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HomeMy WebLinkAboutStaff Report 2408-3411CITY OF PALO ALTO Policy & Services Committee Special Meeting Tuesday, September 10, 2024 7:00 PM     Agenda Item     2.Discussion and Recommendation to Council on a potential reimbursement policy, allowing up to $2,000 annually per Council Member, for specified purposes Policy & Services Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: September 10, 2024 Report #:2408-3411 TITLE Discussion and Recommendation to Council on a potential reimbursement policy, allowing up to $2,000 annually per Council Member, for specified purposes RECOMMENDATION Staff recommends that the Policy and Services Committee further discuss the referral from the City Council related to City Council Discretionary Expenditures and make a recommendation to the City Council for inclusion in the City Council Procedures and Protocols Handbook. BACKGROUND On March 12, 2024, the Policy and Services Committee revisited a Council referral to consider allocating $2,000 annually from the Council contingency fund for each Council member. This allocation would cover expenditures aligned with Council-defined purposes. The discussion was a continuation from February 13, 2024, where the Committee decided to further examine program details and compare similar initiatives in neighboring jurisdictions. During the March 12 meeting, staff presented similar programs in neighboring jurisdictions and reviewed the requirements under Cal. Govt. Code section 53232.2, which allows reimbursement for “actual and necessary expenses incurred in the performance of official duties” and requires certain procedures for implementing such a policy. The Committee showed interest in implementing a policy for reimbursing expenses for cellular phone use and technology when used for official business. ANALYSIS Given the recent increase in Council salaries, a direct stipend, which would be taxable, is not feasible as it would surpass Charter salary limits. Instead, the proposed policy focuses on reimbursements for actual expenses, which are not considered taxable income and are regulated under Section 53232.2 of the Government Code. In conformance with Section 53232.2, the draft policy establishes a written policy for allowable reimbursement with monitoring and reporting requirements. The draft policy includes a provision for full reimbursement of technology purchases used solely for official business and 25% reimbursement for dual personal and official use, up to an amount established by the Council. If the City fully reimburses a Council Member for a physical device, the device must be returned to the City at the end of the Council Member's service. However, the City may allow the Council Member to keep the device if it is determined that the device has no value or is no longer useful to the City. The 25% reimbursement rate stated above also applies to cellular phone usage. The partial rate of reimbursement is intended to account for the difficulty in distinguishing between personal and official uses and will allow for some reimbursement when a Council Member uses their own device for official business. The Committee could recommend a change to this percentage if it reasonably believes that Council members use their personal devices for City business more frequently than one-quarter of the time. All other technology expenditures not specifically covered by the proposed policy would require prior Council approval. Any questions regarding the appropriateness of an expense should be resolved by the Council before the expense is incurred. Reimbursements needing Council approval can be processed in batches as a single item and placed on the Council’s Consent agenda. The Council and Policy and Services Committee has discussed allocating up to $2,000 annually to each Council Member for official expenditures. However, the draft policy does not specify the total annual allocation for Council reimbursements, allowing flexibility in determining the overall available funds if in the future the Council wishes to allocate more money for reimbursements. The amount can be set by resolution or during the budget process. The total budgeted amount will not roll over to the next fiscal year, preventing Council Members from carrying over unspent funds for future use. All claims for reimbursement will need to be supported with documentation and submitted using the City's official expense report forms within 60 days of incurring the expense. The documentation required may depend on the expenditure. An itemized receipt is required however for certain expenses a summary-level receipt, in lieu of a detailed or itemized receipt, may be acceptable. Any claims that are non-compliant or lack proper documentation will be disapproved. Additionally, all expense reports are subject to audit. Approved reimbursements will be processed within 30 days. The proposed policy aims to balance the flexibility and convenience of a stipend—currently unfeasible due to the Council’s salary caps—with the Government Code's requirement that expenses be actual, necessary, and supported by documentation. FISCAL/RESOURCE IMPACT The total amount allocated for Council reimbursements would be determined as part of the annual budget development process. However, depending on the program parameters discussed such as the appropriate means of budgeting and the reimbursement process, staff time resources to administer the program will be needed, primarily in the City Clerk and Administrative Services Departments and would need to be further assessed in alignment with final policy complexity, implementation, and Council requests. ENVIRONMENTAL REVIEW Not a project. ATTACHMENTS Attachment A: Draft Councilmember Reimbursement Policy, August 2024 APPROVED BY: Ed Shikada, City Manager Draft Reimbursement Policy August 2024 1. PURPOSE This Policy establishes the guidelines and standards regarding reimbursement of actual and necessary expenses of the City Council incurred in the performance of official City duties. Council members may incur expenses in fulfilling the responsibilities as an elected official. All expenditures of public funds must be related to the performance of City business. Council members may be reimbursed for actual and necessary expenses incurred in the performance of authorized City business and official duties in conformance with this Policy. 2. AUTHORIZED EXPENSES Communications tools (e.g., cellular phones, data plans, computers, and Internet access) are necessary for Councilmembers to fulfill their official responsibilities of communication with constituents, City staff, and others. In lieu of the City providing communication tools to each Council member, Council members are expected to use personal devices in the course of their duties. 2.1 Technology Purchases Reimbursement Council members may be reimbursed for technology purchases that are essential for performing official duties. These purchases include, but are not limited to, computers, tablets, software, and subscriptions services (e.g., internet, Zoom, etc.). If the technology purchase will be used exclusively for official business, the Council member will be reimbursed for all the actual cost of the purchase up to a total dollar amount established by the Council. If the technology purchase will be used for personal use as well as official business, Council members will be reimbursed 25% of the actual cost of the purchase up to a total dollar amount established by the Council. Considering the difficulty in parsing out official use versus personal use in this circumstance, this shall be considered a reasonable amount to represent the reimbursement for actual costs associated with the technology purchase. 2.2 Cellular Phone Usage Reimbursement Council members will be reimbursed 25% of the actual total monthly cost of the use of their cellular phone up to a total dollar amount established by the Council. Considering the difficulty in parsing out official use versus personal use in this circumstance, this shall be considered a reasonable amount to represent the reimbursement for actual costs associated with the use of their cellular phone. 2.3 Expenditures Requiring Council Approval Except as set forth in this Section, all other expenditures require prior approval by the Council at a public meeting. Any questions regarding the propriety of a particular type of expense should be resolved by the Council before the expense is incurred. 3. MONITORING AND REPORTING All expenses and claims for reimbursement shall be submitted on City expense report forms within 60 days of the incurred expense. All expense reports shall be accompanied by documentation showing that the expenses comply with this Policy for expenditure of public resources. Inability to provide such documentation in a timely manner may result in the expense being borne by the Councilmember. Reimbursements that do not comply with this policy will not be approved. Expense reports are subject to audits. Approved reimbursements will be processed and issued within 30 days of approval.