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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

 

 

Recommended Action

 

Staff recommends that the City Council:

1)    Review and comment on the attached As-Needed and Contracting Staffing Review (Report) and direct staff regarding prioritization of converting as-needed hours to permanent positions and a phased process to bring contracted services in-house;

2)    Adopt the Policy Guiding Decisions to Hire Contracted or As-Needed Staff for Non-Professional Services, Attachment D to the Report.

 

 

Executive Summary

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. 

 

 

Background

On August 26, 2014, Council requested that City staff perform a comprehensive study of the City’s contractual services, including an evaluation of the number of contracted employees and as-needed staff currently performing services for the City, and options to convert these jobs into permanent full time City positions. This study follows two previous reports to Council, in January 2007 and January 2009, in which staff presented an overview of the City’s contracting practices and recommended specific criteria to serve as the basis for contracting.  On both occasions, Council agreed with the criteria to be used in making decisions about contracting for services.

 

Discussion

Between September and December 2014, staff researched best practices and gathered internal information on the City’s contracting and as-needed staffing practices.  For internal information, all City departments provided information on 1) all as-needed staffing and 2) all contractual services over $100,000 annually.  Staff asked departments to identify the current status (what as-needed staff and contractual services the department uses and why), and what it would take to perform the service differently:  with in-house staff, or with permanent versus as-needed staffing.  Finally, staff asked departments to recommend any changes to current service provision methodology.  Finance and other department staff reviewed this information and identified associated costs. 

 

Report conclusions indicate that staff has continued to limit the use of contracted staff to those services meeting the established criteria, that the City also uses certain criteria when making the determination to use as-needed staff, and that the City provides competitive remuneration and strong protections for in-house and contracted staff.    

 

The Report recommends converting approximately 55,000 as-needed hours to 25.65 new permanent full time equivalent positions, and bringing services related to five current contracts in-house, which would add 6.0 FTE to permanent staffing.  These are areas in which staff tested current service provision against criteria, and the result indicated a need for change.  The Report recommends maintaining remaining as-needed staff and contracted services in their current state, based on criteria identified in the study and staff analysis. 

 

The Report concludes with a recommended policy to guide non-professional service delivery decisions, built on the criteria identified in the study.  This policy would provide consistent guidelines for managers and would reflect Council direction and community values.  Its adoption would reinforce the City’s commitment to fair treatment, transparency, and responsible use of resources. 

 

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

·       Risk

·       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. 

Alternatives

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.

 

Financial Impacts & Budget Actions

No immediate budget actions are necessary as a result of this recommendation.  Implementing the staff report recommendations will lead to a one-year $1.8 million cost, with an ongoing $1.4 million ongoing cost.  Following Council direction, staff will include these costs as appropriate in the midyear changes to Council (January 27, 2015) and in the FY 2015-17 Biennial Budget in May and June 2015. 

 

 

Prepared by:  Stephanie Lazicki, Principal Administrative Analyst

 

 

Approved:

 

Forwarded to Council:

 

 

 

 

 

 

Gigi Decavalles-Hughes

Director of Finance

 

Rod Gould

City Manager

 

Attachments:

A.  Contract and As-Needed Staffing Review:  Policy, Practice, Recommendations.