGEMENT COMPENSATION PLAN TO ADJUST THE HEALTH
INSURANCE CASH ALLOCATION, AMEND THE ADMINISTRATIVE
LEAVE PROVISION, AND ADJUST COMPENSATION FOR POLICE
SERGEANTS
RECOMMENDATION:
Adopt resolution amending the Fiscal Year 2003-2004 Management Compensation Plan to adjust
the health insurance cash allocation, amend the administrative leave provision, and adjust
compensation for Police Sergeants.
DISCUSSION:
The Management Compensation Plan applies to Department Heads (Management Group I), Middle
Managers (Management Group II), and Police Sergeants (Management Group III). A number of
midyear changes are presented below. The proposed changes do not apply to the Town Manager.
Cash Allocation
Management employees are provided a cash allocation to be used to purchase benefits, including
medical, dental, and vision insurance. Increases to the management cash allocation have been at
least equal to the increases provided to the Town's represented employees. Effective January 1.
2004, medical and dental insurance premiums will increase and the represented employees cash
allocation will increase by 17.8%. A similar increase on January 1, 2004 is recommended for the
management staff as follows:
2003 2004
Group I Monthly Cash Allocation: $913 $1,076
Group II, III Monthly Cash Allocation: $856 $1,008
PREPARED BY: GaryRogers, Human Resources Director
L
N:\MGR\GROGERS\CNF\COUNCIL\Management\2003\council report comp plan amendments
an 2004.w
Reviewed by: -Asst. Town Manager ZIEAttomey Finance Town Clerk
Revised: January 15, 2004 (9:0 lam)
Reformatted: 10/23/95
e
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION AMENDING THE FISCAL YEAR 2003-2004
MANAGEMENT COMPENSATION PLAN TO ADJUST THE HEALTH
INSURANCE CASH ALLOCATION, AMEND THE ADMINISTRATIVE LEAVE
PROVISION, AND ADJUST COMPENSATION FOR POLICE SERGEANTS
January 15, 2004
In lieu of spending the entire cash allocation on benefits, employees may choose to receive cash-back.
As approved in the June 2003 plan update, managers hired as new Town employees after June 30,
2003 are not eligible for any cash-back. It is proposed that the January 2004 cash-back be frozen at
the 2003 levels. In an effort to contain costs, cash-back is a benefit that will be reviewed for change.
An approach under consideration is a phase-out of this benefit. Some employees view the cash-back
as part of their compensation, so any reduction will pursued in as fair a manner as practical. The next
revision will be included in the FY 2004-05 Management Compensation Plan scheduled for
consideration in the summer, 2004. Once again, in an effort to contain costs, management is taking
the lead in making significant change to a long-standing component of the Town's compensation
system.
Administrative Leave
Currently, upon approval of a Department Head or the Town Manager in the case of Department
Heads, Group I and II management employees are eligible for up to 40 hours of administrative leave
with pay per calender year. Based upon increasing fiscal challenges and related workload, and the
increasing amount of extraordinary work hours performed by management staff, it is proposed that
the Town Manager be granted the authority to provide up to an additional 40 hours of administrative
leave with pay per calendar year (for a total not to exceed 80 hours per year).
Police Sergeant Compensation
Historically, changes in compensation for the Police Sergeants occur at the same time as changes in
the Police Officer's compensation. Pursuant to the terms and conditions of the Town - Police
Officers Association contract, the salary schedule for the Police Officers will be adjusted by 6%
effective January 4, 2004. It is recommended that the Police Sergeant salary schedule also be
adjusted by 6% effective January 4, 2004. This adjustment will ensure continued competitiveness
in the local labor market.
ENVIRONMENTAL ASSESSMENTS:
This item is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
Funds to implement the Management Compensation Plan as amended are included in the Adopted
2003-2004 Operating Budget.
PAGE-3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION AMENDING THE FISCAL YEAR 2003-2004
MANAGEMENT COMPENSATION PLAN TO ADJUST THE HEALTH
INSURANCE CASH ALLOCATION, AMEND THE ADMINISTRATIVE LEAVE
PROVISION, AND ADJUST COMPENSATION FOR POLICE SERGEANTS
January 15, 2004
Attachments:
Resolution amending the Fiscal Year 2003-2004 Management Compensation Plan to adjust the health
insurance cash allocation and amend the administrative leave provision to adjust compensation for
Police Sergeants. '
EXHIBIT A: The Fiscal Year 2003-2004 Management Compensation Plan
RESOLUTION NO.
RESOLUTION OF THE TOWN OF LOS GATOS
AMENDING THE FISCAL YEAR 2003-2004
MANAGEMENT COMPENSATION PLAN
TO ADJUST THE HEALTH INSURANCE CASH ALLOCATION,
AMEND THE ADMINISTRATIVE LEAVE PROVISION,
AND ADJUST COMPENSATION FOR POLICE SERGEANTS
RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa
Clara, State of California, to adjust the health insurance cash allocation, amend the administrative
leave provision, and adjust compensation for Police Sergeants as presented in the Fiscal Year 2003-
2004 Management Compensation Plan, a copy of which is attached hereto as EXHIBIT A, is hereby
approved.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California, held on the day of January, 2004 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYES:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
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EXHIBIT A
TOWN OF LOS GATOS
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MANAGEMENT
COMPENSATION PLAN
Fiscal Year 2003-2004
As Amended
1. PURPOSE
To establish a program and guidelines for a management compensation plan
pursuant to the following goals and objectives:
• Establish a system for the payment of management personnel which results
in appropriate salary-contribution relationships and competitive salary rates.
• Recognize the distinct character of management jobs and incumbents as
opposed to. grouping them with other employees for salary purposes.
• Diminish the possible influence of negotiated salaries for rank-and file
employees on salaries set for management classifications.
• Promote more commitment by management to goals and objectives of the.
Town Council and Town Manager.
• Establish a system where salary serves as an effective device for promoting
better job performance.
• Give recognition to impact of the employee on the job and performance level.
• Promote the further identification of management group and understanding
of associated roles, loyalties, and responsibilities.
• Strengthen the role of the supervisor in the compensation program.
• Appropriately reward those employees whose extra effort results in the
improvement of Town services.
2. APPLICATION
This Policy shall apply to all employees occupying positions designated as
Management.
3. POLICY
a. Criteria For Establishing Ranges - Salary ranges shall be designed to ensure
satisfaction of the "equal pay for equal work" principle. It has been
determined that the maintenance of a strong competitive position in the labor
market has a positive effect on the Town's ability,to attract and retain highly
qualified personnel.
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Additionally, there are identifiable differences in work requirements between
Los Gatos management and presumptively comparable positions in other
agencies. These differences argue against the setting of rates strictly on the
basis of "prevailing wage". To the degree possible, ranges will reflect
consideration of the relative value of positions. This consideration will take
into, account differences and similarities in positions, within the respective
management and employee groupings. The establishment and maintenance
of management ranges shall be guided by the principle that no supervisor
should receive less compensation than their highest paid subordinate if a
similar amount of time is worked. The establishment and.adjustment of
salary ranges shall be effected through resolution of the Town Council.
b. A and..B Ranges - All management classes shall have two ranges titled "A"
and "B The ranges will be reviewed for possible adjustments to be effective
the first pay period in the fiscal year and at such other times as the Town
grants general or cost-of-living adjustments. For Management Group III, the
general or cost-of-living adjustments shall be the same as those granted to
the employee association representing sworn positions. Range adjustments
also may be made to prevent salary compaction and ensure the objectives
of this plan are maintained. Salary range adjustments shall apply to the
ranges only for Group I & II managers. Range adjustments may also be
made in the event of materially changed job assignments.
A Range - The "A" range is appropriate for entry level and fully
qualified employees. The performance expectations are those which
would normally be associated with these levels. The range is to be
used to initially grant a salary based on anticipated performance level
and thereafter to recognize changes in such performance. The "A"
range will have a spread of 35% from entry to top salary with no set
steps (see Appendix A). The lowest salary in the range would be
appropriate for a new employee who minimally satisfies job
requirements. The top of the range is reserved for employees who
perform at the highest level of expected proficiency.
2. B Range - The "B" range is designed for those employees whose
performance and value to the Town clearly exceed normal
expectations. The top salary of any given "B" range shall exceed the
top salary of the A "range of the class by 15%. Placement in the
range is contingent upon the satisfaction of specific requirements and
approval of the Town Manager.
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C. Salary Progressions Within Ranges - Employees, both upon appointment
and during the course of their employment, may receive any salary amount
not to exceed the maximum of their range. During the first three (3) years of
employment, employees shall be reviewed for salary increases at such times
the Town Manager or department head deems appropriate, provided,
however, that at least one review will be conducted annually.
In FY 2003-2004, Management Group I and Group II evaluations will be
completed in September. Management Group I and Group II salary
adjustments, if any, will be delayed until at least January 2004. The sole
consideration in the granting of within-range salary adjustments shall be
performance.
Salary adjustments for employees below the level of Department Head shall
be made upon the recommendation of the Department Head and approval
of the Town Manager. Salary adjustments for Department Heads shall be
determined and approved by the Town Manager.
It is intended that incremental salary adjustments bear a direct relationship
to progress of the employee toward satisfying performance expectations.
Upon employment, the employee and his/her supervisor shall develop a
progress plan including a definition of performance goals, schedule of
performance reviews, and outline of possible within-range adjustments.
Range adjustments average approximately 5%. Adjustments below and
above this amount are permitted. While salary adjustments normally involve
increases, reductions may be made in instances of unsatisfactory
performance. Prior to being finalized, progress plans shall be reviewed and
approved by the concerned Department Head or Town Manager in the case
of Department Heads.
d. Labor Market Survey - Survey agencies making up the labor market base
shall be used as determined appropriate by the Santa Clara County
Employee Relations Service and Town Manager. The determination of
position comparability shall take into account scope of responsibility,
functions supervised, staff size, budget, and related factors. Consideration
will not be given to factors relating to incumbents, such as performance,
length of service, and competency. Supplemental benefits shall be
considered part of compensation paid. In order to determine the position of
the Town's benefit package in relation to the labor market, benefit
information shall also be included in the survey of other municipalities.
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e. Exceptional Contribution Pav - The basic salary" ranges"A" and "B" are
designed to ensure that employees have the potential of a salary which is
internally justified, competitive with salaries paid in other agencies, and/or
should provide compensation appropriate to productivity at the standards
established by the Town. It is recognized, however, that some employees
may make an infrequent or "one time" significant contribution to the Town
which exceeds expectations or job requirements.
The Exceptional Contribution Pay Program (ECPP) is designed to recognize
and encourage this type of contribution. The ECPP is governed by the
following:
• The contribution cannot be within job expectations and must result in
an identifiable and clearly recognized positive impact on the Town.
Ordinarily such impact must be definable in terms of dollar cost
reductions and/or increased productivity without additional costs.
Examples of indicators of such a contribution include the following:
• Within the employee's area of responsibility there has been a
consistent, exceptionally high level of productivity with repeated
successful implementations of progressive and up-to-date operational
and managerial systems.
• Employee initiates a series of innovative approaches to providing
Town services which result in significant cost savings with no
reduction in service level.,
• Employee develops programs or makes suggestions which result in
operational improvements outside his/her normal area of
responsibility.
• Employee develops a program, system, or procedure on his/her own
initiative which results in a measurable significant improvement in
Town services or governmental efficiency.
ECPP may be granted at any time by the Town Manager upon
recommendation by the employee's Department Head in an amount not to
exceed $2,000.00. Amounts greater than $2,000.00 may be granted by the
Town Council upon recommendation of theTown Manager in an amount not
to exceed three (3) months' salary of the affected employee. Payment shall
be made in a lump sum.
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4. GENERAL ADMINISTRATION AND PLAN REVIEW
The Town Manager shall be responsible for the annual review and proposed
changes to the Management Compensation Plan.
5. SUPPLEMENTAL BENEFITS
a. Eligibility - Management employees will be eligible for benefits on the first
day of the month following their hire date.
b. No unexpended dollar amounts associated with selected benefits may be
disbursed to a terminating employee.
C. All benefit selections are subject to State and Federal rules, regulations, and
laws regarding employee benefits and tax status. No guarantee is made
regarding the tax-exempt status of any and all benefits presented or selected
except those allowed by law.
d. Benefit selections must be made during open enrollment. No change may
be made after that time unless. such changes are a result of a qualifying
event or are permitted by the benefit plan.
e. Public Employees Retirement System -The Town shall continue to contract
with PERS to provide the 2% at 55 retirement program for non-safety
management personnel and the 3% at 50 retirement program for safety
management personnel.
f. Vacation
Management I - Accrual Schedule
0 - 60 mos. 15 days per year (4.62 hrs. per pay period)
61 - 120 mos. 20 days per year (6.15 hrs. per pay period)
121 mos. & over 25 days per year (7.70 hrs. per pay period)
Management II - Accrual Schedule
0 - 60 mos.
15 days per year (4.62 hrs. per pay period)
61 - 120 mos.
20 days per year (6.15 hrs. per pay period)
121 - 180 mos.
23 days per year (7.08 hrs. per pay period)
181 mos. & over
25 days per year (7.70 hrs. per pay period)
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Management Ili - Accrual Schedule
0 - 36 mos.
10 days per year (3.08 hrs. per pay period)
37 to 60 mos.
15 days per year (4.62 hrs. per pay period)
61 to 120 mos.
20 days per year (6.16 hrs. per pay period)
121 to 180 mos.
23 days per year (7.08 hrs. per pay period)
181 mos. & over
25 days per year (7.70 hrs per pay period)
The maximum vacation leave accrual shall be 500 hours for Management I
and Il. The maximum vacation leave accrual shall be 344 hours for
Management III. Accrual of vacation leave shall cease when the maximum
accrual level is reached. The Town Manager has the authority to establish
vacation accrual rates for new managers at the time of hire, based upon
experience and years of service.
Vacation Cash-out - Vacation leave cash-out for Management Group I and
II shall be suspended for FY 2003-2004:'' Group III Managers are eligible to
cash out up to 40 hours of vacation based on accruals as of November 30th
Cash-out will be paid during the month of December.
g. Personal Leave - Management Group I and II employees are eligible for a
maximum of forty-eight (48) hours personal leave each calendar year. For
Group I and Group II employees, personal leave has no cash value, may not
be carried over from year to year, nor may it be cashed-out. Management
Group III employees are eligible for a maximum of twenty (20) hours of
personal leave and may cash out the leave if it is not used by the end of
November. Cash-out will be paid during the month of December.
h. Sick Leave - Sick leave accrues at the rate of 8 hours per month (3.70 hours
per pay period) with a 1100 hour accrual limit.
Sick Leave Cash-out - Sick leave cash-out for Management Group I and II
shall be suspended for FY 2003-2004. Management Group I and II
employees who terminate employment with the Town, may cash out their
accrued sick leave as follows:
1 - 59 months of service at 25% of value
60 - 119 months of service at 37.5% of value
120 or more months of service at 50% of value
In order to be eligible for the sick leave cash-out program, the employee
must maintain a sick leave balance of at least 150 hours after the annual
cash-out. Employees who terminate with a sick leave balance of at least 150
hours may cash-out their entire balance pursuant to the schedule above.
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Management Group III employees may cash-out up to 40 hours of
accumulated sick leave at 50% of their current salary in December of each
year.
j. Sick-leave Conversion at Retirement - Employees who retire from the Town,
may convert 100% of the value of the accrued sick leave to a dollar
equivalent at their hourly rate of pay at the time of retirement. This amount
shall be held in an account under the control of the Town. The account will
not accrue interest and will not be paid in cash to the retiree or any
beneficiaries. The employee's portion of their medical payment shall be
withheld from their monthly retirement payment by PERS. From the account
established, the Town will pay the retiree, quarterly in advance, the retiree's
portion of medical payments until all monies are depleted from the account
or the retiree dies, whichever occurs first. The retiree will be responsible for
100% of their share of future medical insurance payments once the account
is exhausted.
k Administrative Leave - Upon approval of his/her Department Head (or by the
Town Manager in the case of Department Heads), Group I and II
management employees are eligible for up to 40 hours administrative leave
with pay per calendar year. Upon approval of the Town Manager. Group
I and Group II management employees are eligible for, up to an
additional 40 hours of administrative leave. Total administrative leave
shall not exceed 80 hours per calendar year. This leave may not
accumulate from year to year, nor may this leave be cashed-out.
Administrative leave may be granted in recognition of extraordinary work
hours by management personnel. Specific examples include unanticipated
emergency situations, extraordinary Council or Commission meetings, and
extensive weekend or evening work.
Salarv Adiustments For Manaqement Emplovees On Extended Leave - An
incumbent management employee who is on extended leave from his/her
position due to sickness, disability, or employee-initiated leave without pay
status shall receive no salary adjustment until returning to full-time work.
Salary adjustments, if any, will become effective after the employee has
completed a full year of active employment since their last
evaluation/increase.
Vacation or sick leave may be used to assure continuation of payroll status
in order to retain insurance benefits under the cash allocation benefits
program. Employees who are absent from work due to a work-related
disability shall not be subject to the provision above and will be considered
for a salary adjustment on their anniversary date.
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m. Leave Accruals - Management employees shall not accrue vacation or sick
leave during any period of unauthorized leave, suspension without pay, or
leave without pay.
n. Continuation Of Benefits - Management employees shall continue to receive
fringe benefits so long as those employees remain on the Town payroll.
o. Disability Insurance - The. Town will provide for a Short Term Disability policy
effective the 8th calendar day; coverage of 60% of weekly earnings up to a
maximum of $1,300/week for 12 weeks.. Long Term Disability benefits begin
on the 91st day of disability; coverage of 60% of monthly earnings up to a
maximum,;of $6;000/mo.
P. Life Insurance - Management employees shall receive Town paid life
insurance coverage providing cover of $50,000 life and $50,000 accidental
death benefit or equal to annual salary, whichever is higher. Additional life
insurance may be purchased in accordance with the Town's current life
insurance carrier and relevant I.R.S. regulations.
q. Vision Plan - Group I & 11 management employees shall be enrolled in the
Town's vision-care health plan (VSP Plan B with a $20 co=pay). The Town
shall pay for the employee-only coverage. At their own cost, employees may
enroll eligible dependents upon hire and at plan inception.
r. Employee Assistance Program Management employees are eligible to
participate in the Town's employee assistance program. The premium shall
be paid by the Town.
S. Cash Allocation Plan Allocations are made to managers as provided in
Appendix B. Benefits which can be purchased through the cash allocation
plan include medical, dental and vision insurance. Managers hired as new
Town employees ,after June 30, 2003 may use the cash allocation for the
purchase of benefits-only. The maximum cash-back allowed under the
cash allocation program on January 1. 2004 shall be as follows:
Group 1: $913 per month
Group II & III: $856 per month
Any amount received in cash is taxable. Employees electing to receive cash
have the option of receiving payment in the first two paychecks of each
month (twenty-four times a year) or twice a year in'December and June.
t. Deferred Compensation The Town will continue to offer a program of
deferred compensation to all managers.
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APPENDIX A
MANAGEMENT COMPENSATION PLAN
BI-WEEKLY SALARY SCHEDULE
A-RANGE MAXIMUM FY 2003-2004
EFFECTIVE 1-4-2004
GROUPIMANAGERS
Police Chief
$ .
5,242.13
Community Development Director
$
4,781.49
Director of Parks & Public Works
$
4,781.49
Assistant Town Manager
$
4,781.49
Finance Director
$
4,567.09
Police Captain
$
4,546.52
Community Services Director
$
4,359.53
Human Resources Director
$
4,359.53
Library Director
$
4,359.53
Redevelopment and Economic Vitality Manager
$
.4,359.53
GROUP II MANAGERS
Assistant Community Development Director
$
4,045.25
Town Engineer
$
4,045.25
Management Information Systems Manager
$
4,045.25
Superintendent
$
4,039.76
Records & Communication Manager
$
3,465.85
Accounting Manager
$
3,425.61
Assistant Library Director
$
3,425.61
Parking Coordinator
$
3,425.61
Parks and Public Works Supervisor
$
3,425.61
GROUP III MANAGERS
Police Sergeant $ 3,597.60 1
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APPENDIX B
MANAGEMENT SUPPLEMENTAL BENEFITS
FY 2003-2004
Effective January 1, 2004
GROUP I - $1,076 per month
Police Chief
Community Development Director
Assistant Town Manager
Director of Parks & Public Works
Finance Director
Police Captain
Library Director
Community Services Director
Human Resources Director
Redevelopment and Economic Vitality Manager
II - $1,008 per month
Assistant Community Development Director
Assistant Library Director
Town Engineer
Management Information Systems Manager
Superintendent
Records & Communication Manager
Accounting Manager
Parking Coordinator
Public Works Supervisor
(GROUP III - $1,008 per month
Police Sergeant
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