CITY OF ALBANY CITY COUNCIL AGENDA STAFF REPORT Agenda Date: January 21, 2014 Reviewed by: PL SUBJECT: REPORT BY: Presentation of Survey Results Requested By City Council - Council Salary and Benefits Paul S. Rankin, Interim Finance Director Aaron Walker, Human Resources Manager SUMMARY The City Council previously discussed the topic of City Council Health Benefits at its December 2, 2013 meeting. During the discussion, the City Council requested that Staff conduct a salary and benefit survey of smaller local cities. That survey is attached. STAFF RECOMMENDATION That the City Council provide staff with any further direction on desired modification of current policies. BACKGROUND/DISCUSSION At a December City Council meeting the Council received a Staff report related to the provision of Health Insurance Benefits. City Council Members are eligible to receive health insurance benefits. For more background information, see the attached Staff Report and Minutes excerpt from the December 2, 2013 City Council meeting (Attachment 1 and Attachment 2). The scope of the discussion extended to also include a discussion of a variety of salary and benefit elements. City of Albany City Council Salary A change in the City Charter was ratified by the voters November 4, 2008 to include the following language regarding the payment of City Council salaries: SECTION 2.08. COUNCIL COMPENSATION. Effective December 15, 2010, each member of the City Council shall receive the amount of three hundred dollars ($300.00) per month in salary as authorized for general law cities by Government Code Section 36516(a), or as the same may be amended from time to time. Since the population of the City of Albany is less than 35,000, the applicable section of the Government Code referenced in the City Charter reads:
California Government Code Excerpt Section 36516(a) (a) (1) A city council may enact an ordinance providing that each member of the city council shall receive a salary based on the population of the city as set forth in paragraph (2). (2) The salaries approved by ordinance under paragraph (1) shall be as follows: (A) In cities up to and including 35,000 in population, up to and including three hundred dollars ($300) per month. Background On State Law Related To Establishing / Modifying Council Member Pay The sections of the Government Code that address City Council pay are applicable to General Law Cities. Section 36516(a)(2) establishes a schedule of maximum pay based on population. The last time the State Legislature modified this schedule was 1984, therefore the schedule below is included in the current law. Population / Statutory Maximum Council Salary Limit (Before Adjustments) Less than 35,000 $300/month 35,001 50,000 $400/month 50,001 75,000 $500/month 75,001 150,000 $600/month 150,001 250,000 $800/month More than 250,000 $1,000/month In 2007, the State Legislature proposed to have the schedule reflect inflation and adopted AB701 (De La Torre, 2007). Governor Schwarzenegger vetoed the legislation and it never took effect. In 2009, the State Legislature approved a bill which reformatted the statute to clarify how city councils and local voters can set and change city council members salaries. Prior to the reformatting the law contained provisions for salary adjustments in section 36516(c). On October 11, 2009, Senate Bill 113 authored by the Senate Local Government Committee was approved by the Governor. This legislation includes the language related to adjustment to City Council salaries that is shown in the section below. The bill did not change the statutory schedule based on population. Specifically CGC 36516(a)(4) reads: (4) The salary of council members may be increased beyond the amount provided in this subdivision by an ordinance or by an amendment to an ordinance, but the amount of the increase shall not exceed an amount equal to 5 percent for each calendar year from the operative date of the last adjustment of the salary in effect when the ordinance or amendment is enacted. No ordinance shall be enacted or amended to provide automatic future increases in salary. As noted at the December City Council Meeting and in the current survey results, there is a wide range of City Council salaries. One reason similar sized cities may pay more than $300 per month, is that as General Law cities they have adopted adjustments as allowed 2
for in the Government Code. The scheduled amount is a maximum starting point before adjustments, so cities may also pay less. Background On City of Albany Charter Amendment Related To City Council Salaries As noted the City of Albany Charter explicitly references the section of the Government Code regarding the schedule of salaries based on population. A review of the ballot materials presented in 2008 suggests that it was anticipated that future changes to the salary would be the result of action by the State Legislature. Specifically in the Arguments supporting the adoption of the Charter amendment it was stated:... This Charter would go into effect in 2010 and any changes in the future would be made by the State Legislature. The local measure adopted in 2008 had no way of anticipating the legislative changes made in 2009. Prior to the reformatted language adopted by the State Legislature in 2009, the language referencing Council salary adjustments was contained in Government Code section 35616(c). The City Attorney has concluded based on the history that, at the time of adoption of the Albany City Charter section 2.08, the City of Albany Charter change did not intend to provide for adjustments except those made by the State Legislature. This is supported both by the ballot argument and by the fact that the Charter section is limited to Government Code section 36516(a) and did not go any further. The ballot statements also support this conclusion. Therefore, a change in the City Council salary of $300 per month would require an amendment to the City Charter. Survey Results At the December 2, 2013 meeting, the City Council requested that Staff conduct a salary and benefit survey of Bay Area cities of a similar size. The Survey results are included in Attachment 3. The list of surveyed agencies included 30 Bay Area cities with a population of 35,000 or less. Responses were obtained from 25 of the cities. The results include the data for the City of Albany. Staff excluded questions related to California Public Employee Retirement System (PERS) coverage for elected officials. If an Agency PERS retirement contract does not exclude the City Council they are considered Optional Members. This means that any member has the option to elect to be covered by the retirement plan or not. This is the treatment under the City of Albany PERS Agreement. Staff will be available to answer questions related to Albany Council Member compensation and the survey responses. The City Council is requested to provide Staff with any further direction as they deem appropriate. FINANCIAL IMPACT The financial impact if any will only occur if there is a change to elected official compensation or benefits. 3
Attachments 1. December 2, 2013 Staff Report 2. December 2, 2013 excerpt from City Council Minutes 3. City Council Salary and Benefit Survey Results 4
CITY OF ALBANY CITY COUNCIL AGENDA STAFF REPORT Agenda Date: December 2, 2013 Reviewed by: Pat O SUBJECT: REPORT BY: City Council Health Benefits Paul S. Rankin, Interim Finance Director Aaron Walker, Human Resources Manager SUMMARY City Council Members are eligible to receive health insurance benefits. The City currently pays the full premium for the coverage selected by the Council Member. The City Council previously discussed this topic at the City Council meetings in 2010. Council Member Barnes requested that the Mayor include the item on the agenda for further discussion. STAFF RECOMMENDATION That the City Council receive the report and provide Staff with any further direction on modification of current policies or additional information needed. BACKGROUND/DISCUSSION City Council members are eligible for enrollment in the City s health insurance program. Currently, the health plan providers include Kaiser and Blue Shield. Council Members may enroll in either plan, and the premium is fully paid by the City. It is a common practice, although not universal, for cities to provide health insurance benefits to their City Council Members. The City obtains health insurance benefits from the Public Employee Medical Hospital Care Act (PEMHCA), which is administered by CalPERS. The program as established by CalPERS requires the employer to pay medical premiums at a minimum level. In 2014 the Minimum Employer Contribution in 2014 is $119 (unless the employer has enrolled in a program that allows a lower amount which increases each year until the two are equal.) In 2010, the City Council examined this issue which was suggested for review by the Social & Economic Justice Commission. The City Council discussed this issue at its meeting of July 19, 2010 (See Attachment 1). Additional information was requested which was presented to the City Council September 20, 2010 (See Attachment 2).
Both City Council Members and employees have an in-lieu contribution option. If they can show proof of other health insurance coverage, such as through a spouse s employer or through a pension plan, the City makes a contribution to a Section 457 deferred compensation retirement account. The amount of the contribution is equivalent of the single Kaiser rate (in 2014 this will be $742.72 per month). The business purpose of offering this option is to provide an incentive for those who already have coverage, to forego carrying double coverage. In turn, the City incurs a lower cost than it would to cover both the employee and dependents. The City also has one Council Member who has coverage through a pension plan. The City is reimbursing the retiree cost of the coverage, which met similar criteria of less cost to the City. Council member Barnes as well as the other members may have a specific piece of the policy which is to be discussed. Based on the discussion in 2010 the following topics may be items for discussion: a) Whether there should be a change in the maximum City payment toward coverage for City Council Members. b) The in-lieu benefit option. c) The timing of any changes to the current policy. In 2013, the annual City cost for Council Member health benefits is projected to total $63,908.40 (average is approximately $1,065 per month per City Council Member). Two Council Members with Blue Shield coverage voluntarily contribute the amount above the Kaiser premium via a deduction from their paychecks. The impact on City staff to administer health benefits for Council members is minimal, as it is done concurrently with employee benefit processing. As background information, the policy negotiated and applicable to other City employees caps the City contribution at the Kaiser rate. Employees who are enrolled in a plan which has a higher cost pay the cost difference through payroll deductions. For discussion purposes, Staff prepared a Table including sample health plans (Kaiser and Blue Shield) and cost sharing based on a cap of the City contribution at the Kaiser premium: 2014 Kaiser & Blue Shield Monthly Premium (Lower Rates Apply If Dependent Is Medicare Covered) Blue Shield (Monthly Premium) 2 Kaiser (Current 100% City Paid) Share of Monthly Blue Shield Premium Paid By Employee Employee Only $ 836.59 $ 742.72 $93.87 Employee + 1 $1,673.18 $1,485.44 $187.74 Dependent Employee + 2 or More Dependents $2,175.13 $1,931.07 $244.06
Ultimately the costs incurred are impacted by the enrollment status (i.e. the number of dependents covered) and the plan selected. The CalPERS Health plan offerings include more than just two plans. In 2014 they have added Anthem and United Healthcare. Anthem s premiums are lower than Kaiser and United s premiums are higher than Kaiser. Staff analyzed the projected impact on annual costs if the contributions for City Council Members were capped at the Kaiser premium. This was reviewed assuming two scenarios: 1) The current enrollment by the City Council; and 2) A maximum scenario if the City had all 5 Council Members selecting family Blue Shield. Under the first scenario the City would save approximately $2,250 ($187.50 per month). Under the second scenario the cap would reduce theoretical City costs by approximately $14,640 ($1,220 per month). FINANCIAL IMPACT As Health Insurance costs increase there is a cost impact. The financial impact if any will only occur if there is a change in the policy. Attachments 1. July 19, 2010 Staff Report 2. July 19, 2010 excerpt from City Council Minutes 3. September 20, 2010 Staff Report 4. September 20, 2010 excerpt from City Council Minutes 3
5-3. Federal Health Care Act - Presentation by Alex Briscoe, Alameda County Health Care Services Agency Alex Briscoe, Alameda County Health Care Services Agency provided a presentation on the Federal Health Care Act. 6. GOOD OF THE CITYIPUBLIC FORUM/ANNOUNCEMENTS Mayor Thomsen opened the Good ofthe CitylPublic Foruml Announcements. The following people spoke: Amber Whitson. A summary of comments is as follows: expressed concern with the temporary transition shelter. 7. PUBLIC HEARING 8. UNFINISHED BUSINESS 9. NEW BUSINESS 9-1. City Council Health Benefits Staff recommendation: that the Council receive the report and provide Staff with any further direction on modification ofcurrent policies or additional information needed Interim Finance & Administrative Services Director Paul Rankin delivered the staff report. City Council Members are eligible to receive health insurance benefits. Currently, the health plan providers include Kaiser and Blue Shield. Council Members may enroll in either plan. and the premium is fully paid by the City. The policy negotiated and applicable to other City employees caps the City contribution at the Kaiser rate. Employees who are enrolled in a plan which has a higher cost pay the cost difference through payroll deductions. The following people spoke: Brian Parsley; Peggy McQuaid; Amber Whitson. A summary ofcomments is as follows: expressed support for parity with City employees. A summary ofcouncil Comments is as follows: the item was raised during a candidate forum, expressed interest in fairness and that Council Members should have the same level ofcoverage as City staff; expressed support for existing benefit structure; suggested comparing benefits packages and salaries with other City Councils, not City employees; expressed interest in additional research regarding City Council salaries and benefits, and the item returning to the Council in January. 4
CITY OF ALBANY CITY COUNCIL SALARY SURVEY COMPLETED JANUARY 2014 This survey was conducted including Bay Area cities with an estimated population as of January 1, 2013 of 35,000 or less. A total of 31 cities including Albany fit this criteria. This population range aligns with Government Code Section 36516(a)(2), which establishes initially the maximum of $300 monthly City Council Member salary for all cities in this range. The City was unable to receive data from 5 cities ( Los Altos [pop. 29,972]; East Palo Alto [pop. 28,675]; Belmont [pop. 26,316]; Woodside [pop. 5,441]; and Portola Valley [ pop. 4,448] ). The Survey Results are displayed in three sections: Monthly Salary; Provisions For Medical Insurance; and Other Benefits. City Council Member Salary & Benefit Survey Results SECTION I. - MONTHLY SALARIES City Population Type Monthly Salary Albany 18,430 Charter $300 Pleasant Hill 33,633 General $585 Menlo Park 32,679 General $640 Foster City 31,120 General $496 Saratoga 30,706 General $250 Los Gatos 30,247 General $150 Burlingame 29,426 General $590 San Pablo 29,266 General $702 San Carlos 28,931 General $300 Hercules 24,403 General $832 Lafayette 24,312 General $0 El Cerrito 23,910 General $441 Millbrae 22,228 General $345 Pinole 18,664 General $300 Orinda 17,925 General $0 Moraga 16,238 General $0 Half Moon Bay 11,581 General $300 Hillsborough 11,115 General $0 Clayton 11,093 General $390 Piedmont 10,889 Charter $0 Emeryville 10,269 General $768 Los Altos Hills 8,264 General $250 Atherton 6,893 General $0 Brisbane 4,379 General $165 Monte Sereno 3,420 General $0 Colma 1,458 General $884 Salary Survey Results - Out of the 26 cities in the survey 24 (92%) are General Law cities and 2 are Charter cities. - Average Monthly Salary (26 cities) $334 Page 1 of 3 Survey January 2014
City Council Member Salary & Benefit Survey Results SECTION II. - PROVISION FOR MEDICAL INSURANCE City Population Eligible? Provisions For City Council Medical Insurance Council PERS Receive Max City $ Plan More or Less 100%/ Portion Any In-Lieu Medical Ins. Albany 18,430 Yes 100% Yes $2,175 More $743 Pleasant Hill 33,633 Yes Portion No $959 Less $200 Menlo Park 32,679 Yes 100% Yes $2,175 Same No Foster City 31,120 Yes Portion Yes $1,535 Same $618 Saratoga 30,706 Yes None Yes $0 Less n/a Los Gatos 30,247 Yes Portion $1,831 Same No Burlingame 29,426 Yes 100% Yes $1,931 Same $350 San Pablo 29,266 Yes Portion Yes $1,781 Same $500 San Carlos 28,931 Yes Portion Yes $1,546 Same $347 Hercules 24,403 No n/a n/a $0 n/a n/a Lafayette 24,312 Yes None No $0 Less n/a El Cerrito 23,910 No n/a No $0 n/a n/a Millbrae 22,228 Yes Portion Yes $1,386 Same No Pinole 18,664 Yes Portion Yes $1,738 Same $600 Orinda 17,925 Yes Portion Yes $119 Less n/a Moraga 16,238 No n/a n/a $0 n/a n/a Half Moon Bay 11,581 No n/a n/a $0 n/a n/a Hillsborough 11,115 Yes 100% Yes $2,175 Same No Clayton 11,093 Yes None Yes $0 Less n/a Piedmont 10,889 No n/a n/a $0 n/a n/a Emeryville 10,269 Yes Portion Yes $1,654 Same $632 Los Altos Hills 8,264 Yes Portion Yes $1,812 Same No Atherton 6,893 No n/a n/a $0 n/a n/a Brisbane 4,379 Yes Portion Yes $1,989 Same $512 Monte Sereno 3,420 No n/a n/a $0 n/a n/a Colma 1,458 Yes 100% Yes $2,175 Same $250 Medical Insurance Survey Results - Of the 26 cities 20 (77%) include provisions for City Council Members to receive health benefits. - Of the 20 cities offering health 5 (25%) cover all costs; 14 (70%) cover a portion; and 1 (5%) provides zero $. - Of the 20 agencies the average maximum monthly contribution was equal to $1,587. - Only the City of Albany has the option to have the City pay more than the City does for other employees. - 10 agencies that provide health insurance to Council Members offer an in-lieu benefit upon proof of coverage. - The average in-lieu benefit payment was $500 based on the agencies that offered one. Page 2 of 3 Survey January 2014
City Council Member Salary & Benefit Survey Results SECTION III. - OTHER BENEFITS City Population Dental Vision Other Albany 18,430 $135 $0 Mayor - $100/mo expense Pleasant Hill 33,633 $0 $0 No Menlo Park 32,679 $135 $25 No Foster City 31,120 $0 $0 $25/meeting Saratoga 30,706 $0 $0 No Los Gatos 30,247 $125 $0 $50 auto allowance Burlingame 29,426 $99 $26 No San Pablo 29,266 $170 $38 retiree medical San Carlos 28,931 $88 $15 No Hercules 24,403 $0 $0 No Lafayette 24,312 $0 $0 No El Cerrito 23,910 $0 $0 $60 cell phone Millbrae 22,228 $108 $16 $350 annual tech; life, ltd Pinole 18,664 $157 $20 No Orinda 17,925 $0 $0 No Moraga 16,238 $0 $0 $ for expenses Half Moon Bay 11,581 $0 $0 No Hillsborough 11,115 $135 $23 No Clayton 11,093 $0 $0 No Piedmont 10,889 $0 $0 $ for expenses Emeryville 10,269 $130 $21 $492 for expenses Los Altos Hills 8,264 $198 $25 No Atherton 6,893 $0 $0 No Brisbane 4,379 $95 $31 $300 auto, $50 tech, $30 phone Monte Sereno 3,420 $0 $0 No Colma 1,458 $188 $25 $100 deferred comp 457; computer; phone Medical Insurance Survey Results - Of the 26 cities 13 (50%) include provisions for City Council Members to receive dental benefits. - For those contributing towards the dental benefits the average monthly cost was $136. - Of the 26 cities 11 (42%) include provisions for City Council Members to receive vision benefits. - For those contributing towards the vision benefits the average monthly cost was $24. Page 3 of 3 Survey January 2014