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HomeMy WebLinkAboutStaff Report 2311-224111.Colleague’s Memo - Adjustment to City Council Compensation CITY COUNCIL Colleague’s Memo Sponsor(s): Council Member Lauing and Vice Mayor Stone Meeting Date: December 4, 2023 Report #: 2311-2241 TITLE Colleague’s Memo - Adjustment to City Council Compensation RECOMMENDATION 1. Raise monthly City Councilmember salaries, at a minimum, to levels set by SB 329. In June of this year Governor Newsom signed SB 329 (Dodd) which allows cities to set council salaries according to the size of each city’s population. Based on the population of Palo Alto, SB 329 allows salaries to be set at $1600/month consistent with this new law. There is also a process for considering future increases over time by Council action. The motivation for Senator Dodd and his colleagues was precisely to make it more appealing to a broader cross section of citizens to stand for public office as well as to recognize the true responsibilities of councilmembers in a city as measured by size. Due to procedural requirements, approving this recommendation would raise Councilmember salaries effective January 1, 2025 (and not before). If this action is taken now, candidates who run in 2024 for City Council will know that, upon taking office in January 2025 their monthly compensation will be $1600. Our hope is to attract a more socioeconomically diverse group of candidates in the 2024 election. Sitting Councilmembers in 2025 will also be increased to that amount. 2. Allow City Councilmembers to participate in the city’s employee childcare assistance benefit as applicable. This new program for city workers should be broadened to include Councilmembers with this need. This benefit reduces a high out-of-pocket cost for the Councilmember for all of the meetings a member needs to attend – including during after school hours and for weekend meetings/events. By definition this benefit would be targeted to younger council members with pre-school or school age children – likely a renter’s demographic. It eliminates a financial burden a prospective candidate would have to address upon joining council. This is not extra salary, but it is a benefit. 3. Consider amending our charter to allow Palo Alto to set Councilmember compensation above SB 329- guidelines. Palo Alto is among the most affluent and highest cost areas in California. As stated above, we are different than many other cities of our population size with our own utilities, a regional water treatment facility, and an airport. Add to that our extensive open space and parklands and a children’s zoo and many other amenities we have which expands the scope of decision- making a councilmember has. In addition, Palo Alto must add over 6000 new homes in the next seven years which will add about 15,000 more residents. A $1600 City Council salary ($19,200 annually) may not be enough to influence a decision to run for council given the time investment and the high expectations of our constituents across this broad scope of responsibilities. And it may not be fair. How should we set compensation? Here are a few data points for consideration. A. Minimum wage in Palo Alto is $17.25 per hour translating to $35,880.00 per year for a full-time job. B. A midlevel senior staff member across the board in the city makes about $162,229 per year. C. A State Assembly member makes $122,694/year + per diem. What is the appropriate compensation level for the job to be done and to attract more diversity in candidates for City Council? BACKGROUND The duties of a Palo Alto city councilmember require a broad skill set and an extraordinary commitment of time and effort. Many hours are required to perform the job while representing Palo Alto residents. Total hours per week are generally estimated to be in a range of 20-30+ hours across a seven-day week. This includes preparation for- and participation in- council meetings, many standing and ad hoc committee meetings, liaison assignments to commissions and outside agencies, meetings with staff, colleagues, residents, businesses, developers, public appearances, and more. The roles of Mayor and Vice Mayor require even more personal time commitment. Unlike many cities, Palo Alto owns its own utilities, regional water treatment facility, and an airport. There are approximately 1000 city employees with a $1 billion budget. In 2014 residents voted in a ballot measure to reduce the size of the council to seven from nine members, which became effective in 2018. All of the same work still needs to be done. The work is covered by spreading the workload among the seven council members. The base salary for a councilmember is currently $1000/month. CONSIDERATIONS I. Council Member Demographics for Better Representation Many councilmembers over the last two decades have been upper income residents with work flexibility and/or residents who are post-career without pressing income obligations. A good number of councilmembers have been empty-nesters. They have served the city admirably and we can expect this demographic to continue to produce excellent council members eager to serve the city. Palo Alto is committed to diversity in all areas of city life from our residents to our city staff to our commissioners and our council members. We welcome residents of all ethnicities and income levels. We also want our city council to represent the varied demographics we now have and the many new residents who will come to PA based on our initiatives to create hundreds of new affordable homes for lower income residents. Historically, few lower income workers have chosen to run for city council. This may be the result of less flexible work hours. In some cases, “free time” for public service is constrained by the demands of younger families to care for. II. Council Member Compensation Relative to Workload The Councilmember’s job is not full-time. But it is highly time intensive. Anecdotally, some residents have argued over the years that it should a be full-time job and that Councilmembers should be fairly compensated for the broad skills required in that full-time job. That option may have merit but is not under consideration as part of this colleagues’ memo. The issue, however, is to assess what fair compensation should be for the responsibilities of the role, the workload required, and to attract a broader spectrum of candidates. FISCAL IMPACT A change in Councilmember total compensation would be incorporated into the City’s General Fund budget; FY 2024 Adopted General Fund Budget is $279.6 million. Costs would consist of the change in salary plus the cost for all benefits, which conservatively amounts to approximately 63% of salary. Benefits will be charged based on the choices made by individuals and may include: pension, retiree medical, workers compensation, Medicare, healthcare (dental, vision, medical), and life insurance. ATTACHMENTS Attachment A - Memorandum on Council Member Salaries November 14, 2023 Page 1 of 2 Memorandum Office of the City Attorney City of Palo Alto This memorandum responds to a request by the authors of the above Colleagues Memo for a description of the law regarding Council Member compensation and Council’s options for increasing that compensation. Current Law. The Charter provides that Council may receive compensation in amounts not to exceed those provided in state law. (Charter, Art. III, Sec. 17.) The Palo Alto Municipal Code (PAMC) sets compensation at $1,000/month. (PAMC 2.04.360). The last update to council compensation was effective January 1, 2017. (Ord. 5304.) State law authorizes a maximum base monthly council member salary based on city population and authorizes annual increases according to a defined methodology. (See Gov. Code §36516.) In 2023, the state legislature adopted SB 329, which increased maximum authorized salary levels and created a second optional methodology for local city councils to increase salaries over time. Under the updated statute, a city of Palo Alto’s size may provide council members a monthly salary of $1,600/month, effective January 1, 2024. Thereafter, annual increases may be made in amounts not to exceed the greater of: (a) 5% of the existing salary for each calendar year since the Council last set council member salaries (noncompounded, see (89 Ops. Cal. Atty Gen. 159 (2006)); or (b) an amount equal to inflation since January 1, 2024 (CPI) but not to exceed 10 percent annually. (Gov. Code §36516.) Each increase must be made by ordinance, with findings demonstrating the need for the increase. Automatic increases are not allowed. Under state law, a salary increase may only come into effect at the beginning of at least one member’s new term. (Gov. Code section 36516.5) In Palo Alto, new Council terms begin on January 1st of every odd-numbered year. (See Charter, Art. III, Sec. 2.) Compensation can be (and typically is) adjusted for all members of a council serving staggered terms whenever at least one member begins a new term of office. State law also provides that council members may receive benefits from the city. Benefits are not counted towards the maximum allowable salary, provided that the same benefits are paid for and available to city employees. (Gov. Code § 36516 (d).) Options for Increasing Compensation. Council has two options to increase council member compensation. Option 2 is available to Palo Alto because Palo Alto is a charter city, and council compensation is a municipal affair. Council could choose one or the other of these options, or, could use option 1 followed by option 2. November 14, 2023 Page 2 of 2 Option 1: Amend PAMC 2.04.360 to increase council member salary, currently $1,000/month, to an amount up to $1,600/month plus inflation from January 1, 2024 to the date of adoption (capped at 10%), with an effective date of January 1, 2025 at the earliest. Option 2: Place a Charter amendment on the November 2024 ballot to delete the existing language that limits council member salary to amounts provided in state law and replace it with a local provision. Upon voter approval, amend PAMC 2.04.360 to increase salary according to the terms of the newly-amended Charter.