City Council

Mayor Cal Sheehy Lake Havasu City Vice Mayor David Lane Police Facility Councilmember Jeni Coke 2360 McCulloch Blvd North Councilmember Jim Dolan Lake Havasu City, Arizona Councilmember Gordon Groat 86403 Councilmember Michele Lin www.lhcaz.gov Councilmember Donna McCoy City Council Work Session Minutes - Final Thursday, August 27, 2020 6:00 PM 1. CALL TO ORDER Mayor Sheehy called the meeting to order at 6:00 p.m. 2. PLEDGE OF ALLEGIANCE The Mayor led in the pledge of Allegiance. Mayor Sheehy announced that the City Council has resumed in-person attendance at public meetings. He said members of the public can attend in-person or watch or listen to the meeting on Channel 4, or live stream on the City’s website. He added that public comments are also being accepted by emailing the City Clerk at cityclerk@lhcaz.gov at least one-hour prior to the posted start time of the meeting. 3. ROLL CALL Present: 7- Mayor Cal Sheehy, Vice Mayor David Lane, Councilmember Jeni Coke, Councilmember Gordon Groat, Councilmember Michele Lin, Councilmember Donna McCoy and Councilmember Jim Dolan *Councilmember McCoy was present via remote conferencing. 4. CALL TO THE PUBLIC There were no requests to address the Council. 5. PUBLIC HEARINGS 5.1 ID 20-2522 Presentation, Discussion, and Potential Direction to Staff Regarding the Positional Analysis (Jess Knudson) Human Resources/Risk Manager Shawn Marie Irula addressed the Council and said as previously discussed on August 11, 2020, Baker Tilly, positional analysis consultant, provided a report and recommendation for a new salary structure and three potential implementation options for the City’s consideration. She said the introduction of the new salary structure meets the City’s needs to bring positions into market; however, the Lake Havasu City Page 1 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 implementation options presented consists of a “one-size-fits-all” approach to bring current employees into the new salary ranges and falls short of accomplishing the City’s goals of compaction and retention. She stated that a more targeted approach would be more appropriate to address specific circumstances within each of the departments. City Manager Jess Knudson reviewed the implementation options included in the memorandum to Council as follows: Option 1: Implement the Baker Tilly Recommendation: ($1.26 million in wages*). • Addresses wage adjustments by bringing employees into the new range and including a 0.5 percent per year in current position. • A negative impact to employees who were promoted in the last few years exists, because while they may have worked for the City for many years, this approach only accounts for the time they have in the current position. • Second negative impact with this approach is the separation between employees working for the City for three to six years, because the minimum entry level pay for the position was increased, which causes minimum separation between the newly hired employee and the employees who have worked for the City for a few years. • The positives with the Baker Tilly report include, establishment of new market salary ranges that allow the City to attract talented employees and pay future employees at market rate. • The creation of job descriptions and addressing reclassifications were successfully accomplished through the Baker Tilly approach, with much of the work accomplished internally, by HR Manager Shawn Irula. Option 2: Modify the Baker Tilly Recommendation. • Staff ran the numbers to estimate costs tied to addressing the two major shortfalls with the Baker Tilly recommendation. o Recently promoted employees are not compensated to the same degree as if they did not pursue and accept a promotion. o Separation between employees is not as evident as hoped because the minimum of the new salary ranges are increased, causing compression with positions that have multiple incumbents. • If the City changed the years in position to years in service for the City, it would cost an additional $500,000*. • If the City changes the 0.5 percent years in service to 1 percent years in service, it would cost an additional $500,000*. • This across the board approach, helps some departments, hurts others and caused no impact other departments. Lake Havasu City Page 2 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 Option 3: Work with Department Directors to Address Market Wages Through a Department-By-Department Approach ($1.75 million*). • Department directors were asked to analyze the needs of their individual departments and present a plan for implementation. See handout. • Employees are treated differently, depending on which department they work under. • Specifics in each department are addressed individually, allowing unique situation to be addressed with a targeted approach. • This approach would require an additional 30 days (October) for the City staff to implement. Option 4: Forgo the Implementation, Address it in the Next Fiscal Year and Reintroduce the Steps for this Fiscal Year ($600,000 in step increases). • This would allow the City the time to collaborate and fine-tune the City’s approach. • The City has waited two years to implement the positional analysis and additional time may cause consternation with employees and community. • Approximately 75 employees are currently at the top of the existing salary range. These employees would not receive a wage adjustment in this fiscal year. Alternatives to Each of the Options: • The City can implement a phased-in approach to spread out the costs to the City over two or three years. • A portion of the plan is implemented in this fiscal year and the remaining portion or portions is implemented in the following fiscal years, to help offset initial costs to the City and allow for discussion regarding additional City revenue considerations. (*Costs provided are for wages only, over a 12-month timeframe. To account for additional City costs tied to increased wages, including overtime, workman’s compensation, pension, PTO payouts, and other costs, an additional, on average, 70% is added to the total costs to the City to implement the Plan.) Mr. Knudson stated that after much time and review, staff’s recommendation is to move forward with Option 3, and noted that there are concerns regarding the ongoing expenses of the positional analysis each year. Mayor Sheehy asked how a position is placed into a pay grade, to which Ms. Irula explained how employees are placed into grades (salary range) and steps when hired and move throughout the ranges based on tenure and performance. She explained that under the Baker Tilly approach the employees below market were moved to market wage with the implementation option of a 0.5 percent adjustment for every year of service in current Lake Havasu City Page 3 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 position. Ms. Irula noted that staff does not feel that this approach is the best option as it does not address compaction issues. Ms. Irula stated that the handout provided with Option 3 includes the proposal from Baker Tilly with a 0.5 percent per year in service (with a one-percent minimum). The handout also explains the additional requested funds from each of the departments to address compaction or placement issues and the total cost to move employees into the new ranges. Vice Mayor Lane asked what the average pay increase is for a promotion, to which Ms. Irula stated that in accordance with City policy, a promotion places an employee into the salary range and step that is closest to a minimum of five percent without being less. Ms. Irula noted that there have been instances where an employee (who is at the top of their current pay range) is promoted and placed at the top of the new pay range. Ms. Irula explained the City’s current pay bands and 10-step system. She said there are no steps associated with an open-range system and employees would move through the ranges in other methodologies, which is currently being reviewed and discussed internally. Ms. Irula noted that there will be some employees that are placed into their new grade at the top of the pay scale due to years in service in their current position. Mayor Sheehy asked how the positions without comparable data were placed into the pay structure, to which Ms. Irula replied that any positions without comparable data were placed into the new pay structure based on their job family. She explained that as part of the job description questionnaires, the consultant was able to group positions together based on job families. She said as part of any positional analysis study it is typical to pick benchmark positions to survey and build a salary structure versus surveying every position in an organization. Ms. Irula stated that there is an appeal process for positions in which the authority, autonomy, and supervisory levels are evaluated to determine if placement within the pay band is appropriate or if the position needs to be adjusted. Mayor Sheehy asked about the pathway moving through the open range system, to which Ms. Irula replied that the scope of work with Baker Tilly included creating policies and processes for movement; however, it has been difficult holding them accountable to complete some of the process therefore staff is reviewing the policies internally. Councilmember Dolan expressed concern regarding the challenges with the consultant, to which Ms. Irula stated that Baker Tilly provided a product that contractually met the City’s scope of work. She said it is challenging from a consultant’s standpoint to come into an organization, such as Lake Havasu City, that has such anomalies and challenges in Lake Havasu City Page 4 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 various departments, requiring a more targeted approach, and offer one solution that will fix everything. Councilmember Dolan expressed his frustration that the Council is not experts in this field and to be asked to meddle into this study to come up with a solution without any professional recommendation is an issue. Councilmember Dolan was in favor of Option 3 as it gives staff flexibility to address challenges within their specific departments. Vice Mayor Lane was in favor of Option 3 and added that the City Council should not be determining the positions and pay scales, but the financial aspects of the positional analysis. Councilmember McCoy was in favor of Option 3 and thanked everyone for their patience as the City works through the positional analysis. There was discussion regarding the timeframe in assigning positions and individuals into the new pay structure and pay bands. Ms. Irula said typically compensation studies are done every five to seven years; however, Lake Havasu City was long overdue for a consultant to come in as the last study was done 13 years ago. There was discussion regarding department involvement in the positional analysis and the reclassification process. Mr. Knudson added that the City will not be using Baker Tilly to create performance evaluations and policies which will result in a cost savings to the City. There was further discussion regarding the process for reclassification and new positions. Public Works Director Greg Froslie spoke to his experience regarding the positional analysis process over the past two years. He said Option 3 did not exist three days ago and said the additional funding needed for Public Works was put together as a “best guess” as directors were given less than a week to put together proposals that would make their departments whole. He noted that his department along with many of the department directors have been given limited time with little discussion and follow up from the consultant. He said 52 job descriptions in Public Works were incorrect and had to be rewritten by City staff. He said if the Council were to move forward with Option 3, staff will need to refine the recommendation and amount requested. Councilmember Dolan asked if the positional analysis puts the City into competitive wages Lake Havasu City Page 5 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 with other agencies, to which Mr. Froslie said he believes creating pay scales at market puts the City into competitive wages. Ms. Irula added that many of the job descriptions from the consultant needed to be rewritten as they were not ready to publish. She added that there were also requests from the departments for new job descriptions and titles that were not included in the finalized report due to time constraints. Councilmember Groat asked how many times the consultant met with the Public Works Department, to which Mr. Froslie replied that the team met with the consultant during a kick-off meeting and he also had one meeting with the consultant for a few hours to discuss the Public Works Department. Mr. Froslie said for Public Works, Option 3 is missing the job descriptions that are different from the existing descriptions as they were intermingled by the consultant into one description and not part of the City’s existing structure. Mayor Sheehy asked why the job descriptions were dated July 2019, to which Ms. Irula explained that they were created after the positional analysis questionnaires which was around this same time last year; however, the City did not receive the job descriptions until recently when they were sent to the department directors for review. Ms. Irula explained that the majority of the issues with employees in the new pay ranges is the compaction it creates because the 0.5 percent does not move the mid-range employees higher into the new scale to address compaction. City Magistrate Mitchell Kalauli spoke to his concerns that the positional analysis does not adequately reflect the Court’s need of a reclassification and issues regarding using years in current position versus years in service. He addressed concerns with the process and that the City did not receive any information from the consultant on how the product (report) was done and why only three responses were received from the comparable cities for the Court. He said for clarification, department directors can make recommendations but do not make the final decisions. He said they can choose to adjust employees within the Court but they do not make the final decision on whether it happens. Mr. Knudson stated that if the Council’s direction is for staff to move forward with Option 3 it gives the flexibility for City staff to identify and address specific issues within the parameters and resources of the City. Police Chief Dan Doyle addressed the Council and said he agrees with Option 3 and added that the Police Department came up with a solution that would better serve the department’s needs and issues. He said this process from a leadership angle does not instill Lake Havasu City Page 6 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 confidence in the employees and the City needs to be cognizant and ensure employees that we can do this and complete it as soon as possible while addressing concerns and recognizing employee patience throughout this process. He said the Police Department wages have been 25 percent under market and noted that the City still has some hurdles in terms of retention and how employees move through the pay scale. Fire Chief Peter Pilafas addressed the Council and said on May 23, 2018, the City Council gave direction to fix compaction and conduct a market study. He said the Baker Tilly study gave market ranges that we can work with and believes the City has a solid solution that moving forward will bring employees to market and fix compaction. Mayor Sheehy opened the public hearing. Ms. Nancy Campbell addressed the Council and spoke regarding the Partnership for Economic Development (PED) labor market report and average housing prices in Arizona. She said the positional analysis study shows that oftentimes hiring outside sources does not work due to the unique makeup of a city. Ms. Campbell noted that the housing market is an important piece that needs to be looked at to continue to attract and retain employees in Lake Havasu City. Mr. Michael Fuller, Lake Havasu City Police Officers Association/Fraternal Order of Police, addressed the Council and spoke regarding the long process and simple solution to fix the Police Department. He said the current range provided by Baker Tilly is a range that can fit in the City’s step-system. He said the issue is that the Police Department is so far out of range and the numbers are what they are. He said the Police Chief was able to come up with a last minute proposal; however, the proposal is trying to work within the current budget and does not fully address the shortcomings within the police officer range. Mr. Fuller added that it is hard to stay competitive with other agencies that are doing things to stay competitive with their current step system. He said they fully support and agree with the Police Chief’s proposal, but noted that it is frustrating that there is money and resources for other things but over the last 10 years the departments have been asked to cut their budgets. He said the City needs to act now with a plan and over the next few years find revenue that will continue this forward. Mayor Sheehy asked Mr. Fuller for clarification on what the proposal does not solve, to which Mr. Fuller said the movement of the new pay range for a police officer is a 17.76 percent increase; however, if the scale is placed into a step increase, the range is anywhere from 17.76 percent to 25 percent and a five-year officer placed into the pay scale would receive a 2.5 percent increase. He said every officer is under market 17.76 to 25 percent; however, the Baker Tilly study creates inequities of a new officer receiving a 17.76 percent increase and a five-year officer receiving a 2.5 percent increase. Mr. Fuller said Lake Havasu City Page 7 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 Option 3 helps narrow the gap, but it does not address the issue as a five-year officer would receive an eight percent increase but is 20 percent below market. He said in reviewing the new pay ranges and using a 10-step system, to get officers (at the officer level) to market average would cost approximately $630,000. He said a five-year officer currently in the mid-range was expecting to go into the mid-range level in the new pay range, which is not happening. Councilmember Dolan stated that pre-recession the Police Department had 96 sworn officers and said there are 80 sworn officers today. Mr. Fuller added that there are currently two open police officer positions that the Police Department is proposing to forgo with this positional analysis to accomplish the needs of the department. There was discussion regarding the number of new officers, mid-range officers, and top-end officers (within last few years of retirement). Mr. Fuller said the new starting range for a new officer is competitive; however, the concerns are the ranges for the mid-range officers which have the experience, training, and specialty assignments. Mr. Tyler Zink, Lake Havasu City Firefighters Association, addressed the Council and spoke concerning comparable market ranges for Lake Havasu City. He said the Fire Department supports the new proposal and believes it works between the current fiscally responsible boundaries to establish comparable salary ranges and creates separation based on years of service to help address compression. He said the study is not comprehensive and does not compare a 14-year firefighter in a comparable city to one in Lake Havasu City nor other benefits that a comparable city offers. He said if the City does not continue to prioritize wages and progression the City may never actually compete. The following written public comments were received and read into the record: • Mr. John Parrott, citizen • Ms. Stephanie Hoffman, citizen • Ms. Sandy McCormack, citizen • Mr. Bob Buche, citizen There being no further comments, Mayor Sheehy closed the public hearing. Mayor Sheehy asked about employees at the top-end and the City’s policy regarding market adjustments, to which Ms. Irula explained that employees at the top end of their current pay scale will see an increase moving into the new pay scale; however, for some employees it may put them at the top-end of the new pay scale which is something that will be addressed as part of the City’s policy implementation. Mayor Sheehy was in favor of Option 3 with implementation of a step-system with some Lake Havasu City Page 8 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 flexibility by policy if appropriate. He added that he would like to see implementation of specialty pay in the Fire Department, which was included in Police Department proposal. Councilmember Groat was in favor of Option 3 with specialty pay for public safety. Councilmember Coke was in favor of Option 3 and asked that any issues or concerns regarding the study be brought to the City Manager and Human Resources/Risk Manager. She added that the Council has to work within the resources that are available. Vice Mayor Lane was in favor of Option 3 and said the City has to work within the budgetary restraints and added that this will be an ongoing effort. Councilmember Lin was in favor of Option 3 and asked about the timeline for implementation, to which Mayor Sheehy said Option 3 would be implemented by October 2020 with the additional items for specialty pay (Fire Department) and the Court items as discussed. Councilmember Dolan was in favor of Option 3. He said the City will need to have conversations moving forward regarding additional revenue options. Councilmember McCoy was in favor of Option 3. Mayor Sheehy said with this recommendation the Council is committed to finding additional revenue options moving forward. Mr. Knudson said the City cannot absorb the additional costs within the existing budget; therefore, moving forward, these conversations will need to happen next budget year. He said the direction from the Council is implementation of a step-system and with a broader open range and asked for clarification on the type of step-system; 10-step system or a system with the same percentage (3.5 percent (exempt)/4.6 percent (non-exempt) between steps. Mayor Sheehy stated that City staff can put together a step-system that works within ranges and available resources. He said the Council’s goal for this is to pay market wages and not impact compaction. 6. ADJOURN Upon motion by Vice Mayor Lane, and seconded, the meeting adjourned at 8:48 p.m. CERTIFICATION I hereby certify that the foregoing is a full and true copy of the Work Session Meeting Lake Havasu City Page 9 Printed on 10/14/2020 City Council Minutes - Final August 27, 2020 Minutes of the Lake Havasu City Council held on the 27th day of August, 2020. I further certify that the meeting was duly called and posted, and that a quorum was present. ____________________________________ Kelly Williams, City Clerk/MMC Lake Havasu City Page 10 Printed on 10/14/2020