Title
Staff Report for Resolutions Approving Letters of Understanding Amending the Employment Agreements of the City Manager and Police Chief
Staffreport
SUMMARY AND RECOMMENDATIONS
It is recommended that the City Council approve a resolution that approves a letter of understanding amending the City Manager’s employment agreement and a resolution that authorizes the City Manager to approve a letter of understanding to amend Sandra Spagnoli, the Chief of Police’s, employment agreement subject to certain parameters.
BACKGROUND
In accordance with CalPERS’ own internal controls, the City of San Leandro was the subject of a random CalPERS audit in 2014. In September 2014, CalPERS issued its audit report, which contained these findings: The City should provide CalPERS a resolution to pay and report the value of Employer Paid Member Contributions (EPMC) for non-represented management employees, specifically the City Manager, Assistant City Manager, and Police Chief; and put the aforementioned three employees in similarly situated groups or classes of employment for retirement contribution purposes.
To address the findings, CalPERS recommended the City do the following:
1) Group the City Manager and Assistant City Manager together as similarly situated non-represented executive management employees.
2) Group the Police Chief with the San Leandro Police Management Association (SLPMA) as the closest related safety group.
Staff concurs with CalPERS’ recommendations and prepared a resolution to group the aforementioned employees as recommended. Upon doing so, the City Manager would receive the same EPMC as specified in the Assistant City Manager’s employment agreement for the period January 1, 2013 through December 31, 2017. In accordance with his employment agreement, the City Manager has been paying his full employee member contribution of 7% to PERS since he was hired January 30, 2012. Grouping the City Manager and the Assistant City Manager together for retirement purposes would result in a reimbursement to the City Manager of approximately $28,755. This is an estimated amount and the actual amount reimbursed may vary based on payroll calculations. The City Manager will amend his employment agreement to donate the entire amount of member contributions reimbursed to charitable organizations in the San Leandro community.
City Manager Employee Assistant CM Employee
Agreement Contribution Agreement Contribution
1/1/2013 7% (of 7%) 1/1/2013 1% (of 8%)
1/1/2014 7% (of 7%) 1/1/2014 2% (of 8%)
1/1/2015 7% (of 7%) 1/1/2015 4% (of 8%)
1/1/2016 7% (of 7%) 1/1/2016 6% (of 8%)
1/1/2017 7% (of 7%) 1/1/2017 8% (of 8%)
Upon addressing the second finding, the Police Chief would receive the same EPMC as specified in the San Leandro Police Management Association (SLPMA) Memorandum of Understanding for the period January 1, 2013 through July 30, 2015. In order to coincide with the SLPMA EPMC schedule, the Police Chief’s rate of employee contributions must be accelerated. Thus, for the period 2013 through 2015, the Police Chief’s EPMC is approximately $13,878 in past employee contributions owed. To offset this amount owed by the Police Chief, the City proposes to credit the Police Chief $13,878 resulting in an offset to the retroactive portion of the employee contribution. In addition, the City Manager recommends that the City Council authorize him to negotiate a lump sum payment or credit, not to exceed $25,000, to cover employee contributions in which the Police Chief will be contributing the full 9% effective January 1, 2016 and to satisfy the Chief’s current contract’s terms, although no increases to salary should occur beyond those identified in the current contract. Amounts are estimated and the actual amount paid may vary based on payroll calculations.
Police Chief Employee SLPMA Employee
Agreement Contribution MOU Contribution
1/1/2013 1% (of 9%) 1/1/2013 0% (of 9%)
1/1/2014 2% 7/1/2013 3%
1/1/2015 4% 7/1/2014 6%
1/1/2016 6.5% 6/1/2015 9%
1/1/2017 9%
Previous Actions
• Resolution No. 2012-002 approving the Employment Agreement with the City Manager for the period January 17, 2012 through January 30, 2015
• Resolution No. 2015-012 approving an extension of the Employment Agreement with the City Manager for the period January 30, 2015 through July 30, 2015
• Resolution No. 2015-035 approving the Employment Agreement with the City Manager for the period February 17, 2015 through January 30, 2020
• Resolution No. 2012-122 approving Employment Agreements for the Police Chief and Assistant City Manager for the period December 12, 2012 through December 31, 2017
Fiscal Impacts
The correction required by CalPERS will result in the City reimbursing the City Manager approximately $28,755 in employee member contributions he already paid. Upon the City Council’s approval, funding will be appropriated from the General Fund Unrestricted Economic Uncertainty Reserves for the respective reimbursement.
The total amount that would be credited to the Police Chief represents the past and future EPMC that the City has paid or would have paid under the current employment contract terms. Pursuant to additional analysis, the City Manager would also be authorized to expend an additional $25,000, if necessary, to insure that the City meets all of the terms of the Police Chief’s current contract, although no new salary increases shall accrue beyond those identified in the current contract.
ATTACHMENTS
Attachments to Resolutions
• Letter of Understanding with City Manager Chris Zapata
• Letter of Understanding with Police Chief Sandra Spagnoli
RECOMMENDED BY: Richard D. Pio Roda, City Attorney
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