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HomeMy WebLinkAbout2013_0826_Minutes Open_APPROVED COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Approved as circulated 9/18/13 Board Committee: SALARY COMMISSION Meeting Date August 26, 2013 Location Mo'ikeha Building, Meeting Room 2A 2B Start of Meeting: 9:00 a.m. End of Meeting: 9: 52 a.m. Present Chair Charles King. Members: Robert Crowell; Randy Finlay; Sheri Kunioka-Volz (9:05 a.m.); Jo Ann Shimamoto Also: First Deputy County Attorney Amy Esaki; Boards & Commissions Office Staff: Support Clerk Barbara Davis; Administrator Paula Morikami; Administrative Aide Teresa Tamura. Also present: Director of Finance Steve Hunt, HR Specialist Janine Rapozo; Acting Director of DPS/HR Tom Takatsuki and HR Specialist II Kathy Tanita Excused Vice Chair Michael Machado Absent SUBJECT DISCUSSION ACTION Call To Order Chair King called the meeting to order at 9:02 a.m. with 4 members present Approval of Open Session Minutes of June 17, 2013 Mr. Crowell moved to approve the minutes as Minutes circulated. Mr. Finlay seconded the motion. Motion carried 4:0 Ms. Kunioka-Volz entered the meeting at 9:05 a.m. Business SC 2013-02 Discussion and possible decision-making on amendments to Resolution 2012-3 and on establishing salary caps for the fiscal year 2014/2015 for Council members and all officers and employees included in Section 3-2. 1 of the Kauai County Code (On-going) a. Comparison of Executive Pay Rate for Counties b. Letter dated 8/13/13 from Mayor Bernard P. Carvalho. Jr., asking the Salary Commission to consider freezing the salary cap for appointed and elected officers of the County for FY 2014/2015 Chair King noted that the previous Resolutions were included in the meeting packet along with a comparison of the executive pay rates for the different Salary Commission Open Session August 26, 2013 Page 2 SUBJECT DISCUSSION ACTION counties. Written testimony from the Office of the Prosecuting Attorney was received at that time and distributed to the members prompting Chair King to ask if that was normal procedure. The Staff assured the Commission that they strive to receive as much information as possible ahead of time. Chair King also noted that the Commission had received a letter from the Mayor requesting they hold off on the salary caps. Chair King asked Mr. Hunt to provide the Commission with his testimony. Mr. Hunt informed the Commission he would be speaking on two accounts. One would be to ask once again to defer any recommendations they may have for salary increases for the elected officials and appointed officers. The second is to clarify language that speaks to maximum salary or maximum compensation, which often is used interchangeably, and deals with such items as car allowances and uniform and gun cleaning allowances that go to our appointed and elected officials. As Director of Finance, Mr. Hunt stated he knows firsthand the financial challenges the County is facing. In order to balance the budget for fiscal 2014 the Administration recommended several increases in taxes and fees to bring the revenues closer in line to the expenditures. Despite cutting approximately $8 million in expenditures from the prior year's budget, the County is still nearly $14 million short in revenue to balance the General Fund budget. The majority of the balancing was done through increases to real property taxes, which accounts for nearly 80% of the General Fund revenue. There were two revenue enhancement proposals that included increasing the tipping fees for Solid Waste and the Vehicle Weight tax increase; both of which did not pass. As we move towards getting a sustainable budget where the revenues are equivalent to the expenditures,there is still a lot of work to be done. Fiscal '14 budget was balanced using approximately $11.8 million from the unassigned fund balance, which essentially is our savings account. However, that balance is now down to $54 thousand. While the County Salary Commission Open Session August 26, 2013 Page 3 SUBJECT DISCUSSION ACTION expects Fiscal '13, when the CAFR (Comprehensive Annual Financial Report) is completed,to provide approximately $12.5 million in lapsed funds. A significant portion of those funds will be used to pay for unbudgeted collective bargaining agreements with Police, Fire, and HGEA 13. Since the Fiscal '14 budget was an attempt to practice budget to actual expenditures, rather than the past practice of budget to budget, future lapsed funds if any will be substantially lower. This means other revenue sources will be needed to replace funding that has come traditionally from the lapsed fund balance. Most noticeably this will likely have a major impact on the direction of Fiscal Year '16 budget, which will rely on balances from our lapsed funds from Fiscal Year '14 and is anticipated to be much, much smaller. With regard to maximum salary versus maximum compensation there needs to be greater clarity in the Salary Commission's Resolution to articulate certain compensation for elected officials and appointed officers that are governed by this Commission. Certain compensation items such as car allowances, uniform cleaning and gun cleaning are simply being paid out through payroll as taxable wages or salary. As Director of Finance, Mr. Hunt said he is not opposed to these compensation items in principle; however he is opposed to self-governance with respect to setting the amounts or terms of this additional compensation. For those either elected or appointed, it is Mr. Hunt's opinion that this body should be charged with establishing the policy for additional compensation. Currently the authorization for additional compensation, above and beyond mere salaries, is coming from the budget process, which is again self-governed. Mr. Hunt humbly asked the Salary Commission to consider this request by incorporating them into future Salary Resolutions. Mr. Finlay asked what the sentence(s)would say to satisfy the concerns about getting control over the extra expenses. Salary Commission Open Session August 26, 2013 Page 4 SUBJECT DISCUSSION ACTION Mr. Hunt said the County Attorney Amy Esaki could help craft that language. In concept they would be looking at an allowance for automobiles rather than a reimbursable expense because it cumbersome for certain members to be tracking all their reimbursable mileage and submitting that. Traditionally it had been done through an allowance, but when the salaries were transferred to this Commission the additional compensation was not really looked at. Mr. Hunt thought the Commission should be setting those limits as part of the Resolution stating the salary limitation, as well as the additional compensation allowable items for Police, Council, and certain members that have been getting those benefits. Mr. Finlay said an easy way would be to take the term "salary caps" and make it"total compensation caps". Mr. Hunt said that would work if they were elevated and incorporated into that but he did not know if the Commission wanted to look at it as a separate line item or just incorporate it into the maximum compensation, and increase it by the amount of those benefits they are currently receiving. Mr. Finlay noted that not all of the positions have those compensable expenses. Mr. Hunt said that was correct. Questioned on the caps, Mr. Hunt said currently there is a cap on the salary alone. But they are also receiving as part of their payroll in one case an auto allowance and in other cases uniform and gun cleaning that goes directly as taxable wages. If you incorporate that into their salary it may actually exceed the salary cap. In principle, Mr. Hunt is not against the allowance; it is just a matter of who is the authorizing authority, which should be the Salary Commission and not through the budget process. Chair King asked who would be the authority to determine who receives the Salary Commission Open Session August 26, 2013 Page 5 SUBJECT DISCUSSION ACTION car allowance. Mr. Hunt said if it is a collective bargaining agreement it is not an issue because it is not governed by salary. It is the elected and appointed that this body should be reviewing as to who is eligible. Asked how it is justified, Mr. Hunt said in the case of Councilmembers they are currently given a $500 a month vehicle allowance. Beginning in May they stopped taking it at Mr. Hunt's recommendation since it needed to be looked at as a reimbursable, which is allowed because of the maximum compensation. Maximum salary and maximum compensation were used interchangeably in the Resolution and that was viewed as additional compensation and shows up on the payroll as such, which put them in excess of the cap and why it was stopped as of May. Now they are eligible to submit for reimbursement, however commute miles from home to the Council is not considered compensable. But when they travel from the Council office to Kekaha for a meeting in the capacity of a Councilmember that round trip would be reimbursable and they could track and submit mileage, which is what they have been doing since May. It is very cumbersome to track miles and submit receipts so it would be easier going back to an allowance, but the allowance is essentially the budget process. Attorney Esaki recommended an Executive Session at the next meeting to go over the details of the Charter requirement as it relates to the responsibilities of the Salary Commission. Chair King asked Mr. Hunt to provide the Commission with a list of positions receiving the allowance. Chair King stated an allowance should not be in the salary process and it should not be taxed. Mr. Hunt said when it is submitted as a reimbursable it is not taxed. From a tax perspective it is more beneficial if they meet the threshold that they are currently receiving, which could be reviewed to see how much of that mileage is actually being utilized for reimbursement and what should be set as a general policy. Salary Commission Open Session August 26, 2013 Page 6 SUBJECT DISCUSSION ACTION Asked how the mileage allowance is set now, Mr. Hunt said it is based on the Federal guideline. Ms. Kunioka-Volz asked if there were County vehicles the Councilmembers would be able to utilize. Mr. Hunt said they currently are not using County vehicles; they are using their personal vehicle, which is why the allowance was established. It is a ways off, but the County is looking at establishing a motor pool of County vehicles to get better utilization of the fleet. Ms. Shimamoto asked for an explanation of how an allowance works. Mr. Hunt said they were getting the allowance on their pay stubs as taxable wages and salaries in the allowance amount, which exceeds the cap because of that compensation rolling into their salary. Asked about the gun cleaning, Mr. Hunt said it is not reimbursable. They are given funding to have their guns cleaned. Mr. Crowell asked how the allowances are determined for the uniform and gun cleaning. Mr. Hunt said they receive the same levels as the collective bargaining staff. Chair King asked for an explanation of budget to past practice. Mr. Hunt said in the past practice of budgeting the County has always looked at the last year's budget, what the fiscal needs are this year and always compared budget to budget, which is not a measure of performance because if you are underperforming and have funds that lapse year after year, particularly in salaries and vacancies, that is essentially a padded budget providing funds to work from. We used a three year analysis to establish the Fiscal '14 budget by looking at Fiscal Years '12, '11, and '10 as the baseline and factored in and made adjustments for growth in departments. The former lapsed moneys will have one more year as Fiscal '13 was still based on the budget Salary Commission Open Session August 26, 2013 Page 7 SUBJECT DISCUSSION ACTION to budget practice. It is anticipated that about $12 to $12 1/2 million in lapsed funds will come in, but$11.8 million of that was used to balance Fiscal '14 budget. It is almost status quo with the exception that based on one resolved but not funded and two yet unresolved collective bargainings, we still have to fund Fire and HGEA, and find about $1.55 million for Police out of the pool of funds. We had a fund balance from a refinance of our bonds of about $2.1 million as a fund balance in our debt fund, which we will not have for Fiscal '15. We are chasing the $2.1 million we had in fund balance as well as what will be pulled out for collective bargaining, and whatever is left will essentially be available to balance next year's budget with the anticipation that we will only have that luxury for one more year. Come Fiscal '16 we will have to find a source of revenue or find expenditure cuts to come back in line for Fiscal'16's budget. Chair King asked if the only way this changes is with increased property values. Mr. Hunt said it is the expansion of the base, so if there is a lot of new construction that adds to the base, a combination of new construction and appreciating values will bring in more revenue, assuming rates stay the same and everything else is status quo. Chair King inquired about the State TAT. One of the misnomers about the TAT is if the occupancy is up the room rates are up and you should be getting more revenue; the State has capped the amount we receive which is $13.85 million in TAT revenue, which from a percentage basis is our second largest source of revenue at 11.82% of the budget. Between property taxes at 80% and TAT at 12%that is the bulk of the budget. To put more on the backs of the taxpayer for collective bargaining and salary increases we are getting close to the elasticity point. We taxed about 13.5%higher this year to raise $11 million in new revenue in property taxes compared to last Fiscal Year. Salary Commission Open Session August 26, 2013 Page 8 SUBJECT DISCUSSION ACTION Questioned on Kaua'i's participation in furlough, Mr. Hunt said the County did participate but was one of the first to come off furloughs. It was very inefficient because overtime kicks in and you are filling positions at time and a half The actual savings was nominal, if any, so furloughs are not necessarily the answer. Ms. Kunioka-Volz noted that the State cut the overtime and did furlough for two years. Mr. Hunt said for a smaller size County we do not have the redundancy so it results in the lack of service or shutting down hours earlier. Chair King said he knew the request was not to raise the salary caps but he feels it is proper to put out a pay scale that is based on the person's job responsibilities and how they perform; how the employer wants to pay to that maximum is something else, and it seems like everyone pays to the maximum. If the Commission raised it, would that still follow? Mr. Hunt thought there would be more pressure internally from some of the appointees to get closer to that amount and raising it would give more authority to the appointees who have not had a raise for a long time. Certain departments are asking to have that increase like the Prosecuting Attorney who does not fall under our control. They actually operate independently so they could potentially go up and hit those maximums. Mr. Finlay asked what percentage of the County's annual budget goes to salaries across the board. Mr. Hunt said salaries,fringe, health, retirement— the whole cost of an employee from the general fund source is about 80%. Mr. Finlay said if the County is forced into a position of finding expenditures that is the target, and of the 80%what percentage is bargaining versus what the Salary Commission controls. Mr. Hunt did not have those figures available but said it would be very nominal; although the pay scale is much higher the body counts are much lower, somewhere maybe around 6% to 8%. Salary Commission Open Session August 26, 2013 Page 9 SUBJECT DISCUSSION ACTION Attorney Esaki reminded the Commission that there is a cap as relates to the Mr. Finlay moved to receive the letter of 8/13/13 deputies as compared to the department head and that is State statute; she from the Mayor and the letter of 8/23/13 from will get that information for the Commission. the Prosecuting Attorney. Ms. Shimamoto seconded the motion. Motion carried 5:0 Mr. Crowell asked, relative to the deputies' salaries, does that also apply to department heads or just the attorneys. Attorney Esaki said it is for all department heads but there is a cap for all deputies. Chair King felt this deserved more than one meeting unless the Commission goes by the Mayor's letter. Mr. Finlay said he is prepared to go by the Mayor's letter and would be prepared to make a motion to follow the Mayor's terms, but they could also take care of the clarification of compensation and salary at the same time. Mr. Finlay stated he would like to see a draft of a Resolution that would follow the Mayor's guidelines and clarify the salary/compensation issue and have that motion ready for the next meeting. Ms. Shimamoto asked if the Salary Commission was the body to take care of what Mr. Hunt addressed. Attorney Esaki said this is the only body that determines the compensation or salary for all of the appointed and elected officers; otherwise it would be a Charter amendment. Mr. Finlay said it could be as simple as taking the current Council's salary cap, adding a$500 per month allowance to it and make that their total compensation cap, which would clarify the issue for the Director of Finance. Attorney Esaki said they could add another paragraph to the Salary Resolution to accomplish that. Salary Commission Open Session August 26, 2013 Page 10 SUBJECT DISCUSSION ACTION Mr. Finlay said he thought that was what the Director of Finance was asking for; some way to put a lid on that little thing before it does get out of hand. Other than that the motion would pretty much reflect the Mayor's language for the next year. Ms. Kunioka-Volz asked if there was a Definition section where this could be clarified. Attorney Esaki clarified that Ms. Kunioka-Volz was referring to salary versus compensation. In the Charter, Attorney Esaki believed those words are used interchangeably. Chair King said if they added another definition that would be a Charter amendment; Attorney Esaki agreed. Mr. Crowell asked where the $500 comes from. Attorney Esaki said the Charter requires reimbursement and does not give an amount. Mr. Hunt addressed this issue noting that currently the authority for the allowances comes through the budget process, which is the Council. It has continued to rollover and at the time the Salary Commission took over the responsibility for the executive salary, the allowance was a component that was left within the budget. Mr. Hunt questions by what authority. Ms. Shimamoto said it says it is authorized as a reimbursable and Mr. Hunt was saying it is not being handled that way. Mr. Hunt said the County is authorizing it as a reimbursable because Councilmembers use their personal vehicles to attend events on behalf of their position. The $500 covers vehicle use, maintenance, insurance, oil and gas. Asked if Councilmembers are compensated for meals, Mr. Hunt explained that if it is the same day travel they do not, but if it is multiple days there is a schedule that will account for meals. They can submit for up to $20 in reimbursables on same day travel put it does not kick in as an actual paid out until it is an overnight travel. The bargaining units get the $20 meal allowance paid out whether Salary Commission Open Session August 26, 2013 Page 11 SUBJECT DISCUSSION ACTION they submit receipts or not. Asked what the gun cleaning and uniforms cleaning allowance was, Mr. Takatsuki confirmed that it was $420 for gun cleaning and $300 for uniform cleaning or $720 annually. Mr. Finlay stated he came to a very clear point and they are going to separate the two resolutions. One Resolution will speak to hold the salaries at their current rate for another year. A separate Resolution will take care of the compensation allowances so that one little minutia detail does not drag down the bigger one. Mr. Hunt told the Commission he will work with the Mr. Finlay moved that the Salary Commission Attorney to identify the positions that would be eligible for those particular propose a Resolution to hold the salary caps for allowances and identify the amounts. one more year. Ms. Shimamoto seconded the motion. Motion carried 5:0 Attorney Esaki asked for clarification on the motion with regard to a salary cap for one year and asked if the cap went to July 1, 2014, or July 1, 2015. Mr. Finlay said the current Resolution is in effect through June of next year; this Resolution would be for the following Fiscal year. Attorney Esaki asked if the cap would be lifted July 1, 2015. Chair King said there would be meetings prior to then to decide what to do at that point. Mr. Finlay pointed out that Council had asked the Salary Commission to make those Resolutions in a timely manner so they can prepare the budgets accordingly. Mr. Finlay made a second motion to have the Attorney Esaki pointed out that for the Councilmembers, the Resolution does Director of Finance and the Attorney's Office not go into effect until the following term. draft language for the Salary Commission's review to resolve the additional expenses type of issues in the hope of putting it into a global Resolution. Ms. Kunioka-Volz seconded the motion. Salary Commission Open Session August 26, 2013 Page 12 SUBJECT DISCUSSION ACTION Attorney Esaki said according to the Resolution 2012-3 the maximum salary scheduled to become effective on July 1, 2013, was deleted so there is no start date for the cap. If the Commission wants to keep it until next year you can still use the same Resolution. Then the next year when you wish to increase it you can amend the Resolution. Attorney Esaki said originally the cap on the increases would have lifted on July 1, 2013, but Resolution 2012- 3 deleted the July 1, 2013, so the salaries are frozen. If the proposal is to keep the salaries frozen until July 1, 2015, there is no need to touch the Resolution. It can be a separate Resolution addressing the allowances. Mr. Finlay said the Commission needs some way to communicate with the County and the budgeters that the salary cap is going to remain in effect for at least another fiscal year. Mr. Finlay said even though it may be in the Resolution,the County needs to know so they can budget properly and know that the Commission is not going to come back in November and raise everything. Chair King asked if that would be in the form of a Resolution or a memo. Attorney Esaki said probably a memo because the Resolution already states there is no salary increase until such time as the Commission decides there should be a salary increase. Otherwise it may be confusing when they look at the Resolution and ask what was intended. Chair King said the memo would be more to the effect that the Commission does not intend to increase any salaries. Attorney Esaki said the next year when they decide a salary increase is appropriate then the Commission would amend the Resolution. Chair King reiterated that the salary freeze would be communicated by memo to Council and rather than a motion to draft a Resolution covering allowances that is just a request to the Finance Director and the Attorney. Mr. Finlay moved to receive the Comparison of Salary Commission Open Session August 26, 2013 Page 13 SUBJECT DISCUSSION ACTION Attorney Esaki said at the next meeting they can review the draft of a Pay Rates. Mr. Crowell seconded the motion. Resolution addressing the allowances. Motion carried 5:0 Chair King noted he had received a nice communication from OIP on the Sunshine Law and asked Attorney Esaki to circulate it to all the Commissioners. Next Meeting Wednesday, September 18, 2013, 9:00 a.m. —Mo'ikeha Building, Meeting Room 2 A/B Adjournment Mr. Crowell moved to adjourn the meeting at 9:52 a.m. Ms. Shimamoto seconded the motion. Motion carried 5:0 Submitted by: Reviewed and Approved by: Barbara Davis, Support Clerk Charles King, Chair (X ) Approved as circulated 9/18/13 ( ) Approved with amendments. See minutes of meeting.