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08.d. Golden Handshake ProgramMEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER SUBJECT: CONSIDERATION OF CALPERS GOLDEN HANDSHAKE PROGRAM DATE: MAY 22,2012 RECOMMENDATION: It is recommended the City Council approve the cost and use of the CalPERS "Golden Handshake" program for individuals in the Lead Worker classification. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: It is anticipated that one employee in this classification will participate in the Golden Handshake program. The total cost over 20 years will be approximately $55,180 with an annual cost of approximately $2,750. The annual savings in salary and benefits is roughly $81,000. It will be recommended to hire one additional part-time maintenance worker as a result of the vacancy, making the total projected annual net savings approximately $55,000. It is likely that the majority of this savings will be in the Water and Sewer Funds. BACKGROUND: Recommendations to restructure the Recreation and Maintenance Services Department were presented to, and approved by, the City Council at the April 24'h meeting. At that time, staff informed the Council that recommendations would be made in phases as staffing assignments were assessed and determined. Therefore, this recommendation is a follow-up and consistent with those recommendations. ANALYSIS OF ISSUES: One of the Lead Workers has expressed an interest in the Golden Handshake program. It has been determined that eliminating this position can generate additional savings and help address objectives established in the maintenance services assessment. The proposal has been discussed with both the remaining supervisor and union representatives, all of which have concurred with the proposed change. The loss of position will likely require transfer of one maintenance worker from the Utilities Division, which would be replaced with the addition of one part-time position. Agenda Item 8.d. Page 1 CITY COUNCIL CONSIDERATION OF CALPERS GOLDEN HANDSHAKE PROGRAM MAY 22,2012 PAGE 2 The loss of position will likely require transfer of one maintenance worker from the Utilities Division, which would be replaced with the addition of one part-time position. As a result, much of this savings will likely be created in the Water and Sewer Funds. While this will not help address the General Fund shortfall, it will help address projected shortfalls that also exist in those funds. The Lead Worker position is proposed to be filled by an existing maintenance worker. One full-time maintenance worker position will be eliminated, which will meet the CalPERS requirement of a net loss of one position. CalPERS requires the costs be presented at a public meeting and then a Resolution be adopted at the following meeting to approve participation. Therefore, the Resolution will be provided to the Council for final approval at the June 12, 2012 meeting. ALTERNATIVES: The following alternatives are provided for City Council consideration: 1. Approve staffs recommendations; 2. Do not approve the Golden Handshake program; or 3. Provide staff other direction. ADVANTAGES: The recommendations will generate cost savings, increase efficiency, enable additional restructuring to improve operations, and provide promotional opportunities for existing staff. DISADVANTAGES: There will be an overall reduction of staffing and a loss of existing expertise and knowledge. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICA'TION AND COMMENTS: The agenda was posted in front of City Hall on Thursday, May 17, 2012 and on the City's website on May 18, 2012. Attachment: 1. CalPERS Two-Years Additional Service Credit Cost Agenda Item 8.d. Page 2 Attachment 1 CALPERS TWO YEARS ADDITIONAL SERVICE CREDIT COST Salary Savings: $182.395 Cost: $1 15,071.27 Classification Maintenance Services Lead Person Maintenance Services Lead Person Maintenance Services Lead Person Total Annual Payroll For Miscellaneous Employees: $3,269,232 Annual Cost For All Eligible Employees: Annual Pay Rate $60,313 $58,836 $63,246 $1 15,071113.24 = $8.6911$3,269,232 = 0.0026584 (increase in PERS rate) 0.0026584 X $3,269.232 = $8.691 Annual Salary Savings $1 82,395 Cost Factor 0.64 0.64 0.67 Approx. Cost Over 20 Years $8,691 X 20 = $173,820 Annual Cost For Those Committed $36,525113.24 = $2.7591$3,269.232 = 0.0008439 (increase in PERS rate) 0.0008439 X $3,269232.00 = $2,759 Annual Salary Savings $58.836 Approx. Cost Over 20 Years $2,759 X 20 = $55,180 No Survivor Allowance 0.97 0.97 0.97 COLA 3.4, or 5% No No No Additional Employer Contributions $37,442.31 $36,525.39 $41,103.58 Agenda Item 8.d. Page 3 THIS PAGE INTENTIO NALLY LEFT BLANK Agenda Item 8.d. Page 4