Human Resources

AGENDA ITEM H-6 Human Resources

STAFF REPORT

City Council Meeting Date: 9/26/2017 Staff Report Number: 17-233-CC

Regular Business: Approve the amendments to the Executive Management Benefits Plan document for unrepresented management personnel effective October 1, 2017

Recommendation Approve amendments to the Executive Management Benefits Plan document for unrepresented management personnel effective October 1, 2017.

Policy Issues This recommendation aligns with the City’s goals of balancing continued fiscal prudence in planning for potential impacts of employee retirement benefits, while also continuing to align the City as a competitive employer in the increasingly robust job market of the Silicon Valley.

Background The 2017-18 budget authorizes 22 management level classifications, collectively referred to as Executive Management or Unrepresented Management, who are unrepresented by an organized labor unit and serve as the City’s division level manager and department heads. Employees at this level serve at will and are largely responsible for ensuring delivery of City Council goals and policies at the department level. Given that these employees are not represented by an organized labor group, the City does not negotiate compensation with these classifications either as individuals or as a group. Rather, the City’s past practice has set forth a series of benefits determined by the City Council as providing a compensation package necessary to attract and retain employees, as documented in the Executive Management Benefits Plan document (Benefits Plan). The City Manager and City Attorney are not covered by this benefit plan however their contracts may reference this benefit plan as agreed upon in their respective contracts.

Analysis On September 12, 2017, the City Council met in closed session to provide direction on amendments to the Executive Management Benefits Plan document (Benefits Plan). With recent tentative agreements reached between the City and both AFSCME Local 829 and SEIU Local 521 for all non-sworn represented employees, the terms of those agreements result in salary increases that narrow the salary differential between supervisors (AFSCME) and managers (Executive Management). If salary ranges for managers are not adjusted commensurate with the increase provided to supervisors, the City will experience wage compaction which impacts in-house employee’s desire to promote within the organization and the ability to

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retain and recruit highly qualified employees in the Executive Management ranks.

The most recent adjustment to Executive Management salary ranges occurred in July 2016 to correspond with a cost of living adjustments provided to supervisory employees who are represented by AFSCME Local 829. With the exception of market rate adjustments provided to certain AFSCME and SEIU represented classifications as part of the classification and compensation study of 2015-16, Executive Management classification salary ranges have received adjustments equal to AFSCME to maintain salary differentials since 2015.

The table to follow summarizes key changes to the Benefits Plan (Attachment A) and provides the fiscal impact of those benefit changes. Additional amendments are included in Attachment A that reflect current practice and/or provide for greater clarity in the administration of the Benefits Plan. Attachment B provides a “clean” version of the benefit plan inclusive of all changes highlighted in Attachment A.

Key provisions and/or changes Fully Burdened Item Description Cost/Savings Salary ranges Assuming City Council approval of the proposed amendments on Section II.A.1 September 26, 2017, the Benefits Plan provides an across the board cost of living adjustment to all unrepresented classification salary ranges as follows: • 4.0%* effective the pay period beginning October 1, 2017* $100,700* • 3.0% effective the pay period following July 1, 2018 104,700 • 2.5% effective the pay period following July 1, 2019 89,800 *Mid-year implementation of the pay rate increase results in an annualized 25 $295,200 percent decrease in the rate adjustment. This results in only a 3% increase for this unit in fiscal year 2017-18. Unlike all other employees, Executive Management employees are not on a step system whereby cost of living adjustments automatically increase employee salaries. Executive Management only receive salary adjustments based on performance and set by the City Manager. Cost estimates are based on an weighted average change equal to that of the annual range adjustment.

Automobile The automobile allowance is a non-pensionable management $29,200 Allowance benefit that provides employees an allowance to maintain a vehicle Section II.C.3 for official city purposes. The benefit was last increased in 2002 and has not been adjusted for the Consumer Price Index to offset the diminishing buying power of the 2002 dollars resulting from inflation. When CPI-U is applied on an annual basis going back to 2003, the 2017 inflation adjusted auto allowance increases from $147.69 to $210 per pay period. The adjustment is recommended to take effective October 1, 2017 with automatic annual inflation adjustments going forward, beginning July 2018, based on CPI-U for the San Francisco-Oakland-San Jose region as measured from February to February.

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Uniform The uniform allowance is not a new benefits but was previously - Allowance omitted from the Benefits Plan document. Section II.C.4

Key provisions and/or changes Fully Burdened

Item Description Cost/Savings Education The Benefits Plan has been enhanced to provide education expense $44,000 Reimbursement reimbursement of up to $3,600 per year per employee, pending City Section II.C.5 Council budget appropriations, for expenses incurred by the employee in the previous twelve months. The first reimbursement period will be for the twelve month period ending September 30, 2017, pending City Council budget appropriation and documentation of expenses by the employee. Subsequent reimbursements shall occur in October of each year for the twelve months ending September 30th.

Eligible education expenses for reimbursements include tuition expenses for classes or programs taken in pursuit of a degree program, certificate program, or other education that enhances the employee’s service to the community. Additional eligible education expenses for reimbursement include post-secondary education student loan debt that the employee incurred either during or prior to his or her employment with the City.

The 2017-18 estimated cost of this benefit is between $29,000 and $44,000 depending on the number of employees seeking reimbursement.

General Leave The recommendation is to combine floating holiday and general - Section II.G.1 leave into a single biweekly pay period accrual and round the accrual up resulting in an increase from 12.81 hours to 13.00 hours for a total of 338 hours per year, up from the current 333 hours per year. This leave is eligible for annual cash out as elected by the employee in the prior calendar year and in compliance with constructive receipts. The annual cash out is non-pensionable compensation.

Administrative The Benefits Plan includes a new paid time off provision, 80 hours of - Leave Administrative Leave, to bring the City’s paid time off benefit to Section II.H market median with comparable cities. Other agencies provide Executive Management employees paid time off buckets of vacation, floating holiday, sick leave, and management/administrative leave. The median sum of all paid time off banks is 419 hours per year.

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The City currently provides 333 hours per year. The leave caries no cash value upon separation. Additionally, the leave cannot carry over from year-to-year.

The compensation changes outlined above, in conjunction with the current City Council approved Benefits Plan, provides a competitive compensation package that maintains the current salary differentials between executive management and supervisory employee represented by AFSCME Local 821..

In addition, the recommended Benefits Plan meets the labor negotiations principles set out by the City Council in the negotiations with organized labor units as follows:

1. Principle #1 – Service to the Community. Service to the community requires a skilled workforce that is committed to providing the level of customer service and responsiveness expected by the City Council, residents, and businesses in Menlo Park. Executive Management employees carry the significant responsibility of ensuring high quality delivery of service to the community, delivering City Council work plan initiatives, and exercising discretion to ensure that taxpayer resources are expended effectively and responsibly.

2. Principle #2 – Fiscal Sustainability. One measure of fiscal sustainability is the relationship between the proposed changes and inflation as measured by the Consumers Price Index, All Urban Consumers (CPI-U), for the San Francisco – Oakland – San Jose region. For budgeting purposes, the City measures CPI-U based on the annual change as measured in February of each year. From February 2016 to February 2017, the CPI-U recorded an increase of 3.4%. Subsequent measures of the year-over-year change in CPI-U were 3.8% and 3.5% in April and June, respectively.

Another measure of fiscal sustainability is the cumulative fiscal impact of the proposed changes and the relationship of that impact to the 2017-18 budget’s 10-year forecast. As discussed in the budget document, the amount available for salary increases takes into consideration increasing costs for employee pension and inflationary assumptions for non-salary items. The proposal provides for an increase of 4% to salary ranges effective October 1, 2017, 3% effective t July 9, 2018, and 2.5% effective July 7, 2019. With the 4% increase taking effect October 1st, the resulting increase on compensation can only impact three quarters of the year for an effective exposure to compensation expense increase of 3% as a result of the salary range changes for the 2017-18 fiscal year. In addition to falling within the assumptions of the City’s long-term fiscal forecast, the salary increases fall within assumptions made by CalPERS in its payroll growth assumptions used in actuarial analysis of pension liabilities.

3. Principle #3 – Recruitment and Retention. The proposed Benefits Plan is an important component of recruiting and retaining quality employees. Competition for Executive Management classifications up and down the Peninsula is intense given the unique skill sets required to serve as a division manager or department head. As part of the 2017-18 annual budget, the City Council authorized an increase of the maximum annual performance bonus from $5,000 to $10,000. In addition to the higher bonus opportunity, the amendments to the Benefits Plan anticipated salary

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range increases, new benefits to attract and retain employees who recently or continue to experience financial burden of post-secondary education, an automobile allowance that has been adjusted going forward to provide the same buying power as when last increased in 2001, and a paid time off program that is in line with market median paid time off benefits provided in neighboring jurisdictions.

Impact on City Resources Due to the nature of the Executive Management Benefits Plan and the fact the employees in this unit are not automatically granted salary increases as a consequence of City Council approved changes in salary ranges, the fiscal impact of this approval is estimated not to exceed $173,900 in 2017-18, however the actual increase may be less. Additional increases in future years to salary ranges similarly are not automatic increases however it is estimated that compensation will no increase more than $104,000 in 2018-19 and $89,900 in 2019-20.

Environmental Review No environmental review is required for this item.

Public Notice Public Notification was achieved by posting the agenda, with the agenda items being listed, at least 72 hours prior to the meeting.

Attachments A. Track changes copy of Executive Management Benefits Plan Document B. Amended Executive Management Benefits Plan Document

Report prepared by: Dan Jacobson, Interim Finance and Budget Manager Lenka Diaz, Human Resources Manager Nick Pegueros, Administrative Services Director

City of Menlo Park 701 Laurel St., Menlo Park, CA 94025 tel 650-330-6600 www.menlopark.org

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PAGE 1184 ATTACHMENT A

CITY OF MENLO PARK EXECUTIVE MANAGEMENT Formatted: All caps BENEFIT COMPENSATION PLAN Formatted: All caps

Management Appointees Effective January 1, 2017 October 1, 2017

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PAGE 1185 Contents I. Plan Participants ...... 5 Field Code Changed II. Plan Participant Compensation ...... 5 A. Salary ...... 5 1. Base Salary ...... 5 2. Performance Evaluations ...... 5 3. Bonus Program ...... 5 4. Salary Administration ...... 5 B. Group Insurance ...... 6 1. Health Plan ...... 6 2. Dental Insurance ...... 6 3. Life Insurance ...... 6 4. Vision Insurance ...... 6 5. Long Term Disability (LTD) Insurance ...... 6 6. Accidental Death and Dismemberment (AD&D) Insurance ...... 6 7. Optional Insurances ...... 6 C. Additional Benefits...... 7 1. Employee Assistance Program (EAP) ...... 7 2. Health Reimbursement Arrangement (HRA) Benefit ...... 7 3. Auto Allowance ...... 7 4. Uniform Allowance ...... 7 5. Education Reimbursement ...... 7 D. Bereavement Leave ...... 7 E. Jury Duty and Witness Leave ...... 8 F. Holidays ...... 8 G. General Leave ...... 8 1. Accrual ...... 8 2. Annual Cash-out ...... 9 3. Separation Cash-out ...... 9 4. Conversion to Retirement Health Credits ...... 9 H. Administrative Leave ...... 9 I. Retirement ...... 11 1. Pension for Miscellaneous/Non-Sworn ...... 11 Formatted: Font: (Default) Arial Page 2 of 14

PAGE 1186 Formatted ... Formatted ... Formatted ... Formatted ... 2. Pension for Safety/Sworn ...... 11 Formatted ... 3. Employer Rate Cost Sharing ...... 12 Formatted ... 4. Retiree Health Benefits ...... 12 Formatted ... J. Deferred Compensation ...... 13 Formatted ... I. Plan Participants ...... 3 Formatted ... II. Designated Management Benefits ...... 3 Formatted ... Formatted A. Bonus Program ...... 3 ... Formatted B. Group Insurance ...... 3 ... Formatted ... 1. Health Plan ...... 3 Formatted ... 2. Dental Insurance ...... 3 Formatted ... 3. Basic Life Insurance ...... 3 Formatted ... 4. Vision Insurance ...... 3 Formatted ... 5. Long Term Disability (LTD) Insurance ...... 4 Formatted ... 6. Accidental Death and Dismemberment (AD&D) Insurance ...... 4 Formatted ... C. Additional Benefits ...... 4 Formatted ... 1. Employee Assistance Program (EAP) ...... 4 Formatted ... 2. Health Reimbursement Arrangement (HRA) Benefit ...... 4 Formatted ... 3. Auto Allowance ...... 4 Formatted ... 4. Uniform Allowance ...... 4 Formatted ... 5. Education Reimbursement ...... 4 Formatted ... D. Bereavement Leave ...... 5 Formatted ... Formatted E. Jury Duty and Witness Leave ...... 5 ... Formatted F. Holidays ...... 5 ... Formatted ... G. General Leave ...... 5 Formatted ... 1. Accrual ...... 5 Formatted ... 2. General Leave Cash-out ...... 6 Formatted ... 3. Separation Cash-out ...... 6 Formatted ... 4. Retirement Cash-out ...... 6 Formatted ... H. Administrative Leave ...... 6 Formatted ... I. Public Employees’ Retirement System ...... 7 Formatted ... 1. Tier 1 Employees ...... 7 Formatted ... 2. Tier 2 Employees ...... 7 Formatted ... 3. Tier 3 Employees ...... 7 Formatted ... 4. Employer Rate Cost Sharing ...... 7 Formatted ... Formatted ... Formatted Page 3 of 14 ... Formatted ... Formatted ... Formatted ... Formatted ... Formatted ... Formatted ... Formatted ... Formatted ... Formatted ... PAGE 1187 Formatted ... d Formatted ... Formatted ... Formatted ... Formatted ... J. Deferred Compensation ...... 7 Formatted ... I. Plan Participants ...... 3 Formatted ... II. Designated Management Benefits ...... 3 Formatted ... A. Bonus Program ...... 3 Formatted ... B. Group Insurance ...... 3 Formatted ... 1. Health Plan ...... 3 Formatted ... 2. Dental Insurance ...... 3 Formatted ... 3. Basic Life Insurance ...... 3 Formatted ... 4. Vision Insurance ...... 3 Formatted ... Formatted 5. Long Term Disability (LTD) Insurance ...... 3 ... Formatted 6. Accidental Death and Dismemberment (AD&D) Insurance ...... 4 ... Formatted ... C. Additional Benefits ...... 4 Formatted ... 1. Employee Assistance Program (EAP) ...... 4 Formatted ... 2. Health Reimbursement Arrangement (HRA) Benefit ...... 4 Formatted ... 3. Auto Allowance ...... 4 Formatted ... D. Bereavement Leave ...... 4 Formatted ... E. Jury Duty and Witness Leave ...... 4 Formatted ... F. Holidays ...... 4 Formatted ... G. Paid Time Off (General Leave) ...... 5 Formatted ... H. Public Employees’ Retirement System ...... 5 Formatted ... 1. Tier 1 Employees ...... 5 Formatted ... 2. Tier 2 Employees ...... 5 Formatted ... 3. Tier 3 Employees ...... 5 Formatted ... 4. Employer Rate Cost Sharing ...... 5 Formatted ... Formatted I. Retiree Health Benefits ...... 6 ... Formatted J. Deferred Compensation ...... 6 ... Formatted ... III. APPENDIX A...... 7 Formatted ... A. Accrual ...... 7 Formatted ... B. General Leave Cash-out ...... 7 Formatted ... C. Separation Cash-out ...... 7 Formatted ... D. Retirement Cash-out ...... 7 Formatted ...

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III.I. PPlan Participants Persons covered by this plan, “Plan participant(s)” or “Employee(s)”, include all City employees in classifications that who are appointed by the City Manager and have been designated unrepresented management at-will employees .. These classifications and are exempt from the Fair Labor Standards Act (FLSA), and are not represented by a collective bargaining unit or one of the City's bargaining units and are not classified as confidential employees.

IV.II. Designated Management BenefitsPlan Participant Compensation In addition to the salary established by the Menlo Park City Council, designated management at-will employees may receive special compensation as follows:

A. Bonus ProgramSalary 1. Base Salary The City Council adopts and publishes a salary schedule for all authorized classifications. The City Manager may set employee salaries at any point in the City Council adopted range. Salaries for employees in this plan do not automatically adjust when City Council amends the salary schedule. Unless otherwise amended by the City Council, salary ranges shall adjust as follows:

Effective Date Change in Salary Range First full Pay Period October 2017 4.0% July 2018 3.0% July 2019 2.5% Formatted: Normal 2. Performance Evaluations Plan participant shall receive periodic evaluations to assess and document performance and expectations. Upon completion of an Employee’s periodic performance evaluation, the City Manager, or designee, may award a merit based salary increase that is within the City Council adopted salary schedule and commensurate with the Employee’s performance. Formatted: Normal 3. Bonus Program Designated management at-will employees may receive lump sum bonuses based on Formatted: Indent: Left: 0.25" performance in addition to salary as determined from time to time by the City Manager.Subject to annual budget appropriations, the City Manager may award one-time bonuses to employees in an amount not to exceed $10,000 per employee per fiscal year.

4. Salary Administration Formatted: Heading 3 Plan participants are salaried employees, exempt from the Fair Labor Standards Act (FLSA), and are not eligible for overtime pay. Salary payment is made by dividing the Employee’s Formatted: Font: (Default) Arial Page 5 of 14

PAGE 1189 annual salary by twenty-six (26). For each pay period, Employees shall be paid on an exception basis whereby, unless directed by the Employee’s supervisor to keep detailed accounting of hours worked, the Employee is only required to report paid time off and not hours worked.

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A.B. Group Insurance 1. Health Plan The City shall pay 100% of health premium costs on behalf of management employees and their eligible dependent(s) as provided for under the California Public Employees' Retirement System (CalPERS) medical program and as approved by the City Council. Participation in the medical plan of choice under CalPERS is subject to the limits of the City of Menlo Park's agreement with CalPERS.

2. Dental Insurance The City will pay 100% of premiums for dental insurance through Delta Dental or a similar plan administrator.

3. Basic Life Insurance The City will pay 100% of premiums for Life Insurance coverage of 150% of annual earnings up to a maximum benefit of $300350,000. Employees may elect to purchase additional life insurance through the City’s insurance carrier.

4. Vision Insurance The City will pay 100% of basic plan premiums for vision insurance through Vision Service Commented [DLD1]: I think we need something to Plan (VSP) or a similar plan administrator. Employees may elect to purchase additional distinguish that the City pays for, and what employees can vision insurance through the City’s insurance carrier. buy-up, as it’s all offered through VSP.

5. Long Term Disability (LTD) Insurance The City will pay 100% of premiums for LTD insurance, which provides up to 66.67% of salary up to the state maximum per month for illness or injury which extends beyond forty- five (45) calendar days.

6. Accidental Death and Dismemberment (AD&D) Insurance The City will pay 100% of premiums for AD&D insurance at the level of 150% of annual earnings up to a maximum benefit of $10350,000 maximum coverage.

7. Optional Insurances Formatted: Heading 3, Indent: Left: 0" Employees have the option of purchasing insurances made available to other employees Formatted: Font: (Default) Arial but not specifically provided for in this document. Formatted: Space After: 8 pt

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PAGE 1190 B.C. Additional Benefits 1. Employee Assistance Program (EAP) Employees and eligible dependents have access to a variety of low/no-cost services through the City's EAP provider, CONCERN, or a similar provider. Services include short term counseling, parenting and childcare services, legal services, financial services and eldercare referral services.

2. Health Reimbursement Arrangement (HRA) Benefit The City shall contribute $2,500 per calendar year (prorated for new/promoted Eemployees during the first year of employment or Eemployees in a leave without pay status) to an HRA account to be used for qualifying healthcare expenses incurred by the Eemployee or eligible Formatted: Heading 3, Indent: Left: 0" dependent(s). Any funds which are unused will roll over into the following year. Formatted: Font: (Default) Arial

Formatted: Space After: 8 pt 3. Auto Allowance The City shall pay each workeremployeePlan participants who are not assigned a City Formatted: Font: (Default) Arial vehicle shall receive an annual auto allowance of $3,840, paid evenly between all pay Formatted: Font: (Default) Arial periods $210 per pay period. This allowance shall be adjusted annually by the Consumer Formatted: Font: (Default) Arial Price Index1. Formatted: Font: (Default) Arial, Superscript

4. Uniform Allowance Formatted: Font: (Default) Arial Unrepresented sworn Plan participants shall receive a uniform allowance of $40 per pay Formatted: Heading 3, Indent: Left: 0" 1 period. This allowance shall be adjusted annually by the Consumer Price Index . Formatted: Font: (Default) Arial 5. Education Reimbursement Formatted: Space After: 8 pt Subject to annual budget appropriations by the City Council, the City shall provide education Formatted: Font: (Default) Arial reimbursement in an amount not to exceed $3,600 per year per employee for the following Formatted: Font: (Default) Arial education expenses: Formatted: Font: (Default) Arial tuition expenses for classes or programs taken in pursuit of a degree program, certificate Formatted: Font: (Default) Arial program, or other education that enhances the employee’s service to the community. Indent: Left: 0.5", Space After: 8 pt This reimbursement may be subject to applicable tax withholdings. Formatted: Formatted: Font: (Default) Arial Student loan payments incurred in the pursuit of post-secondary education during or Formatted: Font: (Default) Arial prior to employee’s service to the City. This reimbursement is subject to applicable tax withholdings. Formatted: Font: (Default) Arial Formatted: Font: (Default) Arial

C.D. Bereavement Leave Formatted: Font: (Default) Arial An employee worker shall be allowed regular pay for not more than three (3) working days Formatted: Font: (Default) Arial, 9 pt when absent because a death has occurred in the immediate family. This absence will not affect Formatted: Font: (Default) Arial the workeremployee’s accrued General Leave or Administrative Leave banks. For purpose of Formatted: Font: (Default) Arial, 9 pt bereavement leave, members of the immediate family shall be limited to mother, stepmother, father, stepfather, mother-in-law, father-in-law, grandmother, grandfather of the Formatted: Font: (Default) Arial Formatted: Font: (Default) Arial

1 Annual adjustments occur the first full pay period of July of each year and are calculated based on the change in Formatted: Font: (Default) Arial, 9 pt Consumer Price Index All Urban Consumers (CPI-U) for the San Francisco – Oakland – San Jose region as Formatted: Font: (Default) Arial measured from February to February. For administrative purposes, the per pay period amount shall be rounded up to the next dollar after the CPI-U adjustment is applied. Formatted: Font: (Default) Arial Page 7 of 14

PAGE 1191 workeremployee, spouse, domestic partner, brother, stepbrother, sister, stepsister, or dependent of the workeremployee.

D.E. Jury Duty and Witness Leave Employees required to report for jury duty or serve as a witness on behalf of the City shall be granted leave with full pay until released by the court, provided the employee remits to the City all fees payments received from such duties.

E.F. Holidays Employees are eligible for eight (8) hours of paid holiday leave for the holidays specified herein:

• New Year’s Day, January 1 • Martin Luther King Day, Third Monday in January • Washington’s Birthday, Third Monday in February • Memorial Day, Last Monday in May • Independence Day, July 4 • Labor Day, First Monday in September • Veterans Day, November 11 • Thanksgiving, Fourth Thursday in November • Day after Thanksgiving, Fourth Friday in November • Christmas Eve, December 24 • Christmas Day, December 25

Holidays may be observed on a different date if they fall on a closed Friday, Saturday, or Sunday. Holidays may also be observed on different dates if they fall during other City Hall closures. At the City Manager’s discretion, City Hall may close for the business days between Christmas Day and New Year’s Day and employee have the option of taking unpaid leave or using accrued leave balances during those days.

F.G. Paid Time Off (General Leave) Employees will accrue and may use General Leave according to Appendix A, the City of Menlo Park Management General Leave Program. Employees accrue General Leave to provide for paid time off, in accordance with City-wide leave policies, for any purpose required by the employee and takes the place of traditional vacation leave, sick leave, and floating holiday leave.

1. Accrual Management general leave combines vacation and sick leave accrual into one program of 299 hours per year. Actual accrual is prorated at 11.5General leave accrues at the rate of 13.0 hours biweekly. In addition, employees receive 34 hours of General Leave the first full pay period of each calendar year. The maximum number of hours which may be accrued is 1,200 hours. Accrual will be frozen upon reaching the maximum.

Management benefits for workerGeneral Leave for Employees who work less than full-time shall be prorated on the basis of hours worked as compared to full-time employment. Formatted: Font: (Default) Arial Page 8 of 14

PAGE 1192 Upon promotion from a represented or confidential classification, the promoted employee’s vacation leaves as of the date of promotion converts to General Leave. The employee’s sick leave balance as of the date of promotion shall be frozen sick leave for use by the employee for eligible sick events in lieu of other paid time off. Compensatory time and Floating Holiday will be cashed out at the employee’s rate of pay prior to promotion.

The City Manager may, as a recruitment tool, award newly hired employees up to 80 hours of General Leave. Formatted: Indent: Left: 0" 2. General LeaveAnnual Cash-out Employees may elect to cash out up to 120 hours of accrued General Leave annually in accordance with the General Leave Cash-out policy.

3. Separation Cash-out Upon separation from City service, accrued general leave may be taken in a cash payment.

4. Conversion to Retirement Cash-outHealth Credits Eligible employees hired by the City on or before October 22, 2011, and retiring from the City of Menlo Park may elect to convert up to 900 hours of General Leave, not otherwise converted to cash, to Retirement Health Credits (RHCs). RHCs may only be applied to a CalPERS-sponsored health plan, and there must be no break in coverage between the time of retirement and the exhaustion of the RHC benefit.

General Leave hours are converted to RHC's in accordance with the following formulas:

Years of Service # of General Conversion of hours to Leave Hours RHC’s 5 to 14.9 8 1 15 to 19.9 6 1 20+ 3 1

Premium coverage is calculated in accordance with the following formulas:

Level of Coverage RHC’s Required for One Month of Coverage Retiree only 1 Retiree +1 dependent 2 Retiree +2 or more dependents 3 Formatted: Indent: Left: 0.25" Employees hired by the City after October 22, 2011 are not eligible for retiree health benefits Formatted: Indent: Left: 0.25", Tab stops: 0.25", Left except for the minimum employer contribution prescribed by CalPERS.

H. Administrative Leave Effective the first full pay period of October of each year, employees shall be granted 80 hours of administrative leave. Administrative leave carries no cash value and any unused balance as of the final full pay period of September shall not carry over beyond that pay period. Employees Formatted: Font: (Default) Arial Page 9 of 14

PAGE 1193 hired after the first pay period of October shall be granted a prorated amount of Administrative Leave at the rate of 4 hours per pay period remaining before the next full pay period of October.

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PAGE 1194 G.I. Public Employees’ Retirement SystemRetirement Effective July 2, 2000, the City will implemented Employer Pick-up, Internal Revenue Code 414 (h) (2), for the Administrative Staff and the City Attorney, and the City shall pays none of the employee’s contribution to the California Public Employees’ Retirement System (CalPERS). Employees are required to pay a portion of the employer’s required contribution. Employees must refer to CalPERS rules and regulations to determine their status as a “Classic” or “New” member.

1. Tier 1 EmployeesPension for Miscellaneous/Non-Sworn Employees hired by the City prior to implementation of a second tier retirement formula will receive the following benefits according to the following formulas:Employees in non-safety classifications are enrolled in CalPERS as follows:

Tier CalPERS Benefit Final Base Employee Formatted Table Member status Formula Compensation Contribution (in addition to cost sharing see and hire date Basis Section I.4.) Formatted: Font: 6 pt 1 Classic 2.7% @ 55 Single highest year 8% Formatted: Font: (Default) +Body (Calibri) before Member: Formatted: Normal February 12, 2012 Formatted: Centered 2 Classic 2.0% @ 60 Final 36-month 7% Formatted: Left Member: on or average after February Formatted: Centered 12, 2012 3 New Member; 2.0% @ 62 Final 36-month ½ normal cost; Formatted: Centered on or after average; capped at adjusted annually January 1, 2013 an amount adjusted by CalPERS annually Formatted: Tab stops: 2.31", Left Non-Safety: 2.7% @ 55, single highest year

Safety: 3.0% @ 50, single highest year

6.2. Tier 2 EmployeesPension for Safety/Sworn Employees in sworn safety classifications are enrolled in CalPERS as follows:

Tier CalPERS Benefit Final Base Employee Formatted Table Member status Formula Compensation Contribution (in addition to cost sharing see and hire date Basis Section I.4.)

1 Classic 3.0% @ 50 Single highest year 9% Member: before November 20, 2011 Formatted: Font: (Default) Arial Page 11 of 14

PAGE 1195 2 Classic 3.0% @ 55 Highest 36-month 9% Member: on or average after November 20, 2011 3 New Member; 2.7% @ 57 Highest 36-month ½ normal cost; on or after average; capped at adjusted annually January 1, 2013 an amount adjusted by CalPERS annually Employees hired by the City after the implementation of a second lower tier retirement formula (November 20, 2011 for safety, February 12, 2012 for non-safety), who are not new members as defined by CalPERS, will receive the benefits according to the following formulas:

Non-Safety: 2.0% @ 60, highest consecutive three years

Safety: 3.0% @ 55, highest consecutive three years

7. Tier 3 Employees New employees, as defined by CalPERS, hired on or after January 1, 2013, will have benefits calculated according to the following formula:

Non-Safety: 2.0% @ 62, highest consecutive three years

Safety: 2.7% @ 57, highest consecutive three years

8.3. Employer Rate Cost Sharing Should the employer rate for the miscellaneous plan rise above 15.850% for a given formula in any year, the increase shall be shared equally between the employee and the employer. As an example, if the employer rate for a given year is 16.850%, the 1.0% increase above 15.850% is split equally between the City and employee resulting the City’s share equaling shall pay 16.350% (15.850% + 0.500%) and the employee shall pay 0.500% (in addition to the fixed employee contribution percentage as set by CalPERS; regardless if the employee is safety or non-safety).

4. Retiree Health Benefits Formatted: Heading 3, Indent: Left: 0" The City contracts with CalPERS under the Public Employee Medical and Hospital Care Act Formatted: Font: (Default) Arial (PEMHCA) for medical insurance. Basic retiree health benefits are provided in accordance with PEMHCA to all retired annuitants. Additional benefits are provided to employees hired Formatted: Space After: 8 pt on or before October 20, 2011 as detailed in the General Leave section of this benefits document.

H. Retiree Health Benefits A worker with a minimum of five (5) years of continuous service, hired by the City prior to October 23, 2011 may elect to convert accumulated general leave to retirement health credits upon retirement from the City may do so under the following schedule: Formatted: Font: (Default) Arial Page 12 of 14

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• Less than fifteen (15) years of continuous service with the City: eight (8) hours of general leave for each retirement health credit, with any remainder being rounded to the next higher credit;

• Fifteen (15) years of service to twenty (20) years of service: six (6) hours of general leave for each retirement health credit, with any remainder being rounded to the next higher credit;

• Over twenty (20) years of service: three (3) hours of general leave for each retirement health credit, with any remainder being rounded to the next higher credit.

Employees hired by the City after October 22, 2011 are not eligible for retiree health benefits except for the minimum employer contribution prescribed by CalPERS.

I.J. Deferred Compensation Employees Plan participants may elect to participate in one of threethe Deferred Compensation (457(b)) plan(s) sponsored by the City.

In addition, the City will match contributions for Tier 2 and 3 employees at a ratio of 1:1 for up to Commented [DLD2]: This language was stricken from the 4% of the employee’s plan participant’s salary, calculated on a bi-weekly basis, for employees document. Should we add a column in the retirement enrolled in the tier 2 or tier 3 pension benefit plan. section to title each plan Tier 1, Tier 2, and PEPRA? Formatted: Font: (Default) Arial

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PAGE 1197 V. APPENDIX A CITY OF MENLO PARK MANAGEMENT GENERAL LEAVE PROGRAM

A. Accrual Management general leave combines vacation and sick leave accrual into one program of 299 hours per year. Actual accrual is prorated at 11.5 hours biweekly. In addition, employees receive 34 hours of General Leave the first full pay period of each calendar year. The maximum number of hours which may be accrued is 1,200 hours. Accrual will be frozen upon reaching the maximum.

Management benefits for workers who work less than full-time shall be prorated on the basis of hours worked as compared to full-time employment.

B. General Leave Cash-out Employees may elect to cash out up to 120 hours of accrued General Leave annually in accordance with the General Leave Cash-out policy.

C. Separation Cash-out Upon separation from City service, accrued general leave may be taken in a cash payment.

D. Retirement Cash-out Eligible employees hired by the City on or before October 22, 2011, and retiring from the City of Menlo Park may elect to convert up to 900 hours of General Leave, not otherwise converted to cash, to Retirement Health Credits (RHCs). RHCs may only be applied to a CalPERS- sponsored health plan, and there must be no break in coverage between the time of retirement and the exhaustion of the RHC benefit.

General Leave hours are converted to RHC's in accordance with the following formulas: • 5-14.9 years of service: 8 hours = 1 RHC • 15-19.9 years of service: 6 hours = 1 RHC • 20+ years of service: 3 hours = 1 RHC

Premium coverage is calculated in accordance with the following formulas: • Single coverage: 1 RHC per month • Double coverage: 2 RHCs per month • Family coverage: 3 RHCs per month

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PAGE 1198 ATTACHMENT B

CITY OF MENLO PARK EXECUTIVE MANAGEMENT COMPENSATION PLAN

Effective October 1, 2017

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PAGE 1199 Contents I. Plan Participants ...... 4 II. Plan Participant Compensation ...... 4 A. Salary ...... 4 1. Base Salary ...... 4 2. Performance Evaluations ...... 4 3. Bonus Program ...... 4 4. Salary Administration ...... 4 B. Group Insurance ...... 5 1. Health Plan ...... 5 2. Dental Insurance ...... 5 3. Life Insurance ...... 5 4. Vision Insurance ...... 5 5. Long Term Disability (LTD) Insurance ...... 5 6. Accidental Death and Dismemberment (AD&D) Insurance ...... 5 7. Optional Insurances ...... 5 C. Additional Benefits ...... 5 1. Employee Assistance Program (EAP) ...... 5 2. Health Reimbursement Arrangement (HRA) Benefit ...... 6 3. Auto Allowance ...... 6 4. Uniform Allowance ...... 6 5. Education Reimbursement ...... 6 D. Bereavement Leave ...... 6 E. Jury Duty and Witness Leave ...... 6 F. Holidays ...... 7 G. General Leave ...... 7 1. Accrual ...... 7 2. Annual Cash-out ...... 7 3. Separation Cash-out ...... 8 4. Conversion to Retirement Health Credits ...... 8 H. Administrative Leave ...... 8 I. Retirement ...... 9 1. Pension for Miscellaneous/Non-Sworn ...... 9

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PAGE 1200 2. Pension for Safety/Sworn ...... 9 3. Employer Rate Cost Sharing ...... 10 4. Retiree Health Benefits ...... 10 J. Deferred Compensation ...... 10

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PAGE 1201

I. Plan Participants Persons covered by this plan, “Plan participant(s)” or “Employee(s)”, include all City employees in classifications that are appointed by the City Manager and have been designated unrepresented management at-will employees .. These classifications are exempt from the Fair Labor Standards Act (FLSA), and are not represented by a collective bargaining unit or classified as confidential employees.

II. Plan Participant Compensation

A. Salary 1. Base Salary The City Council adopts and publishes a salary schedule for all authorized classifications. The City Manager may set employee salaries at any point in the City Council adopted range. Salaries for employees in this plan do not automatically adjust when City Council amends the salary schedule. Unless otherwise amended by the City Council, salary ranges shall adjust as follows:

Effective Date Change in Salary Range First full Pay Period October 2017 4.0% July 2018 3.0% July 2019 2.5%

2. Performance Evaluations Plan participant shall receive periodic evaluations to assess and document performance and expectations. Upon completion of an Employee’s periodic performance evaluation, the City Manager, or designee, may award a merit based salary increase that is within the City Council adopted salary schedule and commensurate with the Employee’s performance.

3. Bonus Program Subject to annual budget appropriations, the City Manager may award one-time bonuses to employees in an amount not to exceed $10,000 per employee per fiscal year.

4. Salary Administration Plan participants are salaried employees, exempt from the Fair Labor Standards Act (FLSA), and are not eligible for overtime pay. Salary payment is made by dividing the Employee’s annual salary by twenty-six (26). For each pay period, Employees shall be paid on an exception basis whereby, unless directed by the Employee’s supervisor to keep detailed accounting of hours worked, the Employee is only required to report paid time off and not hours worked.

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PAGE 1202 B. Group Insurance 1. Health Plan The City shall pay 100% of health premium costs on behalf of employees and their eligible dependent(s) as provided for under the California Public Employees' Retirement System (CalPERS) medical program and as approved by the City Council. Participation in the medical plan of choice under CalPERS is subject to the limits of the City of Menlo Park's agreement with CalPERS.

2. Dental Insurance The City will pay 100% of premiums for dental insurance through Delta Dental or a similar plan administrator.

3. Life Insurance The City will pay 100% of premiums for Life Insurance coverage of 150% of annual earnings up to a maximum benefit of $350,000. Employees may elect to purchase additional life insurance through the City’s insurance carrier.

4. Vision Insurance The City will pay 100% of basic plan premiums for vision insurance through Vision Service Plan (VSP) or a similar plan administrator. Employees may elect to purchase additional vision insurance through the City’s insurance carrier.

6. Accidental Death and Dismemberment (AD&D) Insurance The City will pay 100% of premiums for AD&D insurance at the level of 150% of annual earnings up to a maximum benefit of $350,000.

7. Optional Insurances Employees have the option of purchasing insurances made available to other employees but not specifically provided for in this document.

C. Additional Benefits 1. Employee Assistance Program (EAP) Employees and eligible dependents have access to a variety of low/no-cost services through the City's EAP provider, CONCERN, or a similar provider. Services include short term counseling, parenting and childcare services, legal services, financial services and eldercare referral services.

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PAGE 1203 2. Health Reimbursement Arrangement (HRA) Benefit The City shall contribute $2,500 per calendar year (prorated for new/promoted Employees during the first year of employment or Employees in a leave without pay status) to an HRA account to be used for qualifying healthcare expenses incurred by the Employee or eligible dependent(s). Any funds which are unused will roll over into the following year.

3. Auto Allowance Plan participants who are not assigned a City vehicle shall receive an auto allowance of $210 per pay period. This allowance shall be adjusted annually by the Consumer Price Index1.

4. Uniform Allowance Unrepresented sworn Plan participants shall receive a uniform allowance of $40 per pay period. This allowance shall be adjusted annually by the Consumer Price Index1. 5. Education Reimbursement Subject to annual budget appropriations by the City Council, the City shall provide education reimbursement in an amount not to exceed $3,600 per year per employee for the following education expenses: tuition expenses for classes or programs taken in pursuit of a degree program, certificate program, or other education that enhances the employee’s service to the community. This reimbursement may be subject to applicable tax withholdings. Student loan payments incurred in the pursuit of post-secondary education during or prior to employee’s service to the City. This reimbursement is subject to applicable tax withholdings.

D. Bereavement Leave An employee shall be allowed regular pay for not more than three (3) working days when absent because a death has occurred in the immediate family. This absence will not affect the employee’s accrued General Leave or Administrative Leave banks. For purpose of bereavement leave, members of the immediate family shall be limited to mother, stepmother, father, stepfather, mother-in-law, father-in-law, grandmother, grandfather of the employee, spouse, domestic partner, brother, stepbrother, sister, stepsister, or dependent of the employee.

E. Jury Duty and Witness Leave Employees required to report for jury duty or serve as a witness on behalf of the City shall be granted leave with full pay until released by the court, provided the employee remits to the City all payments received from such duties.

1 Annual adjustments occur the first full pay period of July of each year and are calculated based on the change in Consumer Price Index All Urban Consumers (CPI-U) for the San Francisco – Oakland – San Jose region as measured from February to February. For administrative purposes, the per pay period amount shall be rounded up to the next dollar after the CPI-U adjustment is applied.

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PAGE 1204 F. Holidays Employees are eligible for eight (8) hours of paid holiday leave for the holidays specified herein:

G. General Leave Employees accrue General Leave to provide for paid time off, in accordance with City-wide leave policies, for any purpose required by the employee and takes the place of traditional vacation leave, sick leave, and floating holiday leave.

1. Accrual General leave accrues at the rate of 13.0 hours biweekly. The maximum number of hours which may be accrued is 1,200 hours. Accrual will be frozen upon reaching the maximum.

General Leave for Employees who work less than full-time shall be prorated on the basis of hours worked as compared to full-time employment.

Upon promotion from a represented or confidential classification, the promoted employee’s vacation leaves as of the date of promotion converts to General Leave. The employee’s sick leave balance as of the date of promotion shall be frozen sick leave for use by the employee for eligible sick events in lieu of other paid time off. Compensatory time and Floating Holiday will be cashed out at the employee’s rate of pay prior to promotion.

The City Manager may, as a recruitment tool, award newly hired employees up to 80 hours of General Leave.

2. Annual Cash-out Employees may elect to cash out up to 120 hours of accrued General Leave annually in accordance with the General Leave Cash-out policy.

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PAGE 1205 3. Separation Cash-out Upon separation from City service, accrued general leave may be taken in a cash payment.

4. Conversion to Retirement Health Credits Eligible employees hired by the City on or before October 22, 2011, and retiring from the City of Menlo Park may elect to convert up to 900 hours of General Leave, not otherwise converted to cash, to Retirement Health Credits (RHCs). RHCs may only be applied to a CalPERS-sponsored health plan, and there must be no break in coverage between the time of retirement and the exhaustion of the RHC benefit.

General Leave hours are converted to RHC's in accordance with the following formulas:

Years of Service # of General Conversion of hours to Leave Hours RHC’s 5 to 14.9 8 1 15 to 19.9 6 1 20+ 3 1

Premium coverage is calculated in accordance with the following formulas:

Level of Coverage RHC’s Required for One Month of Coverage Retiree only 1 Retiree +1 dependent 2 Retiree +2 or more dependents 3

Employees hired by the City after October 22, 2011 are not eligible for retiree health benefits except for the minimum employer contribution prescribed by CalPERS.

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PAGE 1206 I. Retirement Effective July 2, 2000, the City implemented Employer Pick-up, Internal Revenue Code 414 (h) (2), for the Administrative Staff and the City Attorney, and the City pays none of the employee’s contribution to the California Public Employees’ Retirement System (CalPERS). Employees are required to pay a portion of the employer’s required contribution. Employees must refer to CalPERS rules and regulations to determine their status as a “Classic” or “New” member.

1. Pension for Miscellaneous/Non-Sworn Employees in non-safety classifications are enrolled in CalPERS as follows:

Tier CalPERS Benefit Final Base Employee Member status Formula Compensation Contribution (in addition to cost sharing see and hire date Basis Section I.4.)

1 Classic 2.7% @ 55 Single highest year 8% Member: before February 12, 2012 2 Classic 2.0% @ 60 Final 36-month 7% Member: on or average after February 12, 2012 3 New Member; 2.0% @ 62 Final 36-month ½ normal cost; on or after average; capped at adjusted annually January 1, 2013 an amount adjusted by CalPERS annually

2. Pension for Safety/Sworn Employees in sworn safety classifications are enrolled in CalPERS as follows:

Tier CalPERS Benefit Final Base Employee Member status Formula Compensation Contribution (in addition to cost sharing see and hire date Basis Section I.4.)

1 Classic 3.0% @ 50 Single highest year 9% Member: before November 20, 2011 2 Classic 3.0% @ 55 Highest 36-month 9% Member: on or average after November 20, 2011 3 New Member; 2.7% @ 57 Highest 36-month ½ normal cost; on or after average; capped at adjusted annually January 1, 2013 an amount adjusted by CalPERS annually

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PAGE 1207

3. Employer Rate Cost Sharing Should the employer rate for the miscellaneous plan rise above 15.850% for a given formula in any year, the increase shall be shared equally between the employee and the employer. As an example, if the employer rate for a given year is 16.850%, the 1.0% increase above 15.850% is split equally between the City and employee resulting the City’s share equaling 16.350% (15.850% + 0.500%) and the employee shall pay 0.500% in addition to the fixed employee contribution percentage as set by CalPERS; regardless if the employee is safety or non-safety).

4. Retiree Health Benefits The City contracts with CalPERS under the Public Employee Medical and Hospital Care Act (PEMHCA) for medical insurance. Basic retiree health benefits are provided in accordance with PEMHCA to all retired annuitants. Additional benefits are provided to employees hired on or before October 20, 2011 as detailed in the General Leave section of this benefits document.

J. Deferred Compensation Plan participants may elect to participate in the Deferred Compensation (457(b)) plan(s) sponsored by the City.

In addition, the City will match contributions for employees at a ratio of 1:1 for up to 4% of the plan participant’s salary, calculated on a bi-weekly basis, for employees enrolled in the tier 2 or tier 3 pension benefit plan.

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PAGE 1208