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HomeMy WebLinkAbout092712_Salary Minutes_APPROVEDasAMENDEDCOUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board /Committee: SALARY COMMISSION Meeting Date September 27, 2012 Location Mo'ikeha Building — Meeting Room 2A/B Start of Meeting: 9:04 a.m. End of Meeting: 10:36 a.m. Present Chair Robert Crowell; Vice -Chair Charles King; Members: Randy Finlay, Michael Machado; Sheri Kunioka -Volz; Jo Ann Shimamoto Also present: Deputy County Attorney Mona Clark; Board & Commissions Office Staff. Support Clerk Mercedes Youn; Administrator Paula Morikami; Administrative Aide Teresa Tamura. Excused Absent SUBJECT DISCUSSION ACTION Prior to the meeting being called to order, Eddie Topenio, Administrative Assistant to the County Council, gave the Oath of Office to Commissioner Jo Ann Shimamoto. Call to Order Chair Crowell called the meeting to order at 9:04 a.m. Chair Crowell gave a warm welcome and expressed his appreciation to Commissioner Shimamoto for volunteering her time to serve on the Salary Commission. Approval of Regular Open Session Minutes of June 14, 2012. Mr. King moved to approve the minutes as Minutes circulated. Ms. Kunioka -Volz seconded the motion. Motion carried 6:0 Business SC 2012 -14 Discussion and deliberation on establishing future salaries caps including, but not limited to fringe benefits of council members and all officers and employees included in Section 3 -2.1 of the Kauai County Code. Chair Crowell said that the information that was circulated to the Commission by mail showed that the salaries for the appointees and the Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 2 SUBJECT DISCUSSION ACTION County Council were comparable to the other counties. Chair Crowell shared his experience when he had to appear before the County Council in May 2012 to answer questions relating to Resolution 2012 -1. He pointed out that he had promised the County Council that the Salary Commission was committed in providing them with its recommendation before the March 15th deadline for fiscal year 2013 -14. Commissioner King questioned whether the recommendation would be outside of the current Resolution 2012 -1 which indicates a salary increase effective July 1, 2013. Chair Crowell said that with the current resolution in place should the Commission decide not to do anything, the salary increases would go into effect on July 1, 2013. He felt that it is incumbent of the Commission to affirm whether the current resolution should remain in place or amend it. He pointed out that certain developments had occurred as a result of the Mayor signing an Executive Order that increased the salaries for the Excluded Managerial positions in both the Fire and Police Department. As a result, it created another significant salary inversion. Chair Crowell explained that in addition to the reports that were in the meeting packets, Staff handed out a report that included the pay rates for both the Council Chair and Council members. Mr. Finlay noted that after he reviewed the information, he observed that the salaries were in line with the other counties. Ms. Kunioka -Volz stated that she agrees and expressed her concern that some of the positions held higher salaries. Mr. Finlay noted that there were certain positions whose salaries were a bit higher but not significant enough for concern. Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 3 SUBJECT DISCUSSION ACTION Ms. Kunioka -Volz asked whether the Commission should compare the budget from each county. Mr. Finlay stated that he agreed and that it should include the number of employees in each county. He gave an example that for the City and County of Honolulu, which is a much bigger organization, one could argue that even the larger organizations can have the same amount of work as their counter parts. Mr. Finlay stated that the study emphasized only the comparative analysis of the other counties and the positions within the Kauai County, which includes a detailed analysis of salaries paid for the different EM positions as well as similar jobs in the other counties. Mr. Finlay voiced his concern that the study did not take into consideration the private sector and that the study preambles back to a period in 2008 which showed that they were more concerned about the shrinking labor pool and how difficult it was for the County to retain people. Mr. Finlay indicated that he had hoped that the NASH Study showed a broader study of the private sector as well as the benefits associated with being a public worker in comparison to the private sector. Mr. Finlay explained that in the private sector when a person retires they do not have the luxury of continuing health care benefits or have an undated pension plan. The only retirement plan that the private sector offers is a 401 K. Mr. Finlay commented that he was glad that the Commission had decided not to go forward with another costly compensation study because it would not have helped the Commission with its ultimate goal, which is to set the salary caps. Additionally, Mr. Finlay pointed out that the number of jobs in the private sector is continuing to diminish and that the compensation packages are Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 4 SUBJECT DISCUSSION ACTION being reduced. He suggested that the Commission should keep that in mind during its discussion on raising the compensation packages for public workers. Ms. Kunioka -Volz informed the Commission that the State had reduced its retirement benefits for its new employees. Mr. Finlay asked Ms. Kunioka- Volz if she could explain in detail the benefit package for its employees and what it entails. Ms. Kunioka -Volz explained that the State has a defined benefit plan and the contributions are mandated. She further explained that what an employee earns is determined by the type of retirement plan and the employee's job category. In general, all current employees earn an average of 4.50 percent interest and the newer employees would earn 2 percent of that. Mr. Finlay asked whether the State's retirement benefit is based on the employee's own contribution towards their retirement. Ms. Kunioka -Volz explained that it is mandated for each employee to contribute a percentage of their earnings and in turn they are guaranteed a rate of return. She further explained that all senior employees contribute an average of 7.8 percent and the newer employee contributes 6 percent of their earnings. Mr. Finlay commented that the State retirement system is very different from the private sector which only offers 401(k) plans which allows the individual to choose what they would like to put aside for their own retirement. Mr. Finlay questioned whether a retiree of the State has the option to take all of their retirement in a lump sum. Ms. Kunioka -Volz stated yes, which includes a lifetime pension. Mr. Finlay asked how the life time pension is funded. Ms. Kunioka -Volz answered through the employer and the Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 5 SUBJECT DISCUSSION ACTION investment earnings of the employees contributions. Mr. King commented that many private companies have a defined benefit plan other than your normal pension plan. Mr. Finlay asked Ms. Kunioka -Volz if she could explain the details of the medical benefits plan for the State retirees. Ms. Kunioka- Volz explained that in 2001 the State changed its medical benefits coverage where it no longer covers the retiree's family members and that it only covers the retiree for life. In addition, the State has imposed years of service and age requirement. Mr. Finlay suggested that the Commission keep that in context when it comes time to determine the salary caps. He indicated that the benefits package for the public sector is far better than the private sector. Ms. Kunioka -Volz agreed and noted that there is a great disparity between the civil service employees and the appointed positions listed in Resolution 2012 -1. Chair Crowell pointed out that because the Mayor signed an Executive Order, the base pay for the assistant chiefs in the Police Department have increased to $120,000 that he believes is an EM -8 level position. Chair Crowell asked whether the Commission should consider time and grade when it comes time to determine the salary caps. He indicated that some of the individuals have over twenty years of service in which he felt they should make more than their respective department heads. Chair Crowell then questioned whether the Commission should take a position in which no subordinate should make more than their department head and that the department head should always have the higher pay. Chair Crowell stated that the base pay for the assistant chiefs is at the Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 6 SUBJECT DISCUSSION ACTION $120,000 mark and was negotiated by SHOPO (State of Hawaii Organization of Police Officers) back in 2009. He explained that at the time the salary increase was to take effect, the Mayor decided to freeze the salaries for the Excluded Managerial positions and that he was unsure why the Mayor had decided to freeze the salaries for the EM's and whether or not there was a lawsuit. Ms. Morikami explained that the reason the Mayor signed the Executive Order was to correct a problem in which the Excluded Managerial positions were not included at a time when they should have been given the salary increase. Mr. King asked whether that meant that the salaries for the assistant chiefs are now higher than the Chief of Police and their counter parts on the other islands, excluding Oahu. Chair Crowell answered yes. Mr. Finlay reiterated what Chair Crowell said about the individuals who have over twenty years of service in which he felt that they should be making more than their department head based on their years of service versus an individual who has only five years of service and accepts the Chief of Police position. Mr. King commented that it would seem logical if you want someone who has the experience and has over twenty years of service to step up and accept the Chief of Police position. Mr. Finlay commented that it doesn't always work that way because who would want to take a position that pays less. Mr. King agreed that no one would want to take a $6,000 pay decrease. Mr. Machado stated that from what he understood the reason why the rank Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 7 SUBJECT DISCUSSION ACTION and file in the Police Department made more than the Police Chief was due to overtime. Ms. Kunioka -Volz agreed. Chair Crowell stated that prior to the Commissions' recommendation to increase the salary cap for the Chief of Police from $107, 335 to $114,490 the base pay for the assistant chiefs was also $107,000 with the potential of making overtime. Chair Crowell indicated that because they had the ability to accumulate overtime and make more money, no one wanted to move up to take the Deputy Police Chief position. Ms. Kunioka -Volz questioned whether it was appropriate to award managers who cannot manage the overtime in department. Mr. Finlay stated that although he agrees with Ms. Kunioka -Volz, it is the way the system has been for years and that the Commission can only cap the salaries for certain positions. He noted that unless there is a Commission with the authority to control the entire system, you cannot stop the inversions from occurring. Mr. Finlay referred back to a previous meeting when Police Commissioner Charles Iona and former SHOPO negotiator, came before the Salary Commission and told the Commission that SHOPO uses the cap set by the Salary Commission as a benchmark to adjust the salaries for the rank and file. Mr. Finlay voiced his concern that the Salary Commission cannot continue to chase the inversions simply because the only way to solve the inversion problem is to keep raising the salaries. Mr. Finlay felt that it is simply not the right time for the Commission to recommend raises for the positions listed in Resolution 2012 -1. Mr. Machado stated that from what he understood, the reason why the Commission justified the salary increase for the Chief of Police was due to Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 8 SUBJECT DISCUSSION ACTION the fact that the Police Department could not retain or find qualified individuals because of the inversion problem. Mr. Machado further indicated that he had concerns about SHOPO using the salary cap as a benchmark to determine the salaries for the rank and file. However, the Salary Commission has no control over that. Ms. Kunioka -Volz pointed out that the problem seems only within the Police Department and not with the other departments which could mean that it is a management problem. Mr. Machado stated that he felt the best solution that he could think of is to hire additional people to fill the vacancies in the Police Department. However, from what he understood there were no funds in the Police Department's budget. Ms. Kunioka -Volz stated that she may be wrong, but she believes that there were funds allocated to fill the vacant positions in the Police Department. Ms. Kunioka -Volz noted that the problem could stem from how the Police Department conducts its background search and from what she understands the process was very lengthy. Chair Crowell stated that the Commission's next step is to determine whether or not to amend Resolution 2012 -1 or leave it as it is currently written. He suggested that the Commissioners take more time to review the information that was provided by Mr. Thomas Takatsuki and continue its discussion in October. He reminded the Commission that he had assured the County Council that the Salary Commission would present its recommendation on or before the March 15th deadline. Mr. Finlay indicated that he was not making a proposal but one option to consider is to vote on a new resolution to defer the salary increase effective July 1, 2013 to July 1, 2014. He stated that he was really hopeful that by Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 9 SUBJECT DISCUSSION ACTION now the economy would have improved and jobs were available but it does not seem that way for the average taxpayer. Ms. Kunioka -Volz stated that it would be helpful for this Commission to have the Director of Finance present at the Commission meeting to provide input on the County's financial stability for fiscal year 2013 -14. Chair Crowell stated that he agrees with Ms. Kunioka -Volz, and instructed Staff to contact the Director of Finance to see whether he would be available to attend the meeting in October. Mr. Finlay stated that it would be a lot easier for the County to balance the budget if the automatic pay increase effective on July 1, 2013 was extended at least for another year. He noted that the 7 percent increase is astronomical in today's world when other people are still negotiating 3 to 5 percent pay cuts. Ms. Kunioka -Volz stated that the State is going on its second year 5 percent pay cut. Chair Crowell asked whether the State is in the process of negotiating a new contract to take effect July 1, 2013. Mr. King stated that it's the department heads that are taking a cut so there would be no negotiating. Chair Crowell stated that he was referring to the rank and file. Chair Crowell asked whether it would be simpler for the Commission to make comparisons between the different counties regarding the positions listed in Resolution 2012 -1. Mr. Machado asked whether the salaries that are listed in Resolution 2012- 2 are salary caps. Ms. Kunioka -Volz indicated that the salaries listed in Resolution 2012 -1 are all salary caps and historically whatever the cap is set it becomes the salary wage. Chair Crowell added that although the Salary Commission sets the cap, it's the appointing authority that can set Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 10 SUBJECT DISCUSSION ACTION the salary at a lower level. Ms. Shimamoto stated that based on the discussion on comparisons, she asked whether the Commission would consider looking into the forecast of the County's budget because it would not make any sense to grant the salary increases if the County is asking each department to cut their budget. Ms. Shimamoto referred to the 7 percent increase and said that as a former rank and file employee for the County she has not seen a 7 percent increase for quite some time now. She suggested that the Commission take that into consideration during its future discussions. Ms. Shimamoto restated Mr. Finlay's question on whether the department heads should always make more than the top paid rank and file. Ms. Shimamoto indicated that a lot of the rank and file employees have tremendous knowledge that makes their department run smoothly. She suggested that the Commission take that into consideration. Mr. King noted that the 7 percent increase for the salary caps was established in 2008 which was supposed to have taken effect in 2011. However, the salaries were frozen for 2 years so it's hard to say that its 7 seven percent per anum. It's 7 percent over the previous wage. Mr. Finlay stated that Ms. Kunioka -Volz brought up a good point that having the Budget Director at the Commission's next meeting would be very helpful for the Commission to determine whether to recommend an increase, lower or defer it by the end of this year. Mr. King commented that it would then be up to the Council and the Administration to figure it out. Ms. Morikami shared with the Commission the concerns of the Count Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 11 SUBJECT DISCUSSION ACTION Council that certain positions like the "County Engineer" require having different certificates or a professional license and should those salaries be adjusted differently from the other positions instead of just straight across the board, such as a two or three tier pay system. Ms. Kunioka -Volz indicated that the same approach was taken when the Commission justified the pay increase for the Police and Fire because it was based on the risk level. Mr. Finlay pointed out that the only way to solve that problem is through raises for certain positions but only if the economy showed signs that it was improving. Mr. King questioned how one would justify the salary cap of $107,000 for the Director of Parks and Recreation versus $103,000 cap for Human Resources Director. Mr. Machado questioned whether in the past the Salary Commission ever reduced the salary caps. Chair Crowell asked the members to keep in mind that the Commission does not have to base its recommendations on the 7 percent increase and that it could lower the percentage. Mr. King suggested to the Commission that perhaps it would make sense for the Commission to first determine which department justifies giving a raise to, and keep the others status quo as oppose to a cut. Mr. Machado voiced his concern that it may trigger each department to come before the Salary Commission just to justify their reasons for a raise. Mr. King pointed out that the Report on salary history showed that between October 1, 1988 and December 1, 1988 certain positions suffered a pay cut. Ms. Kunioka -Volz stated that she found it interesting that a lot of weight was plac ed on filling the positions for the Fire and Police but not for the Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 12 SUBJECT DISCUSSION ACTION County Engineer position. Ms. Kunioka -Volz pointed out that the report on the Current Pay Rate/ Comparison of Executive Pay Rates for State and Counties, certain positions from the other counties did not include a salary amount. Mr. King pointed out that there was also a typo regarding the salary for the Maui Chief of Police. Mr. Finlay questioned whether it would be appropriate to request financial information from the Council Chair and the Mayor regarding the budget for fiscal year 2013 -14 and how much of an impact would it have on their total assets /revenues. Mr. Finlay indicated that the Mayor has been a proponent for the salary freeze for quite some time now and that it would be interesting to see if he still felt the same. Chair Crowell stated that he doesn't think that it is out of the question to ask the Mayor to come to the next meeting or to send one of his representatives. Mr. King suggested that it would be appropriate for the Commission to invite the Mayor to the next meeting rather than request his presence. Ms. Shimamoto stated that the proper protocol would be to send a memo to the Mayor that the Salary Commission would like to invite him to the meeting along with a request for the presence of the Director of Finance. Mr. Finlay shared his position that he is going to recommend a deferral of the salary increases but would be open to hear other arguments. Staff acknowledged the request and will send a memo to the Mayor that the Salary Commission would like to invite him to the meeting along with a request for the presence of the Director of Finance to attend the meeting in October to discuss the budget forecast for fiscal year 2013 -14. Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 13 SUBJECT DISCUSSION ACTION Mr. Machado asked whether in the operating budget report for all counties, does the budget include the salaries for each of the departments? Mr. Finlay clarified that the numbers represent the operating budget that includes the salaries/benefits. SC 2012 -15 Communication dated 9/04/12 from Malcolm Fernandez Director of Personnel Services, to Chair Robert Crowell and Members of the Salary Commission regarding the performance evaluations and increases for executive appointees. Chair Crowell called for a motion to receive item SC 2012 -15. Mr. King moved to receive item SC 2012 -15 for the record. Ms. Kunioka -Volz seconded the motion. Ms. Kunioka -Volz asked why the effective dates were different from the July 1, 2012 date indicated in Resolution 2012 -1. Ms. Tamura explained that the requirements for salary increases include the Director of Personnel Services receipt of a memo from the appointing authority at least thirty days prior to the increase certifying that the appointee's performance has been evaluated pursuant to procedures established by the Director of Personnel Services. Chair Crowell called for the vote to receive item SC 2012 -15 as circulated. Motion carried 6:0 SC 2012 -16 Discussion and decision - making on establishing meeting dates for the remainder of the 2012 calendar year. The Commission reached a consensus and selected October 15"' as its next Salary Commission Regular Open Session Meeting Minutes September 27, 2012 Page 14 SUBJECT DISCUSSION ACTION meeting date. Additionally, if needed, the Commission selected November 16th as its tentative meeting date. Adjournment Mr. Machado moved to adjourn the meeting at 10:36 a.m. Mr. King seconded the motion. Motion carried 6:0 Submitted by: Mercedes Youn, Staff Support Clerk Reviewed and Approved by: ( ) Approved as circulated. (X) Approved as amended. See minutes of the October 15, 2012 meeting. Robert Crowell, Chair