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CC WS 2021 09 27CHANHASSEN CITY COUNCIL WORK SESSION MINUTES SEPTEMBER 27, 2021 Mayor Ryan called the work session to order at 5:01 p.m. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilwoman Rehm, Councilman McDonald, and Councilwoman Schubert. COUNCIL MEMBERS ABSENT: Councilman Campion. STAFF PRESENT: Laurie Hokkanen, City Manager; Charlie Howley, Public Works Director/City Engineer; Kelly Strey, Finance Director; Ari Lyksett, Communications Manager; Don Johnson, Fire Chief; Richard Rice, IT Manager; Kate Aanenson, Community Development Director; Jerry Ruegemer, Park & Recreation Director; and Kim Meuwissen, City Clerk. PUBLIC PRESENT: Bryan Blommel, 6870 Utica Lane. Hokkanen introduced the three items on the work session meeting agenda. REVIEW CLASSIFICATION AND COMPENSATION STUDY Hokkanen presented a PowerPoint presentation of the Classification and Compensation study. Along with implementing supervisor training for employee evaluations, the study was a Strategic Initiative resulting from the Strategic Priority of Operational Excellence. Background: Converted to a performance based pay plan in 2007, with the most recent update in 2016. Issues around compensation have been identified through collective bargaining and in the 2020 employee survey. The City hired McGrath Consulting in March 2021. Dr. Victoria McGrath reviewed job descriptions and employee questionnaires, assigned points to each job, conducted market research, worked with department heads and managers to review and refine her findings, and then provided recommendations. Goals: We want to be competitive in our peer cities, make sure that positions that do similar work are paid similarly, attract and retain well-qualified personnel, and maintain compliance with the pay equity act. Hokkanen presented a list of 20 comparable cities that responded to a salary survey to provide market data for the study – Inver Grove Heights did not respond. Hokkanen noted that this list was the most recently adopted list of comparable cities, which is also used for budget purposes. City Council Work Session Minutes – September 27, 2021 2 Findings: • Starting pay is not competitive in many cases. The majority of our minimum hiring salaries need to be adjusted to better align with the average market • 44% of our positions are below the market minimums, and another 20% that are in range but in danger of falling below • Midpoint comparison: Goal is to be in the 40-60% of the comp ratio. 75% of our positions currently have a midpoint that is in line with the average market rate. Our midpoints are actually in pretty good shape. The issue is whether employees are achieving progression to the midpoint. • Incumbent Comp Ratio: Employees should reach the average market rate within 3-5 years of service. 55% of positions are below the average market rate. 43% are at or above the average market rate. This might look good from a statistical analysis, 29% of our employees have 20 years or more of service so you would expect to see a larger number of people who have achieved the higher end of their salary. Summary: • Minimums of the schedule need to be adjusted to better align with the appropriate salary range. • Current system only has 10 grades or salary ranges which creates part of this problem. Amount between the minimum and maximum is probably too large. We don’t have a system for employees to move from the minimum to the midpoint and to the maximum. • Add more pay grades to adequately put positions in their comparable market range with other people that do like work and to help address compression between pay groups. • A number of employees have 13-33 years of experience. They should all be in the 60- 100% comp range but instead are in the 30-60% range. We have put together our wage ranges so that when we look at the market data an employee should be able to reach the maximum of their salary range, but our pay system has been implemented such that people are not progressing to the midpoint. We would like people to get the midpoint within 3-5 years. But if they stay with us beyond 3-5 years, the pay system is set up so that they could expect to reach their maximum, but in practice and in implementation neither of those things are happening. Employee Demographics: • As of March 21, 51% of employees have five or less years of service. Probably closet to 55% now since we have had a couple of more departures since that date. We are not seeing the tenure of service that we did previously. • A little more than half of the employees are 50+ years in age. The retirement wave that we have already been experiencing we still have some of that coming up. • 11.2 average years of service averaging all employees. We aren’t seeing the same kind of retention with the employees that have been hired within the last five years. Mayor Ryan asked how long people typically stay in one position. Hokkanen responded that 6.6 years is the national average for state and local government. The City has had so many long- tenure employees and no matter what the City does, will probably not happen in the future. We City Council Work Session Minutes – September 27, 2021 3 want to find that tenure, which is probably around that 5-6 years average, where the City is not constantly retraining. That you have enough time with an employee after you’ve made that investment in training that you are benefitting from their service. When they leave particularly less than two years, then that’s a high turnover cost to the organization. Mayor Ryan asked are some cities more likely to get more experienced employees at different levels depending on the size of the city? Does that come into play at all? Mayor Ryan stated for instance, if you lost somebody to a Minnetonka or an Eden Prairie, maybe they can offer something more financially rewarding because they are a bigger city. Hokkanen responded that Dr. McGrath did not look at that question specifically. Having worked in a large city that tried to be at the top of the market that was certainly a philosophy. If you could pay more, you could attract top talent and the scope of projects is bigger. I think that is embedded in other organizations. Strey mentioned that they offer different types of positions. Proposed Pay Plan: • Pay philosophy: middle or slightly above middle of the market • COLA increase to salary schedule and to employees annually, in January. This would help us keep the pay plan competitive. • Performance-based step increases in July o Once step 9 is achieved, only eligible for COLA • Implement Grade and Step System o 19 pay grades in a 9-step system o Progression to the next step is tied to performance which requires a positive performance review • Salary schedule adjusted annually by COLA – maintains alignment and competitiveness. Councilmember Schubert asked if people chose to work close to home as a decision-making factor other than pay. Hokkanen stated there wasn’t specifically in this study but we did factor that in when we set our new comparable cities. Councilmember Schubert stated we want pay to be comparable but if most of our people live within 10 miles of Chanhassen, are we focusing more on the cities that are within that 10-mile radius as well versus the cities that are on the other side of the town that are in that list of comparable cities? Hokkanen stated there is no weighting based on those type of factors. Our employees do not traditionally live within 10 minutes or 10 miles of Chanhassen. We are drawing from quite a range and we do have employees that make significant commutes. Strey added that it is somewhat weighted in that we have more cities that are close to us in that list than the farther away ones. Hokkanen stated that when we set our new comparable cities we did not include cities in the outer ring that we used to use as comparable cities. Hokkanen presented a chart detailing the plan. City Council Work Session Minutes – September 27, 2021 4 Highlights: • 5 employees need adjustment of 10%+ (across all ranges) • 2 employees would be out of range/wage freeze – most likely would receive a lump sum equivalent to the COLA amount until such time that they were back in the range • Average increase across all employees is 2% • Planned COLA for 2022 is 2.5% Implementation Timeline: • Adopt Pay System and Policy Manual o As soon as October 11 • Employees receive adjustments in 2021 o Come onto appropriate place in play pan • Employees receive COLA in January 2022 • Eligible employees receive step increase in July 2022 • New employees receive step increases on anniversary date Mayor Ryan asked if employees that will receive adjustments in 2021, has that been budgeted for? Hokkanen replied that Strey would talk about that in her presentation but we are suggesting we would use fund balance from 2020 to make those adjustments. Mayor Ryan asked for questions. Councilmember McDonald asked how comparable cities are selected. What is the criteria? Hokkanen replied that we updated those earlier this year and we had a variety of factors. Strey explained the process used to select comparable cities. McDonald asked what the goal is. Hokkanen replied that when we take the average from all of these cities, our goal is to be right in the middle. Mayor Ryan asked for clarification of the costs in 2021 and 2022. Strey stated that what would be spent in 2021 is less than $50,000. The budget increase in 2022 of $150,000 is a one-time cost. Councilmember Schubert asked if outside benefits offered beyond pay are equal across all the cities as well in terms of health insurance premiums. Hokkanen replied that in the past we have been slightly above the middle of market for what we offer, factoring in life insurance, dental, health, HSA contribution, etc. Periodic analysis of where we fall on those is conducted. Mayor Ryan asked if the area that we are struggling the most with is retention or retraction. Hokkanen replied that both are issues. We are losing employees. Pay is not everything. Staff and Council have put a lot of effort into other aspects of benefitting employees – employee culture, doing more fun things, make sure that people feel valued, offering more training and development opportunities, offering competitive benefits. We are experiencing a higher number of people who like to work here but will go elsewhere because of an increase in pay. As far as attracting candidates – pools are much less than in the past. Mayor Ryan mentioned some of the City Council Work Session Minutes – September 27, 2021 5 intangibles are also the costs that go into training in not dollars but in hours spent during the hiring process. Councilmember Rehm asked if the Rec Center Supervisor job has been filled and is part of the reason that we don’t have a salary that matches the demand for that job. Hokkanen clarified that the salary schedule is for full-time employees but once this is in place, what do the corresponding part-time salaries look like. Salary is a factor in that and the scarcity of the people looking for part-time work. Councilmember Rehm asked if that would be another study that would be brought to the Council to look at. Hokkanen stated it would not necessarily be a study but an accompanying range for part-time employees. Strey stated it would probably more of an internal survey of our comparable cities. Mayor Ryan asked what staff was looking for from Council. Hokkanen stated staff wants to know what additional questions Council has before they consider adopting plan. The tentative plan would be to have this on the October 11 City Council meeting for adoption. 2022 BUDGET DISCUSSION Finance Director Strey presented a PowerPoint presentation on the Preliminary Tax Levy Adoption. Upcoming Budget Meetings: • September 27 City Council meeting – Adopt Max Tax • November 8 Work Session o Budget Review – all funds o Fees & Charges Review o Utility Rate Review o CIP Review • November 22 Work Session (Tentative if needed) o Reserve for follow up discussion • December 13 City Council meeting o TNT Meeting (separate meeting not required) o Adopt Budget Strey provided a detailed review of property tax levy impacts for 2022 and 2023 projection. She then reviewed the line items for the property tax levy impacts. One of the items outlined in the General Fund proposes $60,000 to address the increased fire response trend. Fire Chief Johnson discussed the increased fire response trend and the need for increased daytime level of service. Hokkanen stated that the $60,000 was a placeholder so if this trend continues over the next few months there will be funds available to address it. This would give the Council the flexibility to respond without waiting for the 2023 budget. Mayor Ryan asked about using American Rescue Plan Act (ARPA) funds for this purpose. Hokkanen stated that these funds can be used to increase staffing beyond where you were pre-COVID if an increase in violent crime can be demonstrated, but upon review it was not evident that we could use ARPA funds for this purpose. Staff said they would look into further and report back. City Council Work Session Minutes – September 27, 2021 6 Strey presented a slide showing what the impact would be on a $400,000 home. The annual increase would be $25-$29 per year (2.9% - 3.3%). Chanhassen’s 2022 tax is 30%-120% less than comparable cities’ 2021 tax. Strey reviewed 2021 staffing changes and 2022 proposed staffing. Strey also reviewed the General Fund balance available highlighting the current available fund balance, 2021 budget amendments to use fund balance, and 2022 proposed budget calls for one-time use of fund balance. Strey presented successes in the General Fund, Capital Funds, and Outlook for maintaining AAA bond rating is positive. Strey reviewed some challenges and opportunities, specifically in capital plans, planned debt in the Enterprise funds has been increasing, and inflationary pressures are increasing. Strey concluded the presentation and reviewed the proposed motions are to either set the tax levy with a 4.5% increase or to set the tax levy with a 4.9% increase. Mayor Ryan asked the Council for questions. Councilmember McDonald questioned what he was giving up by going from 4.9% down to 4.5%. Hokkanen responded that we would be giving up future flexibility. $50,000 in contingency would be available between now and December. Mayor Ryan questioned the $60,000 (increase fire response trend) placeholder without a specific plan. She wants to see a plan before the December meeting. She also wanted to have more conversation about COLA and the step program ($335K). Her overall concern is with the increases from 2022 to 2023. A possible park referendum still has not been addressed. She has concerns about the facilities study and increases from 2022 to 2023. Councilmember McDonald shared Mayor Ryan’s concerns about the placeholders. He would like to see details before December. He is not in favor of passing budget with a $60K placeholder even for fire services. The budget is good but we still need more details before we start passing numbers. Strey stated the budget book will be posted on website tomorrow. McDonald replied that once you post the budget we are going to start getting questions. We need to be able to answer these questions. Councilmember Schubert wants good and clear communication on COLA and step increases. Why are we increasing employee pay when other businesses are unable to pay their employees market value. Councilmember Rehm said the presentation was clear. Her preference would be to go with the 4.9% as she would rather have the leeway. City Council Work Session Minutes – September 27, 2021 7 Mayor Ryan thanked Kelly for the presentation. The work session was recessed at 6:50 pm. The work session resumed at 8:23 pm. DATA PRACTICES ACT DISCUSSION Hokkanen provided background that the City Council has been receiving a lot of data requests from resident in particular; however, this is a growing trend. She introduced City Attorney Andrea McDowell-Poehler to talk about what Council’s responsibilities are and to answer questions. McDowell Poehler stated that ultimately the City Council has little or no responsibility when it comes to data practices, except to the extent that there can be liability if you share data that is public or private confidential data or if you have data that you need to provide to the City so that they can respond to a data request. Possibly a personal computer or cell phone if you are doing city business on them. Councilmember McDonald asked about city emails being forwarded to his private email. McDowell Poehler responded that it is okay as long as it is coming through your city email. Hokkanen added that a best practice would be to communicate through city email as opposed to personal email. Councilmember Rehm asked about receiving messages via Facebook. McDowell Poehler responded that we are not there yet. There is no specific law. Ultimately, data is data regardless of how it comes in. Hokkanen brought up the records retention requirements. We always have to provide data if we have it. Mayor Ryan stated that we (specifically the Mayor and City Manager) have been accused that we’ve been conducting criminal activity as it relates to some of the data requests and conversations. McDowell Poehler responded that the City has not done anything criminal in responding to data requests as they come in. There is time involved in reviewing data for redaction, typically it’s 10 days. Mayor Ryan asked what happens if it takes longer than 10 days. McDowell Poehler replied that it is not going to be criminal. Nobody is going to bring action on that while the City is doing its due diligence. Mayor Ryan asked what has been done in terms of this specific data request. Hokkanen responded that we handle all data practices requests the same. When they come in we first work to understand what the requestor is looking for so we can provide the correct data. In most cases we are not able to charge for providing the data. In this specific request, the requestor asked for pretty much anything to do with four members of their family, especially correspondence. Out IT professionals go through and do some keyword searches, email addresses and first and last City Council Work Session Minutes – September 27, 2021 8 names. Those are placed in a file and staff needs to review each item to make sure there is no private data that needs to be redacted or not included. In this case it was several thousand emails given the commonality of the name involved. Those are then put on a sharefile site which allows the person to access the data remotely without having to come into City Hall or having to pay for copies. We are continuing to see clarification. We do have a data request form that is published on our website but people are not obligated to use our form. So many data requests come in where they are asking for data they are entitled to but they are also sharing a lot of opinions and extraneous information. Councilmember McDonald asked about private data. The emails we were receiving were also asking for private data. What their interpretation of the Data Practices Act (“Act”) was that they would have access to all data, private or not. What can we say is private data and we wouldn’t share it. McDowell Poehler stated the Act is a large portion of the statute and it goes through all types of data for every sort of government and identifies what is public or what is private. When a request is received, the reviewer has a pretty good working knowledge of what is private or public. When they have questions they will call our office. I always check the statute for updates on what data is private. Hokkanen stated that if we had a police department we would have a lot more private data. We don’t maintain very much data that is classified as private. Social security numbers, email addresses, enrollment and registration records on minors are private but we don’t maintain very much data that is classified as private, largely because we don’t have a police department. As the City Clerk, Kim Meuwissen is now the Responsible Authority and will be the first point of contact for data requests. Assistant City Manager Matt Unmacht will be the Compliance Officer. Historically both positions had been assigned to the Assistant City Manager. Rick (Rice) does a lot of the work that actually goes into finding and putting together the data. We are not required to update policy annually. Staff looks to the City Attorney’s office for expertise and support. Members of the City Council asked questions of the City Attorney to gain better understanding. Hokkanen stated that we believe in the Data Practices Act. We are committed to having fair and open and transparent government. Most of the time when someone is looking for something we don’t need to engage in the Data Practices Act request to respond to them. We try to be as helpful as we can with the least formality as possible and there are times when a formal request should be submitted, but this type of situation usually occurs when there is some other breakdown in communication or ability to work together. FUTURE WORK SESSION SCHEDULE The meeting adjourned at 8:47 pm. Submitted and prepared by Kim Meuwissen City Council Work Session Minutes – September 27, 2021 9 City Clerk