Minutes of the October 9, 2013 Board Meeting

MINUTES OF THE SPECIAL MEETING

OF THE BOARD OF DIRECTORS OF THE

IRONHOUSE SANITARY DISTRICT

October 9, 2013

The Ironhouse Sanitary District (ISD) Board of Directors met in Special Session to hold a Special Meeting on Wednesday October 9, 2013.

The place of the meeting was the Ironhouse Sanitary District Office at 450 Walnut Meadows Drive, Oakley, California.  The meeting was called to order by President Lauritzen at 6:02 p.m.

 1.      Call to Order  

2.       Roll Call:

          Pledge of Allegiance

Members present:               David Contreras, David Huerta, Chris Lauritzen, Michael Painter, and Doug Scheer

Members absent:                none

Staff/Consultants present:     Tom Williams, General Manager

                                      Susan Walde, District Secretary

                                      Bob Henn, District Counsel

                                      Shana Whitford, Administrative Assistant

                                      Beverly Dagneau, Sr. Accounting Technician

                                      Jim Moore, Lead Maintenance Worker

                                      Brian Connelly, Maintenance Worker II

                                      Dominick Gardiner, Maintenance Worker II

Interested parties present:     Steve Rosner, Oakley, CA

3.       Approval of the Agenda

          M/S D. Painter, M. Scheer, D. and the Board voted to approve the Agenda.

 4.      Public Comment – There were no comments from the public in attendance.

 5.      BUSINESS BEFORE THE BOARD

          A.  Consideration of Adopting Resolutions No. 13-04, 13-05, & 13-06, Resolutions Fixing the Employer’s Contribution Under The Public Employees’ Medical and Hospital Care Act.

          Mr. Williams stated to the Board that the current covered medical for employees is family Kaiser Basic Family Plan Rate which is $1,738.44.  There was an approved amount for medical insurance in the budget for 12%.  The increase to Kaiser Basic Family Plan Rate is an increase of 11.08% which is well within the budget for medical.  This is the first year that Kaiser Basic Family Plan Rate is not the lowest cost coverage but, for 2014 it is now one of the highest cost family plans.  We currently have 16 staff members on family medical coverage.  We have 14 families covered by Kaiser and 2 covered by Blue Shield.  In addition, we have one retired employee utilizing family medical coverage.  Mr. Williams reviewed with the Board the recommendation stated in his staff report which is to adopt the Resolutions 13-04, 13-05 and 13-06 covering up to a per employee maximum contribution of the monthly Bay Area Kaiser Basic Family Rate, or $1,931.07, for staff and retirees. 

          Director Lauritzen stated an apology to the Board for not being able to attend the October 1^st meeting.  It was his suggestion to hold a special meeting of the Board to make a decision for staff to have a chance to change their medical plan if needed prior to the close of open enrollment.  With that in mind, President Lauritzen asked for comments from the audience on the agenda item. 

          Dominick Gardiner, an ISD employee, spoke to the Board regarding his opinion; he would like the Board to consider continuing to maintain the cost of the Kaiser Basic Family Plan benefits coverage over a considered salary increase. 

          Beverly Dagneau stated she felt likewise.

          Shana Whitford stated she as well felt likewise.

          Mr. Gardiner stated that maintaining health insurance for families of the employees is far more superior in preference, and due to the open enrollment closing on October 11, it will be challenging for families with preexisting medical conditions to find comparable Doctors under another insurance plan. 

          President Lauritzen stated that the Board understands the concerns of the employees and have the same issues with medical insurance as staff.  In the private sector, life is changing quickly.  He gave an example of a large corporation now hiring employees for 27 hrs. vs. 40 hrs. to get under the medical insurance requirement.  He gave examples of how in private industry, the employee insurance may be covered and the employee is given the opportunity to cover the family with the employee paying the increased cost for family coverage.  President Lauritzen asked staff in the audience about considering contributing some amount to their medical benefits.  He gave an example of the potential Bart strike and the issues they are dealing with.  He stated that last year the Board made a change in the way the Directors get their medical coverage going forward.  He gave the example of Director Scheer and how he has his family covered and pays the district for that coverage and at retirement there will be no benefits for him.  He stated that change is coming to the industry.  The employer contribution is on the table, the full family medical is covered this year, but the Board needs to consider next year going forward and consider a possible employee contribution.  He also stated that Obama Care has an uncertain effect on the future on medical coverage.  The Board has a big decision to make.

          Director Huerta stated that under the Affordable Care Act as of October 1, 2013, the insurance companies take preexisting medical conditions.

          Director Contreras asked of staff when they are made aware of open enrollment?  Staff answered that they received a notice from CalPERS in the mail and Ms. Dagneau sent out a memo to all staff in early September.  Director Contreras suggested that General Manager should have notified staff of the Board’s decision to consider a cap for medical insurance in 2012. 

Mr. Williams stated the Resolutions are drafted for the Board’s consideration to be filed with CalPERS.

Director Scheer asked about the language related to the minimal contributions.  Mr. Williams explained that it is a requirement for the non-PERS Retirement and Directors. 

Director Scheer stated that he would like to have a specific dollar amount for the District’s per employee maximum contribution stated in the Resolutions.  He stated his insurance will go up 35% and so will others.  His recommendation to the Board is to establish a specific amount to be paid by the District for 2014. 

President Lauritzen stated that it will be up to staff to review the individual plans offered by CalPERS to determine coverage changes.  He asked Mr. Williams when the District is noticed about the rates and increases.  Mr. Williams stated the earliest we know there was a webinar on July 24^th stating what the new costs would be.  President Lauritzen asked that as a district we consider the individual plans or dollar amount earlier each year.  The plans are changing and Kaiser is no longer the affordable family coverage.  In the past, the Board has used it as a benchmark.

Director Contreras stated that he agrees with Director Scheer on setting a specific dollar amount for District coverage.

Director Scheer stated that all the plans offered to the employees by CalPERS are good plans and we as a Board should cover the most affordable.

Director Painter said this past week, he has been tallying the employees to see who prefers a salary increase or an increase to cover full medical.  He made a recommendation to the Board to consider using the amount considered in the budget and cover the 11.08% increase to full Kaiser Family Medical and consider making changes next year. 

Director Huerta stated his recommendation is for the District to set the amount paid for medical up to $1,738.44 on the Resolutions for 2012.  He stated that we (the Board), had a discussion that the Board has to make a decision on changing an open ended amount to be covered for medical insurance. 

          Director Contreras read the minutes from the November 2012 meeting. The proposed minutes read:  “The Board unanimously voted to adopt Resolutions 12-10., 12-11, and 12-12 fixing the employer’s contribution under the Public Employees’ Medical and Hospital Care Act as up to a maximum of the Bay Area Kaiser Basic Family Rate of $1,738.44 per month for ISD employees and retirees for calendar year 2013; and for Directors, up to a maximum of $115 per month.”  He then stated that Director Painter said at the Oct. 1 meeting he too had recollection of the Board putting a cap on the medical. 

          Director Lauritzen indicated it was his recollection the Board did have a discussion about eventually capping medical for the employees, but the Board was going to wait until the Koff study results where complete.  

Director Contreras asked that if an amount is allocated in the budget, is it spent?  He stated he sees it as a placeholder.

          Mr. Williams pointed out that the action taken last year was a cap established only for calendar year 2013, and the action did not extend to calendar year 2014.  Each calendar year ISD must take a new action indicating what its maximum contribution will be and inform CalPERS.      

President Lauritzen stated the debate is what we can afford.  He was asked by Director Painter at the meeting; are we going to move forward without the Koff study?

Director Huerta addressed the allocation in the budget for the 2014 medical increases.  He stated the money was budgeted, whether the Board knew the employees comparables on the Koff study, he would like to state that the Board set the rate at the Kaiser family rate dollar amount as a cap.

Director Contreras apologized to staff that they were not made aware of the Board’s intent on medical coverage to propose savings in the future.

President Lauritzen stated that the Board’s intent was to lead by example, but we weren’t going to address capping the medical without the Koff study results and have the staff taken care of. 

Director Contreras stated that all the plans offered by CalPERS are good plans and he recommends keeping the contribution rate as it is.  The rate payers are getting hit with increases without consideration of fairness to them. 

President Lauritzen stated that the families that are currently enrolled in the Kaiser Family Medical will have a $192.63 impact without changing to another plan. 

Director Contreras brought to the attention of the Board that most families contribute to the expense of medical coverage for a family.  Director Scheer reminded the Board that the City of Oakley only pays $1,034 toward an employee’s insurance. 

Mr. Williams pointed out on a spreadsheet, the medical insurances coverage offered by the different comparators on the Koff study.  As we go down the road, we need to consider keeping benefits comparable to retain good staff.  He understands that keeping up with other districts is a hard pill to swallow.  He asked the Board to consider setting a level to be competitive; considering proximity to home, work environment and benefits.  He stated that in 2006 the Board established the benchmark to keep the District at the 50 percentile. 

M/S D. Scheer, D. Contreras and the Board voted to pay up to $1, 738.44 for the coverage selected by the employee or annuitant for 2014.  Opposed: M. Painter.

President Lauritzen stated that we don’t know the future of the medical insurance costs, and how they are going to impact the District.  He would like the Board to consider in the future offers for the employees.  Fiscally, the Board has a responsibility to the rate payers.  He stated this is a revolving item.  He recommended the Board bring in a medical insurance expert to make recommendations to the Board regarding the outlook for future medical trends.

Discussion was held regarding how the capped amount will impact the retirees and will be capped at the $1,738.44.  Discussion was also held on the need to review the future medical costs and the impact on the District and the need to notify employees in a timely manner for their medical insurance planning.  President Lauritzen determined the consideration of medical insurance coverage should be brought back to the Board for review next April for determination before the budget process concludes.

At 7:10 p.m. - The President called for a short recess.  At 7:20 p.m. the Board reconvened.

          President Lauritzen motioned, seconded by D. Contreras to amend the previous motion to adopt Resolutions 13-04, 13-05 and 13-06; as recommended and submitted in the Board packet, and stating up to the maximum of $1,738.44 and not the monthly Bay Area Kaiser Basic Family Rate for Resolutions 13-04 and 13-06.  Resolution 13-05 is adopted as recommended, up to a maximum of the minimum employer contribution.

  

          B.  Review and Discussion of the June 2013 draft Total Compensation Study for the Ironhouse Sanitary District.

Mr. Williams provided several financial scenarios impacting the future budget if we were to adopt the current Koff study as presented.  He issued a spreadsheet showing where the District sits in comparison to the 50 Percentile and a range placement recommendation spreadsheet showing each position.  Along with these he issued a proposed list of comparators from the salary study.  Mr. Williams gave clarity to each document provided and reviewed the numbers with the Board.

President Lauritzen asked what we can do to help the employees that have value to the District. 

Mr. Williams stated there are ways to help families and gave an example of encouraging employees to participate in the District’s deferred compensation plan; possibly by offering a small District match for employee contributions.    

Director Painter asked Mr. Williams if he can give raises to employees that are doing a good job.  Mr. Williams stated that no, he cannot.  Once we set the classification step ranges we cannot increase employee pay above the top of class. 

Director Scheer stated that we should be able to reward someone for excelling in their job.

Mr. Williams briefed the Board on the process of putting the Koff study together.  Mr. Williams reviewed the bench mark classifications and reviewed the data on the spreadsheet. 

Director Contreras reviewed salary and health care benefits for the General Manager with the Board.  Discussion was held on these comparables.

Director Contreras spoke for the finance committee that page 5 of the packet (Appendix IV – Range Placement Recommendations from the draft Total Compensation Study, TCS) is a review of the benchmark positions and classifications for future positions which will be reviewed in the near future when the Personnel/Human Resources committee gets together.  He gave an overview of the data on the spreadsheet including comments on the data sheet.  He stated there are some internal alignments for total compensation recommended by Mr. Williams. 

Mr. Williams stated that he is considering two internal re-alignments from the draft TCS for the Ranch, Levee and Reclamation Supervisor and District Secretary positions.  Mr. Williams indicated these two positions should be adjusted upward based on internal aligment considerations.   

Director Scheer stated he would like to see a benefit compensation included on the range placement recommendations spreadsheet.

Director Contreras stated that sheets 1&2 (Koff Adjustment Effect on Budget and Net Revenue Test) shows the estimated total adjusted expenses.  Sheet 1& 2 show what it would take annually to implement the Koff study for year one and year two.  It would be a $24 impact to the rate payer if fully implemented in the first year.  Page 2 shows the projections for connections and anticipated fees needed, including a 3% COLA and operating cost increases.  He wanted the Board to note that increases are based on conservative assumptions. 

Director Scheer asked the Board if we can just consider accepting increases for some of the positions. Mr. Williams gave some examples of internal alignments and positions, and how some positions are “tied” to others.

Director Contreras requested the Board to review what the rates would be, and asked what percent of total compensation are benefits? Mr. Williams indicated approximately 63% of total compensation is benefits, and a range he has seen for public agency benefits ratio is between 53%-78%.  Director Contreras stated the Finance Committee would like to hear from the Board. He stated the Committee has submitted a written recommendation to the Board and the committee is at logger heads with the General Manager and cannot move forward.  The District needs to meet the net revenue requirement test and we are, but only by a small margin of $114,000.

President Lauritzen stated the Board should ask are we being as efficient as we can; do we have a succession plan for replacing aging personnel?  He gave an example of how it took two years to implement an ADP payroll system for accounting and as a District we need to look at efficiencies.  He suggested we look at hiring contractors to fill some of the work needs.

Director Contreras stated the finance committee has been working with the General Manager to review these options. He asked what the consensus of the Board is.  Is it the Board’s intent to stay at the 50 percentile? 

President Lauritzen asked are you as a Board committed to staying there.

Director Contreras stated this is the perfect storm.  The new development numbers are not here and we are dealing with the factors of the economy.  The District has a three million dollar commitment now that we didn’t have before. 

President Lauritzen asked the General Manager where we are at now with compensation.  Mr. Williams stated that overall the employee compensation is at the 40^th percentile. He stated we need to be at the 50^th percentile to retain and attract good employees.

Director Huerta asked is that premeditated method required and how many employees have left. 

Director Scheer stated those days are gone.  With rates the way they are, he is not sure it’s that way anymore.  He agrees that we need to do something, but not at the 50^th percentile. 

President Lauritzen stated that business if fluid and we can’t be locked in.  He supports the 45^th percentile and would like to review again next year.  If we get more connections we can be more fluid.  He addressed the argument that we can raise rates.  He has not raised his harbor rates in years and small businesses have not raised rates.  Yes, he wants to retain employees, so we need to address what can we raise total compensation to and what we can do to show the employees we value them. 

Director Painter stated we need to be responsible and we need to review the compensation on a yearly basis to see as a Board what we can do.

Mr. Williams stated the assumptions in the Koff effects analysis are conservative.  He stated we need to review every year as we have increases in connections and connection fees. 

President Lauritzen stated the Board does not want to drop below the 40^th percentile and asked the Board what is our preferred level, what can we do to find a balance.  He is trying to be a good governor and trying to be fiscally responsible.  He stated we need to give the employees a little more and need to put more money in our reserve accounts. 

Director Painter stated we need to make a decision and an action to support the employees. 

M/S M. Painter, D. Huerta and the Board voted to direct the General Manager to meet with the Finance committee to review the study at the 43^rd percentile and the 45^th percentile and bring a recommendation back to the Board at the December meeting for a decision to be effective January 1, 2014. 

Staff Report: Mr. Williams reported to the board that the Chamber of Commerce mixer would be held here at the District office tomorrow October 10^th.  Mr. Haefke will be giving a tour of the WRF at 5:30 to any interested parties.  November 14^th the ECWMA will be holding their meeting here at the District office.  Ironhouse will be hosting the event.  He also stated he has signed up for CCWD’s presentation on the Bay Delta Conservation Plan (BDCP) and CCWD’s water modeling efforts, being held on October 25 at CCWD’s offices.  If any Board members are interested in attending to please let him know. 

  

6.       Adjournment

President Lauritzen adjourned the Special meeting at 8:58 p.m. to Tuesday, November 5, 2013 at 7:00 p.m. for the next regular meeting in the Ironhouse Sanitary District offices at 450 Walnut Meadows Drive, Oakley, California.