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C. Review Paid Time Off (PTO) vs. Sick/Vacation Benefits0 CITI[ OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 7901 Park Place Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site www.ci.chanhassen.mn.us MEMORANDUM TO: Todd Gerhardt, City Manager FROM: Laurie Hokkanen, Assistant City Manage DATE: August 22, 2011 SUBJ: Sick and Vacation/PTO BACKGROUND One of the city's 2011 KFS Goals was to examine the sick and vacation benefits offered to employees. Staff has analyzed the paid time off programs of our KFS comparison cities, as well. The City of Chanhassen currently divides paid time off into two categories, sick and vacation. Vacation is accrued according to the following schedule: 0 -5 years: 12 days 6 -15 years: 17 days 16- 20years: 22 days 21+ years: 27 days Vacation can be accrued up to 3x the annual rate of accrual, for a max of 81 days /648 hours. Vacation time is paid at 100% upon severance into the employee's Post Retirement Healthcare Savings Plan (HCSP). C Sick time is accrued at the rate of one day per month (3.69 hours per 80 hours worked.) Accrual is capped at 600 hours. Employees are expected to manage their sick balances to provide for use in lieu of short term disability insurance. For employees with a balance exceeding 600 hours, 1 /2 of the balance above 600 hours is cashed out into the HCSP at the end of the calendar year. For example, John Smith is a current employee with a sick balance of 700 hours. John receives 50 hours of pay into his HCSP and 50 hours are deleted from the books, leaving John with a balance of 600 hours. At the time of severance, ` / 2 of the balance is paid into the HCSP. So, if John Smith had a balance of 700 hours on the date of his separation, 350 hours would be paid into his HCSP and 350 hours would be deleted. Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow Mr. Todd Gerhardt August 22, 2011 Page 2 Attached please find a summary of the PTO benefits offered by our comparison cities. While each program is slightly different, staff found that in general, the benefits offered by the City of Chanhassen are comparable to those offered by other cities. RECOMMENDATION Following this comparison, staff has two recommendations for changes to our program. First, staff proposes to cap the annual rate of accrual for vacation at 2x the annual rate. There are currently 23 out of 73 employees who are at their max accrual for vacation hours. Staff proposes that the city would buy them out of the difference between the current 3x accrual rate, prior to any 2012 salary adjustment, at a total cost of $53,242.16. Secondly, staff proposes to introduce a new accrual category at 10 -15 years of service/ 19 days of vacation. If the city council desires to implement these changes, staff would incorporate the changes into the Personnel Policy for approval at a future city council meeting. ATTACHMENTS 1. KFS Cities Comparison Spreadsheet 2. KFS Cities Comparison of Compensated Absences Balances g: \admin \lh \key financial strategies\201 I kfs \sick and vacation memo 8 -22 -1 l.doc Comparison of Compensated Absences, KFS Cities Compensated Absence City Payable Bal at 12 -31 -10 Andover $ 704,441 Champlin 426,570 Chanhassen 948,046 Chaska 935,824 Farmington 572,546 Inver Grove Heights 1,733,731 Lino Lakes 666,225 Oakdale 916,565 Prior Lake 1,065,143 Savage 1,263,069 Shoreview 338,301 Comparison of Paid Time Off Policies Chanhassen KFS Cities August 22, 2011 City Type of Plan Number of Sick Days Number of Vacation /PTO- Annual Days at Hire j Vacation /PTO Days at Max : Max Total Accrual - Vacation Days � I i j Short Term Disability Max Accrual of Sick Time and Severance Policy Policy for Sick Time Severance Policy - Vacation /PTO Cash -out option for Vacation /PTO Funeral Leave Policy I ! Conversion from sick /vacation plan to PTO - -- -- Accrue up to 600 hours. 1/2 of hours beyond 600 Employee - - Chanhassen -i Andover Vacation /Sick - I Sick /Vacation(working with Union to move to PTO) - -- 12 12 -- -- 1 12 10 - -- - - . - 25 20 3x accrual 25 days - - - Paid Elective Benefit are cashed out into PEHCSP annually and at -- sepe } I Employee Paid Elective ! Unlimited accrual. Paid at seperation - 20% @2 1 Benefit i years, 40% @6 years, 50% @10 yrs. i -- - - - - -- - -. - Accrue up to 1040 hours, then accrue at 50/ (6 " o 100% into PEHCSP 100% - - -� No No - use sick not required tU use sick or vacation for immediate fam ily n/a - -. - -- Champlin Sick /Vacation 12 10 25 Yearly Accrual + 80 hours days) with no max. After 5 years, can convert unused sick leave in excess of 350 hours to I vacation at 2:1 ratio. Employees who use less than 32 hours of sick time in a year can convert 100% After 3 years, with min balance i of 120 hours, up to 80 hours into deferred comp or H.S.A. n/a 24 ho urs into H.S - Vacation time converted to Chaska Farmington - -- PTO - - -- - n/a - 12 - - -- - 20 - - - - -_ -- 10 -- - � 32 -_ -- - 25 -- - -- 2x - — - - - -- : 40 days After 5 days, Internally Funded Salary n/a Continuation Plan i _- I Accrue up to 1440 hours. Pay out 25% at severence after 5 years of service and 50% after 10 year of service. o -- - 100% 4 days per year, to cash or deferred com p � not required to use sick time, 2 -3 days per event PTO. Sick time placed into sick bank, to be used or paid at 1/3 of balance up to 30 days upon seperation. i I not deducted from sick or vacation 10 �- - -- - -�- Inver Grove Heights Vacation /Personal ! Leave I 7.5 to 12 -- I 23 30 days Accrue up to 480 hours. Employees with more than 480 hours can exchange up to 40 hours for 100% No cash or 80 hours i nto the HCSP. - - -- - - - - -- -- - - -- - - I Lino Lakes Sick /Vacation 12 5 25 30 days Internally funded, up to Accrue up to 960 hours. 50% of hours beyond 120 days. 220 can be cashed out @50% into deferred comp. Sick paid 50% into DC at seperation. No n/a up to 3 days Oakdale Vacation /Sick 12 10 23 1.5 x Accrue up to 960 hours. Hours accrued beyond f 960 go into a "sick bank" to be used only after all I No n/a regular sick leave has been exhausted. I Prior Lake -- - -- Vacation /Sick - - _ 12 - - - - -- - - - -- 1 - - 25 - - - - - _ _ 2x if hired after Janu oth or Accrue up to 960 hours. 1/2 of hours in excess of 480 cashed out annually as cash or deferred comp. 100% Vacation above max is use or- lose. n/a -- - .. - -!. 10 use sick 1 day of Savage Vacation /Sick 12 10 21 Accrue up to 480 hours (for employees hired since 2005). Hours above 480 cashed out at 50% each year into H.S.A. or deferred comp. Paid at bereavement leave, can then I use 2 days of sick 50% at severance. time, use vacation Shoreview PTO n/a 16.5 26.25 30 days Short -term disability starts after three we eks' n/a of disability, internally funded and managed. 100% Employees earning 26 days per year and with a balance of 220' hours or more may transfer 20 1 hours into deferred comp. separate from annual leave Allowed employees to keep existing leave in separate accounts and use as appropriate.