MINUTES City Council Employee Benefits Ad Hoc Committee April 27, 2017

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1 MINUTES City Council Employee Benefits Ad Hoc Committee April 27, 2017 A Work Session of the City of Denton City Council Employee Benefits Ad Hoc Committee (formerly Employee Leave Ad Hoc Committee ) convened on Thursday, April 27, 2017, at 10 a.m. in the City Manager s Conference Room, 215 E. McKinney, Denton, Texas. PRESENT: STAFF: Council Member Kathleen Wazny Council Member Keely Briggs Council Member Sara Bagheri City Manager, Todd Hileman Deputy City Manager, Bryan Langley Director of Human Resources, Carla Romine Risk Manager, Scott Payne Fire Department Representative, Ward Morton, was also in attendance as a member of the audience After determining that a quorum was present, the Denton City Council Employee Leave Ad Hoc Committee convened in a Work Session. Council Member Wazny called the meeting to order at 10:05 a.m. 1. Approve the minutes from the March 24, 2017, ad hoc committee meeting. Kathleen Wazny asked if the committee members had reviewed the minutes from the March 24, 2017 meeting and if there were any additions or corrections. Keely Briggs moved to approve the minutes as presented. Sara Bagheri seconded the motion and it carried unanimously. 2. Review, discuss, and give staff direction on the employee benefits/policies for City of Denton employees. Wazny opened the discussion on the benefits for the City of Denton employees. The discussion began at the first committee meeting on March 24, She commended the work by Human Resources in providing the benefits comparison report and directed the committee to the medical insurance line item on the report behind the FY 15/16 Personnel Services tab. Todd Hileman joined the meeting at 10:10 a.m. Wazny commented on the automatic 6% increase for health insurance that is included in the budget each year. She stated it was helpful having the summary and breakdown of the total cost of the health insurance included in the FY 15/16 budget. She requested this type of information be shared and discussed with the Council during future budget discussions. The reason for forming the committee was to consider how the City employee s vacation and sick leave benefits compares to benefits provided to the employees with other cities

2 in 2016 and the need to discuss what terms could be offered or recommendations made by the committee. The group needs to determine how to bring this before the employees and invite feedback on how the proposed benefit changes would affect them. Wazny asked the committee if changes are to be recommended, should they be made in a step process instead of a one-time higher increase. There could be an emphasis on a step process, graduated over a three year time. Bryan Langley asked that Scott Payne share with the committee the process that takes place each year with the Employees Insurance Committee (EIC) representatives as they consider the claims cost and possible options. The information is taken to their areas, requesting feedback and come back to the EIC with recommendations. Scott Payne explained the yearly gathering of data and working with consultants in considering changes in the industry to add to this process over a three to four year time span. Staff works with the EIC in examining changes that are used from the previous 3 years. Lots of changes are vetted by the EIC. Langley added that previous discussions were had with the City Council and the Audit Finance Committee about the City s funding that is included in the budget, but noted that this has not been brought up to this City Council. Wazny stated her concern that over the last two budget cycles there was an automatic three to five percent pay raise followed by a six percent increase in health care cost. There has to be a balance of what the City will provide. For a while, the Council was told the pay increase was three percent, then they found out it was really up to five percent (understanding it was based on performance) with the justification that wages had been frozen in the past. This is not happening coast to coast, or the County. No one in the industry is getting that; it is the reason why the committee should look at benefits other cities are providing. Sara Bagheri added that the committee did not make a decision on sick leave and vacation carryover/payout during the last meeting discussion. Langley expressed staff s willingness to discuss any of the data provided on sick leave and vacation. The committee had asked for a report on options for vacation carryover and payouts as well as figures on actual payouts. Wazny suggested that the committee sift through the reports but added that the new City Council will also need to digest all the information also. The committee could make a recommendation for the City Council s consideration. Bagheri proposed that the item could be placed on the Work Session but still make a recommendation as a committee. Wazny asked the committee to consider what direction should be requested from the City Council. Romine distributed options for vacation carryover and payout, as well as information on the cost of sick and vacation payouts for FY 14/15, FY 15/16, and FY 16/17 through 3/17/17.

3 Staff and committee members discussed the options provided by staff, recommendations that could be presented to the Council through a Work Session or Consent item, and who should present the information. The vacation carryover and payout options were reviewed along with the option to grandfather to lessen the negative impact on employees and a phased in approach, over two or three years on the cost to pay down to reduced cap. Wazny asked the committee for their support of Option 1, 2, or 3 for vacation carryover/payout. The group discussed the tier system for vacation carry over, cash out pros and cons, and the need for and level of a cap. The employee bonus hours would be eliminated and the cap will be at market rate. Romine reminded the Committee that at the March meeting, they discussed recommending Option 2, which would eliminate the bonus time and create a tiered vacation accrual based on years of service: 0 10 years = 3 weeks; years = 4 weeks, and 20+ = 5 weeks. Bagheri asked for Hileman s input. Hileman stated that he had no issue with paring back the actual accrual and agreed with Langley. He would like to hear from the employees on how much of an issue this is to them. Bagheri suggested staff could do an anonymous survey. Briggs asked if the EIC could help. Langley confirmed that EIC could assist with getting input from employees. The committee discussed the various options for sick leave accruals and all supported Option 2, which would increase accrual to 120 hours (15 days), which is consistent with Civil Service employees. The Committee agreed that the employees should provide input. They stated that the recommendations will be presented to the City Council eventually but use the EIC to take it to the employees and get feedback. Discussion then turned to what the survey should be include. Hileman suggested having the committee go to the employees and bring back the information. I agree with Bryan. It would be better if the employees have a say in this. Langley concurred with asking the employees for their input versus telling them this is what the committee recommends. We will start with that and bring it back to you. Wazny suggested the need for Council to consider these changes along with the Budget. The committee discussed the inclusion of the Fire and Police Department with any recommended changes, noting there is some disparity in the difference between civil service and non-civil service. Romine reminded them of what was statutorily required. Wazny stated she does not want to change Police and Fire, but Bagheri stated she was okay with at least having a discussion about vacation carryover and payout.

4 Hileman mentioned that there is also some disparity with pension issues. Might be smart if the two could be tied together. The committee discussed the differences in the Fire Department pension and non-civil service TMRS and the funding for each. Wazny agreed with Hileman s suggestion of tying the two issues together and bringing them back to Council. Briggs mentioned that the Fire Department has higher sick and vacation benefits. Romine responded stating it was because their benefits are calculated using 12 hour days versus 8 hour days. Even though the hours are different, when calculated back down, both Police and Fire receive 15 days of accrual and 90 days of sick payout. Langley added that it is all meant to be equal due to the difference in hours. Wazny directed the committee s attention to the City Manager s suggestion. Hileman confirmed that it can be done and would like to knit the two together for the Council to see the difference. Wazny mentioned the cities she had red flagged to compare with Denton s cost for benefits from the general fund. The committee discussed the current benefits and bringing the City in line with other cities. Payne explained that the new health insurance rates would be effective January He stated we have lots of levers we can pull which can affect health insurance cost. Each lever gives another level of changes with one affecting the other. The Committee looked at the present matrix and how the data should be presented to the City Council. Hileman stated his reluctance to frame all this as cost savings; it really needs to be framed as cost containment. Payne assured the committee that they could come up with a plan. Langley stated we can come back with the information from the EIC and come up with options based on scenarios with 6% funding, 3% funding, 2% funding, etc. Hileman agreed that it would be a lot easier to work with that. Let the committee give a recommendation in over-reaching goals, then take it to Council. Payne suggested the timing be considered. As they talk to the consultants to determine any increase in cost and get real months data versus trended numbers. Try to make the timing coincide with the Budget discussions.

5 Hileman continued, this with the understanding that we can easily go back and go through variables to quantify. Romine stated that the ad hoc Committee will need to meet again to discuss the feedback from the EIC. Since the current resolution is set to expire May 16 th, they will need to take another resolution back to Council to extend the timeframe for the ad hoc Committee. Wazny asked if they should wait for the new Council. Hileman responded with his preference to report back to the Committee. Bagheri concurred that they could report back to the new ad hoc Committee. Wazny agreed they should meet to discuss the feedback. New Council will be installed on May 16. Bring forward a new ad hoc Committee and meet with them ahead of time to bring them up to speed. Hileman stated that they should be able to brief them pretty fast. 3. Set future meeting dates and topics. No future meetings were set. With no more business to address, the meeting was adjourned at 11:25 a.m.