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04-12-10 CC WS MinCITY OF SHOREWOOD CITY COUNCIL WORD SESSION MONDAY, APRIL 12, 2010 MMMYM 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Mayor Lizee called the meeting to order at 6:05 P.M. A. Roll Call Present. Mayor Lizee; Councilmembers Bailey, Turgeon, Woodruff and Zerby; Administrator Heck; Finance Director Burton; Planning Director Nielsen; Director of Public Works Brown; and Engineer Landim Absent: None B. Review Agenda Woodruff moved, Zerby seconded, approving the agenda as presented. Motion passed 5/0. 2. PERSONNEL POLICY MANUAL Administrator Heck stated in 2008 Council made a decision to move from a step /merit approach for compensating employees to a performance based system. Staff worked with a consultant in 2009 to develop and receive training on such a system. The system was implemented late 2009 /early 2010. The personnel policy manual does not reflect this change. He explained the meeting packet for this evening contains his recommended general updates to the policy manual as well updates specific to the compensation component. Heck highlighted the general updates (not including compensation) he suggests be made to the policy manual. They are as follows. The organizational chart needs to be updated. ➢ Section 3.06 Pre - Employment and Job Related Examinations should be revised to say only Public Works new employees need to take a pre - employment physical. ➢ Section 4.09 Use of city Communications Resources needs to be updated to cover cell phones, mobile data devices, laptops, desktops, email, phones, social media sites, email between council members and so forth. He noted he is in the process of drafting a model policy he would like the Technology Committee to review before presenting it to Council for consideration. Section 7.01 should be reviewed regarding incentive pay for not enrolling in the City's health care plan. The current policy is to give employees $100 for enrolling in their spouse's or partner's health plan. ➢ Section 7.08 Health Management and Wellness Program should be updated to remove the requirement of eight monthly visits to a health club in order to be eligible to exchange up to two hours of sick leave per month (a value of up to $40) to help pay for their health club membership. There is no way to validate the number of visits. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES April 12, 2010 Page 2 of 6 Heck stated the meeting packet for this evening included a copy of a document he prepared in 2009 regarding compensation. He reviewed items he thought should be considered as part of a compensation policy. How often to conduct a market analysis. . How close the City's wage scales should be to the market average. Whether or not the City should use the average low, average median or average high compensation. Whether or not the City wants to continue to allow for compensation above the market average. What amount the City should set aside annually for performance increases. What size /range the increase should be for employees who meet expectations and exceed expectations. Councilmember Woodruff reviewed his suggested general revisions to the policy manual, which he had emailed to Administrator Heck on March 23, 2010. Section 3.08 Subd. 2 Probationary Period Extension should be revised to also allow the Council to extend an employee's probationary period. i' Section 3.08 Subd. 3 Probationary Period Termination should be revised to allow the Council to terminate an employee even if the City Administrator is not in agreement with that. ➢ Section 3.08 Subd. 6 should be revised to say "The review shall be written and outline the ..." rather than "The review shall be documented and outline the ... ". He suggested Council be provided with a copy of the six month performance report before the end of the six month probationary period. Section 4.09 Use of City Communications Resources needs to be updated. ➢ Section 7.08 Health Management and Wellness Program should be revised to use the word "costs" rather than "dues ". Section 8.03 Subd. B Sick Leave When Taken should be revised to be more generic by removing any reference to specific types of health care appointments and replacing them with "health care appointments ". He questioned what "attending" meant in the statement "attending to the employee's spouse /partner or child ". Administrator Heck stated that would be made to be specific to health related needs. Section 8.03 Subd. C Sick Leave Worker's Compensation should be clarified in sentence 2. ➢ An employee should sign a document rather than endorse a document. Woodruff stated in Administrator Heck's document regarding compensation the three performance ratings do not mention achieving the requirements in employees' job descriptions. He recommended that CITY OF SH RE WOOD WORK SESSION MEETING MiN TES April t2, 2010 Page 3 of 6 be added to each rating. He commented no employee is ever going to meet 100 percent of the requirement. Mayor Liz6e asked Councilmember Woodruff to clarify his thoughts about granting the Council the authority to extend a new employee's probationary period or to terminate an employee during their probationary period. Councilmember Woodruff stated the policy states the City Administrator has the authority to extend the probationary period; it does not grant the Council the same authority. The policy states Council may terminate an employee during a probationary period if the City Administrator thinks that should happen. He did not think the Council should give up its right to terminate anyone independent of whether or not the City Administrator is in agreement. It sounds as if the City Administrator can override Council when it comes to terminating an employee. Liz6e stated she thought it is the City Administrator's responsibility to terminate staff. The Administrator is responsible for informing the Council of employee performance issues, and if there are grounds for termination Council will formalize that. Councilmember Turgeon commented that only Council has the authority to hire or fire an employee. Administrator Heck explained the City has a city administrator form of government. Under State Statute in this form of government, the city council is the hiring and firing body. The city administrator manages personnel and makes recommendations on personnel, but the city council takes the action. In a city manager form of government, the city manager makes personnel decisions on things such as hiring, firing, extending probationary periods and so forth. Mayor Liz6e asked if Heck thought there was a problem with the language as written, noting she did not. Heck stated the language may give the City Administrator more authority than is allowed by State Statute if the language is read literally. Heck then stated the Administrator must prove there is sufficient cause to support any such action. Heck expressed he becomes a little leery when there is too much activity from a personnel perspective with Council. He commented there are city administrator forms of government that establish a personnel committee consisting of the city administrator and a couple of council members. Mayor Liz6e recommended "if in the City Administrator's opinion" be removed from the language in Section 3.08 Subd. 3. Councilmember Woodruff stated he would be satisfied with that change. Woodruff then stated he did not think any council would not listen to the City Administrator. Councilmember Bailey suggested "by the city Administrator" be removed from Section 3.08 Subd. 2 regarding Probationary Period Extension. Councilmember Zerby stated that with regard to Section 4.09 Use of City Communications Resources in other policies he has seen the policies state the city can inspect city -owned computers and emails sent/received on company computers at any time. He thought that should be clearly stated in the policy. Administrator Heck stated that is included in that section he is rewriting. The rewrite will address monitoring time spent on City -owned computers remotely as well policies about social media, downloading information and so forth. Councilmember Woodruff stated the League of Minnesota Cities has a social media model policy as well as one for communications. Administrator Heck stated he has a copy of both, and also has a model that addresses ennail between council members and between staff and council members. Councilmember Zerby asked if the buy -down of accrued sick leave hours in excess of 800 has been completed. He wondered if there were any employees who have currently accrued more than 800 hours. He noted the 800 hour maximum policy was put in place in 2006. Administrator Heck stated he was not sure what happened then, but based on his experience a buy -down is a one time occurrence. Director Burton explained she thought there were 2 — 3 employees with close to 800 accrued sick leave hours. She then explained the policy adopted in 2006 had a provision to buy -down excess hours each year end. CITE' OF SHOREWOOD WORK SESSION MEE'rI G MINUTE April 12, 2010 Page 4 of 6 Councilmember Woodruff stated it was his recollection was there was to be a one time buy-down, noting he was not sure as he was not a member of the council at that time. Councilmember Turgeon stated it was her recollection it was a one time buy -down to get all employees to the new maximum of 800 hours from the old maximum of 1,200 hours. Director Burton stated there had not been a cap on accrued sick leave hours before the 800 cap was put in place and that was a liability for the City, and the negotiations about establishing a cap included an annual buy-down. Turgeon stated the City bought it down once and it was not going to buy it down again. Administrator Heck stated the policy has conflicting statements. It states there is a cap and then it states hours is excess of the cap will be bought down annually. Heck commented that usually a cap means just that; the maximum amount can't be exceeded. He commented sick time is not the employee's time; it's the City's time. Councilmember Zerby asked how employees can accrue more than 800 hours if their excess was bought down in 2006. Director Burton explained employees earn eight hours of sick leave a month. If they were at the maximum of 800 at the start of the year and used less than the 96 hours earned during the year their year -end balance would be more than 800 hours. The buy -down could potentially be 48 hours if they didn't use any sick leave. She noted the cap occurs at year end. Director Nielsen stated the policy adopted in 2006 was to buy -down excess hours annually. Councihnember Turgeon stated she has not worked any place where unused sick leave accumulated from year to year; and this practice was new to her. She indicated she understood both sides of this. If someone doesn't use their annual sick leave earned and they exceed the 800 -hour maximum, they get rewarded with the annual buy -down. She stated she struggles with having an annual buy -down. Councilmember Zerby read an excerpt from the October 9, 2006, work session minutes, which was as follows. "Turgeon then stated one way to view a yearly buy -down of sick leave hours in excess of an 800 -hour cap was to consider it a "bonus" for good attendance." Councilmember Turgeon asked if Council wanted to buy -down excess sick leave again this year and then stop that practice. Councilmember Bailey stated sick leave is what it is, and if an employee is not sick that's great. It's not meant to be a bonus sort of arrangement; it's meant to cover short -term illness. He recommended not continuing with the buy -down after this year. Councilmember Zerby stated he supported buying down the excess sick leave at 2010 year -end and then stopping that practice. Mayor Lizee asked Administrator Heck to look into other cities policies. Administrator Heck stated most cities cap sick leave at 800 hours and there is no buy -down in excess. Other cities don't even carry any excess on the books. He noted employees can already "cash in" up to two hours of sick leave a month for an amount up to $40 for things such as health club expenses. Councilmember Woodruff reviewed his thoughts on a compensation philosophy, which is based on his experiences. His thoughts are based on an assumption that the City will conduct a periodic salary survey. He related that Administrator Heck had suggested it be done every two years and he thought that frequency would be appropriate. He stated there are organizations that can conduct the surveys for the City. One organization he is aware of will use an organization's job descriptions and fit them into categories of job descriptions in a particular in particular industry, which in this case would be municipal CITE' OF SHOREWOOD WORK SESSION MEETING MlNurES April 12,2010 Page 5 at 6 government. For each job description, the organization is provided a pay range based on an average high salary and an average low salary, and an average market salary. Woodruff stated from a policy perspective he thought Council wanted to pay to market and not have salary increases based on things such as the consumer- price index or the implicit price deflator. He explained something lie has seen that works successfully is establishing a meeting - expectations range for salaries for employees who meet expectations. Employees who meet expectations are not paid at the top or bottom of the salary range for their position. A somewhat arbitrary decision has to be made on how large the meeting - expectations range should be. One way of determining the meeting - expectations salary range would be to make the lower end of it some percent lower than the mid -point of the position's salary range and the top of the of it the sarne percent higher than the mid - point. He recommended against any employee's annual salary exceeding the top of the salary range for their position. An employee could receive a lump -sum payment salary increase rather than a base salary range. Woodruff then stated employees who do not meet expectations would not get a pay increases until they do meet expectations. Employees who meet expectations and have a salary below the lower end of the meeting- expectations salary range should get increases greater than employees who meet expectations and have salaries in the meeting- expectations range. Employees who exceed expectations should move more rapidly through the meeting- expectations range. Woodruff asked if the City could update the salary ranges every two years, to which Administrator Heck responded yes. Woodruff stated Council has to decide if it supports establishing a meeting - expectations salary range philosophy. He explained an employee would be able to earn a salary outside of that range but that would occur slowly. He stated annually Council would decide the pool of dollars that would be used for salary increases and the City Administrator would have to decide how to allocate the pool of money based on placement in the meeting- expectations salary ranges. The percent increase would vary based on the size of the pool. Woodruff then stated Council has to agree to a philosophy on where in the position's salary range new employees should start at. He thought somewhere between the mid -point and low end of end of the meeting- expectations salary range for that position was typical. Councilmember Turgeon stated her experiences have been with a tier -based system. She indicated she thought there are factors in addition to meeting expectations that must be factored into determining an employee's increase. At one of the companies she worked at if employees were all equal when it came to meeting expectations then supervisors came together and ranked them for increases based on each employee's potential. She did not think all employees who met expectations should get the same percent increase. Councilmember Woodruff stated other factors besides performance could be considered when determining increases. Administrator Heck stated he has access to a League of Minnesota Cities' survey, which is done by the Waters Consulting Group. It's based on every municipalities' and county's compensation and benefit information. The survey can be searched by position. The same organization is doing a survey for the International City Managers Association and is using nationwide data. Councilmember Turgeon stated the compensation policy needs to address long -term employees and in particular those who are at the top of their position's salary range. Increases for those employee's can be CITE' OF SHOR W OD WORK SESSION MEETING MINUTES April 12, 2010 Page 6 of 6 done with lamp ®suin payments or a combination of some amount of base pay increase and lump -sum payment. There also needs to be a way to adjust positions' salary ranges. Administrator fleck stated salary ranges in the public sector don't increase too much. Councilmember Woodruff stated when the survey is done every two years it's likely the ranges will increase some. He then stated if there is an entry level position and a second higher level similar position both positions should have a position description. He then stated with his proposed approach, the City would be paying market rate for the resources it was competing for. Turgeon moved, Zer y seconded, Adjourning the City Council Work Session of April 12, 2010, at 7:03 P.M. Motion passed 510. RESPECTFULLY SUBMITTED Christine Freeman, Recorder Christine Lizee, Mayor