Loading...
HomeMy WebLinkAbout12/10/2010 Regular.City of Springfield Regular Meeting • MINUTES OF THE SPECIAL REGULAR MEETING OF THE SPRINGFIELD CITY COUNCIL HELD • FRIDAY, DECEMBER 10, 2010 The City of Springfield Council met in special regular session. in the Library Meeting Room, 225 Fifth Street, Springfield, Oregon, on Friday, December 10, 2010 at 12:00 p.m., with Mayor Lundberg presiding. ATTENDANCE Present were Mayor Lundberg and Councilors Ralston, Wylie, Moore, Simmons, and Pishioneri. - Also present were City Manager Gino Grimaldi, City Attorney Matt Cox, City Recorder Amy Sowa, and members of the staff. BUSINESS FROM THE CITY MANAGER 1. Compensation Plans for AFSCME Local 1148, SEIU (OPEU) Local 995 and Non-Union Employees. Human Resources Director Greta Utecht presented the staff report on this item. She thanked the Mayor and Council for coming in for this special meeting. The City of Springfield and OPEU Loca1995 bargained athree-year contract earlier this year. Provisions of the contract called for a reopener to bargain the structure and the implementation of anew compensation plan in 2011. The City's contract with AFSCME Local 1148 (bargained in 2009 and ending June 30, 2012), allowed for the bargaining of the structure of the new compensation plan only, since there was already agreement on the implementation of the plan in calendar year 2011. The City was given several compensation plan options based on data resulting from a comprehensive market survey conducted by the consultant (Fox Lawson & Associates) hired for this project. After receiving direction from Council as to preferred options, the City bargained with AFSCME and SEN. and reached agreement as to plan structure and, implementation strategy. Following those processes, executive team deliberated on options for both structure .and implementation strategies for non-union employees.. Based on results from all negotiations and deliberations, staff was now requesting that Council authorize the City Manager to adopt and. implement the proposed compensation plans. None of the employee groups (AFSCME, SEIU or non-union) impacted by the proposed new plans received Cost of Living Adjustments in FY2009 or in FY2010 due to the budget reductions that the City was forced to make as a result of the failing economy.. During the spring and summer of 2010 both bargaining units negotiated fora 1.5% market adjustment to be granted effective July 2011, and both units considered the impact of implementing a new compensation plan in their contract negotiations. At that same time, non-union employees were asked to wait for the new plan's implementation rather than assuming that they would~be granted compensation increases similar to those negotiated by the unions. All hoped that by the time we were ready to City of Springfield Council Regular Meeting minutes December 10, 2010 .Page 2 implement new compensation plans, the economic outlook would have improved, but once again, we° are faced with serious economic issues while trying to address employee compensation. Based on the agreed-upon structures and strategies, implementation of the new plans would result in a net cost increase of $86,239 in calendar year 2011 and a net cost increase of approximately $788,826 over three years. Details of how these costs were calculated were included in the Council Briefing Memo in the agenda packet. Ms. Utecht spoke regarding the union agreements and noted that OPEU had chosen the eleven step plan. The last two steps would only be used when extreme market conditions came into play, or when there was clear criteria for pay-for-performance. She said the union suggested the pay for ,performance pay plan, which was unusual for a union, but a positive. move. Staff would be . working on that portion of the pay plan over the next year. She described using the first step to hire. people at a lower rate that could be trained for the organization. She further described the 1.5% increase for OPEU, and the implementing strategy for union and non-union groups. She refer€ed to the attachments. in the agenda packet which showed how implementation would proceed for each of the groups. She noted the first year costs for implementation and said that figure was fairly accurate. Years two and three were harder to calculate; so the worst case scenario was figured. Staff would still be working on policies and procedures and correcting contract language so it applied to the new classification structure. Computer systems would also be updated. Councilor Pishioneri appreciated that they were looking at the first level for entry level employees which would be less than normal entry costs. He asked if there could be a scenario where a new hire was brought in at a higher rate than an employee who had been here for 4-5 years on this new plan. Ms. Utecht said she did not believe that would occur. Whenever a plan was changed, it was nearly impossible to maintain the same internal relationships in pay. The only time that would have an impact was in a situation where the position (such as Court clerks) was way under market. During the conversion, all employees in that position would have to move~up. The implementation strategy was that no one would move until their merit-date, so if a newer employee had an earlier merit date, they could move on to the new plan sooner than someone who had been here longer. They were discussing how to make that more equitable. In this case, if the Court clerks, which were part of OPEU, wanted a different implementation that would not cost the City more, they would have to sign a memorandum of understanding (MOU) with the union. Councilor Pishioneri asked if they could indicate where new hires.would be starting. Ms. Utecht said everyone was moving onto the new plan at least at step 2. Any new employees could be started at step 1. Some situations would be unique. They had looked. at a number of scenarios to make this as cost effective and fair as possible, but there would still be issues. Employees were clear about what this would mean. For those that had topped out on the pay plan, the issue of how many years they had been here compared to someone else was meaningless. Most people understood it was impossible to do this without some changes in the internal relationships. Councilor Pishioneri said as long as they were aware. . City of Springfield Council Regular Meeting Minutes December 10, 2010 Page 3 Councilor Ralston spoke regarding the figures in the financial impact section of the agenda item summary. He asked if the increase would be over $700,000 in the second two years. Ms. Utecht said those estimates were very high estimates. The estimates were calendar year estimates, yet the system was set up from July to June. She looked at how many employees still had room to move to another step, calculated the average salary in each of the units, and multiplied the cost of the step with the average salary for the .full year. Most employees would not receive their step increase until somewhere in the middle of the calendar year. This.was an inflated estimate. The second year would be most expensive because the most people would be moving up one step. From there on the costs would be lower and lower. Councilor Ralston said OPEU went to the 11-step plan and AFSCME went to the 7-step plan. He asked how many employees were in AFSCME Ms. Utecht said about forty-three. There were sixty-four non-union employees, and 118 SEIU/OPEU employees. Councilor Ralston said knowing the 7 step plan cost more, AFSCME still chose that plan. The costs would escalate over time. He hoped these figures were grossly overestimated because the City was not collecting any more funds. . Mr. Grimaldi said when staff had done their financial projections, implementation of the class and comp plan had been factored. Councilor Ralston asked if AFSCME had already ratified the 7-step plan. Ms. Utecht said she was asking the Council to authorize the City Manager to adopt this-plan. The 7-step plan was presented to Council during their Executive Session with regards to AFSCME. That plan was chosen because the measure of the work for that group did not lend itself to a 50% pay range. The union was given the option of equal percentages between steps or even dollar value between steps. The equal dollar value was more expensive the first few years than the equal percentage because there was a bigger gap between the lower steps. By the end of the third year, most of the AFSCME would be at the top step again. - Councilor Wylie said she was concerned about the large amounts of funds. She wouldn't expect the unions to be negotiating cost of living adjustment (COLA) increases at the same time. Ms. Utecht said they didn't. The unions negotiated the COLA late last Spring before the financial and comparative information was available. Both AFSCME and OPEU had COLA based on CPI in their contracts for July 2012 that were negotiated before this information was available. Councilor Wylie said they. needed to look at the cost of personnel in both negotiated benefits and. benefits of the market based plan: This was not the time to dig into our pockets. Ms. Utecht said employees did go without a COLA for two years while they were waiting for the new plan to be finalized. City of Springfield Council Regular Meeting Minutes December 10, 2010 Page 4 Councilor Pishioneri asked if it would be better to forego implementation of this plan until the new CPI figures were available. Ms. Utecht said this year's adjustment was not based on CPI, but rather next year's. July of 2012 was when it would be based on CPI. July of 2011 was a flat 1 1/2 % that was negotiated before the. pay plan came out. Mr. Grimaldi noted that the pay plan had been adjusted accordingly. Councilor Moore -said people were' not moving into this pay plan until their annual merit. She asked if the 1 1/z% was being applied for those that would not have reached their merit step by Juiy 1, 2011. Yes. That was a double whammy for those employees. Ms. Utecht said the employees were aware. This would- be a difficult implementation. The new plan would be implemented. in January with everyone placed on the plan between steps. It would take a full year to get everyone on the new pay plan. There were people that didn't have their merit until December, and would need to wait almost a full year to move to the next step. Moving to the next step could result in a 1-4% increase. That had made it very difficult to do the costing on this and why she believed years 2 and 3 .were grossly overestimated. She had provided the worst case scenario. She explained how she got those figures. Councilor Moore said there were a lot of people that had been here for a number of years that would be retiring. In the next 10 years, we would be looking at opportunities to hire new people and train them. Ms. Utecht said they were not trying to create a plan that broke the budget this year, but a plan that allowed the City to move forward when the economy moved up. The plan would allow the City to bring new people in at an affordable cost and reward those that had been here for a number of years. The current plan was very narrow and outdated. Councilor Ralston referred to the three options in the analysis of implementation scenarios listed on page 4 of Attachment 1 of the agenda packet. SEILT/OPEU agreed on Option C. He asked if that was what the figure of $86,239 was based on. Yes. The employees needed to understand this was to their benefit in the long run. The immediate problem he saw was that we were still in a recession. Option A was what he felt they needed to stick to. He understood why they went with the other option, but this was to their benefit in the long run. He understood that some of the employees may have decreased in salary when taking their steps, but he didn't feel they could take those few exceptions to benefit everyone. The City didn't have any money. Ms. Utecht said when looking at the actual implementation costs between A and B on the 11-step plan, and looked at specific employees, there were not many that would have been at less than one percent. When calculating how far people were from the next step, there were very few that were less than 1 %, so the 1 % option didn't play out to be much more of an expense as the no increase option. When they were in bargaining, the union knew the situation. Those union representatives had to go back and explain this to their members, and employees had been waiting for the plan, and did not ask for an increase last year. Their only other option was to go to the 7 step plan. She felt it was great that they took this leap of faith with the 11-step plan. It reduced the amounts between steps and worked in a pay for performance criteria. This was groundbreaking and pretty positive. City of Springfield . Council Regular Meeting Minutes December 10, 2010 Page 5 Councilor Ralston said he was just voicing his frustration. He asked if most people were expecting to move up one level on an annual basis. Yes, if they performed well. He noted that .was a 2 1/z% increase each year, and they would still ask for COLA's. That was~doubling what the City would be paying. He was' willing to give them increases based on merit, but not on future COLA's. Ms. Utecht said. most people would move onto the plan at about mid-range. The unions did not know what this would look like when they were negotiating the future COLA's last year. Councilor Pishioneri spoke regarding pay performance steps. He was encouraged by that, and said he didn't like automatic raises. He understood what they were doing was difficult. Supervisors provided the evaluations, and they needed to be trained and encouraged that thiswas not an automatic raise each year. Ms. Utecht said people were told step 9 was the top. Staff would work with unions and non- unions to develop criteria to allow people to strive to temporarily move to next steps: Councilor Pishioneri said the only people that should be in steps 10 and 11 should be our emerging leaders. Councilor Wylie asked if they could include language that COLA and performance pay increases were not to exceed 3% a year, with the step increase coming first, for at least three years. This plan had not been implemented yet, so they could add whatever language they wanted. Ms. Utecht noted that the COLA's were negotiated. Mr. Grimaldi said this would be something for future contracts which they hadn't worked on yet. Councilor Ralston said he believed she meant it would be on an individual basis. Mr. Grimaldi said they could think about it during the next negotiations. That would be an appropriate conversation for an Executive Session. Ms. Utecht said the difficulty in doing that was that every employee would need to be manually tracked and paid. They may end up using any saved funds by paying for administration. Mr. Grimaldi said the concept of controlling cost in the future was valid. Councilor Wylie said she was addressing Councilor Ralston's issues regarding increases. She asked if there was something they could do at this time. With the 11-step plan, it may not happen. Mr. Grimaldi said it, was not safe to assume what the COLAs would be in the future. They could negotiate the COLA's, but the City was a player in those negotiations. Councilor Wylie said she was 100% behind the new plan, but was concerned with the steps in combination with the COLA. Councilor Moore asked if the total benefit package had already been negotiated. City of Springfield Council Regular Meeting Minutes December 10, 2010 Page 6 Ms. Utecht said that had already been negotiated and was not changeable at this.time. It could be changeable next.time the contract was opened.. She noted that with the new affordable care legislation, if the City changed our plan too dramatically, it would take us out of grandfather status, causing high administrative costs. They contemplated trying to negotiate with SPA for a different medical plan, but when they looked at it further, found it was not a good thing to do at this time. The medical plans for SPA, OPEU/SEIU and AFSCME were in place. Councilor Moore asked how much of an increase .in medical insurance last year. Ms. Utecht said it was about 13%. Councilor Moore said she had read something about Lane Transit District (LTD) negotiating a benefit package. She confirmed that those could be negotiated later. Ms. Utecht said the City's health plan, which was called the Health Reimbursement Account -plan, was different than most other public agencies. In this plan, employees shared a greater. portion of the cost compared to other public agencies. It was one of the least expensive for the City. Councilor Simmons commended Ms. Utecht and all involved in this process. The bargaining units and staff had put a lot of energy into it. It would be difficult in the next budget year, and there would be some sacrifices. This was a well balanced plan, but did have costs that were perhaps unsustainable. It was one of the best comprehensive reviews of the plan he had seen in his 30 years at the City. Decisions needed to be made along with the bargaining units, about whether or not to trim services, lay people.off; or share the burden. Councilor Ralston had raised some valid questions. It was a credit to all involved and was a good strategy. He didn't feel it would be sustainable, and noted that it would take the City a long time to dig out of this unemployment cycle. Councilor Moore said in other governmental agencies, people were taking leave days. She asked if the City had the ability to do. Ms. Utecht said they could cut people's schedules, which would constitute a layoff. Staff would be looking, in the next week, at voluntary furloughs and a potential for early separation. Other agencies had been fairly successful in bringing down their costs without have to actually lay people off. The City of Eugene did that a couple of years ago, and had done a lot of research that could be helpful to Springfield. Staff would talk about that next week. Councilor Simmons said staff needed to be careful in laying people off in a public agency as unemployment compensation costs were high. His daughter was on furlough days, and it created a complicated situation and the employer had not gained anything. Ms. Utecht said it was also difficult if it increased overtime in other positions. Many things needed to be balanced. She understood what Councilor Ralston was saying regarding plan options and COLA's. That was a good share of the reasons that there was no COLA built into the top paid employees pay. This was a hard time to be doing something like this and she was appreciative that Council was willing to hear them out. City of Springfield Council Regular Meeting Minutes December 10, 2010 Page 7 Councilor Wylie spoke regarding furloughs and layoffs, and noted that we didn't want to do those things for emergency services. The City prided ourselves on turning permits around quickly and having good service. The City had a great staff that was highly skilled and she appreciated them very much. In that regard, she didn't have a problem with making sure they were properly compensated. She just didn't want to cut services or lay people off to maintain a higher level of wages. It was a difficult balance and she .appreciated Ms. Utecht. Councilor Ralston said on the surface this was fair and equitable to the employees. He was opposed to this from the beginning because he knew the expectation was that employees would be paid more. In the private sector, there was no cost of living raise. If the business did well, the employee's raises were based on performance. We didn't have that in the City, but rather merit. increases and COLA. To him, he didn't do both. Now that this system was in place, the step increases should encourage employees to perform their job well. When it was time to.discuss COLA, he would not support increases. They could only lay off so many people before they wouldn't be able to get the job done. He was in favor of being fair, but the City couldn't afford it. Councilor Simmons asked if the City was obligated to pay for extended unemployment based on the federal extension. Ms. Utecht said the City paid the state mandated benefits. If the Federal government extended those benefits, the feds would pick up the costs. She was not completely sure if the feds picked up the full costs, but could go back and look. It was based on when the employee was laid off. It was nearly as complicated as the health insurance plan. Councilor Moore said she appreciated the conversion to the new classification plan. That part would be a benefit to both employees and the City.. Ms. Utecht added that they couldn't convert to the new classification plan without the compensation plan. Mayor Lundberg said the Council had a good in depth discussion on this subject. It was a huge part of the City's budget and was very important to the City as we moved forward. The Council was all in agreement, except perhaps Councilor Ralston, that having the Classification and Compensation Plan was a well intentioned idea in the beginning, and something needed to be done. As they moved forward into the next negotiations, there would be a lot of things to consider. Timing on this was difficult; the economy was bad, the Classification and Compensation Plan was complete, and health care reform changed for'the nation. A decision was needed today about moving forward with this new plan and revisiting it again in the future. Councilor Pishioneri said at the beginning of this project, the Council recognized that the City needed to be healthy in the sense of having good classification and treating the employees fairly and doing their j ob well. There could betimes when the increases would be doubled for some employees, but there would be a significant number of employees that would be topping out and would no longer receive pay steps, but would only have COLAs. For the betterment of the organization, this was the right thing to do. Mayor Lundberg said all of the Council agreed they had a great staff. Councilor Ralston said he didn't feel they had a choice. City of Springfield Council Regular Meeting Minutes December 10, 201 Q . Page 8 IT WAS MOVED BY COUNCILOR RALSTON WITH A SECOND BY COUNCILOR WYLIE TO AUTHORIZE THE CITY MANAGER TO ADOPT AND IMPLEMENT NEW COMPENSATION PLANS FOR AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES, LOCAL 1148; SEIU LOCAL 995 OREGON PUBLIC EMPLOYEES UNION EMPLOYEES; AND NON-UNION EMPLOYEES. THE MOTION PASSED WITH A VOTE OF 5 FOR AND 0 AGAINST. ADJOURNMENT The meeting was adjourned at 1:00 p:m. Minutes Recorder Amy Sowa Attest: City Recor Christine L. Lundberg Mayor