PISMO BEACH COUNCIL AGENDA REPORT
Agenda Item 12.F
SUBJECT/TITLE:
REVIEW OF COUNCIL EXPENSE REIMBURSEMENT AND COMPENSATION
PRACTICES
RECOMMENDATION:
Receive a report on the City’s practices with respect to expense reimbursement and compensation for City Council Members, and provide direction if desired.
BACKGROUND:
At the February 1, 2022 City Council meeting, there was consensus among a majority of the Council to direct staff to return with an agenda item allowing for the discussion of the City’s expense reimbursement and compensation practices for City Council Members.
These topics are discussed individually below.
Expense Reimbursement
Expense reimbursement practices for public officials are primarily regulated by Government Code Sections 25008, 36514.5, and 53232 et seq. (provisions enacted in 2005 by AB 1234, a bill that is widely known for also establishing an ethics training requirement for City Council Members and other officials).
These laws stipulate that Council Members and Advisory Body Members may only receive expense reimbursement for “actual and necessary” expenses incurred in the course of their duties, and only as documented by expense report forms and/or accompanying receipts, which generally precludes such payments being made on a proactive or estimated basis. Any practice of proactive or estimated payments for expenses would constitute additional compensation (salary) to the official, which is generally prohibited by state laws that limit such compensation, as discussed in the following section.
These laws also stipulate that a local agency must publicly adopt a written policy detailing its expense reimbursement practices for elected and appointed legislative body members, including which types of expenses or activities are reimbursable.
Purchasing Policy / Travel and Meal Expenses
The City’s Purchasing Policy was amended on March 5, 2019 by Resolution R-2019-021 to reflect the provisions of AB 1234 with respect to Council Member and Advisory Body Member travel and meal reimbursements.
The provisions of the Policy that relate specifically to the City Council and Advisory Body Members are summarized as follows:
12.F-1Council Agenda 6-21-2022
Council Members who wish to be reimbursed for travel-related meals and incidental expenses may do so up to the maximum federal per diem rate for each city and state where the related travel occurs.
With respect to lodging, the City will pay for “the most reasonable priced accommodations available consistent with the purpose and goals of the travel” at the actual cost for official City business that requires an overnight stay. If a Council Member wants to seek reimbursement for levels of expenses not otherwise authorized under the City’s reimbursement policy, then they may seek prior approval for such reimbursement from the City Manager (before incurring the expense), but is considered taxable as wages for the Council Member. Council Members must use expense report forms and provide accompanying receipts to substantiate the charges.
The above documentation is public record.
Other Expense Reimbursement
AB 1234 requires public agencies wishing to offer expense reimbursements to its elected and appointed officials to adopt a policy stipulating which expenses the agency considers to be reimbursable, and the maximum amounts therefor. As such it is necessary for the City to have a written policy setting the reimbursement amounts for telephone service, internet service, and “miscellaneous” expenses unrelated to travel. Staff is preparing an update to the City’s Purchasing Policy that will formally memorialize the existing reimbursable expenses as follows, which will be returned to the Council in the near future:
Telephone service costs of up to $55 per month
Internet service costs of up to $40 per month
Miscellaneous expenses (mileage, office supplies, etc.) of up to $150 per month
Discussion of Compensation Options for Consideration
Due to the limitations set forth in the Government Code on the manner in which elected officials may be reimbursed for their expenses, staff has not identified any viable alternatives to the City’s current practices with respect to travel and meal expenses. With respect to expenses not related to travel, should the Council wish to continue to be eligible for reimbursement of certain expenses such as internet and phone service costs, the only viable course of action identified by staff is the previously discussed adoption of updates to the Purchasing Policy stipulating the nature and amounts of such reimbursements.
With respect to mileage expenses specifically, the California Attorney General has rendered an opinion that the payment of an allowance (i.e. a proactively paid stipend) to Council Members for the costs of vehicle travel associated with the performance of official duties is a permissible exception to the general rule under AB 1234 that expenses may only be reimbursed retroactively. As such, the Council could direct staff to explore this possibility for vehicle costs and return with a related policy item, which would involve the execution of a contract by each Member wishing to receive reimbursement, as provided by Government Code Section 1223, along with a comporting revision to the Purchasing Policy.
12.F-2Council Agenda 6-21-2022
Compensation (Salary)
Compensation for City Council Members is regulated by Government Code Section 36516 et seq., which provides that Council Member salary may be increased in an amount not to exceed 5% per calendar year from the effective date of the prior salary increase.
The increase is not a compounded year-over-year increase based on what could have been established each year, but a simple per-year increase based on the last-established salary amount.
The Council last considered its members’ compensation in March 2018, at which time the Council opted to pursue the maximum compensation increase allowed by law. Ordinance O-2018-005 was adopted on March 20, 2018, and a 50% salary increase, from $514.80 to $772.20 per month for Council Members, became effective following the certification of the 2018 election results. Government Code Section 36516.5 states that a change in compensation does not apply to a Council Member during the Council Member’s term of office, so any changes become effective only after the next election for Council Members.
The additional Mayoral compensation of $300 per month remained unchanged, for a total of $1,072.20 per month for the Mayor.
Options for Direction
Pursuant to Government Code Section 36516(a)(4), at this time the City Council could opt to direct staff to prepare an ordinance that would enact a further increase in compensation of up to 20%, or an additional $154.44, for a total of up to $926.64 per month (a 5%-per-year increase since the last increase 2018). If the Council were ultimately to adopt such an ordinance prior to the 2022 general election, the increase would become effective for all members following the certification of the election results.
The Council could also opt to provide direction to staff on Mayoral compensation, which is discussed further below.
Table 1 shows monthly Council Member salaries adopted by other cities in the county.
Table 1. Current Council and Mayor Salaries in Nearby Cities
City Council
Salary (a)
Add'l Mayor
Salary (b)
Mayor Salary
(total) (a+b=c)
Atascadero $600.00 $150.00 $750.00
Paso Robles $600.00 $200.00 $800.00
Arroyo Grande $648.00 $150.00 $798.00
Grover Beach1 $720.00 $180.00 $900.00
Pismo Beach $772.20 $300.00 $1072.20
Morro Bay2 $1,000.00 $400.00 $1,400.00
San Luis Obispo3 $1,990.00 $518.00 $2,508.00
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Notes on figures shown in Table 1:
1. Projected Grover Beach compensation of $720 for Council Members and $900 for Mayor is expected to be adopted by ordinance in 2022 and become effective after the 2022 election. Current salary is $600 for Council and $750 for Mayor.
2. Morro Bay compensation of $1,000 for Council Members and $1,400 for Mayor has been adopted by ordinance and will be effective after the 2022 election.
Current salary is $500 for Council and $700 for Mayor.
3. San Luis Obispo is a charter city and is not bound by the same salary limitations as general law cities such as Pismo Beach, which may explain the relatively higher salary amount for that city.
Table 2 shows various options for salary amount increases for Pismo Beach, along with a comparative analysis to other cities' Council salaries. These figures assume that additional Mayor compensation of $300 remains unchanged (see next section for discussion) and assumes the implementation of projected increases in Grover Beach. As noted above, in accordance with California Attorney General opinion 06-504, the 5- percent-per-year increase is not compounded when calculating multi-year increases.
Table 2. Analysis of Potential Salary Increase Amounts1 2
Increase
from
Current
Council
Member
Salary
Mayor Salary
(total)
Compared to
Median
(Council)
Compared to
Average
(Council)
Rank
1 = highest
7 = lowest
(Council)
0% $772.20 $1,072.20 +$52.20 -$132.11 3
5% $810.81 $1,110.81 +$90.81 -$93.50 3
10% $849.42 $1,149.42 +$129.42 -$54.89 3
15% $888.03 $1,188.03 +$168.03 -$16.28 3
20% (max) $926.64 $1,226.64 +$206.64 +$22.33 3
Additional Mayor Compensation
In addition to salary received as a Council Member, Government Code Section 36516.1 provides the Mayor may receive additional compensation as established by Council ordinance. The amount of this compensation is not regulated by Government Code, and an increase may be enacted at any time, including mid-term of office.
In accordance with Municipal Code Section 2.04.020B., the Mayor presently receives an additional $300 in compensation per month, bringing the salary total for the position to $1,072.20 per month. This additional Mayoral compensation is the third-highest amount countywide (behind San Luis Obispo and Morro Bay). The Council may choose to leave the Mayor compensation amount unchanged, or it may direct an increase or decrease to the amount. If Council wishes to increase or decrease the amount, staff recommends that the change be made concurrent with any amendment to Council compensation that the
1 2 See Notes on Table 1.
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Council may wish to make. Additional Mayor compensation amounts adopted by other cities are shown in Table 1.
Conclusion and Recommendation
With respect to reimbursements for expenses not related to travel, staff is preparing an update to the Purchasing Policy that will formally establish a policy stipulating reimbursable expenses for Council Members, in amounts that meet with current reimbursement practices:
Telephone service costs of up to $55 per month
Internet service costs of up to $40 per month
Miscellaneous expenses (mileage, office supplies, constituent meetings, etc.) of up to $150 per month.
The Council may provide direction as to the above reimbursement amounts at this juncture. The Council may also direct staff to return with a policy item relating to the establishment of a vehicle allowance, which would involve the execution of a contract by each Member wishing to receive reimbursement, along with a comporting revision to the Purchasing Policy.
With respect to compensation (monthly salary), the Council may opt to direct staff to return with further information about a potential compensation increase, including preparation of an ordinance to implement such an increase, or take no action.
FISCAL IMPACT:
There is no fiscal impact associated with this discussion item. Any fiscal impact associated with related updates to the Purchasing Policy will be discussed in that report.
Should the Council direct staff to prepare an ordinance relating to Council compensation, the full fiscal impact would be analyzed at that time.
ALTERNATIVES:
1. As outlined in the above report.
ATTACHMENTS:
None
Prepared by: Meeting Date: June 21, 2022
Erica Inderlied, City Clerk
Submitted by: Jorge Garcia, Assistant City Manager
City Manager Approval:
12.F-5Council Agenda 6-21-2022