08.i. Suspending Conversion of Annual LeaveMEMORANDUM
TO: CITY COUNCIL
FROM: STEVEN ADAMS, ClTY MANAGER f
SUBJECT: CONSIDERATION OF A RESOLUTION SUSPENDING CONVERSION
OF ANNUAL LEAVE TO SALARY FOR MANAGEMENT EMPLOYEES
DATE: JUNE 12,2012
RECOMMENDATION:
It is recommended the City Council approve a Resolution implementing preliminary
adjustments to compensation for management employees for FY 2012-13 in order to
suspend conversion of annual leave to salary.
IMPACT ON PERSONNEL AND FINANCIAL RESOURCES:
If fully implemented, the proposed change could save up to approximately $65,000 in
FY 2012-13. It could also have impacts on personnel and service levels by encouraging
more use of annual leave.
BACKGROUND:
Management employees are currently allowed to convert up to 100 hours of annual
leave to salary if they have accumulated at least 160 hours remaining after the leave is
deducted. Cash out can take place in July andlor January. The memorandums of
understanding covering police and miscellaneous employees also provide benefits
involving conversion of leave to salary, but are different since they receive sick and
vacation leave instead of annual leave. Their cash out of leave only takes place in
January. Labor negotiations with represented employees will likely not be completed by
July 1''.
ANALYSIS OF ISSUES:
The current plan approved by the City Council to address the projected budget shortfall
for FY 2012-13 included the need for approximately $350,000 in savings from
efficiencies andlor employee concessions. Staff will be presenting final budget
recommendations to the City Council at the June 26, 2012 meeting. After the City
Council takes action on proposed reductions, there may be a remaining need for
employee concessions in order to adequately address the budget shortfall.
Agenda Item 8.i.
Page 1
ClTY COUNCIL
CONSIDERATION OF A RESOLUTION OF THE ClTY COUNCIL OF THE ClTY OF
ARROYO GRANDE MODIFYING COMPENSATION FOR MANAGEMENT
EMPLOYEES FOR FY 2012-13 TO SUSPEND CASH OUT OF ANNUAL LEAVE
JUNE 12,2012
PAGE 2
Elimination or reduction of benefits involving conversion of leave to salary could be one
option for employee concessions to generate savings. To maintain this as a viable
option, it is necessary to suspend July cash out of leave while negotiations proceed with
other labor groups. Staff will return with an additional Resolution establishing final
provisions for management compensation and benefits for FY 2012-13 once these
issues have been resolved.
Therefore, the benefit is not recommended to be eliminated at this time. It is simply
being suspended to provide time to include it as one alternative in deliberations
involving budget strategies.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
- Approve Resolution suspending conversion of annual leave to salary;
- Modify and approve Resolution;
- Do not suspend the conversion of annual leave to salary; or
- Provide staff other direction.
ADVANTAGES
Adoption of the Resolution will maintain elimination or reduction of conversion of
management annual leave as a viable strategy for savings to address the FY 2012-13
projected budget shortfall.
DISADVANTAGES
Suspending conversion of annual leave to salary will negatively impact employees that
have anticipated that compensation in July.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The agenda was posted in front of City Hall on Thursday, June 7, 2012 and on the
City's website on Friday, June 8, 2012. No public comments were received.
Agenda Item 8.i.
Page 2
RESOLUTION NO.
A RESOLU'TION OF THE ClTY COUNCIL OF THE ClTY OF
ARROYO GRANDE MODIFYING COMPENSATION AND
BENEFITS FOR MANAGEMENT EMPLOYEES FOR FY
201 2-1 3
WHEREAS, the City Council of the City of Arroyo Grande ("City") deems it in the best
interest of the City that compensation and benefits for management employees be
adjusted as hereinafter provided.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande
that:
1. Conversion of annual leave to salary by management employees shall be
suspended until final recommendations for compensation and benefits for
management employees for FY 2012-1 3 are approved.
2. All other current management employee salary and benefit terms and conditions
shall remain in full force and effect until final recommendations for compensation
and benefits for management employees for FY 201 2-1 3 are approved.
On motion of Council Member seconded by Council Member
and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of
Agenda Item 8.i.
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RESOLUTION NO.
PAGE 2
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
Agenda Item 8.i.
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