City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Human Resources
Meeting Date: June 16, 2025
Report #:2505-4650
TITLE
Approval of the Council Appointed Officers (CAO) Committee‘s Recommendation to Approve the CAO Annual Evaluation Process, Timeline, and Questions; and Approval of Professional Services Contract Number C25193915 with the Municipal Resources Group, LLC (MRG) in an Amount Not to Exceed $208,500 for Council Appointed Officer Performance Evaluation Services for a Period of Three Years. CEQA Status - Not A Project
RECOMMENDATION
The CAO Committee recommends approval of the CAO annual evaluation process timeline, the CAO self-evaluation questions and Council interview questions for the annual evaluation process (Attachment A), and staff recommends that the City Council approve and authorize the Mayor or designee to execute Contract Number C25193915 with MRG (Attachment B), to provide CAO performance evaluation services, for a three year term, and a total amount not to exceed $208,500, including $144,000 for basic services and $64,500 for additional services.
BACKGROUND
The City Manager, City Attorney, City Auditor and City Clerk are appointed directly by the City Council and, as such, are reviewed by the City Council on an annual basis in accordance with their individual employment agreements. The City Auditor is also appointed directly by the City Council however the City contracts for internal auditing services with Baker Tilly under the terms of the contract. Such review is necessary for Council members to ensure the efficiency of the appointed offices, to provide general feedback on their performance, to set goals for the coming year, and to identify areas of improvement. It is also necessary to review compensation to ensure that the positions are paid appropriately in comparison to the market and their performances. Given that a need exists for objectivity and facilitation as well as the time commitment in meeting with seven City Council members, the four CAO’s, and the CAO Committee, the use of an outside consultant increases efficiency.
The Council Appointed Officers (CAO) Committee met on November 26, 20241 to review and debrief regarding the 2023-2024 CAO performance evaluation process, as well as to discuss the next steps for the CAO performance evaluation services contract. The CAO Committee strongly supported continuing with a facilitator and unanimously approved to request a proposal for services. The MRG proposal was reviewed by Mayor Lauing as well as the 2025 CAO Committee Chair, Greer Stone and the CAO Committee and was recommended for Council to approve services to be negotiated with MRG.
ANALYSIS
In June 2018, the Council approved a one-year contract (C18172268) with Municipal Resources Group (MRG) for CAO performance evaluation services for one-year term through June 20, 20192. This contract had the option to extend the term for up to two additional years through 2022. Council then approved a three-year contract extension (C22185281) with this current contract ending June 20, 2025 with a total annual cost of $51,200 and a not-to-exceed amount of $153,600.
On April 7, 20253, the CAO Committee recommended to the Council that the CAO Committee Chair negotiate a new professional services contract with MRG for the CAO performance evaluation services with the existing consultant and facilitator. The Council approved (passed 7- 0). The new professional services contract with MRG in an amount not to exceed $208,500 for a period of up to three years is attached (Attachment B) and was provided to the CAO Chair for final review.
Contract Overview
The contract engages MRG to facilitate the annual performance evaluation and compensation adjustment process for the City’s four CAOs.
Scope of Services:
•Preparation of Evaluation Tools: Development of customized questionnaires in coordination with the Council CAO Committee.
•Interview & Evaluation: Individual interviews with all seven Council Members and CAOs; preparation of a comprehensive written evaluation report; facilitation of evaluation discussions during closed sessions.
•Compensation Review: Recommendations to Council CAO Committee and assistance in compensation discussions and negotiations.
1 CAO Committee Meeting, November 26, 2024, Action Item #2, Special Meeting https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16465 2 City Council Meeting, June 25, 2018, Item #9148, https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/year-archive/2018/id-9148.pdf 3 City Council, April 7, 2025, Agenda Item #14, SR #2503-4356, https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16024 •Optional Additional Services:
1.Executive Salary Analysis (compensation benchmarking from comparable jurisdictions)
2.Direct Reports Feedback (360-degree evaluation from senior staff using an online survey tool)
Following this, the CAO Committee met on May 12, 20254 to review and discuss the timeline for the annual evaluation process, to review the CAO self-evaluation questions and the Council interview questions and give direction to the evaluation process facilitator. The CAO Committee agreed with the timeline proposed and made suggestions to each of the CAO self-evaluation questions and Council interview questions as seen in Attachment A.
FISCAL/RESOURCE IMPACT
This contract is funded through the Council budget. There is no fiscal impact in FY 2026, as funds have already been allocated to cover costs for the first year of the contract. Costs for future years will be addressed through the City’s annual budget process.
STAKEHOLDER ENGAGEMENT
Public comment was made during the CAO Committee review on May 12, 2025 and opportunity was available when report was on the Council Consent agenda on April 7, 2025.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because approval of and execution of a professional services contract for facilitating CAO performance evaluations is a continuing administrative activity. CEQA Guidelines section 15378(b)(2).
ATTACHMENTS
Attachment A: CAO Evaluation Timeline and Interview Materials Attachment B: Contract with Municipal Resources Group, LLC; Contract # C25193915 APPROVED BY:
Sandra Blanch, Human Resources Director
4 CAO Committee Meeting, May 12, 2025, Action Item #1, Special Meeting https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17368