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2017-07-10 Minutes - Draft DRAFT MINUTES City Council Employee Benefits Ad Hoc Committee July 10, 2017 A Work Session of the City of Denton City Council Employee Benefits Ad Hoc Committee (formerly "Employee Leave Ad Hoc Committee") convened on Monday, July 10, 2017, at 1:30 9.m. in the City Manager's Conference Room, 215 E. McKinney, Denton, Texas . PRESENT: Council Member, Committee Chair Sara Bagheri Council Member Keely Briggs Council Member John Ryan STAFF: Deputy City Manager, Bryan Langley Director of Human Resources, Carla Romine Risk Manager, Scott Payne After determining that a quorum was present, the Denton City Council Employee Benefits Ad Hoc Committee convened in a Work Session. Langley called the meeting to order at 1:35 p.m. 1. Select a chair for the City Council Benefits Ad-hoc Committee. Keely Briggs moved that Sara Bagheri be selected as chair for the Benefits Ad Hoc Committee ("committee"). John Ryan seconded the motion, and it carried unanimously. 2. Approve the minutes from the April 27, 2017, ad hoc committee meeting. Keely Briggs moved to approve the minutes as presented. Sara Bagheri seconded the motion and it carried unanimously. 3. Review and discuss feedback offered by employees on sick and vacation benefits as well as health insurance Langley updated the committee on actions that have been taken since the last meeting. The options for vacation and sick benefit changes that the committee previously discussed, as well as the vacation and sick benefit survey compilation that was shared with the Council on February 14, 2017, were given to the Employee Insurance Committee (EIC). Staff requested that EIC members share the information with the employees in their area and seek feedback on the options and determine which options would be most favored by employees. A copy of what was shared with the EIC was provided to the committee (Exhibit 2). Payne prepared a report capturing the feedback received (Exhibit 1). He combined the feedback received and grouped similar feedback together in order to get a good idea of the overall opinion. The biggest comment was that if the goal is to be more in line with other Cities, then sick leave should be paid out when someone leaves. Romine explained that most employees recommended not changing benefits for existing employees, and, instead, make changes for new employees (e.g., those hired on or after 1 October 1, 2017). Langley encouraged that if it is decided to use a grandfathering option, to have an end date stipulated to eliminate confusion and lessen the administrative impact. Romine stated that she and Payne were invited to attend a meeting of the Electric employees in which the benefit change options were discussed. They were asked what was driving these changes. Specifically, they were asked if there was a budgetary shortfall that was driving the changes. Romine stated she told the group that Council is always interested in being fiscally responsible to our rate payers and taxpayers, but it was more of ensuring we were in line with other cities. Romine told the committee she didn't know what else to say. Bagheri explained that the compensation study did not compare how the City measures with benefits, but we have more room for changes since the pay is leading. When looking at sick accruals, Payne explained that the committee had some consensus about option 2 for sick leave, (referencing Exhibit 1) which is to increase the accrual from 96 to 120 hours annually. Discussion moved to vacation benefits. Bagheri asked how many employees currently have more than 320 hours of accrued vacation. Romine responded, as of February 20, 2017, 157 non-civil service employees, 53 Police civil service employees, and 4 Fire civil service employees. The committee discussed some buyback options. Payne mentioned that if a buyback option was offered, then doing so would create a tangible expense to the current budget that has not existed before. Briggs stressed that she doesn't want any of the female staff to lose benefits due to maternity leave. Payne referenced Exhibit 1, pointing out that vacation accrual option 1, which was to cap the bonus time at 20 years of service, was most favored by the employees. The employees mostly chose the carryover and payout option 3 based on years of service. Bagheri clarified that option 1 was to cap vacation time accrual starting at year 20, which would cap the time at 180 hours (Fire civil service would be a different amount). Plus this would remove the addition of 4 hours per year starting after year 20. This still puts us at a leading position in comparison to other Cities. Vacation will continue to remain available after 6 months of employment. Romine continued that vacation accrual and carryover payout is currently 320, and fire is 480. Bagheri asked about the bonus hours that are accrued every year beginning at year 5. Langley explained that the bonus time is a Denton specific program that accrues 4 hours on your anniversary beginning on year 5 of employment. 2 Payne stated to also consider that studies show the new generation of employees entering the workforce are looking for more tangible upfront rewards. If this is the workforce we are trying to attract, then keeping the bonus time seems to be important. Bagheri said that we need to figure out option 1 or option 2 or any combination thereof. It makes sense that if we change the accrual than we also change the payout. Bagheri asked for feedback from Ryan and Briggs. Ryan said that option 2 seems easier to choose. He asked if we have any information on attrition based on years of service? For example, do most people leave between 10-15 years? Or do we have surveys in exit interviews? Romine stated staff could look into it and provide an answer. Discussion was had regarding how decisions made will affect civil and non-civil service employees. Ryan stated that in the interest of simplicity, option 2 works the best. Briggs stated that in reading the minutes from the committee's last meeting, the committee was recommending option 2. Bagheri asked the other members for their final recommendations regarding the accrual. Committee member Ryan chose option 2 and Briggs and Bagheri chose option 1. Payne clarified that option 1 is the consensus for accrual; option 3 is consensus for carryover and payout. Bagheri stated that since the goal is to not have a large payout when leaving the City, then capping the payout at a lower number but leaving accrual is a good idea. Bagheri likes option 1 numbers and option 3 hybrid using a graduated plan. This would mean 240 payout (360 for Fire); 320 carryover, graduated plan based off years of service. Example—Less than 10 years =240 hours, more than 10 years = 320 hours. Briggs agreed with Bagheri stating that 240 hours payout and 320 hours carryover. Ryan liked option 3 for carryover and payout but that option doesn't line up with option 1 on the vacation accrual. Langley suggested that if the goal is capping vacation time and having a payout of 240 hours upon separation, then make only those changes. There are so many options we can choose from, let's start with the goal in mind. Discussion continued on combining option 1 and option 3 for vacation carryover. Briggs likes the cap at 240 hours with a graduated payout. Romine said she wanted to double check on the Fire service hours. 3 Langley stated we can summarize the information discussed today and send this to the committee to make sure we are all on the same page. Bagheri began discussion on grandfathering and asked for feedback. Langley suggested for staff to meet with payroll to learn about the best way to phase grandfathering into the Kronos system and email those options to the committee. Bagheri suggested phasing everything within 2 years. A shorter timeframe is best. Bagheri moved to discuss payout. 2 years for people with over 240 hours to draw down time. Ryan suggested that during the first year of phasing in the new rules, employees that have over 240 hours can still get paid out up to 320 hours. For the second year, employees that have over 240 can get paid out up to 280 hours. Discussion was had regarding Civil Service employee benefits. Bagheri clarified that vacation accrual is capped at 20 years including Police and Fire. Langley recommended phasing accruals at 220 for year 1 and 180 for year 2. But also meeting with payroll to make sure this is something Kronos can accommodate. Bagheri stated that for year 1, for the +20 employees, cut the bonus time in half and year 2 to 0 bonus time. No changes on sick time. Briggs suggested increasing the sick since the committee was recommending decreasing the vacation, with the consensus that the committee didn't want to pay out sick time. Bagheri stated she thought 15 days sick time across the board for everyone made sense. Romine mention the next step is discussing who will make the recommendations to the Council. Langley offered that staff will introduce the topic, providing some information on what has been done and what the recommended changes are by the ad hoc committee; the ad hoc committee could take over after that. Bagheri thought that was a good suggestion. 4. Review, discuss and give staff direction on employee benefits/policies for City of Denton Employees. Bagheri commented that discussions on sick and vacation benefits were rolled into the previous agenda item. Payne commented that discussions on health benefits are scheduled annually with the Executive team regarding what the plan can afford, and what level of revenue is coming in between employees and the City contributions. Also, based on staff projections what changes are needed to accommodate those projections. An example is removing out of network benefits to address costly abuse and prescription plan changes. 4 Ryan stated that a health insurance plan is a management level decision, not a policy maker level that Council should discuss. Bagheri recommended having audit finance review the insurance plan policies and add this discussion as part of the budget process this year. 5. Set future meeting dates and topics. No future meetings were set. With no more business to address, the meeting was adjourned at 3:37 p.m. 5 City of Denton Vacation and Sick Benefits Summary and Recommended Changes by Council Ad Hoc Committee CURRENT BENEFITS RECOMMENDED CHANGES BY COUNCIL AD HOC COMMITTEE Police Civil Service Police Civil Service Fire Civil Service Fire Civil Service Benefit Non-Civil Service and Fire Civil Service Non-Civil Service and Fire Civil Service Employees Working Employees Working Effective Date Employees* Employees Working Shift** Employees* Employees Working Shift** 40 hours** 40 hours** VACATION Monthly Accrual 7hoursrsor 10 hours 15 hours No change No change No change N/A 1/1/18 for new employees;for existing employees,we would have each year of 4 hours for each year of 6 hours for each year of Cap at 20 years,so the Cap at 20 years,so the Cap at 20 years,so the a phased implementation.The bonus time beginning on 1/1/18 Bonus Accrual service,beginning on service,beginning on service,beginning on maximum bonus time is 60 maximum bonus time is maximum bonus time is would be decreased to 2 hours(3 hours for Fire civil service the fifth anniversary the fifth anniversary the fifth anniversary hours 60 hours 90 hours employees)for years beyond 20;then be removed altogether 1/1/19 for years beyond 20. 1/1/18 for new employees;for existing employees,we would have 0-l0 years=240hours 0-l0 years=240hours 0-l0 years=360hours a phased implementation.The carryover for 0-10 years would be Maximum Annual Carry Over 320 hours 320 hours 480 hours 280 hours beginning 1/1/18,then would be 240 beginning 1/1/19 10+years=320 hours 10+years=320 hours 10+years=480 hours (for Fire civil service employees,would be 420 hours beginning 1/1/18,then would be 360 hours beginning 1/1/19). 1/1/18 for new employees;for existing employees,we would have Accrued hours up to 320 Accrued hours up to 320 Accrued hours up to 480 Accrued hours up to 240 Accrued hours up to 240 Accrued hours up to 360 a phased implementation.Beginning 1/1/18,employees would be Pay Out Upon Termination^ hours hours hours hours hours hours paid up to 280 accrued hours,and on 1/1/19,they would be paid up to 240 accrued hours for Fire civil service employees,would be 420 hours beginning 1/1/18,then 360 hours beginning 1/1/19). SICK LEAVE Monthly Accrual 8 hours 10 hours 15 hours 10 hours No change No change 1/1/18 for new as well as existing employees Maximum Annual Accrual 720 hours Unlimited Unlimited No change No change No change N/A Accrued hours up to 720 Accrued hours up to Pay Out Upon Termination none^^ No change No change No change N/A hours 1,080 hours *Benefits presented in this chart are for regular,full-time employees.Regular 1/2 time and 3/4 employees receive prorated benefits. **Many of the sick and vacation benefits are mandated by Chapter 143 of the Texas Local Government Code.The mandated benefits per statute are highlighted in yellow. ^Pay out upon termination is only allowed if the employee has completed 6 months of employment,has not been terminated for gross misconduct,and has returned all City property on or before issuance of the employee's final pay check. ^^Exeption:per policy 111.01,employees who die while in service of the City or while on authorized military leave of absence shall be paid for all unused sick leave not to exceed 90 working days.