CITY COUNCIL SUMMARY REPORT. Agenda No Key Words: Council Compensation Meeting Date: December 9, 2014 PREPARED BY:

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1 Agenda No Key Words: Council Compensation Meeting Date: December 9, 2014 SUMMARY REPORT CITY COUNCIL PREPARED BY: Douglas L. White, City Attorney RECOMMENDATION I REQUESTED ACTION: Waive second reading, read by title only, and adopt an Ordinance amending Chapter 2.01 of the Dixon Municipal Code ("D.M.C.") to increase City Councilmember ("Councilmember") salaries and provide health and welfare benefits to Councilmembers. BACKGROUND I DISCUSSION I ANALYSIS: Councilmember Salaries The City of Dixon ("City") currently pays each of the Council members three hundred dollars ($300) per month. A city may increase compensation of Councilmembers at a rate of five percent (5%) per calendar year from the date the last increase in compensation took place. 1 The last time City Council compensation was increased was at the earliest, the year Thus, at least fourteen (14) years have passed since the last time Council member compensation was been changed. Therefore, the Councilmembers' compensation may be increased by seventy percent (70%). Seventy percent (70%) of three hundred dollars ($300) is two hundred ten dollars ($210). Together, this means that Councilmembers may be paid five hundred ten dollars ($510) per month. Additionall, state law requires that Councilmember salaries are only increased by ordinance. Therefore, under the proposed ordinance ("Ordinance"), the Councilmembers will be paid five hundred ten dollars ($510) per month. Any increase in all of the Councilmembers' salary may only become effective once any one of the Councilmembers has completed the term they are serving when the ordinance increasing their salary is passed. 3 Therefore, after th is Ordinance is adopted, the raise in salary would take effect as soon as one of the terms for one of the Councilmembers voting on the Ordinance expires. 1 Government Code 36516(a)(4). 2 Government Code Government Code

2 Under the Ordinance, the mayor's monthly pay is also increased to a total of six hundred dollars ($600). Where a city separately elects a mayor, as the City does, that individual may be paid an additional sum beyond what is paid to the Councilmembers 4 The Ordinance restricts the increase in the mayor's pay from taking effect until the mayor has completed his current term. The amount of the mayor's new pay is comparable to other cities that also have a mayor who is separately elected. Should one of the Councilmembers currently be collecting retirement benefits from the California Public Retirement System ("CaIPERS"), their salary based on their position as a Councilmember will not affect their retirement benefits through CaIPERS, provided they meet a number of conditions. First, there must be a period of one hundred eighty (180) days between the date of retirement that triggered retirement benefits through CalPERS and the date of becoming a Councilmember. Second, the Councilmember's retirement benefits cannot be a result of their service previously serving as a Councilmember. Where a Councilmember is currently collecting CalPERS retirement benefits, he or she must report their elective office position to CalPERS to determine whether a portion of his or her retirement benefits should be suspended while he or she serves as a Councilmember. Health and Welfare Benefits Councilmembers are not currently provided with health and welfare benefits by the City. The City may provide health and welfare benefits to Councilmembers subject to any conditions the City may wish to establish 5 The proposed ordinance provides health and welfare benefits to the Councilmembers only during the term(s) they serve on the City Council. Once a Councilmember is no longer on the City Council, the City no longer provides that individual with City paid health and welfare benefits. The types of benefits provided are also limited to provide medical and dental, but not life insurance or pension benefits in most instances. The level of benefits provided in the proposed ordinance mirror those that are provided to the highest mid-manager group of employees of the City. The medical and dental benefits will be provided through the City's contract with CaIPERS. Should a Councilmember elect to forego medical or dental benefits provided by the City, that Councilmember may direct the City determined value of those medical and dental benefits to a deferred compensation account, if such a deferred compensation account is offered to the highest mid-manager group of employees of the City. There are a number of cities throughout California that provide health and welfare benefits to their city councilmembers with a wide array of different types of benefits and variations on the amount of money spent in providing such benefits. The benefits provided in the proposed ordinance are generally what are provided to most city councilmembers by cities throughout the state of California. A Council member may elect to not receive medical or dental benefits through the City,6 but the City may not provide a cash payment in lieu of the benefit should a 4 Government Code Government Code (a) 6 Government Code 36516(f).

3 Council member choose to waive the benefits offered l A Councilmember who chooses to forego medical or dental benefits provided by the City may instead direct the value the City associates with the medical and dental benefits to a deferred compensation plan organized under section 457 of the Internal Revenue Code. B Directing the value of the medical and dental benefits to a deferred compensation plan does not operate as a cash payment in lieu of the health and welfare benefits because the Councilmember does not have immediate access to the cash value and that value may only be distributed to the Councilmember on the occurrence of particular conditions such as the Councilmember no longer serving on the City Council. 9 ALTERNATIVES I OPTIONS: The City Council's options regarding the Ordinance include: 1. Motion to conduct the second reading, by title only, and adopt the Ordinance. 2. Do not adopt the Ordinance as introduced at the last meeting; 3. Provide staff with alternate direction. ENVIRONMENTAL: The Ordinance does not constitute a project under the California Environmental Quality Act, pursuant to Public Resources Code sections 21065, SUBSEQUENT ACTION(S): The Ordinance would take effect thirty (30) days after the second reading. FINANCIAL IMPACT: The City currently spends $3,600 on compensation for each Councilmember annually. With five (5) Councilmembers, this results in a total expense of $18,000. The increase in compensation means that the City will spend $6,120 to compensate each councilmember annually and $7,200 annually to compensate the mayor. Under the Ordinance, the new total annual expense would be $31,680. Therefore, the Ordinance will result in an increased expense of $13,680 per year for compensation of the City Council. The City will also incur costs for the medical and dental benefits it provides the Councilmembers. 789 Ops.CaI.Atty.Gen. 107 (May 22,2006). B 26 USC Ops.CaI.Atty.Gen. 107 (May 22, 2006).

4 ATTACHMENTS: Ordinance APPROVALS: Finance: C", M,,,,oc 11- City Attorney:

5 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DIXON, AMENDING CHAPTER 2.01 OF THE DIXON MUNICIPAL CODE REGARDING THE CITY COUNCIL WHEREAS, the City Council finds that it is in the best interest of the public to compensate City Councilmembers and provide benefits at a level that enables all individuals to serve the City as City Councilmembers without undue hardship; and WHEREAS, California Government Code Sections et al. and et al. set forth certain requirements for City Councilmember compensation and health and welfare benefits; and WHEREAS, City Council compensation has not been adjusted since at least the year 2000; and WHEREAS, Government Code section 36516(a)(4), provides that City Council compensation may be increased in five percent (5%) increments for each calendar year from the operative date of the last adjustment of the salary in effect when the ordinance or amendment is enacted ; and WHEREAS, it is within the public's interests of health, safety, and welfare, to have a City Council that is appropriately compensated for its service to the City. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CALIFORNIA DOES ORDAIN AS FOLLOWS: DIXON, SECTION 1: Chapter 2.01 of Title 2 of Dixon's Municipal Code shall be amended to read as follows: Section shall be added to read as follows: City councilmembers' salaries. A. Commencing on the effective date of the ordinance codified in this section, each member of the city council shall receive, as salary, the sum of five hundred ten dollars ($510) per month in accordance with the five percent salary increase per calendar year, which is authorized in Section 36516(a)(4) of the Government Code of California at the same time and in the same manner as the salaries are paid to other officers and employees of the city. B. In accordance with the provisions of Government Code Section , the elected mayor of the city shall receive, as salary, the sum of six hundred dollars ($600) per month, which shall be payable at the same time and in the same manner as the salaries are paid to other officers and employees of the city.

6 C. An increase in the salary provided for in subsections A and B of this section, shall be payable only on and after the date upon which any member of the city council becomes eligible therefor, by virtue of beginning a new term of office, following the next succeeding general municipal election held in the city following the effective date of the ordinance codified in this section in which a councilmember's term expires. D. The salaries prescribed in this section are and shall be exclusive of any amounts payable to each member of the city council as reimbursement for actual and necessary expenses, including travel expenses, incurred by them in the performance of official duties for the city. E. Any member of the city council or the mayor shall have the right to waive any and all of the salary or reimbursement provided for in this section. Section shall be added to read as follows: City councilmembers health and welfare benefits. A. Commencing on the effective date of the ordinance codified in this section, the mayor and members of the city council shall be eligible for the city's health and welfare benefits, as defined in Government Code Section 53200(d), on the same terms and under the same provisions as apply to the highest group of mid-managers in the city, except that the mayor and members of the city council are not eligible for retirement or life insurance benefits and benefits are extended only for the term(s) each city councilmember or mayor serves on the city council. Health and Welfare Benefits will become effective on the first day of the month following the effective date of the ordinance. B. Any member of the city councilor the mayor shall have the right to waive any and all of the health and welfare benefits provided for in this section. SECTION 2: The City Clerk shall cause a summary of this Ordinance to be published in a newspaper of general circulation in the City of Dixon within fifteen (15) days of its enactment; shall certify to the enactment and publication of this Ordinance; and shall cause this Ordinance and its certification to be entered into the Book of Ordinances of the City: This Ordinance was introduced at a meeting of the City Council of the City of Dixon duly held on the 25th day of November, 2014 and approved at a meeting of the City Council of the City of Dixon duly held on the 9 th day of December, 2014 by the following roll call vote:

7 AYES: NOES: ABSENT: ABSTAIN: APPROVED: ATTEST: Jack Batchelor Mayor of the City of Dixon Sue lien Johnston City Clerk of the City of Dixon