City Council Report
City Council Meeting: January 13, 2015
Agenda Item: 8-C
To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director of Finance
Subject: Contract and As-Needed and Staffing Review Report
This staff report summarizes findings of the Contract and As-Needed Staffing Review: Policy, Practice, Recommendations report prepared by City staff at Council’s direction. The report, included as Attachment A, examines when various types of staffing are used to provide services, what it would entail to convert as-needed and contract staffing to in-house permanent staffing, and includes a number of recommendations to convert certain as-needed and contract positions to in-house permanent positions. The report also presents a policy to guide City service provision practices moving forward.
The following is a summary of the findings:
As-needed. Staff reviewed all possible as-needed conversions, and analyzed each position against criteria for appropriate as-needed use, listed below:
· Fluctuating or Inconsistent Demand
· Seasonal Work
· Limited Daily Hours
· Fill Vacancies
· Pilot or Limited Term Program
· Unbudgeted Additional Service
Staff found that 47 percent of the total identified as-needed hours did not fit these criteria. Staff recommends converting these hours to 25.65 full time equivalent staff or 30 positions: 14.0 full time and 16.0 part time. This change would impact 40-50 current as-needed employees filling these hours. The recommended positions represent areas in which increasing and consistent operational need makes permanent positions a better staffing choice. These include customer service for recreational programs, parking meter collections, maintenance work in City buildings and the Pier, and custodial work on the Beach. Staff estimates the net cost of these conversions at $1.0 million, of which $0.3 million is in the General Fund.
Contracts. City staff follows the informal guidelines and criteria identified in the 2007 and 2009 review, and refined for clarity in the current study.
· Workforce Flexibility
· Specialized / Technical expertise
· Space Requirements
· Capital/ Equipment Requirements
· Proprietary Control
· Short term / Pilot
The City has 43 contracts over $100,000 annually, for a total of $23.9 million, or approximately 5 percent of the City’s FY 2014-15 operating budget; the same percentage as in the 2007 / 2009 reports. Staff estimates the net cost of providing all services in-house at $69.4 million. This cost includes a 371.7 FTE or 19 percent increase in the City’s permanent work force, and an approximately 90,000 square foot increase in space to house new staff, vehicles, and other equipment.
Based on a detailed review of each contract with these criteria, staff recommends converting five contracts providing general maintenance and repair, including bus facilities maintenance, city heating, ventilation and air conditioning (HVAC) installations and repairs, painting services, graffiti removal, and plan check and tree inspection services to in-house services. Staff estimates a one-time $0.8 million cost, with an ongoing $0.3 million cost above the current contract amounts for these conversions, of which $0.5 million one-time and $0.1 million ongoing is in the General Fund. Conversions would include 6.0 new full time equivalent positions.
Remaining contracts definitively meet criteria for contracted service. Each contract meets one or more of the established criteria, while the eight largest contracts – which make up approximately 70 percent of the total dollar value – meet two to four of the criteria. The Report presents detailed analysis for each of these contracts, and identifies criteria for contracts with lower annual amounts.
Policy. The recommended policy institutionalizes the contracted service and as-needed staff use criteria presented in the study. These are critical to ensuring that the City maintains its current practices, and that staff continues to provide City staff opportunities for delivering services if they can do so effectively. A policy would reinforce current practice, and would clearly state Council priorities and community values to current and potential City staff, contractors, and the community. Future staff reports recommending contractual services or as-needed changes would include an analysis of the need based on the policy to be adopted
Implementation / Phasing. Staff recommends converting certain as-needed hours to permanent positions, and bringing currently contracted services in-house. Implementing changes simultaneously and within a short period of time would increase the City’s overall budget by $1.8 million in year one ($0.8 million General Fund; $1.0 million other funds). The changes would also increase permanent staff by 31.7 FTE (10.5 FTE General Fund; 21.2 FTE positions in all other funds). Ongoing, the changes represent a $1.4 million increase ($0.5 million General Fund; $0.9 million other funds). Staff recommends a three-year process in phases to implement recommended changes:
Phase I: Policy Adoption and Direction on Conversions (January 13 Council Meeting). Council adopts recommended policy and prioritizes as-needed conversion proposals.
Phase II: Partial as-needed conversion (Five-Year Forecast / Midyear Budget) Based on Council direction, staff would create positions as directed and begin recruitment.
Phase III: Contracted services and remaining as-needed conversion (FY 2015-17 Biennial Budget). Staff would incorporate additional resource requests, including vehicle, space, and staffing, in department biennial budget request. Council would consider these in the context of the new budget and updated financial forecast.
As Council prepares to consider the financial forecast, these resource decisions involve tradeoffs. Other pressures, including previously-noted capital needs, affordable housing, health care and retirement costs, emerging needs for fire and non-sworn police staffing, augmentation of workers’ compensation funding, and public safety communications systems must be considered. Council will view these recommendations in the context of the City’s overall priorities at its January 27 meeting.
Council could direct staff to review additional areas, or to include greater or fewer conversion recommendations in either the as-needed or contracted staff areas. These directions would have direct impacts on service quality, existing contracted or as-needed staff, managers, and resource availability.
Council could not adopt the recommended policy, or could direct staff to revise the policy’s contents. Not adopting the policy would mean staff would continue to rely on existing informal policy and criteria to guide service provision decisions.