LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE

The Legislative, Finance, and Administration Committee meeting was held on March 9, 2009 at 6:00 p.m. with Chairman Slavin presiding. Members present were Mr. McGlumphy, Mr. Salters, Dr. Jones, and Mr. Shevock. Other members of Council present were Mr. Leary (arrived at 6:10 p.m.), Mrs. Russell (arrived at 6:43 p.m.), Mr. McGiffin, Mr. Ruane, Mrs. Williams, Council President Hogan, and Mayor Carey.

AGENDA ADDITIONS/DELETIONS

Mr. Salters moved for approval of the agenda, seconded by Mr. Shevock and unanimously carried.

Review and Recommendations - Filling Critical Positions

During their meeting of February 23, 2009, members recommended approval of the Hiring Freeze for Fiscal Year 2008-2009, but to allow the hiring of critical positions through the review and approval of the Legislative, Finance, and Administration Committee and City Council. It was suggested that there be a “standing” agenda item to consider the filling of critical positions and, if there are no positions to consider, the item could be removed.

Mr. Slavin noted that there are no critical positions to be considered at this time; therefore, no action was required of the committee.

Implementation of MAG Report - Phase I (Tabled by Committee February 23, 2009)

During their meeting of February 23, 2009, members considered staff’s recommendation for implementation of Phase I of the MAG Report, as follows: 1) Adoption of salary ranges for each grade; 2) Adoption of recommended grade changes for 30 positions and salary adjustments for three (3) positions; 3) Adoption of the market adjustments to the salaries of the City Manager, Parks and Recreation Director, and Director of Planning and Inspections effective January 1, 2009; and 4) Change in title of Planning and Inspections Director to Planning and Community Development Director. After much discussion, the committee tabled the implementation of Phase I of the MAG Report.

Mr. Salters moved to remove the matter from the table, seconded by Dr. Jones and carried with Mr. McGlumphy voting no.

Mr. DePrima reminded members that during the committee’s previous meeting, the matter was tabled to allow additional time for questioning. He stated that there is no additional information to provide and that staff had not received any written questions from members for staff to respond.

Mr. McGlumphy provided members with a four (4) page report (Attachment #1), and explained his objections to taking any action for salary increases at this time. Referring to the four (4) recommendations submitted by staff, he relayed several questions and concerns.

Responding to the questions and concerns relayed by Mr. McGlumphy, Mr. DePrima stated that there were only three (3) employees that were below market for the experience they had, which is why they are being recommended for upgrades. If any other employees are below market, it is due to the experience they have; therefore, there would be no further changes. With regards to the concerns of there being six (6) generations of corrections issued by MAG, Mr. DePrima explained that this was due to there being constant changes to jobs and the need to collect and correct data. The reason for the last significant change (from 19 to 4) was because Council requested that the last set of raises be calculated and factored.

Mr. DePrima relayed his opposition regarding the need to defer action on Phase I until receipt of the recommendations resulting from the Phase II Report for the Review and Evaluation of the PFP Evaluation System to the City of Dover. He explained that both Phase I and Phase II are distinct studies with very independent requests. The Phase II Study reviewed the Pay-for-Performance and evaluation system and should be considered separately from the Phase I Study.

Mr. DePrima reiterated that there would be no changes in salaries resulting from the recommended upgrades and that next fiscal year, any performance increase would be based on the employees’ salary, which would be the same regardless. Should Council approve the new range which establishes a new mid-point, he stated that there could be a very small impact on an employee’s salary since the mid-point of their grade would be higher.

Mr. DePrima confirmed that the 3.66% increase was factored in. He assured members that there was no change in the scoring for the Director of Planning and Inspections. The reason for the title change for the Director of Planning and Inspections to Planning and Community Development Director, as indicated in the Study, was due to combining the Community Development Director and Economic Development Director. With regards to the IT Director’s vacation, Mr. DePrima indicated that there are two (2) other employees who are getting additional vacation, as agreed to in their contract. However, he noted that these employees are currently “at market” and by factoring in their vacation time, they would remain “at market”; therefore, he stated that there is no reason to consider them.

Mr. DePrima re-emphasized that there are no costs associated with the changes to the upgrades. He explained that, although an employee grade can change, they could remain in the same salary range, which is why there are only three (3) positions recommended for salary adjustments and 30 positions recommended for grade changes only.

Mr. DePrima stated his feeling that there are significant differences between upgrades and promotions. He explained that when a current employee applies for a position within the City, they compete with other applicants from outside of the City. When the employee is selected for the position, they are the top candidate for the position and are generally filling the position at a lower salary than the incumbent. He stated that, historically, the City has penalized these employees or considered them as receiving an upgrade, which it is not. Mr. DePrima stated that there are several promotions in the City and, when they are counted, it can skew the numbers.

Referring to the current economic situation, Mr. Salters stated his concern with considering any position upgrades and salary increases. He questioned if the City did not begin this process a couple of years ago, if they would be considering it now. It was his feeling that there will not be enough funds to increase salaries substantially over the next two (2) to three (3) years. Responding, Mr. DePrima reiterated that there are no costs associated with the upgrades and that approval of the upgrades will not add to the problem. It was his opinion that by not adopting the latest study, which was requested by Council, it would be unfair to those employees who were re-graded or not re-graded.

Mr. Shevock moved to recommend approval of staff’s recommendations, as outlined in the action form, and that this matter be forwarded to City Council for a final decision, seconded by Mr. Salters.

Referring to the report provided by Mr. McGlumphy (see Attachment #1), Mrs. Williams noted that the average salary for full-time employees is $55,923.28. With this being the average salary, she felt that “at market”, “below market”, and “above market” is irrelevant in this economy, explaining that everything in the market today is not what it was when this discussion first began. Although she understands that there are no costs associated with most of the upgrades at this time, she advised members that such upgrades usually will ultimately result in an economic upgrade as well. During these grave economic times, Mrs. Williams expressed concern with giving any consideration to upgrades when the average salary for full-time employees totals $55,923.28. She felt that the City has already accomplished the goal of well compensating its employees and that the employees should be proud of this accomplishment.

Mr. McGlumphy stated that the City’s Personnel Handbook clearly defines upgrading of positions equals five percent (5%). Responding, Mr. DePrima stated that the Section of the Handbook referred to is used for different upgrading circumstances than for those recommended. He explained that if there is an employee on extended leave (such as being called for reserve duty), then a subordinate may be hired to fulfill their position and a 5% increase is provided in their salary. This 5% is also typically provided when there is a regrading of a position that requires a change in the job title and duties, which is not the type of upgrades being recommended. Mr. DePrima assured members that he will not be returning in six (6) months to request a 5% increase for those employees that are being recommended for upgrades.

Mr. McGiffin felt that members may be confusing two (2) different issues: one being the integrity of this process, which was adopted by Council; and the dollars and cents that will be spent during this and future years. Alluding to the comments made by Mrs. Williams, he stated that it appears that the City’s compensation works, and if it does, he felt it was because the compensation system adopted works and because the system has been maintained. He felt that if the City wishes for this system to continue to work, it is necessary for the City to maintain the integrity of the system and if it happens that these times are such that would prohibit the City from increasing compensation, this could be accomplished in a different step in the process. However, to preserve the integrity of the system, which is a laudable goal that has paid dividends in terms of employee satisfaction and morale and the quality of work provided, Mr. McGiffin felt that members should decide where their commitment lies and make sure that these two (2) issues remain separate.

It was Mr. Ruane’s recollection that the practice has always been to review these types of recommendations (salary ranges) in the context of the City’s budget. He felt that requesting consideration at this time is out of line with the City’s practice and should be reserved to be considered during the budget hearings. It is only in that context that he felt members could make prudent decisions.

On a call for the question, the motion to recommend approval of staff’s recommendation for implementation of Phase I of the MAG Report, as follows: 1) Adoption of salary ranges for each grade; 2) Adoption of recommended grade changes for 30 positions and salary adjustments for three (3) positions; 3) Adoption of the market adjustments to the salaries of the City Manager, Parks and Recreation Director, and Director of Planning and Inspections effective January 1, 2009; and 4) Change in title of Planning and Inspections Director to Planning and Community Development Director was carried with Mr. McGlumphy voting no.

State of the Budget Report - Mid-Year Review of the City of Dover Fiscal Year 2009 Budget

Members were provided the State of the Budget Report - Mid-Year Review of the City of Dover Fiscal Year 2009 Budget. Members were advised that the purpose of the report was to give City Council a mid-year picture of the City’s operating expenses and revenues for all City budgets, which should be considered a proactive exercise so that Council can take necessary actions to adjust budgetary behavior, if necessary.

Mrs. Tieman, Senior City Administrator, explained that the report contains information regarding a series of revisions to the City’s budget. These revisions begin with audit adjustments, which are performed annually to update the budget with audited prior year balance figures. There are revisions to adjust for a State Health Insurance Holiday and Workers Compensation adjustments to pay for a retiree stipend. She stated that these revisions were made to comply with accounting and procedural recommendations from the City’s auditors. Included in the reductions are a series of adjustments based on presentations given to the Utility Committee and to Council. She advised members that these revisions are required for various reasons. These presentations for revisions occurred on November 10, 2008, (presentation dated November 3, 2008), November 24, 2008, and January 26, 2009. Additional revisions are included for the date of this presentation, March 9, 2009.

Mrs. Tieman advised members that after all the revenue adjustments and expense reductions presented in this report are made, the major operating and capital funds (General, Electric and Water/Wastewater) meet budget balance requirements. In the context of the City’s current economic environment, she noted that it reiterates staff’s commitment to “Managing to the Budget”.

With reference to the federal stimulus program, Mr. Salters noted the many deteriorated homes in the City and suggested that the City make every effort to help homeowners make improvements to their homes.

Mrs. Mitchell, Controller/Treasurer, noted that the reductions, along with larger than anticipated beginning year fund balances, compensated for reduced revenue in emission credit sales and interest earnings in the Electric Fund. She explained that the Electric Fund balance meets policy requirements and falls within the eight percent (8%) of $8,219,350, and 12% of $12,329,025 of the policy requirements. She advised members that the forecasted budget balance is $10.3M, which is $2,085,000 over and above the minimum requirement. Mrs. Mitchell stated that she recommended that these funds be transfer to the Rate Stabilization Reserve because there are hedges locked in at a higher rate, explaining the possibility of mitigating a potential rate increase for next year. She stated that this recommendation is not reflected in the adjustments included in the Mid-Year Report and that it will be presented to members for consideration at a later time.

Responding to Mr. McGlumphy, Mrs. Tieman stated that the increase of savings in the “10 series” (salaries and benefits) for the General Fund as compared to Electric and Water/Wastewater is due to the ability to delay the hiring of employees. She explained the hiring freeze was for those positions that are not critical to the operations of City services and that the positions within the General Fund fall into this category more frequently than those positions in the Electric and Water/Wastewater Funds, which resulted in a higher savings for the General Fund departments.

Mr. Salters moved to recommend acceptance of the State of the Budget - Mid-Year Review of the City of Dover Fiscal Year 2009 Budget Report, seconded by Dr. Jones and unanimously carried. (City Clerk’s Office Note: As a result of the Committee’s actions, Proposed Budget Amendment Ordinances will be presented at the March 23, 2009 City Council Meeting for a First Reading.)

Estimated Impact of Proposed Budget Reductions and Revisions

As requested during a review of the Quarterly Revenue Report (Regular Council Meeting of January 26, 2009), members were provided a report that contained the estimated impact of proposed budget reductions proposed for each department.

Mr. McGlumphy stated that he had requested the information due to concerns regarding the differences between the three (3) major funds, particularly the salaries and benefits savings. He stated that staff previously explained the differences and that these concerns have been resolved and thanked staff for providing the detailed information.

Mr. Salters moved for adjournment, seconded by Mr. Shevock and unanimously carried.

Meeting Adjourned at 7:02 P.M.

                                                                                    Respectfully submitted,

                                                                                    Timothy A. Slavin

                                                                                    Chairman

TAS/AC/TM/jg

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Attachments

Attachment #1 -   4-Page Report provided by Councilman McGlumphy regarding Salaries, Raises, and Upgrades