Item #05
Date: July 14, 2026
To: Mayor and City Council
From: Jim Schaad, City Manager
Subject: Funding a Full-Time Human Resources Director
Recommendation:
Staff recommends that the City Council, 1) Approve salary and benefit funding in the amount of $213,340 for one (1.0) full-time Human Resources Director; 2) Approve the budget adjustments identified by staff to correct Human Resources operating account appropriations and provide additional funding associated with the Human Resources Director position, as reflected in the accompanying presentation; and 3) Authorize the addition of one (1.0) full-time Human Resources Director position to the City's authorized position allocation.
Rationale for Recommendation:
The City currently obtains executive-level Human Resources services through an outside consultant who will retire from providing services to the City at the end of July 2026. Based upon the operational, financial, legal, and organizational analysis completed as related to the Fiscal Year 2026-2027 budget process, staff concludes that establishing a full-time Human Resources Director provides the most effective, sustainable, and cost-effective long-term method of delivering executive-level Human Resources and Risk Management services.
The internal staffing model provides approximately 1,925 productive service hours annually compared to approximately 1,355 hours under the consultant model analyzed by staff, at an equal or lower overall cost. The internal model also provides greater organizational continuity, responsiveness, institutional knowledge, and executive-level capacity while creating an opportunity for future cost sharing with the Linda Fire Protection District.
Background:
Historically, the City's higher-level Human Resources responsibilities were assigned to a management employee who also served as the City Clerk and Executive Assistant to the City Manager. While this organizational structure consolidated several administrative functions into a single position, the increasing complexity of public-sector Human Resources responsibilities, combined with the breadth of the position's other duties, created the need for additional specialized Human Resources expertise.
In March 2023, the City Council approved changes to the position's responsibilities to formally include the Human Resources function. In January 2024, the Council approved additional Human Resources Item #05
responsibilities for the City's Administrative Assistant, and in June 2024, the Council approved separation of the City Clerk and Human Resources functions.
To address the City's need for higher-level Human Resources expertise, the City retained John Perry in August 2024. In December 2024, the City Council approved an amendment to Mr. Perry's agreement to provide higher-level Human Resources services. Routine personnel administration continued to be performed by City staff, while Mr. Perry provided services including labor relations, employee investigations, disciplinary matters, employment law compliance, policy development, organizational development, and other specialized Human Resources functions.
In June 2025, the City Council added a Human Resources Director position to the City's authorized staffing allocation; however, the position was not funded in the Fiscal Year 2025-2026 Budget.
Mr. Perry has advised the City that he intends to retire from providing Human Resources services at the end of July 2026. Accordingly, the City must establish an alternative method of providing executive-level Human Resources services.
During the Fiscal Year 2026-2027 budget discussions, the City Council directed staff to evaluate the available alternatives for providing executive-level Human Resources services and return with a recommendation. This report and the accompanying presentation have been prepared in response to that direction.
Discussion & Analysis
Staff evaluated two alternatives for providing executive-level Human Resources services following the retirement of the City's current Human Resources consultant.
Executive-level Human Resources responsibilities in California public agencies extend well beyond traditional personnel administration. Public agencies operate within a significantly more complex legal and regulatory environment than many private organizations. Human Resources responsibilities include constitutional due process requirements, collective bargaining obligations under the Meyers-Milias-Brown Act, Peace Officer Bill of Rights requirements, CalPERS retirement administration, extensive state and federal employment law compliance, employee leave administration, workplace investigations, and organizational risk management.
In Marysville, like many other public agencies, Human Resources also administers Risk Management functions, including workers' compensation, insurance administration, and organizational liability reduction. Consequently, Human Resources workload is driven by organizational complexity and organizational needs in addition to employee count.
To address these responsibilities, the proposed Human Resources Director would provide executive-level Human Resources and Risk Management services, including:
• Labor relations, negotiations, and contract administration; • Employee investigations, discipline, and grievance resolution; • Employment law compliance;
• Classification and compensation;
• Organizational development;
• Policy development and implementation;
• Supervisor coaching and leadership development;
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• Recruitment strategy, executive recruitment, and onboarding oversight; • Workers' compensation, ADA, leave administration, and complex personnel matters; • Risk management, insurance administration, and organizational liability reduction; • Human Resources support for shared-service partners, if approved by the City Council; and • Other duties and strategic organizational initiatives as assigned by the City Manager.
Routine personnel administration would continue to be performed by existing administrative staff.
Staff also evaluated legal considerations associated with long-term consulting arrangements. Legal guidance for the analysis was provided by Liebert Cassidy Whitmore, the City's labor and employment counsel and a leading California public-sector labor and employment law firm.
While independent contractors may appropriately provide Human Resources services, the California Public Employees' Retirement Law requires employee status to be determined based upon the actual working relationship rather than solely by the terms of a consulting agreement or IRS Form 1099 status.
Use of a consulting firm does not automatically eliminate the potential for CalPERS review if an individual functions as a common-law employee. Long-term consulting arrangements should therefore be evaluated for CalPERS compliance before implementation.
The City currently has two pending CalPERS classification matters involving consultant status, one involving Human Resources and one involving the Police Chief, further demonstrating that these issues are active considerations for the City.
Financial and Service Level Analysis:
Staff compared the financial and operational impacts of the two alternatives. The detailed budget assumptions and cost comparisons are provided in the accompanying presentation.
Under the assumptions used in the analysis, procuring higher-level Human Resources services through an outside consultant at a rate of $165 per hour would cost approximately $230,275 annually and provide approximately 1,355 service hours.
By comparison, an internal Human Resources Director is estimated to provide approximately 1,925 productive service hours annually. Salary and benefit costs for the position are budgeted at $213,340 at the top of the salary range. The financial analysis also includes an additional $2,000 for professional development and $2,000 for travel, lodging and meals associated with the position, resulting in a total incremental cost of $217,340 for the Director alternative. Based on a mid-range recruitment assumption, the total incremental cost is estimated at $200,521.
The analysis therefore indicates that the internal staffing model provides approximately 570 additional productive service hours annually at an equal or lower overall cost than the consultant alternative. The internal staffing model also provides greater organizational continuity, institutional knowledge, immediate availability, participation as a member of the City's executive management team, and additional capacity to address organizational priorities.
During completion of the analysis, staff also identified several Human Resources budget accounts that should be adjusted to more accurately reflect anticipated expenditures. These include adjustments to professional services, new-hire background investigations, professional development, travel, lodging and meals, and other operating accounts based upon historical expenditures and the recommended service delivery model.
These adjustments are reflected in the budget comparisons contained in the accompanying presentation and allow for a more accurate comparison of the two service delivery alternatives.
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Potential Shared Services with Linda Fire Protection District:
Staff also evaluated opportunities to provide executive-level Human Resources services to the Linda Fire Protection District through a future shared-services agreement. The District currently has administrative resources available to perform routine personnel administration and anticipates primarily needing access to higher-level Human Resources services.
For purposes of illustrating the potential financial impact, the analysis assumes that approximately 30 percent of the Human Resources Director's cost and available service capacity could be allocated to the District. Using the midrange salary assumption, this would reduce the City's estimated annual cost to approximately $141,565 while retaining approximately 1,348 productive service hours for City purposes.
Any shared-services agreement would require negotiation of mutually acceptable terms and separate approval by the Linda Fire Protection District Board of Directors and the Marysville City Council.
The financial analysis and staff recommendation are not dependent upon cost sharing with the Linda Fire Protection District. Based upon the analysis presented, the internal Human Resources Director option already provides more available service hours at an equal or lower cost than the consultant alternative. Any future cost sharing would provide an additional financial benefit beyond those reflected in the basis for staff's recommendation.
Likewise, the opportunity to provide services to another agency should not be interpreted as indicating that the City lacks sufficient work to justify a full-time Human Resources Director. The City has identified numerous higher-level Human Resources, Risk Management, organizational development, policy, training, compliance, and organizational improvement initiatives that would benefit from executive-level attention.
As with other department directors, priorities and assignments evolve over time based upon organizational needs and City Council priorities. Any services provided to the Linda Fire Protection District would allocate a portion of the Director's professional capacity to the District while allowing the City to recover a portion of the cost of the position.
Alternatives Considered:
Alternative 1 – Establish a Full-Time Human Resources Director (Staff Recommendation) Approve salary and benefit funding in the amount of $213,340 for one (1.0) full-time Human Resources Director, approve the associated Human Resources operating budget adjustments identified by staff, and authorize the position within the City's staffing allocation.
This alternative would provide approximately 1,925 productive service hours annually and dedicated executivelevel Human Resources and Risk Management services. The total incremental cost is estimated at $217,340 at the top of the salary range and $200,521 at the mid-range. The alternative would increase organizational capacity, provide greater continuity and immediate availability, reduce reliance on long-term consulting arrangements, and create an opportunity for future cost sharing with the Linda Fire Protection District.
Alternative 2 – Procure Executive-Level Human Resources Services Through an Outside Consultant Direct staff to procure executive-level Human Resources services through a qualified outside consultant following the retirement of the City's current Human Resources consultant.
Based upon the assumptions used in the analysis, this alternative would require additional appropriations to the Professional Services account and is estimated to cost approximately $230,275 annually for 1,355 hours of service.
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Because the City's current Human Resources consultant is retiring, this alternative would also require the City to identify and procure a replacement consultant. The City would continue to rely on contracted executive-level Human Resources services in conjunction with the existing Human Resources Technician position and would be responsible for ongoing administration and oversight of the consulting agreement.
Environmental Review:
The action proposed in this item is administrative in nature and does not constitute a project under the California Environmental Quality Act (CEQA).
Alignment with City Council Goal(s):
• Goal #1 – Increase Fiscal Sustainability
• Goal #6 – Strengthen Institutional Capacity
Legal Review:
The legal considerations associated with long-term consulting arrangements discussed in this report were reviewed with Liebert Cassidy Whitmore, the City's labor and employment counsel.
Any future shared-services agreement with the Linda Fire Protection District would require separate City Council approval.
Fiscal Impact:
Approval of this item will authorize salary and benefit funding in the amount of $213,340 for one (1.0) full-time Human Resources Director and approve adjustments to Human Resources operating accounts identified during staff's budget review. The recommended adjustments include an additional $2,000 for professional development and $2,000 for travel, lodging and meals associated with the new position.
The recommended budget retains funding for specialized labor negotiations, legal services, the City's remaining financial obligation to its current Human Resources consultant, and other consulting services that may periodically be required.
Based upon the financial analysis summarized in the accompanying presentation, the total incremental cost of the internal Human Resources Director alternative is estimated at $217,340 at the top of the salary range and $200,521 at the mid-range, compared to approximately $230,275 for the consultant alternative. The internal model also provides approximately 1,925 productive service hours annually compared to approximately 1,355 hours under the consultant alternative.
Future reimbursement from the Linda Fire Protection District is not assumed in the financial analysis supporting the staff recommendation. Any future shared-services agreement approved by both agencies would provide an additional offset to General Fund costs.
Attachments:
1) Human Resources Service Delivery Analysis Presentation Item #05