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City Council
Staff Report
From: COUNCIL APPOINTED OFFICERS COMMITTEE
Report Type: ACTION ITEMS
Lead Department: Human Resources
Meeting Date: December 11, 2023
Report #:2311-2213
TITLE
Approval of Amendments to the Employment Agreements between the City of Palo Alto and Council Appointed Officers, specifically the City Manager, and City Attorney and Adoption of Amended Resolution Amending Appointment Term for Interim City Clerk through March 31, 2024 and salary adjustment. CEQA Status - Not a Project
RECOMMENDATION
Staff recommends that the City Council approve and authorize the Mayor to execute the following contract amendments for Council Approved Officers and Adoption of Amended Resolution Amending Appointment Term for Interim City Clerk:
1. Amendment No. 11 to Employment Agreement between the City of Palo Alto and Molly S. Stump (Attachment A);
2. Amendment No. 5 to Employment Agreement between the City of Palo Alto and Ed Shikada (Attachment B); and
3. Amendment to Resolution Amending Appointment Term for Interim City Clerk through March 31, 2024, and salary adjustment in alignment with increase for all unrepresented Management and Professional employees (Attachment C)
BACKGROUND / DISCUSSION
The City Council has completed annual merit reviews for Council Appointed Officers (CAOs):
City Attorney Molly S. Stump and City Manager Ed Shikada for the prior fiscal year’s performance (FY 2023).
Staff has been directed by City Council to forward amendments to employment agreements to implement merit- based increases to the CAO’s annual salaries, effective July 1, 2022, as follows:
•City Attorney Molly S. Stump, merit increase of 7% from $335,750 to $359,258 (Attachment A);
•City Manager Ed Shikada, merit increase of 7% from $381,372 to $408,096 (Attachment B).
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As appointed officers of the Council, the City Attorney and City Manager1 are employed under employment agreements specifying that performance and salary are evaluated annually.
The following paragraph is the specific provision in the City Manager’s employment agreement that addresses salary adjustments:
Salary Adjustments. Not less than once each year, the City Council shall meet for the express purpose of evaluating the performance of Shikada and determining whether to grant him an increase in annual base salary based on performance. The City Council will act in good faith in determining whether to provide an increase based on performance, but the ultimate decision in this regard is within the sole discretion of the City Council.
The Council may also adjust Shikada’s annual base salary due to labor market and/or internal equity conditions.
The City Attorney’s employment agreement contains a similar provision.
For the FY 2023 performance evaluation period, City Council completed evaluations for the City Manager, and City Attorney. Council completed the evaluations with the assistance of an outside consultant. The consultant, a professional with the firm MRG, facilitates CAO evaluations with many agencies throughout California. The process includes surveys, 1-1 interviews, and facilitated closed session discussions as appropriate under the Brown Act.
At the conclusion of the CAO evaluation process, Council directed staff to prepare amendments reflecting a 7% increase to the salaries of the City Attorney and the City Manager, amendments are attached to this staff report as exhibits. The 7% increase to the salary the only changes to the agreements and all other terms and conditions remain the same.
Resolution Amending Appointment Term for City Clerk and Salary Adjustment City Clerk Lesley Milton provided the City Council notice that she was resigning effective May 19, 2023 to take a new opportunity at another California city. On May 1, 2023, the Council Appointed Officers (CAO) Committee met to discuss a recommendation to the City Council regarding the City Clerk vacancy. On May 22, 2023 the City Council interviewed one candidate followed by their request to HR Director to take steps to have Mahealani Ah Yun appointed as the Interim City Clerk through December 1, 2023 or until the formal executive recruitment is completed, whichever is sooner. (Attachment C).
The executive recruitment is still in process. The posting for this recruitment was opened in September 2023 and closed on October 22, 2023. The City Council is in process of scheduling formal interviews. Since the recruitment process is not complete it is necessary to amend the 1 Previous Employment Agreements of the City Attorney and the City Manager (Pg. 109) 3 4
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appointment term and extend the interim appointment through March 31, 2024 or until the formal executive recruitment is completed, whichever is sooner.
In addition, the amendment to the contract includes a 4% salary increase, the same increase received by the Unrepresented Management and Professional employees. This salary increase will be paid retroactive to July 1, 2023, consistent with the Unrepresented Management and Professional employees unit, and will result in an annual salary of $126,152 .
FISCAL/RESOURCE IMPACT
The additional cost for CAO salary increases of approximately $55,800 for the CAO positions is expected to be funded in the respective departmental FY 2024 Adopted Budgets as these adjustments are in alignment with unrepresented management professional wage assumptions. Staff will incorporate these changes ongoing in the development of the FY 2025 Proposed Budget.
STAKEHOLDER ENGAGEMENT
Employment agreements of local public agency executives are required to be voted on in open session when change in salary or benefits is proposed to provide transparency for stakeholders.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) in that the amendments to the employment agreements are personnel-related actions. CEQA Guidelines Section 15378(b)(2).
ATTACHMENTS
Attachment A: Amendment No. 11 to the Employment Agreement between the City of Palo Alto and Molly Stump
Attachment B: Amendment No. 5 to the Employment Agreement between the City of Palo Alto and Edward Shikada
Attachment C: Amendment to Resolution Amending Appointment Term for Mahealani Ah Yun as the Palo Alto Interim City Clerk
APPROVED BY:
Sandra Blanch, Human Resources Director