Title
Adoption of Resolution Approving Revisions to the Executive Management Employees Compensation Plan, Modifying the Public Safety Retiree Medical Benefit Eligibility for the Police and Fire Chiefs to Provide Up to Five Years of Service Credit to External Hires with a Vested Retiree Medical Benefit with Their Prior Agency, and Making Other Minor Revisions. (Human Resources 10025060)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City of Alameda (City) seeks to attract a diverse pool of highly qualified candidates for executive management positions. Currently, eligibility for Public Safety Retiree Medical benefits for the Police and Fire Chiefs is limited to those serving with the City for ten years. External hires may be credited up to five years toward the ten-year requirement for time serving as Fire/Public Safety Chief at their previous agencies. This restriction can be a barrier to recruitment for many qualified candidates, particularly those from larger organizations with more diverse management groups.
Staff now recommends an adjustment to Section 5.2 of the Executive compensation plan to provide five years of service credit to Fire/Public Safety Chief external hires who had a similar vested benefit at their prior agency, regardless of time serving as a Fire/Public Safety Chief with their prior agency.
In addition, staff recommends two minor additional changes to the compensation plan: adding the Base Reuse & Economic Development Director classification throughout and updating the Transportation Allowance section to provide the City Manager authority to determine which classifications to provide with exclusive use vehicles in lieu of allowance.
BACKGROUND
Most of the City’s at-will senior executive management employees, including the Public Safety Chiefs, are covered by the Executive Management Compensation Plan. The exceptions are 1) the City Manager and the City Attorney who are Council appointees and have separate employment agreements directly with the Council; and 2) The Director of the Rent Program and the Police Auditor, in both cases the Council authorized the City Attorney to execute at-will employment agreements with those employee while generally following the Executive Management Compensation Plan.
In 2011 the City modified retiree health benefits for new public safety employees. Prior to 2011 public safety employees were eligible for two-party retiree medical reimbursement after five years of service. After 2011, new employees were required to have ten years of service with the City to be eligible for one-party medical reimbursement.
On May 7, 2019, City Council approved a modification to retiree health benefits for Public Safety Chiefs. This modification allowed up to five years of service credit time, based on actual time served as a Fire/Public Safety Chief at another agency, toward the ten-year retiree medical eligibility requirement. This modification provided no credit for service in any position other than Chief.
Staff now recommends a further adjustment to the provision in order to ensure the City is able attract the most qualified and diverse pool of candidates for Fire and Police Chief. To attract qualified candidates from larger organizations, who generally have a more diverse and varied management team, staff is recommending this modification to provide five years of service credit toward the ten-year retiree medical eligibility for all time served in public safety at another agency for any external hire who has a vested retiree medical benefit at that other agency.
The goal of this amendment is to increase the number and diversity of qualified applicants for the executive management positions of Police and Fire Chiefs within the City.
DISCUSSION
Modification of Section 5.2
While many Public Safety/Firefighter employees will spend their entire career with one agency, it is not uncommon for someone to change agencies to promote to Chief of Police or Fire Chief, especially at larger agencies with a large management group. A newly hired Police Chief or Fire Chief may have to forfeit a superior retiree medical benefit at their current agency when they join the City.
Currently, Section 5.2 of the Executive Management Employees Compensation Plan grants up to five years of credit for retiree medical benefits to those who have served as Chiefs in other agencies. The recommended revision will broaden this framework by removing the requirement that the external hire must be a Chief, thus allowing such external hires to receive up to five years of service credit, provided they are relinquishing a fully vested retiree medical benefit from another agency that exceeds the minimum requirements set by the Public Employees Medical and Hospital Care Act (PEMHCA).
This change is particularly significant as it opens the door for credit to be granted to a wider range of positions, akin to the current lateral incentive available for officers. However, it also places a critical condition on this credit, as it will only apply to candidates who are giving up a vested benefit from their previous agency.
The recommended revision places the City on par with many other agencies in the region. For instance, the City of Berkeley, offers a more generous policy, allowing up to 15 years of service credit, with a gradual vesting scale that reaches 100% after 20 years, resulting in 100% of the benefit after five years with Berkeley. At agencies such as Hayward and Livermore/Pleasanton vesting occurs either upon appointment or after five years with the agency even if they do not offer any credit for prior service.
The recommended revision to Section 5.2 is intended to enhance recruitment efforts by attracting a larger diverse and qualified pool of candidates. The current structure tends to incentivize the lateral movement of Chiefs from smaller agencies, which may have limited diversity due to fewer opportunities. By allowing for the potential recruitment of candidates from larger, more diverse agencies, this update aims to increase and enrich the candidate pool.
Moreover, the new revision is likely to appeal to seasoned professionals who may be hesitant to leave their vested benefits, especially as they near retirement. Given that many qualified candidates serve as Chiefs for an average of only four to five years, the prospect of relinquishing their retiree benefits could deter them from making a move to an agency like Alameda that currently requires a significant commitment for similar benefits.
The implementation of this provision is subject to actuarial study as required by Government Code section 7507. This code requires the City to conduct an actuarial report if the change in post-employment benefits exceeds an annual increase of 3% in premium cost. It is not anticipated that the recommended change in benefits will exceed 3%.
Modification of Section 12
Section 12 of the Executive Management Employees Compensation Plan outlines a transportation allowance for all Executive Team members covered by the plan, except for the Chief of Police, Fire Chief, and Public Works Director. These positions are provided exclusive-use vehicles instead of the monthly allowance, as they are recognized by the City as key employees with emergency response responsibilities.
The compensation plan mandates that the City Manager review the necessity of exclusive-use vehicles for each classification annually and upon any vacancy. This review may lead to a determination that certain classifications no longer require a vehicle, in which case they would receive the transportation allowance.
Staff recommends modifying this section to grant the City Manager the discretion to assign exclusive-use vehicles to other classifications within the compensation plan, rather than solely to those currently specified. Positions such as the Information Technology Director and General Manager of Alameda Municipal Power may also be deemed essential for emergency response. This modification would empower the City Manager to make vehicle assignments as needed, streamlining the process and reducing the necessity for continuous amendments to the compensation plan.
ALTERNATIVES
• Approve the recommended revisions to the Executive Management Employees Compensation Plan revising the eligibility requirement for external Fire and Police Chief hires, and Section 12 providing the City Manager authority to determine which unit members receive exclusive use vehicles.
• Approve a different eligibility requirement for Fire and Police Chief’s hired from other agencies.
• Do not approve the recommended revisions.
FINANCIAL IMPACT
The recommended changes to Section 5.2 would allow a City Fire Chief or Police Chief hired from another agency with a vested retirement benefit to become eligible for employee only medical reimbursement with between five and ten years of service with the City instead of the current minimum of ten years of service.
The annual cost for retiree medical for single party insurance is estimated at approximately $13,000 a year depending on the plan selected. Once the retiree becomes eligible for a Medicare supplement the cost is estimated at approximately $5,000 a year depending on the plan selected.
There is minimal additional cost associated with the changes to Section 12. No additional vehicle purchase would be required and fuel cost would be offset by the cessation of transportation allowance to any Department Head receiving an exclusive use vehicle.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report
RECOMMENDATION
Adopt a resolution approving revisions to the Executive Management Employees Compensation Plan, modifying the public safety retiree medical benefit eligibility for the Police and Fire Chiefs to provide up to five years of service credit to external hires with a vested retiree medical benefit with their prior agency, and making other minor revisions.
Respectfully submitted,
Jessica Romeo, Human Resources Director
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibits:
1. Executive Management Compensation Plan - Redline
2. Executive Management Compensation Plan - Clean