HomeMy WebLinkAboutStaff Report 382-09TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: HUMAN RESOURCES
DATE: SEPTEMBER 21, 2009 CMR: 382:09
SUBJECT: Adoption of Resolution Amending the 2008-2009 Conlpensation Plan for
Management and Professional Personnel Adopted by Resolution No. 8844 to Revise the
Provisions Related to Variable Management Compensation
RECOMMENDATION
Staff reconlll1ends Council approval of the attached resolution mnending the conlpensation
plan for Managelnent and Professional personnel effective for the pay periods beginning July
1, 2008 through June 30, 2009 revising the provisions for the Variable Managelnent
Compensation CVMC) program.
BACKGROUND
The Management and Professional group includes 242 active elnployees. The Managelnent
and Professional employees are unrepresented and do not have a Inemorandum of agreement
or other contract. The benefits for the group are covered in a Conlpensation Plan which is
adopted by resolution of the Council.
In early 2009, it becalne clear that the City was facing a General Fund deficit for fiscal year
2009-2010. The existing provisions of the plan give the City 1\1anager the discretion to
award VMC. In light of the budget situation, the City Manager initially considered
recommending eliminating VMC awards for 2008-2009 in order to produce savings of
$650,000 for fiscal year 2009-2010 CVMC dollars are budgeted in the fiscal year following
the perfonnance period). After collaborating with the Management and Professional
COlllnittee, C a committee comprised of one elnployee from each departlnent who provide the
City Manager with feedback and concerns on behalf of the Management and Professional
elnployees), the concerns raised about this recommendation centered on the potential effects
to employees within the group. The COlnnlittee reconlll1ended that the City Manager offer a
choice to the Managelnent and Professional elnployees for an alternate option in-lieu of a
VMC award.
DISCUSSION
After considering input from the Managelnent and Professional COlllnittee, the City Manager
recolmnends:
CMR: 382:09 Page 10f3
• Amending the FY 2008-2009 Compensation Plan to allow employees to choose to
receive an amount equivalent to VMC for FY 2009 or forego it. Those who choose to
receive a VMC equivalent Inust trade an equivalent value of Management leave
andlor vacation leave. Subject to department head approval, an elnployee could also
request to trade for furlough. The VMC equivalent alnount will be determined based
upon perfonnance, will be variable, but will be capped at a nlaximum of four (4%)
percent.
This decision to change the VMC program is a cost saving measure in the short term and is
recognized to be a fmancial impact to the Management and Professional employees who have
chosen to forego this award as a contribution to the City's budget deficit. Although the City
Manager has discretion not to award VMC, the proposed revision to the program offers an
acceptable alternative that Ineets the City's financial needs and helps lnitigate potential
hardships to employees. For those few elnployees electing to have the VMC equivalent paid,
they will offset the VMC award by contributing the equivalent amount in leave back to the
City. This exchange will have a zero net effect resulting in savings that will help to address
the City's budget challenge.
PayInent ofVMC to Inembers of the Fire Chiefs Association (FCA) is a similar program, but
a contractual obligation for this unit does not give the City Manager authority to change the
VMC benefit for the FCA employees. The City requested that th~ ~<;=Agroup agree to
suspend the VMC benefit for this year, but the group declined.
RESOURCE IMPACT
The change to the VMC progrmn will result in a savings of approximately $650,000 in the
General Fund and approxhnately $579,000 in all other funds. Total City-wide savings would
be approximately $1.2 million. The General Fund savings will be used to partially offset the
$3 million compensation reduction placeholder that is in the 2010 Adopted Operating
budget.
POLICY IMPLICATIONS
The action recoillinended by this report is consistent with City Council direction.
ENVIRONMENTAL REVIEW
This is not a project llilder the California Enviromnental Quality Act (CEQA).
ATTACHMENTS
Attachment A:
CMR: 382:09
Resolution of the Council of the City of Palo Alto Amending the 2008-
2009 COlnpensation Plan for Managelnent and Professional Personnel
Adopted by Resolution No. 8844 to Revise the Provisions Related to
Variable Managelnent Compensation
Page 20f3
PREPARED BY: Sandra T.R. Blanch, Assistant Hunlan Resources Director
DEPARTMENT
Director of Hunlan Resources
I
CITY MANAGER APPROVAL:
CMR: 382:09 30f3
* * * APPROVED * * *
Resolution No.
Resolution of the Council of the City of Palo Alto
Amending the 2008-2009 Compensation Plan for
Management and Professional Personnel Adopted by
Resolution No. 8844 to Revise the Provisions Related to
Variable Management Compensation
WHEREAS, the Council Adopted Resolution No. 8844 on July 7,2008 Approving
the 2008-2009 Compensation Plan for Managelnent and Professional Personnel and Council
Appointees (the "COlnpensation Plan"); and
WHEREAS, Section I of the COlnpensation Plan provides that employees lnay earn
Variable Management Compensation ("VMC"), an annual cash award based on merit, by
meeting or exceeding objectives established under the annual perfonnance planning and
appraisal system( the "VMC PrograIn"); and
WHEREAS, consistent with the City's budgeting practices, the total amount
available for VMC awards for the 2009 fiscal year was to be budgeted in the 2010 fiscal year
budget; and
\;VHEREAS, the City faces a budget deficitbfmore than$lOmil1ion for fiscal year
2010; and
WHEREAS, to help address the City's budget challenges, the City must revise the
VMC program so that it has no iInpact on the fiscal year 2010 budget.
NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE
as follows:
SECTION 1. Pursuant to the provisions of Section 12 of Article III of the
Charter of the City of Palo Alto, the Compensation Plan for Management and Professional
Personnel and Council Appointees adopted by Resolution No. 8844, is hereby amended to revise
Section I(B)(4) as follows:
4. Perfonnance Planning and Appraisal. Perfonnance appraisals will be
conducted at the end of each fiscal year during the months of July through
September prior to detennining individual elnployee fixed and variable
compensation. This process includes both review of previous perfonnance plan
and preparation of the perfonnance plan for the next planning period (usually the
fiscal year). Perfonnance plans are jointly prepared by the employee and
supervisor with the concurrence of the departn1ent head or Council-appointed
officer. The perfonnance plans shall contain measurable objectives which place
special emphasis on position description duties or specific assignments. Progress
toward meeting objectives shall be monitored periodically. The perfonnance
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appraisals should be implemented in a l11anner that will achieve the following
objectives:
.. Define the el11ployee' s job duties and expected level of performance for
the next review period to ensure that both the employee and supervisor
have a clear understanding of the employee's role and responsibilities;
'" Evaluate and do CU111ent past perfonllance to serve as a basis for
establishing and obtaining future perfonllance standards/objectives;
.. Facilitate t\vo-\vay con11nunication and understanding bei'Neen the
elllployee and his or her supervisor;
OJ Counsel and encourage employees to work toward a learning developnlent
plan and realize their full potential;
OJ Establish future work plan objectives to be considered for a '/I\4C.
Work plans should include job related projects or special goals related to regular
job duties when applicable. At the conclusion of the fiscal year (or review period),
supervisors shall make a final determination of the overall performance rating.
RecOlllmendations shall be forwarded to departIllent heads or council-appointed
officers who will then determine individual fixed and variable compensation
adjustIllents according to the provisions of the compensation plan. This process
should be completed by September 30t\ 2009.
DUe to the City~ s budget situation, the City IvIanager has determined that VIvIC
will not be awarded for the 2008-2009 fiscal year. If, after completing the
performance appraisal process, a department head or council-appointed officer
determines that an employee would have been eligible to receive a VMC award,
the eligible employee may opt to receive an aIll0unt equivalent to that award by
agreeing to offset that amount. The offset shall be accomplished by returning to
the City one or more of the following leaves totaling an amount equivalent to the
VMC:
(1) Vacation hours;
(2) Managelnent Annual Leave;
(3) Unpaid furlough (subject to Department Head approval).
The Director of Administrative Services is authorized to
implement the amended compensation plan as set forth in Section 1 of this Resolution.
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*** APPROVED * * *
SECTION 3. The Council finds that this is not a project under the California
Environmental Quality Act and, therefore, no environlnental inlpact asseSSlnent is necessary.
Il'JTRODUCED A1'JD PASSED: Septenlber 2009
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM: APPROVED:
Sr. Deputy City Attorney
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