HomeMy WebLinkAboutSalary Savings Analysis Memo
M E M O R A N D U M
DATE: July 24, 2014
TO: Mayor Ross & City Council
Paul Brandenburg, City Manager
Micki Rundell, CFO
FROM: Susan Morgan, Finance Director
SUBJECT: Salary
Savings and Vacancy Factor - Analysis Results
Summary Findings.
The current Fiscal and Budgetary Policy (Section VI. B. 1. Vacancy Factor) requires a 1% Vacancy Factor in the General
Fund to take into account normal and expected salary savings. This amount appears adequate and reflective of actual experience. Below summarizes the projected actual salary savings
included in the projections used to prepare the City Manager’s proposed 2014/15 budget.
The calculation summary above takes into account the overtime and temporary employee costs incurred
to cover services during the vacancy, as well as, the actual cost of benefit payouts for retiring and departing employees. The temporary agency contracts are payments to Evins and Labor
Finders used by Municipal Court and Streets to procure temporary labor to cover staffing requirements in those departments during position vacancies that are not accounted for in the
Personnel cost line items. A brief analysis of 2012/13, the prior fiscal year, produced similar results.
Ratios and Factors.
The recent discussion of higher factors was based on turnover ratios. Turnover ratios indicate the number of positions that become vacant during a given time period,
but do not necessarily produce vacancy rates that result in a comparable percentage of net salary savings. A vacancy factor is the number of open positions at any given time. The Fiscal
and Budgetary Policy should be more appropriately termed vacancy factor salary savings.
Minimum Staffing Requirements.
Most City departments have minimum staffing requirements to meet
public safety and customer service needs. Police and Fire have very specific operating staffing requirements that are filled by paying overtime to other trained, certified staff within
those departments. Upon review, only a small percentage of salary and benefits from vacant positions are realized as savings due to the high cost of paying time and a half and higher
class pay that is usually required to cover those vacancies.
Departments such a Municipal Court, Library, Parks and Recreation, have similar minimum staffing requirements to meet operating
hours, classes, customer windows/service desks, telephone coverage and maintenance levels. The Streets department has expected maintenance projects that are scheduled and expected to
be completed within certain timeframes. Depending on the department’s operations and staffing levels, varying methods are used to maintain those service requirements. Parks, Streets
and Municipal Court use outside temporary employment agencies; while Library and Recreation usually rely on overtime and adding hours to part time and seasonal staff.
Management Control
of Realized Salary Savings.
The use of realized salary savings is tightly controlled by the Fiscal & Budgetary Policy. Per Section IV. E. Control and Accountability, the Division Director
must have City Manager approval prior to moving those budgeted funds for other uses.
OPERATING BUDGET
Control and Accountability – Each Division Director, appointed by the City Manager,
will be responsible for the administration of his/her departmental budget. This includes accomplishing the Goals and Objectives adopted as part of the budget and monitoring each department
budget for compliance with spending limitations. Division Directors may transfer funds up to $20,000 within the operations and maintenance or capital line items within a departmental
budget category without additional approval. All transfers within the Personnel line items require approval of the Chief Financial Officer and City Manager. All other transfers of appropriation
or budget amendments require either City Council or City Manager approval as outlined in Section IV.I and Section VI.B.4.
In practice, this policy is managed by Finance. Finance reviews
division requests and prepares an analysis to determine that the funds are truly available above and beyond the vacancy factor required by policy. If funds are available, a preprinted
form with appropriate justification attached is signed by the appropriate Division Director. That form is then submitted to the City Manager for approval. These requests have occurred
and been approved, but are unusual.
Conclusion
Based on operating requirements and the current fiscal analysis, increasing the vacancy factor salary savings in the General Fund budget
would not produce additional savings without impairing the City’s ability to meet service requirements within each department.