PREPARED BY: REINA SCHWARTZ DATE OF MEETING: 06/01/20
SUBJECT:
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO APPROVING AN EMPLOYEE VOLUNTARY SEPARATION PROGRAM TO ADDRESS COVID-19 FINANCIAL IMPACTS TO CITY’S FY2020/21 GENERAL FUND BUDGET AND DURING ECONOMIC RECOVERY PERIOD
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
Approval of this item does not fall within a specific adopted policy priority within the approved FY2019-21 City Council Priority Workplan but is necessary to support the funding needed for projects and programs contained within the Workplan.
CEQA Compliance Statement
This is not a project as defined by CEQA as a budget or financing mechanism pursuant to 14 Cal. Code of Regulations section 15378(b).
BACKGROUND
Current budget projections indicate that General Fund revenues are expected to drop by approximately $10 million for FY2020/21 creating a significant General Fund shortfall. The overall recommendation for covering this budget deficit is a multi-pronged approach using reserves, CIP (capital improvement program) reductions, departmental services and supplies reductions as well as labor savings. The overall target for proposed labor cost savings for FY 2020/21 is about 10 percent of $26.7M or approx. $2.5 million.
While the City is working with its represented employee groups as well as unrepresented employees on strategies to achieve these labor savings, one potential mechanism for creating savings is by increasing the number of vacant positions within the City.
Employee voluntary separation programs are a typical option for public agencies who undertake a rapid downsizing effort and are intended to achieve the following objectives:
• Reduce salary and benefit costs in response to fiscal challenges.
• Focus the organization on core priorities, and strategic objectives, within a resource constrained environment.
• Minimize potential involuntary separations.
The proposed Employee Voluntary Separation Program (EVSP) allows the City to offer employees a one-time lump sum payment equivalent to twelve weeks of base salary up to a maximum of $40,000 as an incentive to voluntarily separate. The City may offer this incentive to employees who volunteer to separate by resignation or retirement. Vacated positions are intended to result in a net decrease in costs to the City for as long as the position can remain unfilled without compromising the core priorities of the City.
The EVSP is not an entitlement or benefit, but rather is intended to supplement the range of budget reduction options available to the City. Not every individual application will be approved, as requests will be considered on a case-by-case basis to determine the impact and the ability to achieve long-term savings.
Eligible employees include regular, full-time employees who have achieved normal retirement age and are not on initial probation with the City. Employees in the following categories are specifically excluded: Division Managers, Executive Management and Contract Employees. In addition, other ineligible employees include those holding critical positions identified within departments required to maintain minimum staffing levels; probationary employees; limited-term employees; retired annuitants; part-time employees; employees who have already applied for retirement with CalPERS or provided written notice of resignation; and employees that are being involuntarily separated by the City as a result of disciplinary action.
The effective date of separation will be confirmed by the City Manager’s Office and will be on or before August 31, 2020. Accepted applicants must voluntarily accept and sign a Separation Agreement that contains a release of all employment rights and claims. The Program has been further detailed in Exhibit A to the attached resolution.
Staff anticipates opening the application period for the EVSP on June 2, 2020 if approved by City Council action this evening. Completed applications must be received by June 30, 2020 to begin producing potential FY 2020/21 cost savings no later than August 31st accounting for all needed time related to City employee noticing and review.
FISCAL IMPACT
The cost of the Program will depend on the number of employees who are approved for the incentive. The costs would be funded through FY 2020/21 salary savings. The result of the program will be an overall decrease in staffing levels and will create annual GF labor cost savings to be determined by end of period June 30, 2021.