11 Staff Report - Management Compensation Plan for FY 2006/07~0 N 0 MEETING DATE: 8/7/06
ITEM NO:
c" s COUNCIL AGENDA REPORT
~S GASO
DATE: July 28, 2006
TO: MAYOR AND TOWN COUNCIL
FROM: DEBRA J. FIGONE, TOWN MANAGER
SUBJECT: ADOPT RESOLUTION APPROVING THE MANAGEMENT
COMPENSATION PLAN FOR FISCAL YEAR 2006/07
RECOMMENDATION:
Adopt resolution approving the Management Compensation Plan for Fiscal Year 2006/07.
BACKGROUND:
The Town's Management Compensation Plan, adopted and amended annually by resolution,
provides guidelines related to management pay and benefits. Foundational to the Town's
Management Compensation Plan are the principles of equal pay for equal work and the necessity to
maintain a strong competitive position in the labor market to attract and retain highly qualified
personnel.
The FY 2006/07 Budget adopted by Council was developed with a "status quo" approach. This
"status quo" budget was built with the intent to maintain existing service levels. Specific to salaries
and benefits, the adopted budget includes known and projected salary increases for represented
employees, with moderate inflationary increases for unrepresented employees, including
Management.
DISCUSSION:
In keeping with the "status quo" approach adopted in the FY 2006/07 budget, no substantial changes
to the Management Compensation Plan are recommended at this time. The major components of the
plan and their application are described below.
L
PREPARED BY: IR MI PORTILLO
Human Resources Director
NAPSL\MISC\Personnel agr. and resos\MgmtSalariesTCReport8.7.06.doc
Reviewed by: Vt)S Assistant Town Manager Town Attorney
Clerk Administrator finance Community Development
L .
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE MANAGEMENT
COMPENSATION PLAN FOR FISCAL YEAR 2006/07
July 28, 2006
• Salary Range Adjustments: On the basis of internal and external equity, cost-of-living, and other
relevant factors, the Town Manager may recommend range adjustments for specific job
classifications or for across-the-board adjustments. Last fiscal year, Council authorized a 2%
general cost-of-living increase for management classes and approved the re-alignment of three
management classes on the basis of internal and external equity.
At this time, only one position is recommended for re-alignment in the Management
Compensation Plan. Specifically, a job study was conducted for Senior Building Inspector in the
Community Development Department. Based upon the findings of the job study, it is
recommended that the existing position be upgraded to the management classification of
Building Official and that the incumbent be appointed accordingly.
Performance-Based Salary Range Progression: At any time throughout the year, the Town
Manager may evaluate and adjust a manager's placement within the salary range, based upon
performance. The Management Compensation Plan recommends that within-range adjustments
average approximately 5% until a manager reaches the top of the range. However, this is only a
guideline and must be taken in context for fiscal conditions. As a result of the tight fiscal
environment in last few years, range progression has not occurred at the 5% level and has been
applied at a more conservative level.
• Exceptional Contribution Pay- The Town Manager may grant a lump sum bonus at any time
throughout the year to reward significant contributions that result in identifiable positive impacts
on the Town. Such impacts may include exceptionally high productivity, significant cost
savings, and increased efficiencies, or dramatic improvements in the quality of services. Under
the current plan, lump sum bonuses may not exceed 3% of base pay.
Police Sergeants Excepted: Police Sergeants are identified as Management Group III in the
Management Compensation Plan. In accordance with the Compensation Plan, increases for
Sergeants are to be awarded consistent with the Police Offers' Association (POA) memorandum
of agreement. As such, Sergeants will not receive the general management increase, but
received a 2.5% as of January 2006 and will receive 3.5% for January 2007. Additionally,
Sergeants are provided performance evaluations on their anniversary dates and are considered for
in-range movement at that time and not in the management review cycle.
In accordance with the "status quo" approach adopted in the FY 2006/07 budget, it is recommended
that the Management Compensation Plan be approved to include a general increase of 2% for FY
2006/07, effective August 27, 2007 (the beginning of the payperiod closest to September l.) It is
further recommended that supplemental benefits be maintained at the status quo and no changes are
recommended to the benefits package at this time. The annual performance review process to be
initiated for management employees will determine any individual performance-based adjustments
as allowed by this plan.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION APPROVING THE MANAGEMENT
COMPENSATION PLAN FOR FISCAL YEAR 2006/07
July 28, 2006
FISCAL IMPACT:
The adopted budget for FY 2006/07 includes funding to support the recommended 2% general
increase for management salaries. Funds needed for in-range movement and lump sum bonuses
will be absorbed in the existing budget
Attachments: Management Compensation Plan FY 2006/07 (with markups)
Salary Resolution
RESOLUTION
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
APPROVING THE MANAGEMENT COMPENSATION PLAN
FOR FISCAL YEAR 2006-2007
RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa
Clara, State of California, that the Management Compensation Plan for Fiscal Year 2006-2007, a
copy of which is attached hereto, is hereby approved.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California, held on the 7th day of August, 2006 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
EXHIBIT A
TOWN OF LOS GATOS
MANAGEMENT
COMPENSATION PLAN
Fiscal Year 2006/07
Formatted: Centered
Deleted: 2005-06
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.
1
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 September. 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 1 & 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. 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.
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% (see Appendix
A). Placement in the range is contingent upon the satisfaction of
specific requirements and approval of the Town Manager.
2
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. 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.
Management Group 1 and Group 11 evaluations are scheduled to be
completed in September of each year. Management Group I and Group II
salary range adjustments in FY 2006/07 will be effective August 27, 2006.
-
The sole consideration in the granting of within-range salary adjustments
shall be performance. Management Group III salary range adjustments
are effective consistent with the Town of Los Gatos Police Officers'
Association Memorandum of Understanding.
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 within parameters established by the
Town Manager. 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. The Town Manager shall establish the parameters for
implementation and the salary progression guidelines on an annual basis.
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.
Deleted: 2004-05 -
Deleted: August 28, 2005 j
Exceptional Contribution Pay - 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 orjob requirements.
The Exceptional Contribution Pay Program (ECPP) is designed to
recognize and encourage this type of contribution. 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 3% of salary (Maximum B-Range compensation). Amounts greater
than 3% of base salary may be granted by the Town Council upon
recommendation of the Town Manager. Payment shall be made in a lump
sum.
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. With the exception of the Cash Allocation Program, 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 PIERS 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)
Manaaement 11 - 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)
Manaaement I I I -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)
5
6
The maximum vacation leave accrual shall be 500 hours for Management
I and II. 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 is permitted twice a year in December and June. The amount to be
cashed out is limited to the amount accrued. 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. Management Group III may cash out their
personal leave at base pay if it is not used by the end of November.
Management Group III may use personal leave during the month of
December; however, employees desiring to receive compensation for
those hours shall do so in conjunction with the annual cash-out in
November.
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 for Group I and Group
II Managers, and an 1180 hour accrual limit for Group III Managers.
Sick Leave Cash-out - Management 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
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. Management Group I and II may cash out their accrued sick leave
twice a year in December or June, pursuant to the schedule above.
6
In order to be eligible for the sick leave cash-out program, Group I & II
Managers must maintain a sick leave balance of at least 150 hours after
the annual cash-out. Group I & II Managers who terminate with a sick
leave balance of at least 150 hours may cash-out their entire balance
pursuant to the schedule above. Group III Managers who terminate with a
sick leave balance of at least 200 hours may cash-out their entire balance
pursuant to the schedule above.
Sick-leave Conversion at Retirement - Employees hired into any regular,
full-time Town position prior to November 15, 2004, 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.
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. Administrative leave does not
accumulate from year to year, and may not 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.
Salary Adjustments For Management Employees On Extended Leave - A
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.
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 the regular schedule.
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 - 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 & Family Medical Insurance Plan
Effective January 1, 2005 managers will have the option of participating in
a Cash Allocation Plan or a Family Medical Insurance Plan as follows:
Cash Allocation Plan
• All managers hired on or after November 15, 2004 shall receive a cash
allocation for benefits of $400 per month;
• All managers hired before November 15, 2004 shall receive a cash
allocation for benefits of $950 per month;
• Managers participating in this plan may receive the benefit as cash.
Deleted: Effective January 1, 2004
through December 31, 2004:¶
4
<#>Group I managers shall receive a
cash allocation of $1,076 per month;Q
<#>Group II & Group III managers
shall receive a cash allocation of
$1,008 permonth;¶
<#>Management employees hired
prior to July 1, 2003, may choose to
receive up to $913 per month of their
cash allocation in cash. ¶
<#>Management employees hired on
July 1, 2003 or later may use the
cash allocation for the purchase of
benefits only.¶
Effective January 1, 2005 managers will have the option of participating in
a Cash Allocation Plan or a Family Medical Insurance Plan as follows:
Cash Allocation Plan
• All managers hired on or after November 15, 2004 shall receive a cash
allocation for benefits of $400 per month;
• All managers hired before November 15, 2004 shall receive a cash
allocation for benefits of $950 per month;
• Managers participating in this plan may receive the benefit as cash.
Benefits which can be purchased through the cash allocation plan include
medical, dental and vision insurance. These benefits are available on a
pre-tax basis. If the premium cost of the health plan exceeds the Town
contribution, the employee shall pay through payroll deduction the
difference between the monthly premium and the amount contributed by
the Town.
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.
Family Medical Insurance Plan
• Managers shall receive a $1,256 per month contribution toward
monthly health insurance premiums. If the premium costs exceed the
Town contribution, the manager shall pay through payroll deduction the
difference between the monthly premium and the amount contributed
by the Town. The employee shall forfeit any balance should the Town
contribution exceed the cost of the premiums.
Deferred Compensation - The Town will offer a program of deferred
compensation to all managers.
i COmmeDt: ~eplaee i„th ~,}?da[ed
Sala,} 1 able.
Formatted: Strikethrough
10
8/2/20069:33 AM APPENDIX A
MANAGEMENT CLASSIFICATIONS SALARY TABLE*
EFFECTIVE 8/27/06
Classification
Maximum Annual
Salary
Effective 8/27/06
Total
Bi-Weekly
Salary
Group I
Police Chief
$167,965.00
$6,460.19
Assistant Town Manager
$155,702.00
$5,988.54
Community Development Director
$155,702.00
$5,988.54
Director of Parks & Public Works
$155,702.00
$5,988.54
Finance Director
$155,702.00
$5,988.54
Police Captain
$145,677.00
$5,602.96
Community Services Director
$139,685.00
$5,372.50
Human Resources Director
$139,685.00
$5,372.50
Libra Director
$139,685.00
$5,372.50
Group 11
Assistant Community Development Director
$139,685.00
$5,372.50
Town Engineer
$139,685.00
$5,372.50
MIS Manager
$129,615.00
$4,985.19
Superintendent
$129,615.00
$4,985.19
Building Official
$114,868.00
$4,418.00
Accounting Manager
$109,762.00
$4,221.62
Assistant Libra Director
$109,762.00
$4,221.62
Clerk Administrator
$109,762.00
$4,221.62
Economic Vitality Manager
$109,762.00
$4,221.62
Administrative Programs Manager
$109,762.00
$4,221.62
Parks and Public Works Supervisor
$109,762.00
$4,221.62
Police Admin Services Manager
$109,762.00
$4,221.62
Group III (B-range Max
Police Sergeant"
$4,495.12
*Reflects 2% increase "Effective 1/4/06
GDB X6816
Mgmt Salary Schedule 2006-07MGMT082706