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HomeMy WebLinkAboutStaff Report 2402-2649CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, March 11, 2024 Council Chambers & Hybrid 5:30 PM     Agenda Item     11.Adopt an Ordinance Increasing Council Member Salary From $1,000/Month to $1,600/Month, Effective January 1, 2025, as authorized by State law City Council Staff Report From: City Attorney Report Type: CONSENT CALENDAR Lead Department: City Attorney Meeting Date: March 11, 2024 Report #:2402-2649 TITLE Adopt an Ordinance Increasing Council Member Salary From $1,000/Month to $1,600/Month, Effective January 1, 2025, as authorized by State law RECOMMENDATION Adopt an ordinance to increase Council member salaries, effective January 1, 2025, from $1,000/month to $1,600/month, as authorized by State law. BACKGROUND Council members receive a salary of $1,000/month. This salary was set in 2017 and has not been increased since that time.1 On December 4, 2023, the City Council considered a Colleagues Memo regarding an adjustment to City Council compensation (attached as Attachment A). The Council moved to increase Council member salary to the amount allowed by SB-329, $1,600/month, and allow Council members to participate in the City’s employee childcare assistance benefit. The Council also moved to direct staff to prepare future ordinances applying a cost-of-living adjustment to Council member compensation biannually. Also on December 4, Council referred to the Policy and Services Committee consideration of a citizen advisory committee to discuss a possible City Charter amendment that would allow increases in Council member compensation above the amount provided in state law. At the Committee’s February 13, 2024 meeting, the Committee developed a recommendation on that issue, which is scheduled for Council consideration on March 11. ANALYSIS The City Charter provides that Council members may receive compensation in amounts not to exceed state law. (Charter, Art. III, Sec. 17). 1 https://www.cityofpaloalto.org/files/assets/public/v/1/city-clerk/ordinances/ord-5304.pdf In 2023, the state legislature adopted SB 329, which increased the maximum authorized salary levels of city council members 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. 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 council 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 section 36516 (d)). The attached Ordinance amends Palo Alto Municipal Code section 2.04.360 to provide an increase in Council salaries to $1,600 per month effective January 1, 2025 (attached as Attachment B). Council also moved to include Council members in the City’s childcare assistance pilot (attached as Attachment C). Staff is evaluating the childcare assistance pilot in light of Councilmembers‘ particular needs and circumstances and will report back in the future. FISCAL/RESOURCE IMPACT A change in council member compensation would be incorporated into the City’s General Fund budget as part of the FY 2025 Budget process. Annual salary costs for the Council are currently $84,000. This change would increase salaries by $25,200 in FY 2025, with the start date of January 1, 2025, and $50,400 annually in subsequent years for an annual total salary cost of $134,400 beginning in FY 2026. These salary costs do not include the cost of benefits which depend on the choices made by individual Council members. ENVIRONMENTAL REVIEW Adoption of this Ordinance is not a project under the California Environmental Quality Act (CEQA). ATTACHMENTS Attachment A: Colleague’s Memo - Adjustment to City Council Compensation Attachment B: Ordinance of the Council of the City of Palo Alto Amending Chapter 2.04 (Council Organization and Procedure) of the Palo Alto Municipal Code to Increase the Salary of Council Members Effective January 2025 Attachment C: City of Palo Alto Childcare Assistance Guidelines APPROVED BY: Molly Stump, City Attorney 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. Attachment A 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 Attachment A 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 Attachment A *NOT YET APPROVED* Attachment B 1 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Chapter 2.04 (Council Organization and Procedure) of the Palo Alto Municipal Code to Increase the Salary of Council Members Effective January 2025 The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Article III, Section 17 of the Charter of the City of Palo Alto provides that compensation may be paid to council members in amounts not to exceed those provided by general law. B. Council member salaries were last set in 2017 by Ordinance No. 5304 in the amount of $1,000 per month. C. In 2023, the state legislature adopted SB 329, which allows a city of Palo Alto’s size to provide council members a monthly salary of $1,600. D. Palo Alto is among the highest cost areas in California. E. There is a need to ensure a council member’s time commitment is fairly compensated, to allow candidates of diverse socioeconomic backgrounds to fill the role without significant personal burden. SECTION 2. Chapter 2.04 (Council Organization and Procedure) of Title 2 (Administrative Code) the Palo Alto Municipal Code is hereby amended as follows: 2.04.360. Salary of council members. (a) The salary of the council members shall be $600.00 per month. Effective January 1, 2017, the salary of the council members shall be $1,000 per month. Effective January 1, 2025, the salary of the council members shall be $1,600 per month. (b) A city council member may waive any or all of the compensation permitted by this section. SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the *NOT YET APPROVED* Attachment B 2 fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 4. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment. SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Deputy City Attorney City Manager Attachment C City of Palo Alto Childcare Assistance Guidelines The City of Palo Alto understands the importance of childcare for an employee’s family. To help support our employees and build on our family-friendly work environment, the City of Palo Alto is now piloting childcare assistance1. The City will be providing up to $10,000 per calendar year to eligible regular employees to help offset the cost of childcare expenses. Am I eligible? • Employees must be a regular City of Palo Alto employee. • Employees must have an eligible dependent enrolled in a childcare facility located within Palo Alto city limits. How much am I eligible for? • Employees may receive up to $10,000 per calendar year towards the cost of childcare. The first $5,000 will be a pre-tax reimbursement, which will count towards the IRS childcare FSA limit. The remaining $5,000 will be a post-tax reimbursement. • The amount employees may be eligible for is based on the number of onsite days worked per week2. The chart below illustrates the assistance amount per onsite days per week. Number of onsite days per week Childcare assistance per calendar year 1 day $2,500 2 days $5,000 3 days $7,500 4 days $10,000 How do I sign up? • Employees are required to enroll annually during Open Enrollment by completing the enrollment form provided by Human Resources. For example, for year 2024 enrollment forms must be completed during the 2023 Open Enrollment period. • Employees hired or promoted to an eligible position can enroll in this benefit during the new hire benefit enrollment period. How do I get reimbursed? Pre-tax benefit • Employees will pay the childcare expense3 out of pocket and retain proof of expense and payment. • Then, they will log-in to their Navia account and submit for reimbursement through Navia. Post-tax benefit • Employees will pay the childcare expense3 out of pocket and retain proof of expense and payment. • Reimbursement for the post-tax portion of this benefit will occur twice a year: June 1 - 15 and December 1 - 15 Attachment C • Employees who are eligible for reimbursement must submit a copy of the proof of expense and proof of payment along with the reimbursement request form provided by HR. • HR will review the submission for qualification and if eligible, employees will get reimbursed via their paycheck. Additional Notes: • Subsidy amounts will be prorated for new hires, promoted employees, midyear enrollments due to a qualifying life events and benefited part time employees. • Funds in the City of Palo Alto’s Childcare Assistance will be allocated to employees on first come basis up to the maximum budgeted amount for that year. Please see annual budget document for details. • Eligible expenses are: Daycare, before and after school care, and preschool. All facilities must be located within Palo Alto city limits. • Regular employee is defined in the merit rules, section 306: Appointment on a full- or part-time basis in an authorized position. "Part-time" means 40 to 79 hours per pay period. "Full-time" means 80 or more hours per pay period. • If two City of Palo Alto employees share the same eligible dependent only one employee may claim the subsidy. • The City reserves the right to modify or terminate this childcare assistance pilot at any time. If you have additional questions, please do not hesitate to contact HR Benefits, HRBenefits@cityofpaloalto.org or (650) 329-2376. 1Childcare assistance is a pilot for calendar year 2024 2Safety shift employees working a 24-hour shift may be eligible for up to $5000 per shift day 3Eligible childcare expenses must be incurred within the calendar year in which benefit was approved. If an employee separates from employment with the City prior to end of the year, only eligible childcare expense incurred until the employees last day will count towards reimbursement.