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RPVCCA_CC_SR_2012_02_21_09_Employee_Performance_Incentive_Program_GoalsCITY OF MEMORANDUM RANCHO PALOS VERDES TO: FROM: DATE: SUBJECT: REVIEWED: Project Manager: HONORABLE MAYOR &CITY COUNCIL MEMBERS ERIC MAUSSER,HUMAN RESOURCES MANAGER FEBRUARY 21,2012 EMPLOYEE PERFORMANCE INCENTIVE PROGRAM (PIP)PERFORMANCE GOALS FOR FY 2011-12 CAROLYN LEHR,CITY MANAGER ~ Kit Fox,AICP,Senior Administrative Analyst 6JJ RECOMMENDATION 1)Review and adopt the draft Performance Goals forthe employee Performance Incentive Program (PIP)for FY 2011-12;and,2)authorize the Finance Advisory Committee (FAC) workplan to include the review and validation of PIP achievements for City Council consideration. BACKGROUND Mayor Misetich originated the PIP concept during the FY 201 0-11 budget adoption process. Staff was challenged to identify at least $150,000 in cost savings and new revenues as a basis for allocating at least $83,000 to the employee merit/bonus pool.The City Council may recall that Staff's successful efforts during the inaugural FY 201 0-11 round of PIP were presented to the public on May 3,2011. In adopting the FY 2011-12 budget on June 21,2011,the previous City Council again endorsed the PIP concept,tying the FY 2011-12 employee merit/bonus pool allocation to cost savings/revenue enhancements (50%),achievement of City Council goals (25%)and maintenance of excellent customer service (25%),this year raised to a 3:1 ratio.The target for this year's PIP is a minimum of $342,900,compared to $150,000 from last year (see attachments).Since the adoption of the current budget,Staff has been proceeding under these assumptions for the FY 2011-12 PIP. Recently,Mayor Misetich has suggested that this year's program would benefit from the development of specific,measureable City Council-approved goals to serve as guidance for 9-1 MEMORANDUM:PIP Performance Goals for FY 2011·12 February 21,2012 Page 2 Staff.The adoption of such goals would also give the current City Council the opportunity to provide direction to Staff in furtherance of its highest priority short-and long-term goals, as articulated by the City Council in a recent series of facilitated workshops. DISCUSSION Attached to tonight's report is a list of draft performance goals for the FY 2011-12 PIP for the City Council's consideration and adoption.These goals fall into several broad categories,including: •Energy Use Efficiencies •Staffing and Service-Level Efficiencies •Procurement and Contracting Efficiencies •Emergency Preparedness Enhancements •Grant Funding Return on Investment In addition to the achievement of measurable and quantifiable results related to these broad performance goals,Staff anticipates that additional cost savings and revenue enhancements for the City will be achieved in FY 2011-12 as the result of the initiative of individual Staff members and City departments. For the purposes of reporting to the City Council at year end,Staff will provide the City Council with a full accounting of the organization's achievements under the FY 2011-12 PIP,in accordance with the City Council-adopted performance goals.Prior to this, however,Staff suggests modifying the Finance Advisory Committee (FAC)workplan to include the review and validation of the preliminary results of the FY 2011-12 PIP.Staff anticipates that the final results of this year's program would be ready to present to the City Council in Mayor June of 2012. CONCLUSION In conclusion,Staff recommends that the City Council review and adopt the draft Performance Goals for the FY 2011-12 PIP. Attachments: •Draft Employee Performance Incentive Program (PIP)Performance Goals for FY 2011-12 •City Council Staff report of June 21,2011 (without attachments) M:\Policy Issues\FY11-12 Employee Performance Incentive Program\20120221_PIPGoalsFY11-12_StaffRpt.doc 9-2 Employee Performance Incentive Program Performance Goals FY 2011·12 Energy Use Efficiencies •Implement programs and initiatives to reduce energy and natural resource use at City facilities,with a target goal of $5,000 in annual savings. Staffing and Service-Level Efficiencies •Pursue greater efficiency of the use and deployment of City Staff,based upon fluctuations in demand or activity levels,while maintaining high levels of cU'stomer service together with one of the lowest per-capita staffing levels in the South Bay.The goal is to demonstrate savings by strategic re-allocation of Staff in at least two (2)instances. •Reduce reliance upon consultants by taking greater advantage of in-house Staff resources and expertise to perform tasks,with the goal of at least (2)significant assignments normally performed by consultants. Procurement and Contracting Efficiencies •Where appropriate,utilize the pre-qualification bid process,value engineering and continued best management practices to achieve project savings as recorded at the time the City Council approves the project Notice of Completion. The goal entails listing specific examples of cost savings achieved by applying ingenuity to the management of project costs. •Where appropriate,pursue grant funding for capital improvement projects.List grants applied for and awarded. Emergency Preparedness Enhancements •Pursue a leadership role in the coordination of improved community emergency preparedness on the Peninsula and in the South Bay region.This goal addresses top City Council priorities of public safety and joint emergency responsiveness within our region. Grant Funding Return on Investment •Achieve at least 200%return on investment from the services of grant and advocacy consultants in seeking State and Federal funding of City projects, programs and initiatives. M:\Policy Issues\FY11-12 Employee Performance Incentive Program\Draft PIP Performance Goals FY11-12.doc 9-3 CITY OF MEMORANDUM TO: FROM: DATE: SUBJECT: REVIEWED: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCI~ DENNIS McLEAN,DIRECTOR OF FINANCE &INFORMATION<i!l.:::> TECHNOLOGY • JUNE 21,2011 ADOPTION OF CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2011·2012 CAROLYN LEHR,CITY MANAGER c5l- Staff Coordinator:Kathryn Downs,Deputy Director of Finance &Information Technology RECOMMENDATION 1.Adopt Resolution No.2011-I approving a budget appropriation and adopting the operating and capital improvement budget for FY11-12;and 2.Adopt Resolution No.2011-,establishing salary and hourly ranges for all competitive,management and part-time employee job classifications. DISCUSSION Budget Summary The draft FY11-12 General Fund budget is balanced,as follows: , Revenues 23,198,200 Transfers In 452,000 f~.lIM__t.J1fJJiiW_ Expenditures 18,810,065 Transfers Gut 4,839,253_wtl••ljJ•••#I"~ Recent information from the State Controller's office indicates that the City has general 9-4 ADOPTION OF CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2011·2012 June 21,2011 Page 2 of 5 revenue per capita of $408,which can be compared to the South Bay average of $794 and statewide average of $663.Even with limited resources,the City is able to provide a high level of service to its residents and maintain a balanced operating budget. The draft FY11-12 citywide budget of $35.2 million maintains core service levels and includes a total Capital Improvement Projects (CIP)and Water Quality Flood Protection (WQFP)budget of $7.8 million to maintain and improve the City's infrastructure.The City's 20 11 Five-Year Capital Improvement Plan has been integrated into the proposed FY11-12 budget. The attached resolution memorializes the draft budget presented on June 7th ,as modified by the City Council during its budget workshop.If the City Council adopts the resolution at this public hearing,the City's balanced budget will be effective July 1,2011.Staff expects to present Redevelopment Agency and Improvement Authority budgets for adoption on July 5,2011. General Fund Reserve On June 7th ,the City Council approved a General Fund transfer of $211,000 to the CIP Fund for a sewer relocation project associated with the larger San Ramon Canyon project. This FY1 0-11 General Fund transfer impacts the estimated June 30,2012 General Fund Reserve level,which is now expected to be about $253,000 below policy threshold,as illustrated below. Proposed FY11-12 Expenditures 18,810,065 However,consistent with prior years,Staff expects that FY1 0-11 favorable variances will restore the General Fund Reserve to the policy threshold.The FY10-11 results are expected to be available prior to the end of the 2011 calendar year. Changes After June 7th Budget Workshop The City Council's direction for the General Fund on June 7th included a net surplus of $3.6,782 for FY11-12.City Council also directed Staff to return with more information regarding the proposed Hesse Park kitchen improvement project.Staff recommends including an appropriation of $35,000 in the FY11-12 budget,as the justification for the project is compelling. The condition of the Hesse Park kitchen is an important variable that impacts rental9-5 ADOPTION OF CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2011·2012 June 21,2011 Page 3 of 5 revenue at the park site.The kitchen is frequently used by caterers and hosts for various private party events,as well as both privately managed and City managed recreation programs.Even though numerous repairs have been made,the appliances are aging and are not completely reliable to function during events;which lead to'complaints and a decline in rental events~The project would also include replacement of the aged cabinets to increase the appeal to prospective renters,and installation of a code-compliant venting hood. Staff is currently proposing one other significant chan~e to the FY11-12 budget,which does not affect the General Fund.Prior to the June 7 bUdget workshop,the City was informed that County Supervisor Knabe intended to grant the City an additional $150,000 of Measure A money during FY11-12.While preparing for the June 7th workshop,Staff planned to use the Measure A grant to fund two small park and trail projects: ~Eastview Park playground equipment replacement to address issues raised by a playground safety audit ($89,000);and ~The City's matching contribution to the California Coastal Trail project primarily funded with a $500,000 grant from the California Coastal Conservancy ($60,000 match). After further discussion with Supervisor Knabe's office,it was determined that the Measure A grant is best used for one single project that can be completed within the next 12 months.To achieve Supervisor's Knabe's goals,Staff recommends a larger project at Eastview Park to replace the playground equipment,and improve access to a restroom complaint with the Americans with Disabilities Act.The larger project estimate is $240,000, and would be partially funded with the $150,000 Measure A grant.To maintain a balanced budget,Staff recommends funding both the remaining $90,000 ofthe Eastview project and the $60,000 California Coastal Trail match from the CIP Reserve. Finally,per City Council's direction,Staff has included a $6,000 allocation in the Building Maintenance program of the General Fund to explore cooling options at City Hall.Staff expects to return to City Council at a later date outlining the City's options. Employee Compensation The proposed employee compensation budget includes a 3.0%cost of living increase based on the change in the Los Angeles Consumer Price Index for the 12 months ended March 2011,which is consistent with prior practice;a 1.6%merit increase,which is consistent with FYi 0-11;and a Performance Incentive Program (PIP)with a maximum payout of $114,300.The proposed PIP is based on a 3:1 ratio.For every $3 dollars of cost savings/new revenue,$1 of incentive pay may be disbursed after City Council review and approval. Staff has updated the FY11-12 Salary Ranges (exhibit A of the salary range resolution)by 3.0%for the cost of living increase.As a housekeeping item,3 classifications have been added to the salary schedule to give management greater flexibility when filling the employee positions authorized by City Council.The 3 classifications are:Assistant to the9-6 ADOPTION OF CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2011·2012 June 21,2011 Page 4 of 5 City Manager,Senior Accounting Technician,and Television Producer (a part-time position).As recent as FY09-1 0,the salary schedule included a classification for Assistant to the City Manager,which was inadvertently deleted from the FY10-11 salary schedule. Job descriptions for the other 2 classifications have been attached to this staff report. Adding the classifications to the salary schedule does not increase the City's employee headcount or budgeted payroll. Potential Future Impacts to FY11-12 Budget The City has applied for a federal grant to subsidize the Community Resource (CORE) Sheriff program,and expects notification after July 1st•If the grant is not awarded,the Sheriff may not continue to provide the CORE deputy services at the discounted "grant" rate.Staff will keep the City Council informed as more information becomes available. The Pension Subcommittee of the City Council is expected to complete its work within the next several months.Any decisions made by the City Council to alter the City's pension benefit are expected to impact the FY11-12 budget. Reserve Policies -Status Report In accordance with City Council policy No.41:Reserve Policies,the chart below summarizes each fund's reserve level,the estimated reserve at June 30,2012 and identifies any expected excess or shortage.The estimates are based on the proposed FY11-12 budget. Street Maintenance Hab itat Restorati on Habitat Restoration Subregion One Capital Improvement Projects Capital Improvement Projects Equipment Replacement Attaohments 50%of budgete expenditures One year of Portuguese Bend road maintenance Emergency projects Future maintenance Developer endowment Emergency or Future Projects FE MA reserve for FY04-05 winter storms Estimated replacement cost of assets held 516,400 50,000 74,786 750,000 3,000,000 215,209 1.698,166 517,365 50,000 171.992 752,520 7,483,111 215,209 1,735,548 965 97,206 2,520 4,483,111 37,382 Draft Budget Dooument for FY11 12 &-FY12 13 Resolution No.2011 ,approving a budget appropriation and adopting the operating and oapital improvement budget for FY11 12 Resolution No.2011 ,ostablishing salary and hourly ranges for all eompetiti'le, 9-7 ADOPTION OF CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2011·2012 June 21,2011 .Page 5 of 5 manageffient and part tiffie effiployee job olassifioations by applying a Consuffier Prioe IndE»<(CPI)adjustffient of 3.0%to all ranges Exhibit A Salary and Hourly Sohedule for COffipetitive,Manageffient and Part Tiffie Positions Exhibit B Sohedule for Auto Allov~noes Job Desoriptions for Senior J\oGOunting Toohnioian and Tolovision Produoer 9-8