Item 9B MemoCity of Southlake, Texas
MEMORANDUM
July 10, 2003
TO: Billy Campbell, City Manager
FROM: Kevin Hugman, Director of Human Resources
SUBJECT: Resolution No. 03 -043, Amending City of Southlake personnel policies regarding
employee benefits, including vacation, compensatory time, and sick leave
benefits; and implementing a one -time monetary reduction of employee's accrued
vacation and compensatory leave.
Action Requested: City Council approval of Resolution No. 03 -043, amending the personnel
policies to implement a cap on accruals on vacation, compensatory time and
sick leave accruals; and authorizing the City Manager to compensate
employees on a one -time basis to reduce accrued leave balances to levels
below the limits as amended by the proposed policy revisions.
Background
Information: Through the years, City employees have accrued many hours of unused
vacation leave and compensatory time. These accrued paid leave balances
have created a significant financial liability for the City because the monetary
value of the accrued paid leave balance must be accounted for in the General
Fund balance. The total financial liability has continued to grow due to (1) no
existing enforceable limits on leave balance accruals, and (2) the increase in
employee wage rates over time which increases the dollar value of each hour
of earned leave. In addition, the purpose of vacation and compensatory time
off in allowing an employee to "recharge" is defeated when employees do not
use their paid time off
Staff conducted surveys of 14 area cities to determine a fair method of limiting
the City's financial liability due to unlimited paid leave accruals, while also
considering the needs of employees and the various work units. The following
are highlights of the proposed policy revisions to Chapter 4 "Wage and Salary
Administration" and Chapter 6 "Employee Benefits:"
• Accrual of compensatory time in lieu of wages for overtime hours worked,
will be capped at 48 hours for all employees. All other overtime will be
paid in wages.
• Vacation leave accruals will be capped at 240 hours for regular employees,
and 360 hours for fire shift personnel (who accrue and use leave at a higher
rate since they are on 24 -hour shifts). Accruals of vacation leave will cease
when an employee reaches the specified limit.
• Sick leave accruals will be capped at 720 hours and will cease to accrue
when an employee reaches those limits. Resolution No. 03 -043 will allow
those employees with sick leave balances in excess of 720 hours to retain
the difference, but to cease accruals until such time as their sick leave
balance is reduced below 720 hours.
Billy Campbell, City Manager
July 10, 2003
Page 2
• Continues current policy of payment of accrued sick leave, up to 400
hours, upon separation from City with 20 years of service or more, but now
includes exception for involuntary termination.
• Added restrictions for death -in- family leave, court leave and military leave
benefits.
• Included modifications to Employee Benefits section to reflect Family
Medical Leave Act (FMLA) policy.
Financial
Considerations: The proposed policy will allow the City to control its financial liability due to
accrued paid leave balances by restricting the balances allowed. Resolution
No. 03 -043 also authorizes a one -time buy back of accrued vacation leave and
authorizes buy back of compensatory time. The estimated cost of buy -back for
accrued vacation leave is $300,000 to $500,000, depending on the amount of
vacation leave sold back by employees (selling back to maximum or minimum
balances). Accrued compensatory time is approximately $150,000.
The General Fund balance includes the total financial liability of all accrued
paid leave, therefore, funds exist in the General Fund to allow the buy -back
provision of Resolution No. 03 -043. The buy -back will significantly reduce
the current financial liability, and the proposed policy revisions will ensure the
future liability does not reach current proportions.
Citizen Input/
Board Review: Not Applicable.
Legal Review: The City Attorney has reviewed the policy.
Alternatives: Input as desired by Council.
Supporting
Documents:
• Resolution No. 03 -043, Amending City of Southlake personnel policies
regarding employee benefits, including vacation, compensatory time, and
sick leave benefits; and implementing a one -time monetary reduction of
employee's accrued vacation and compensatory leave.
• Chapter 4 "Wage and Salary Administration" (underline /strike - through
with changes).
• Chapter 6 "Employee Benefits" (underline /strike - through with changes).
Staff
Recommendation: City Council approval of Resolution No. 03 -043, amending the personnel
policies to implement a cap on accruals on vacation, compensatory time and
sick leave accruals; and authorizing the City Manager to compensate
employees on a one -time basis to reduce accrued leave balances to levels
below the limits as amended by the proposed policy revisions.