MINUTES OF A BUDGET WORK SESSION OF THE CHAPEL HILL TOWN COUNCIL

MONDAY, MAY 4, 1992 AT 7:30 P.M.

Mayor Broun called the meeting to order. Council Members in attendance were Julie Andresen, Joyce Brown, Mark Chilton, Alan Rimer, Art Werner and Roosevelt Wilkerson, Jr.. Council Member Joe Herzenberg arrived at 8:15 p.m. Council Member Joe Capowski was absent excused. Also in attendance were Assistant to the Mayor Lisa Price, Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Finance Director Jim Baker, Personnel Director Pat Crotts, Public Works Director Bruce Heflin and Town Attorney Ralph Karpinos.

Mayor Broun announced that this was Clean Drinking Water Week, and that he had signed a proclamation to this effect.

Mayor Broun noted that Council Member Herzenberg was in Hillsborough, representing the Council at the Orange County Commissioners' meeting, and would be late to the Council Meeting.

Mr. Horton briefly reviewed the budget matters before the Council this evening. He said that Mr. John Latimer had earlier submitted a letter to the Council concerning compensation and benefits and this would be the first issue on this evening's agenda.

Personnel Director Pat Crotts said that it is the Town's policy to treat all employees the same. For example, the 401-K pension plan and the Town's longevity plan both benefitted all employees equally. However, there are instances of different classes of employees being treated differently. For example, she said that drug testing was done for safety-sensitive positions only, and requirements for uniforms applied only to some employees.

Ms. Crotts said the Town tried to maintain a turnover rate of less than ten percent. She stated that it has been eight to eleven percent for the past several years. Ms. Crotts noted that the Town tried to meet service changes through turnover or attrition, rather than reductions in staff.

Council Member Andresen asked how many communities using merit pay systems reviewed positions every four years. Ms. Crotts said the larger communities did continual review, while smaller cities do them every four to seven years. Council Member Andresen said she understood the purpose of doing the review every four years was to reduce turnover by keeping salaries in line with area employers. She asked what resources were used to stay on top of the reviews and how much staff time was needed to do an ongoing study. Ms. Crotts said that if the entire study were contracted out, it would cost between $30,000 and $40,000. She stated that about one-third of her time and one-third to one-half of one staff member had been used during the review period.

Mr. Horton said the Town reviewed what it paid for work in order to stay in compliance with current laws such as the Fair Labor Standards Act. He stated that if the Town did studies less frequently than every four years, he would be worried about the Town's compliance. Council Member Andresen asked whether this kind of review process would be done if the Town did not employ a merit-based pay system. Mr. Horton said yes.

Council Member Andresen said she agreed that the Town was getting a better quality employee by keeping our salaries in line with benchmark salaries elsewhere in our market, but asked whether there wasn't an argument for examining private employers in the area also. Ms. Crotts said the Town was sometimes able to get only limited information from private sources. She pointed out that the study did not consider the highest-paying employers nor the lowest paying, but concentrated on those in the middle-range.

Council Member Brown said the economy likely had a serious effect on the Town's turnover rate. Mr. Horton noted that at one point recently the turnover rate was about four percent, which was very low. Council Member Brown said the municipalities used for comparison salaries had larger budgets than the Town. Mr. Horton said employees and potential applicants looked at the rate of pay when considering working with the Town, and did not consider the overall budgets of the Town. He said looking at the size of budgets may not be an indication of what salaries should be.

Council Member Rimer said Mr. Latimer's statement concerning necessary bus driving skills and training was erroneous. He inquired about the basis for position pay ranges. Ms. Crotts said the Town examined hiring rates as well as average salary paid for similar jobs in the market. She added that if some organizations set salaries for a particular job higher, and the Town lost employees to that entity, salary adjustments for these positions would be advisable. She noted that there were cross-checks for similar jobs to assure that correct rates were in use.

Council Member Wilkerson asked what would be the additional cost for providing the five percent 401-(k) benefit for those persons not mandated by State legislation. He said he would be interested in looking at the savings from stairstepping the benefit. Council Member Wilkerson also asked what percentage and job types of employees were contributing to their own 401-(k).

Council Member Andresen asked what the savings would be if the Town reduced the 401-(k) for non-mandated employee participants to two percent.

Council Member Wilkerson said the Town needed to take a look at its financial capabilities compared to the other communities used for job comparison purposes.

Mayor Broun inquired about the lowest salaries paid by the Town and how many people were at these levels. Ms. Crotts said the lowest hiring rate paid was $12,797 per year. She noted that the reclassification study recommended raising this figure. Ms. Crotts stated that two or three employees were currently paid less than $14,000 per year.

Council Member Werner requested information on employee training and professional development costs by department and as a percentage of salary.

COMPARISON OF TOWN AND UNC STATE BENEFIT PLAN

Mr. Horton said the Town performed a comprehensive comparison of benefits plans last year, and had done a partial study this year. Ms. Crotts said the Town had reviewed the UNC/State medical benefits plans in comparison to the Town's plans. She said the Town's traditional plan only covered three percent of employees, and that the Town was being dropped by the carrier because there was insufficient plan participation. She noted that the health coverage plans for Town and State employees and their dependents were somewhat similar. Ms. Crotts said when the State's full benefits package was compared to the Town's, they were virtually identical.

Mayor Broun said one of the principal differences was that the Town partially paid for dependent coverage while the State did not, but the overall cost was the same. Ms. Crotts said that one way to contain costs was to have employees join health maintenance organizations. She noted that ninety-seven percent of the Town's employees were members of such organizations.

POSITIONS TO BE FILLED DURING THE REMAINDER OF THIS FISCAL YEAR

Mr. Horton said the Town had been very careful about filling vacant positions during the fiscal year and would continue this practice. He said each position vacated would be researched to attempt to devise ways to do without positions. Mr. Horton said he expected to continue to fill vacancies in the Fire, Police, Inspections, and Public Works, Transportation, Housing and Community Development, and Finance Departments. He noted that the Transportation Department had seasonal variations in the number of employees needed. Mr. Horton said vacancies would receive additional review in the Manager's Office, Library, Parks & Recreation, Engineering, and Planning Departments.

Council Member Andresen asked whether the Library Assistant III position would be filled when the new library was opened. Mr. Horton said this would depend on whether the Council chose to do so. He said the position provided a valuable service, and some citizens had noticed the absence of this position.

Council Member Andresen inquired about the percent of personnel costs compared to total operating expenditures. She also asked whether there would be an increase in personnel costs as compared to total operating expenditures. Mr. Baker said personnel costs are typically about sixty-five percent of the budget, with this year's percentage being approximately sixty-six percent. Council Member Andresen inquired about the source of this anticipated increase. Mr. Baker noted that the operating budget had been reduced significantly, while personnel costs were fairly static.

Council Member Brown noted that thirty-two positions had been filled this year. She inquired about the nature of these positions. Ms. Crotts said there were a number bus driver, sanitation collection, truck driver and public safety officer positions. She also noted that other positions such as the Town Accountant and a Planner position had been filled.

Mayor Broun inquired about the Parks & Recreation staff's reaction to position reductions. Mr. Horton said the staff had to adjust some of its work methods and duties as a result of the unfilled vacancies.

Council Member Andresen said she found it useful to speak directly to department heads as part of the Council's budget work session process. She asked department heads would be available to speak to Council in the future. Mr. Horton said this could be arranged, if the Council wished.

Council Member Rimer said the dialogue between the Council and department heads was very useful last year, but he preferred highlighting of problem areas rather than formal presentations.

Mayor Broun agreed that the Council did not need formal reports from department heads, but having department heads available to answer questions at budget work sessions would be very useful.

JOB CLASSIFICATION AND PAY RANGE ASSIGNMENT STUDY

Ms. Crotts said the primary reason for the Town to study the pay ranges for jobs was to assure equal pay for equal work, and to assure a pay plan competitive in the Triangle area. She noted that the classification and pay study found that approximately one-third of the jobs were currently paid within the correct pay range, and that approximately two-thirds of the jobs were recommended for increase in pay ranges. She said the increases would mainly affect the hiring rates for future employees, because most of the employees in these jobs were actually being paid high enough in the range that their pay was not affected. She said the recommendations included increasing the salaries of thirty-nine employees as of October 1. Ms. Crotts said merit funding would possibly be included in future budgets, but not the current one. Ms. Crotts said she expected to present the final reclassification and pay plan recommendations in June.

Council Member Werner inquired about the job titles of the thirty-nine positions for which pay range increases were recommended. Ms. Crotts said job categories such as laborers, truck drivers, bus drivers and sanitation equipment operators were recommended for pay range adjustments. Council Member Werner inquired about the anticipated future impacts of the proposed reclassification and pay plan. Mr. Horton stated that recommendations about market adjustments and merit costs would be made each year. Ms. Crotts said if other employers in the market area initiated higher market rates, then the Council would have to decide whether the Town wanted to increase pay ranges.

Council Member Brown inquired about the extent of pay plan adjustments in the event that financial conditions improved significantly. Mr. Horton said he would recommend that some funds be used for employee merit increases. He noted that pay range assignments, rather than classifications, needed to be adjusted for some employees. Mr. Horton said some changes would likely occur each year in the job market. Mayor Broun stated that it was very likely that market pay ranges would increases over a four-year period.

Council Member Brown inquired if the Town gave merit increases during one particularly prosperous year, what would happen if a very lean year followed. Mr. Horton stated that individual years did not tend to be extremely prosperous or deprived, so variations in personnel expenses tended to be gradual and not difficult to assimilate. Council Member Werner said he favored the approach of giving the Manager an amount of money or percentage and instructing him to determine a basis for distribution of the funds. Council Member Andresen asked whether there was a difference in the way the Town dealt with benchmarks between department heads and other employees. Mr. Horton said yes, noting that the Town attempted to assure that department heads are paid more than the employees they are supervising. He added that department heads are compared on a national basis to comparably-sized towns with relative labor markets, not to the local market.

DISCUSSION OF OPERATIONS ISSUES

Mr. Horton said the Council had been wrestling with options for residential refuse collection services. He asked Bruce Heflin, Public Works Director, to make a brief report.

Mr. Heflin said there were three proposals for handling residential refuse collections services: (1) to reduce routes from seven to six residential crews, (2) once-weekly rear-yard refuse collection, using existing crews, (3) once-weekly curbside collection using roll carts. Council Member Brown said that additional information had been requested which was not included in the report, including the costs of white goods and leaf collections. She asked whether another presentation would be made including this information. Mr. Horton said the Town had not traditionally collected information on how much it cost to collect specific types of waste. Mr. Heflin said that he anticipated that the work contemplated by the Landfill Owners' Group would provide such information. Council Member Brown said that the Council had requested an integrated system and that she had asked for additional recycling information.

Mayor Broun said the Landfill Owner's Group work would result in an integrated plan for waste management, which might have an impact on some of the decisions presently before the Council.

Mr. Horton said the Council could make decisions on the issues before it now, but it would be doing so without the benefit of the Landfill Owners' Group's study on an integrated county-wide plan. Council Member Brown said the Landfill Owners' Group had not been charged with doing a study. She requested that the Council carefully examine the need for hiring a consultant. Council Member Brown said there were people who were willing to help the Town with these issues. Council Member Werner asked whether the Council would close out some options which might come as a result of the Landfill Owners' Group study if it made some decisions now. Mr. Heflin said the Landfill Owners' Group's study would likely be available within the next twelve months. Council Member Werner noted that proposed changes presently before the Council would cost additional money. He asked whether it made sense to make changes this year, then get a report next year which might cause the Council to spend more money. Mr. Heflin said if the Town waited it would have more information and if changed to once per week curbside collections, it might accrue savings one year earlier.

Mr. Horton said routing of several types of trucks was a more reasonable concern than roll-carts. He said that the Town could be asking citizens to learn one thing this year, then another thing next year. Council Member Werner said it appeared that the Council should not make a decision to change garbage collection service at present. Council Member Andresen said the cost savings with the proposed curbside collection service, which has been fairly controversial, were not that significant at the beginning of the process. Council Member Andresen said she would have been prepared to make an argument that local government should make a decision on effectiveness and what citizens like, but the fact that savings were not that large, and that the Landfill Owners' Group might recommend against roll-carts, made her believe that the Council should not make a decision at present to change service delivery methods.

Council Member Rimer said the issue of collection methods might need to be studied by a consultant, but there were some internal operating issues which the staff could study to make the current service more efficient. He said it was appropriate that, when the Landfill Owners' Group brought back their study, that the Council and the public would have an opportunity to comment on it, and if the Council did not like it, could request that it be changed. Council Member Rimer said he recommended that the process continue. Council Member Rimer said he hoped that there would be a Landfill Owners' Group meeting in May at which a draft scope of work could be considered. He said when the group made recommendations, the Council could always make changes. Council Member Werner said he thought the Council should give the Manager clear direction on how to proceed.

Council Member Brown said the Town needed to expand the options available and provide additional information. Council Member Brown said she wondered about the Landfill Owners' Group paying a consultant to do a study, when a similar study could be done without paying a consultant. She said a great deal of time and tax dollars had been spent on studies. Council Member Brown said the Council had not set policy goals and directions for staff. She stated that a consultant should not be setting the Town's goals and policies. Council Member Andresen said a coordinated solution to waste disposal problems was necessary and the larger unit would be more efficient than the Town itself. Council Member Andresen said she supported the efforts of the Landfill Owners' Group. Council Member Brown said the Council should set goals and policies for the Council's Landfill Owners' Group representative to take to that group.

Mayor Broun said he thought that an integrated solid waste management plan was needed. He said it did not make sense for the Council to make any major changes at this point. Mayor Broun asked the Council whether it made sense to continue with the pilot curbside project or to institute a once-per-week rearyard pilot collection program. Mr. Horton said he strongly recommended a pilot program if the Council was interested in once-per-week rearyard collection. He also suggested that the once-per-week curbside pilot program continue if the Council still needed additional information on the program. Mayor Broun asked whether it made sense to remove roll carts from pilot neighborhoods in the event that a future decision was made to institute a roll cart refuse collection program Town-wide.

Council Member Herzenberg urged the Council to allow the pilot project to continue until a final decision was made. He said many people wanted smaller carts. He expressed hoped that there would be some way to use variable sizes of carts. Mr. Horton said continuing the project would provide a chance to go through a full cycle of seasons with the carts.

Council Member Wilkerson asked whether the Council would be able to suggest changes to the Landfill Owners' Group's recommendations. Council Member Rimer said this would be the purpose of bringing the report before the Council. Council Member Wilkerson asked whether the consultant would then begin their job. Council Member Rimer said the three local governments could then agree to hire a consultant and establish a timetable. Council Member Wilkerson asked whether the timetable would be brought back to the Council by the Fall. Council Member Rimer said yes. Council Member Wilkerson said he favored waiting before making any changes to the present collection program.

Council Member Wilkerson said if the consultant came back to the Council with suggestions for changes, the Council should be willing to make some decisions about changing the Town's present methodology. He said also said the Council could make a decision about whether or not to approve the use of a consultant. Council Member Chilton agreed that the Council had not established goals or guidelines to approach solid waste collection methods. He asked how appropriate it would be for the Council to adopt some philosophical perspectives.

Council Member Rimer said he saw the study that Landfill Owners' Group will do as giving the Council a whole series of options to evaluate and put into a framework. He suggested that the Council devote a work session to the issue of solid waste. Council Member Rimer said he thought the Council needed more information and that it was important that the Council look at an integrated system, including source reduction, beginning with the manufacturer. Council Member Rimer said he thought there were some missing pieces, which the study would include. He said the Landfill Owners' Group seek guidance from the local government boards.

Council Member Brown said that for the past six years the Town had been doing studies, hiring consultants, and looking at the disposal end of the waste issue. She said that if the Council had set a goal of looking at the front end of the waste issue, it would have saved a lot of citizen time, and we would have been much farther along than we are at present.

Council Member Werner said the Council had adopted general policies over the years, and they hadn't necessarily led to anything concrete. Council Member Werner said he would like to proceed with the Landfill Owners' Group study. Mayor Broun said that he thought from a budget standpoint, the Council would like to wait for an integrated plan before making any major changes in residential refuse collection services. Council Member Werner said he was not sure whether the pilot program should continue. He stated that modifying the program might cost more in the future and the Town had an obligation to provide everyone with the same service. Mayor Broun said he thought the pilot program should continue. Council Member Brown said she thought the pilot program should continue, but that the should try to provide different size carts.

Mr. Horton said he would prepare a decision memorandum and a proposal to conduct a test of once per week rear-yard residential refuse collection for the Council to consider.

PROPOSED ANNEXATION BOUNDARIES

Council Member Andresen said one possibility was that the Council could do nothing. She said the Town of Carrboro was saying they wanted an equitable solution, and had proposed several ideas. She said everything south of Ray Road was in the watershed. Council Member Andresen stated that the Town of Chapel Hill could expand all the way to Star Point, which could add to the tax base, but the Town of Carrboro would never have an interest in the area south of Ray Road and west of Smith Level Road. She said the Town of Carrboro might have an interest in the property east of Smith Level Road. Council Member Andresen requested ideas from other Council Members.

Mayor Broun expressed some concern about the area north of Town, noting that the Town needed to be careful until there was some indication about what the University planned to do with the Horace Williams Airport area.

Council Member Brown said she thought all of Star Point was included in the watershed. Council Member Andresen said she would provide additional information on this matter.

Council Member Herzenberg suggested that there could be a moratorium on annexation until a decision was made. Mayor Broun said such a moratorium should be limited to the disputed areas.

The meeting adjourned at 10:02 p.m.