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B. Sick & Vacation Benefits vs PTO0 CITY OF CBANgASSEN 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 ManageJAD DATE: August 22, 2011 OA16p_ 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). 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, 1 /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 N 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 Ldoc Comparison of Compensated Absences, KFS Cities Compen Absenc 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 Number of Vacation /PTO- Annual Vacation /PTO Days at Max Total Accrual - I Short Term Disability ` Max Accrual of Sick Time and Severance Policy Severance Policy - Cash -out option for I Funeral leave Conversion from Sick Days I Days at Hire Max I Vacation Days Policy for Sick Time Vacation /PTO Vacation /PTO Policy I sick /vacation plan to PTO � I ! i Accrue up to 600 hours. Chanhassen Vacation /Sick 12 12 25 3x accrual Employee Paid Elective 1/2 of hours beyond 600 are cashed out into PEHCSP annually and at 100o I ' Benefit / into PEHCSP No use sick I n/a -- - - - -- —+— - I -- - — sepe ! T _... - -_ -- - - -- -- -- --------------- not required to Sick /Vacation(working use sick or i Employee Paid Elective i Unlimited accrual. Paid at seperation - 20% @2 Andover with Union move to 12 10 20 25 days i I 100% No vacation for PTOO) ) Benefit I years, 40 % @6years,50 % @10yrs. immediate I -} - - -- ---------- - - -:.. .p __.... - - � -- - - -- - - -- - - - -- - - - - - - -— __ family -- I Accrue u to 1040 hours, then accrue at 50% 6 days) with no max. After 5 years, can convert ` Yearly Accrual + 80 unused sick leave in excess of 350 hours to I After 3 years, with min balance i I I Champlin Sick /Vacation 12 10 25 ! 100% hours I vacation at 2:1 ratio. Employees who use less ! I of 120 hours, up to 80 hours I n/a than 32 hours of sick time in a year can convert into deferred comp or H.S.A. 24 hours into H.S Chaska I PTO I n/a j 20 Farmington 12 10 I Vacation /Personal Inver Grove Heights Leave j 7.5 to 12 1 10 I ' Lino Lakes Sick /Vacation 12 5 i Oakdale Vacation /Sick 12 10 I Prior Lake Vacation /Sick 12 10 i I i Savage Vacation /Sick j 12 I 10 I I � Shoreview ; PTO n/a I 16.5 32 1 2x 21 26.25 1 30 days Vacation time converted to After 5 days, Internally I not required to PTO. Sick time placed into Funded Salary n/a ! 100% 4 days per year, to cash or use sick time, 2 -3 sick bank, to be used or Continuation Plan i ; deferred comp days per event paid at 1/3 of balance up to I i i -- - -.. .....;...._..----- ._....... - - -- - - - -- ___.'. -- -- ------- - - - - -- - - - -- - n seperation. 0 days upo sepe on. t' Accrue up to 1440 hours. Pay out 25% at I not deducted — severence after 5 Y ears of service and 50% after from sick or 10 years of service. I vacation I — - - -- ...._ _.....__..._.... _.. -- Accrue up to 480 hours. Employees with more T than 480 hours can exchange up to 40 hours for 100% No cash or 80 hours into the HCSP. i Accrue up to 960 hours. 50% of hours beyond Internally funded, up to I 120 days. 720 can be cashed out @50% into deferred comp. No Sick paid 50% into DC at seperation. i Accrue up to 960 hours. Hours accrued beyond 960 go into a "sick bank" to be used only after all regular sick leave has been exhausted. I Accrue up to 960 hours. 1/2 of hours in excess of I 480 cashed out annually as cash or deferred i 100% - - - - -. _ ... - - -I - -- comp. -- Accrue up to 480 hours (for employees hired since 2005). Hours above 480 cashed out at 50% j each year into H.S.A. or deferred comp. Paid at , 50% at severance. i Short-term disability starts after three weeks' n/a 100% of disability, internally funded and managed. n/a No up to 3 days n/a III i Vacation above max is use -or- use sick n/a lose. 1 day of bereavement leave, can then use 2 days of sick i time, then use vacation Employees earning 26 days per Allowed employees to keep ! year and with a balance of 220 separate from I existing leave in separate hours or more may transfer 20 I annual leave accounts and use as hours into deferred comp. i appropriate. Y 25 ` 40 days I 23 30 days 25 30 days 23 I 1.5 x 2x if hired after 25 January 1, 2011 or 2.5x otherwise 21 26.25 1 30 days Vacation time converted to After 5 days, Internally I not required to PTO. Sick time placed into Funded Salary n/a ! 100% 4 days per year, to cash or use sick time, 2 -3 sick bank, to be used or Continuation Plan i ; deferred comp days per event paid at 1/3 of balance up to I i i -- - -.. .....;...._..----- ._....... - - -- - - - -- ___.'. -- -- ------- - - - - -- - - - -- - n seperation. 0 days upo sepe on. t' Accrue up to 1440 hours. Pay out 25% at I not deducted — severence after 5 Y ears of service and 50% after from sick or 10 years of service. I vacation I — - - -- ...._ _.....__..._.... _.. -- Accrue up to 480 hours. Employees with more T than 480 hours can exchange up to 40 hours for 100% No cash or 80 hours into the HCSP. i Accrue up to 960 hours. 50% of hours beyond Internally funded, up to I 120 days. 720 can be cashed out @50% into deferred comp. No Sick paid 50% into DC at seperation. i Accrue up to 960 hours. Hours accrued beyond 960 go into a "sick bank" to be used only after all regular sick leave has been exhausted. I Accrue up to 960 hours. 1/2 of hours in excess of I 480 cashed out annually as cash or deferred i 100% - - - - -. _ ... - - -I - -- comp. -- Accrue up to 480 hours (for employees hired since 2005). Hours above 480 cashed out at 50% j each year into H.S.A. or deferred comp. Paid at , 50% at severance. i Short-term disability starts after three weeks' n/a 100% of disability, internally funded and managed. n/a No up to 3 days n/a III i Vacation above max is use -or- use sick n/a lose. 1 day of bereavement leave, can then use 2 days of sick i time, then use vacation Employees earning 26 days per Allowed employees to keep ! year and with a balance of 220 separate from I existing leave in separate hours or more may transfer 20 I annual leave accounts and use as hours into deferred comp. i appropriate.