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HomeMy WebLinkAbout20-Human Resources CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Dept: Human Resources Subject: ESTABLISH A RETIREMENT ENHANCEMENT PROGRAM FOR POLICE SAFETY EMPLOYEES. From: Linn Livingston Date: February 2, 2011 MICC Meeting Date: February 7,2011 Synopsis of Previous Council Action: Recommended Motion: Approve the Retirement Enhancement Program for eligible Police Safety employees and direct the City Manager to implement. Concur: Contact person: Phone: Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: Potential Savinqs $189.800 Source: (Acct. No.) (Acct. Description) Finance: Council Notes: Agenda Item No. d.O {;;)-07-?OII CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Staff Report Subiect: Establish a Retirement Enhancement Program for Police Safety Employees. Back2found: On June 30, 2010 the Mayor and Common Council adopted the budget for FY 2010-11 that included personnel cost savings assumptions totaling approximately $10.7 million and various revenue strategy assumptions that would generate $10.2 million. After further consideration of the various revenue items, the Council determined that several of them were no longer viable options. In addition, it was also determined that about $1.1 million of the personnel cost savings assumptions included in the FY 2010-2011 budget were also not viable. The City Manager was then requested to propose a modified budget strategy to bring the FY 2010 -2011 and FY 2011- 2012 budgets back into balance. On August 23, 2010 the City Manager's proposed Modified Budget Strategies were discussed and approved by the Mayor and Council. The new budget strategy deleted those revenue and personnel cost items that were no longer viable and replaced them with an 8% expenditure budget reduction for each Department. The 8% budget reductions were divided into two parts with the Tier 2 reductions being those that eliminated filled staff positions. The Police Department's Tier 2 reductions included the elimination of 27 Police Officer positions for an annual savings of just over $2.6 million starting in FY 2011-2012. Based on implementation estimates from the Finance Department, the Tier 2 reductions need to be implemented in March/April 2010 in order to achieve the annual savings for FY 2011-2012. The Police Department is currently estimating there will be approximately 14 vacant police safety positions in FY 2010-2011 that can be eliminated as part of the Tier 2 reductions. The elimination of an additional 13 positions would be necessary in order to fully implement the Police Department's Tier 2 reductions without having to layoff any filled staff positions. The Police administrative staff analyzed several options to assist with meeting the budget requirement. One solution was to review programs that provided the department with a firm number of future vacancies, while continuing to meet the staffing expertise and savings requirement. The proposed program was discussed with representatives of the PMA and POA and is designed to provide the department with a guaranteed number of vacancies, thereby reducing the potential notification and layoff of current police officers to meet the budget requirements. There are currently 12 eligible employees who meet the following requirements: Program Eligibility Requirements: . Eligible employees must be a minimum of 50 years of age with a minimum of 28 years of serVIce. . Eligible employees must retire with a service retirement (industrial disability/disability will not be eligible) on or before March 1, 2011. . Eligible employees will be offered an opportunity to continue to work part-time, at their current hourly rate without benefits, through June 30, 2011. . The payoff of accrued leave for the eligible employee will be divided into two payments _ 50% at time of retirement and the balance in January 2012. . Each eligible participant will sign an agreement outlining the provisions of the program; these agreements will be reviewed by the City Attorney's Office prior to approval. Additionally, the Department will not promote any employee to fill the vacated positions until the new fiscal year in order to meet the necessary savings. Financial Impact: If all 12 of the eligible employees elected to participate in the Retirement Enhancement Program the estimated financial impact from the benefit savings for FY 2010-2011 would be $189,800. However, the cost of the payouts for the accrued leave balances for the employees that participate in the program will have to be absorbed by the Department. In order to mitigate that impact, the program requires the participating employees to agree to accept the leave pay-out in two payments spanning across the two fiscal years. Therefore, in addition to maintaining a benefit savings in the Police Department budget, each year the City will be able to reduce its long term liability for leave accrual pay-outs. This reduction in long term liability reduces future costs to the City and helps improve the financial stability of the general fund in future years. Recommendation: Approve the Retirement Enhancement Program for eligible Police Safety employees and direct the City Manager to implement the program.