Employee Retention Incentive Options — Goleta City Council, July 19, 2022

Agenda Item C.1

CPMS DISCUSSION/ACTION ITEM
Meeting Date: July 19, 2022
____________________________________________________________

TO: Mayor and Councilmembers

FROM: Kristine Schmidt, Assistant City Manager

SUBJECT: Employee Retention Incentive Options

RECOMMENDATIONS:

A. Adopt Resolution No. 22 -__ entitled, “A Resolution of the City Council of the City of Goleta authorizing the City Manager to Amend the Memoranda of Understanding with SEIU Local 620 to Provide Certain Retention Incentives, and to amend the Personnel Rules as Necessary to Provide the Same Incentives to Unrepresented Employees, Managers, and Executives, Effective August 1, 2022”;

B. Authorize the City Manager to amend the Personnel Rules to increase the Transportation Demand Management (TDM) Program allowance by 50%, from $5 per day to $7.50 per day.

C. Adopt Resolution No. 22-__ entitled “A Resolution of the City Council of the City of Goleta, California Amending the Wage Schedule for Hourly Employees and Intern Assignments effective August 13, 2022.”

BACKGROUND:

At the City Council’s FY 2022/23 Mid -Cycle Budget Workshop on May 31, 2022 , Councilmembers expressed concern about the impact that recent consumer price increases are having on City employees and their families and recognized that recent employee compensation increases have not kept up with rising costs for groceries, gas, and other expenses1. A tough job market for employers and demonstrated recruitment difficulties were also discussed. Council discussed doing something to incentivize City employee retention and morale, and to limit the potential further e ffects of turnover on staff’s ability to complete important City projects.

1 The City currently has labor agreements and policies effective through December 2023 , approved in December 2021, that provide for up to 4% salary increase in FY 2021/22 and up to 4% in FY 2022/23, with a modest increase ($20/month) toward health insurance each year . The CPI -U for L os Angeles -Long Beach-Anaheim has been increasing by a significantly higher percentage year-over-year (for example 8.5% in Mar-Mar, 7.9% Apr-Apr, and 8% May-May), and CalPERS medical insurance rates have been increasing each year by $100/month or more at all levels, and at some levels significantly more.

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There was discussion about considering retention incentives centering around two basic scenarios.
 One scenario would be more focused on inflation and the cost increases as a short- term “blip” and would consider something like a one -time retention bonus that would put one-time monetary support into workers’ pockets in a way that is “non- base-building”, meaning that it would not increase compensation into the future.  Another scenario would view the current cost increases as more enduring going forward and build the employee compensation base in a way that recognizes that ongoing impact, but still does not affect the City’s pension liabilities. Examples of the latter that were discussed were health benefi ts, childcare support, and transportation support for commuters.

Several different Councilmembers emphasized ensuring that any such options were not subject to pension contributions (or “non-PERSable”), so that they would not increase the City’s pension liabilities. Councilmembers discussed management reaching out to employees directly to determine the impacts of inflation on them and the type of support within those parameters that would be most helpful.

At the time of budget adoption on June 26, 2022, staff recommended as a placeholder conceptually dedicating approximately $100,000 of anticipated one-time salary savings from normal anticipated recruitment delays for newly authorized positions in the FY 2022/23 Budget for the purpose of retention incentives. Staff committed to meeting with the City ’s officially recognized employee organization (SEIU, Local 620 ) to determine employee priorities.

DISCUSSION:

After revisiting Council’s expressed intent, considering a suite of different options, and discussing employee impacts and interests with designated bargaining representatives, staff recommends the following retention incentives for regular employees:

 A retention incentive of $1,000 per regular City employee provided in one of the following three ways:

1. A one-time retention bonus of $1,000 per employee. This would be both non-base- building and non-PERSable.

2. A one-time retention bonus of $500 per employee, plus an ongoing increase to the family medical benefit allowance (or cash in lieu of medical insurance) of $41.67 per month, or $500 per year. The bonus would be non -base-building, while the medical benefit would increase employee’s ongoing compensation by that amount.

Both would be non-PERSable.

3. An ongoing increase to the family medical benefit allowance (or cash in lieu of medical insurance) of $83.34 per month, or $1,000 per year. This would increase employees’ ongoing compensation but would be non-PERSable.

A further discussion to assist Council in selecting one of these three options is included later in this report (See “Selecting an Option”, below).

2 Meeting Date: July 19, 2022

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Staff also recommend revisiting our classification and total compensation study, last completed in 2015, to ensure that the City retains its 75 th percentile market placement within the City’s comparison labor market. Several Councilmembers mentioned this benchmark, and the positive effect it has had on the organization , as an important standard to maintain. There is currently $75,000 available for special services as needed in the City Manager’s program budget that can be utilized for a refresh of the 2015 compensation study. Staff will return to Council once the recommended scope of the project has been determined to request additional funding, if necessary. This project will include a review of identified classifications that may be over- or under- classified/paid for the job duties performed to ensure that compensation is internally equitable. This project will also help us evaluate the impacts of recent financial conditions and ensure that the City is strategically placed in the labor market.

Staff recommends increasing the Transportation Demand Management (TDM) Program allowance by 50%, from $5 per day to $7.50 per day. This daily allowance applies when an employee commutes to work using an alternative transportation method (walking/biking, bus, rail, car/vanpool, rideshare, etc.). It does not apply to telecommuting. This will help alternative commuters who may be facing fare/cost increases. As explained under “Fiscal Impacts”, below, staff believe this can be done with existing budgeted funds.

Staff also recommend providing a $0.50/hour increase to all hourly employees at all levels (e.g., Library Pages, Interns, Department Aides, Custodians) effective August 13, 2022.

Hourly positions are part-time, temporary, and seasonal employees who average less than half -time service (˂999 hours) in a fiscal year. The State recently ann ounced a $0.50/hour increase in the State minimum wage effective in January 2023 , from $15 per hour to $15.50 per hour (about a 3.3% increase). The City’s lowest hourly rate is currently $15.00, and this action would bring it up to $15. 50. This action would bring other hourly employees and interns at higher wage levels up by $0.50/hour, too.

The changes are summarized in the table below.

Current rates
Level Entry Maximum
Custodian $ 15.30
Library Page $ 15.30
Department Aide $ 15.30 $ 19.30 Intern I $ 15.00
Intern II $ 15.50 $ 19.30
Intern III $ 20.30
Legal Intern I $ 20.30
Legal Intern II $ 21.30 $ 24.30 Special Project Associate $ 25.00

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Proposed Rates - Effective August 13, 2022
Level Entry Maximum
Custodian $ 15.80
Library Page $ 15.80
Department Aide $ 15.80 $ 19.80 Intern I $ 15.50
Intern II $ 16.00 $ 19.80
Intern III $ 20.80
Legal Intern I $ 20.80
Legal Intern II $ 21.80 $ 24.80 Special Project Associate $ 25.50

Finally, staff recommend the conversion of one unnamed floating holiday to two named holidays: Cesar Chavez Day (a floating holiday) and Juneteenth (a fixed holiday). This recommendation is part of a separate report on today’s agenda that also recommends establishing both as official City holidays.

Selecting an Option

As mentioned above, staff recommend providing a non -PERSable retention incentive of $1,000 in FY 2022-23 in one of the following ways:

1. A one-time bonus of $1,000 only

2. A one-time bonus of $500, plus an ongoing increase to health insurance (or cash in lieu) allowance of $500 per year ($41.67 per month)

3. An ongoing increase to health allowance (or cash in lieu) of $1000 per year ($83.34 per month) only.

In our discussions with SEIU representatives, they conveyed that our employees were grateful that Council recognized the impacts of the current economic situation on them and appreciated your willingness to consider any option outside of forma l labor negotiations. Of the one-time options that we discussed, employees preferred the bonus because it applies to all employees and allows the most flexibility for employees to use the money to address their own circumstances. However, since all employees are facing medical insurance increases, whether from CalPERS or their outside insurance through a family member’s coverage, and because these are ongoing cost increases to them, the option that employees most prefer is the option to put that full $1 ,000 toward the health insurance allowance.

There is data to support this sense that employees are paying more toward benefits.

CalPERS rates have been steadily increasing each year. In 2015 the lowest family medical premium available in the Santa Barbara South Coast area was $1,168 per month, and the City’s contribution was $1,225, covering the full monthly cost. In 2022, the lowest family premium is $1,528 per month and the City’s contribution is $1 ,295, leaving the family to cover a minimum of approximately $233 per month, plus whatever deductibles and copays may be required. Under other, more generous plans offered, employees may 4 Meeting Date: July 19, 2022

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be required to pay significantly more (in fact, under one option, the employee must pay $1,323.54 per month out of pocket for family coverage , not including deductibles and copays).

The health insurance contribution is generally bargained as part of an overall labor package reflecting the values brought to the bargaining table by each union and employer related to the mix of salary and benefits, as well as the premiums applicable to each employer’s benefit plans, so it is difficult to make meaningful apples-to-apples benefit comparisons between agencies outside of a total compensation package comparison.

For reference, the City of Santa Barbara recently increased its maximum contribution to CalPERS health insurance for SEIU, Local 620 employees to significantly more than what the City of Goleta pays employees ( Employee Only= $1,112.88/month; Employee + 1= $1,402.88; Family $1,768.87). The County of Santa Barbara’s contribution, on the other hand, is less than what Goleta pays (Employee Only= $8 63.48/month; Employee + 1= $913.48; Family $1 ,173.48), but they have not bargained recently, and they have a different premium structure . Staff believe that more employers will be increasing their health insurance contributions in the future in order to provide competitive compensation while limiting increases to pension liabilities. Updating the total compensation survey regularly will allow us to compare each agency’s full salary and benefit package to see the real impact of these changes on total compensation offered by our labor market competitors.

Employees who do not take insurance thro ugh the City must demonstrate that they are covered under another group health plan, such as through a spouse. These employees are also facing health insurance cost increases, so staff’s recommendation is to increase the monthly cash allowance in lieu of insurance (currently limited to $950 per month) by the same increase that Council selects for the health insurance contribution.

The attached Resolution is drafted so that Council can adopt it with any of the three options listed above and strike those provisions it does not wish to implement.

FISCAL IMPACTS:

The cost of the $1,000 per employee retention incentive in Fiscal Year 2022-23 is similar under all three options, at approximately $110,000. Staff expect that this cost can be fully covered by salary and benefit savings from vacant positions in the current budget year, so no additional appropriations are necessary. The option that provides a $41.47 per month health benefit, or $500 per year, would have an ongoing cost increase in future budget years of $55,000. The option that provides a $83.34 per month health benefit, or $1,000 per year, would have an ongoing cost increase in future budget years of $110,000.

The cost of increasing the TDM allowance is estimated at a maximum of $3,000 per year.

At the height of its use pre -COVID, the cost of this benefit was $12,000 per year.

However, since employees have been telecommuting more, there are fewer claims for this program, and staff believe that the $14,000 in the current budget is more than enough to cover the proposed increase.

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There is currently $75,000 available for special services as needed in the City Manager’s program budget that can be utilized for a refresh of the 2015 compensation study. Staff will return to Council should the project require additional funding once the recommended scope of the project has been determined.

The cost of increasing all hourly employee pay rates by $0.50 per hour would be an approximate $10,000 increase.

As detailed in the separate staff report on this item, there is not direct budget impact to adding the Cesar Chavez Day and Juneteenth holidays, but there would be a 0.38% impact on productivity for one less day of work.

Staff does not recommend ne w budget appropriations at this time due to the number of vacancies and potential budgeted salary savings of $3.2 million in the General Fund.

ALTERNATIVES:

Council could decline to provide any of the incentives recommended in this report or could provide additional or alternative incentives.

Reviewed By: Legal Review By: Approved By:

___________________ ___________________ _________________ Kristine Schmidt Megan Garibaldi Michelle Greene
Assistant City Manager City Attorney City Manager

ATTACHMENTS:

1. Resolution No. 22-__ entitled, “A Resolution of the City Council of the City of Goleta authorizing the City Manager to Amend the Memoranda of Understanding with SEIU Local 620 to Provide Certain Retention Incentives, and to amend the Personnel Rules as Necessary to Provide the Same Incentives to Unrepresented Employees, Managers, and Executives, Effective August 1, 2022;”

2. Resolution No. 22-__ entitled “A Resolution of the City Council of the City of Goleta, California Amending the Wa ge Schedule for Hourly Employees and Intern Assignments effective August 13, 2022.”
6 Attachment 1

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GOLETA, CALIFORNIA,

AUTHORIZING THE CITY MANAGER TO AMEND THE MEMORANDA OF
UNDERSTANDING WITH SEIU LOCAL 620 TO PROVIDE CERTAIN RETENTION

INCENTIVES, AND TO AMEND THE PERSONNEL RULES AS NECESSARY TO

PROVIDE THE SAME INCENTIVES TO UNREPRESENTED EMPLOYEES, MANAGERS, AND EXECUTIVES, EFFECTIVE AUGUST 1, 2022
7 RESOLUTION NO. 22-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

GOLETA, CALIFORNIA, AUTHORIZING THE CITY MANAGER

TO AMEND THE MEMORANDA OF UNDERSTANDING WITH
SEIU LOCAL 620 TO PROVIDE CERTAIN RETENTION

INCENTIVES, AND TO AMEND THE PERSONNEL RULES AS

NECESSARY TO PROVIDE THE SAME INCENTIVES TO

UNREPRESENTED EMPLOYEES, MANAGERS, AND
EXECUTIVES, EFFECTIVE AUGUST 1, 2022

WHEREAS, on December 7, 2021 , the City Council approved and authorized the City Manager to execute Amended and Restated Agreements No. 18-037 and 180-038, the Memorand a of Understanding with SEIU, Local 620 Regarding the Goleta General Employees Bargaining Unit and Miscellaneous Bargaining Unit , which are valid through the ex piration of their terms on December 31, 2023; and

WHEREAS, on March 3, 2015, the City Council adopted the City of Goleta Personnel Rules via Resolution 15 -09, which were subsequently amended via Resolution No. 15 -36, Resolution No 20-57, Resolution 20 -71, and Resolution 21-XX; and

WHEREAS, the City Council wishes to change the terms and conditions of employment for both represented and unrepresented employees to prov ide certain retention incentives,

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNC IL OF
THE CITY OF GOLETA, AS FOLLOWS:

SECTION 1 . The City Manager is authorized to agree to amend the existing Memoranda o f Understanding with the General and Miscellaneous bargaining unit s as necessary , su bject to agreement with those employee organizations, to provide the following incentives:

PART A

1. [Delete and renum ber if not approved] A one -time payment of $1,000.00 per employee employed as of the date of the adoption of this Resolution, not added to the salary schedule, not related to performance, and not reportable as special compensation for purposes of the Calif ornia Public Employees Retirement System (CalPERS).

2. [Delete and renumber if not approved] A one -time payment of $500.00 per employee employed as of the date of the adoption of this Resolution , not added to the salary schedule, not related to performance, and not reportable as special compensation for 8 Resolution 22-0X
Retention Incentives
purposes of the California Public Employees Retirement System (CalPERS) and an increase to the flexible benefit allowance for medical, dental and vision insurance effective August 1, 2022, from $1,295.00 per month to $1,336.67 per month , with an increase to the maximum may be paid to the employee in lieu of insurance premiums from $950 per month to $991.67 per month . Such benefit change shall not be considered a qualifying event under the City’s cafeteria pla n allowing changes to benefit elections during the current plan year.

3. [Delete and renumber if not approved] An increase to the flexible benefit allowance for medical, dental and vision insurance effective August 1, 2022 from $1,295.00 per month to $1,378.34 per month, with an increase to the maximum may be paid to the employee in lieu of insurance premiums from $950 per month to $1,033.34 per month. Such benefit change shall not be considered a qualifying event under the City ’s cafeteria plan allowing chan ges to benefit elections during the current plan year.

PART B

1. An increase to the per diem benefit incentive for employee use of alternative transportation from $5.00 per day to $7.50 per day.

2. Convert the single unnamed 8-hour floating holiday to two named 8-hour holidays, prorated for part -time employees: Cesar Chavez Day as a floating holiday and Juneteenth as a fixed holiday.

SECTION 2. The City Manager is authorized to amend the Personnel Rules, as nec essary, to provide the same recruitment incentives to unrepresented employees, managers, and executives.

SECTION 5
The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

PASSED, APPROVED AND ADOPTED this __ day of _____ 2022.

__________________________

PAULA PEROTTE
MAYOR

ATTEST: APPROVED AS TO FORM:

_________________________ __________________________
DEBORAH S. LOPEZ MEGAN GARIBALDI

CITY CLERK CITY ATTORNEY
9 Resolution 22-0X
Retention Incentives

STATE OF CALIFORNIA )
COUNTY OF SANTA BARBARA ) ss.

CITY OF GOLETA )

I, DEBORAH S. LOPEZ, City Clerk of the City of Goleta , California, DO HEREBY CERTIFY that the forego ing Resolution No. 22-__ was duly adopted by the City Council of the City of Goleta at a regular meeting held on the ___ day of ______, 2022 by the following vote of the Council:

AYES:

NOES:

ABSENT:

(SEAL)

_________________________
DEBORAH S. LOPEZ

CITY CLERK

10 Attachment 2

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GOLETA, CALIFORNIA,

AMENDING THE WAGE SCHEDULE FOR HOURLY EMPLOYEES AND INTERN ASSIGNMENTS EFFECTIVE AUGUST 13, 2022
11 RESOLUTION NO. 22-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

GOLETA, CALIFORNIA, AMENDING THE WAGE SCHEDULE

FOR HOURLY EMPLOYEES AND INTERN ASSIGNMENTS
EFFECTIVE AUGUST 13, 2022

WHEREAS, the City of Goleta has had a long -standing paid internship program in the non-classified service providing local students with the opportunity for on-the-job experience and training in public service; and

WHEREAS, the City hires certain short-hour part-time employees to work on an hourly basis as extra help at less than half time in several different departments; and

WHEREAS, the City wished to establish a regular and transparent method for Council to approve and amend wage schedules and benefits related to these hourly employees and interns; and

WHEREAS, on September 3, 20 19, Council adopted Resolution No. 19- 53 entitled, “A Resolution of the City Council of the City Council of the City of Goleta, California, Establishing a Wage Schedule for Hourly and Intern Assignments for Fiscal Years 2019/20 through 2021/22”; and

WHEREAS, the City Council has subsequently amended the Wage Schedule for Hourly and Intern Assignments contained therein from time to time; and

WHEREAS, Council now wishes to amend the Wage Schedule for Hourly and Intern Assignments to include additional wage adjustments;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNC IL OF
THE CITY OF GOLETA, AS FOLLOWS:

SECTION 1.

The category of “Hourly” employment will apply to those part -time, intern, temporary, and seasonal employees in hourly classi fications identified herein .

Such employment may not exceed 999 hours in any July through June fiscal year without the prior written approval of the City Manager. The hourly rates contained in this Resolution shall supersede any other previously approved hourly rates for hourly and intern assignments.

SECTION 2.

Wage ranges for hourly employees and interns shall be increased as follows:

12 Resolution 0X-0X
Hourly and Intern Wage Rates

Current Wage rates

Level Entry Maximum
Custodian 15.30
Library Page 15.30
Department Aide 15.30 19.30
Intern I 15.00
Intern II 15.50 19.30
Intern III 20.30
Legal Intern I 20.30
Legal Intern II 21.30 24.30
Special Project Associate 25.00

Effective August 13, 2022

Level Entry Maximum
Custodian 15.80 19.80
Library Page 15.80
Department Aide 15.80 19.80
Intern I 15.50
Intern II 16.00 19.80
Intern III 20.80
Legal Intern I 20.80
Legal Intern II 21.80 24.80
Special Project Associate 25.50

These rates will remain in effect until changed by the City Council.

SECTION 3.

Where no wage range exists, employees will be appointed at the identified entry wage rate. Where a wage range exists, the City Manager or his/her designee may assign an employee at any wage level within the range based on qualifications and tenure.

SECTION 4.

Such employees serve in the non -classified se rvice and will re ceive benefits only as required by state and federal law , or as may be subsequently established for these employee s by re solution of the City Council.