MINUTES OF A BUDGET WORK SESSION HELD BY THE MAYOR AND COUNCIL OF

THE TOWN OF CHAPEL HILL, NORTH CAROLINA, THURSDAY, APRIL 1, 1993

Mayor Broun called the session to order at 7:36 p.m.

Council Members in attendance were Julie Andresen, Joyce Brown, Joe Capowski, Mark Chilton, Joe Herzenberg, Barbara Powell, Alan Rimer and Arthur Werner. Also in attendance were Assistant to the Mayor Lisa Price, Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Finance Director James Baker, Personnel Director Patricia Crotts, Library Director Kathleen Thompson, Public Services Librarian Mark Bayles, Library Secretary Donna Sayers, Police Chief Ralph Pendergraph, Police Captain Gregg Jarvies, Police Administrative Analyst Jane Cousins and Transportation Director Robert Godding.

Personnel/Compensation Issues

Personnel Director Pat Crotts said a 4.75% salary increase was proposed for satisfactorily performing employees. She noted that salaries in the Research Triangle area had increased by an average of 3.5 to 4.5% in the last year. Noting that the Town had not granted any merit or market increases in 1992, Ms. Crotts stated that the Town needed to provide a salary increase of at least 4.75% to remain competitive with other local employers. She also noted the importance of keeping and attracting good employees by paying competitive salaries.

Mayor Broun requested a clarification of average and starting salaries. Ms. Crotts briefly clarified and reviewed average and starting salaries for a number of positions. Council Member Werner requested additional information concerning minimum salaries for jobs. Ms. Crotts said the Town attempted to hire new employees at the minimum rate. Mr. Horton said the Town rarely hired above starting rates. Council Member Werner inquired how many of the nineteen positions examined were unique positions. Ms. Crotts said four of the nineteen jobs, including Police Chief and Finance Director were single person positions.

Council Member Andresen inquired whether there was any linkage between the Town's recent reclassification study and the fact that many of Town positions were in the bottom of half of comparable salary ranges. Ms. Crotts said if there had been no reclassification study, it was likely that the Town's rates would have been comparatively even lower. Council Member Andresen inquired whether position descriptions had been rewritten. Ms. Crotts said this was correct. Council Member Andresen said it would be helpful to have a five-year time horizon comparing Town salaries with those of market competitors. Mayor Broun said the most relevant point was the current status of employee's salaries. Council Member Werner said the most relevant figure was average Town salaries relative to other employers. He added that it was a little misleading to focus solely on the rate of increase for the past year.

Council Member Capowski inquired about the logic for recommending a 4.75% salary for all satisfactorily performing employees. Noting that seven of nine governmental entities in the salary survey used flat increases, Ms. Crotts stated that the proposed increase would help to assure that the Town was remaining competitive with market rates. She added that gradations of salary increases would mostly affect employees in lower salary ranges. Ms. Crotts added that persons in higher-level jobs might be inclined to leave Town employment if market rates were increasing at a higher rate than Town market increases. Council Member Capowski inquired whether the proposed salary increase would cost a total of $805,000. Mr. Horton said this was approximately correct. Council Member Capowski inquired about the overhead and benefits portion of the proposed increase. Ms. Crotts said this was approximately eighteen percent and was included in the $805,000 figure.

Council Member Capowski requested that staff calculate overall Town costs for flat $500, $750 and $1,000 increases for all Town employees. Council Member Werner inquired about Council Member Capowski's rationale for this approach. Council Member Capowski said a flat increase would be more beneficial to lower-paid employees. Council Member Werner noted that it was relatively rare for employers to provide flat dollar increases to all employees. Council Member Werner inquired whether a permanent change in the Town's salary adjustment system was being proposed. Council Member Chilton said he did not believe that a flat salary increase was an unusual idea. Council Member Chilton also noted that he could not justify $800,000 in pay increases. Council Member Werner noted that most organizations including the Town would like to pay more to its lowest-paid employees. Noting that a limited amount of funds were available, Mayor Broun said that salary increases would be quite small by definition. He added that it might make sense to have a flat salary increase for all Town employees. Council Member Werner suggested that it might be best to attempt to reclassify lower-end positions if these persons were being paid less than the market.

Council Member Andresen inquired about the impact of flat salary increase arrangement. Ms. Crotts said such an arrangement would have a greater impact on higher-skilled jobs, with some of these positions possibly being less competitive in terms of salaries. Council Member Andresen said she thought that a flat salary increase system had some appeal which merited further exploration. Council Member Rimer said if lower classified employees were not being paid enough, they may need to be stepped up in their position classifications. He added that Police Department personnel appeared to be underpaid in general. Council Member Rimer also noted that retraining costs for some positions might cost between thirty and fifty percent of a position's annual salary.

Council Member Capowski said he thought that a flat raise was an inefficient was to preserve good personnel. He suggested that merit raises could be used to maintain good staff. Council Member Rimer expressed his concurrence. Council Member Capowski said he favored increases which would be most favorable to the Town's lowest-paid employees. He also expressed support for a merit system for the top ten percent of employees.

Council Member Brown inquired about the Town's turnover rate. Mr. Horton said the turnover rate had been influenced for a time by the overall national economy. He added that the low overall rate was attributable to good personnel practices including competitive pay. Ms. Crotts noted that for a number of years, the Town had attempted to maintain a turnover rate of eight to nine percent. She said that the Town's turnover rate during the late 1970's had been as high as twenty-five percent while in the past few years the rate had been between four and six percent. Ms. Crotts estimated that turnover during the current year was approximately nine percent. Council Member Andresen inquired when the 401-(k) for all employees had been introduced. Ms. Crotts said the plan had been introduced in 1986.

Council Member Brown said it appeared that the number of Town employees had increased considerably since she began her service as a Council Member. Mr. Horton said staff could provide this information. Council Member Brown inquired about the possibility of achieving greater operational efficiencies via an attrition vacancy program. Mr. Horton said opportunities for operational efficiency were constantly being examined. He noted that the Police Department was currently operating with 1950's technology, impairing many of the department's operating efficiencies. Mr. Horton said he did not believe that seeking efficiencies would avoid the need for increasing some costs. In response to Council Member Brown's earlier question, Mr. Horton noted that the Town had 461 full-time and 53 part-time employees in 1992-93, compared to 448 full-time and 42 part-time employees in 1990-91. Council Member Brown requested that staff continue to explore ways to combine jobs and use fewer workers. Mr. Horton said he would present a number of options to the Council throughout the budget process. Noting the importance of efficiency in government operations, Council Member Andresen inquired about the level of current staff participation with volunteer citizen committees compared to five years ago. She noted that the Durham city and county government structures were currently involved in a restructuring and merger process.

Noting that there was not necessarily a need to reduce services, Council Member Brown inquired about the possibility of reducing the number of persons on the Town's sanitation collection crews. Mr. Horton said staff could give more detailed options to the Council at the April 13th work session. Mr. Horton stated that sanitation workers tended to be very hard working, attempting to achieve maximum operating efficiencies. Council Member Brown said she was seeking ways to achieve efficiencies, rather than implying that sanitation collectors were not working to their full ability. Mr. Horton said it would be necessary to change technology and methods to make refuse collection more efficient. Noting that all Council meetings were videotape or audiotaped, he also said that changing to "action-only" minutes would save over five hundred hours of staff time annually, three hundred hours of which were non-compensated. Council Member Herzenberg said although minutes of work sessions might be reduced, he did not favor minutes of actions only for regular meetings. Council Member Rimer noted that videotapes of meetings would last for at least twenty-five years. He suggested that the handling of minutes could be discussed at a future Council meeting.

Council Member Capowski noted that whereas rapidly growing communities could afford employee pay raises the Town was not experiencing rapid population or property tax base growth. Council Member Brown noted that she had seen recent studies suggesting that growth did not pay for itself. Council Member Brown said she would like to hear more proposals about better use of the Town Clerk's time. Council Member Rimer noted that growth spirals stopped at some time causing long-term problems for communities which had experienced rapid growth at one time. Council Member Werner emphasized the importance of the Council discussing services provided by the Town including refuse collection, minutes preparation and other programs.

Council Member Powell requested additional information concerning the proposed pay increase for Town employees. She inquired about the possibility of merging the Town's Transportation and Public Works Departments. Mr. Horton said he would not recommend such a departmental merger. He noted that the Transportation Department had challenging operations and a complex federal process to obtain funds. Mr. Horton also said he might propose in the future that the Public Works Department be broken up into smaller departments. Council Member Powell inquired whether this break up would necessitate additional employees. Mr. Horton said this was not necessarily the case. Council Member Brown inquired about the possibility of merging the Public Works and Engineering Departments. Mr. Horton noted that a former Town employee had recommended this merger, but that he, Mr. Horton, did not consider his reasons valid. He stated that a number of other shifts were proposed including moving community development activities to the Planning Department and human services programs to the Police Department.

Mayor Broun requested that staff calculate estimated costs for a pay increase on the basis of declining percentages, starting at 4.75% and declining to 3% at upper grades or starting at 4% and declining to 2%. Mr. Horton said staff could provide this information. Council Member Werner emphasized the importance of establishing a Town pay adjustment system for the long term. He said it was an inefficient use of Council time to have different systems. Council Member Werner also emphasized the need for the Council to discuss merit pay increases. Council Member Capowski said the Council should give feedback to the staff on how much to make available for pay raises. Mayor Broun said it made more sense for the Council to explore additional options in this regard. Council Member Andresen requested additional information on the Town's employee benefits compared to other communities. Ms. Crotts said she could provide additional information on Town benefits compared to other local employers.

Operations at Proposed Library

Library Director Kathleen Thompson presented an overview of proposed library services at the new facility. She noted that additional financial and personnel resources would be needed to continue existing services at the new building. Ms. Thompson said annualized additional operating costs would be approximately $300,000. She stated that an increase in facility demand of at least thirty percent was anticipated. Ms. Thompson also noted that the provision of two reference desk staff, rather than one as at present, was proposed for the new facility. She stated that the library could be open on eight additional holidays, with minimal staff and services, at an additional cost of $3,500 per year.

Council Member Rimer commended Ms. Thompson for her concise and clear presentation and her proposal for adjusting library operating hours. Council Member Rimer asked whether the new automation system was included in the library's capital budget. Ms. Thompson said yes. Council Member Rimer inquired how many simultaneous users could be accommodated by the system. Ms. Thompson said three. Council Member Rimer said he thought the staff's estimate of a thirty percent increase in traffic was very conservative.

Council Member Andresen commended Ms. Thompson for the clarity of her memorandum. Council Member Andresen said she also liked the scheduling recommendations before the Council. She requested additional information concerning State library funding guidelines and criteria. Mr. Horton stated that if the Town failed to spend at least the same amount of funds as the previous year, State library funding could be cut off. Council Member Andresen inquired how much funding could be lost. Ms. Thompson said approximately $29,000 in the first year. She also noted that it would take at least two years for the Town's funding eligibility to be restored. Council Member Capowski asked whether it was necessary for the Town to actually spend more. Finance Director James Baker noted that it was necessary for the Town to budget and spend more funds in the current year than the previous year.

Council Member Andresen said she had some concerns about the number of proposed new positions. Council Member Brown inquired about the availability of federal funds for library operations. Ms. Thompson said the Town had had to reject a federal grant because related expenses would have been greater than the amount of the grant. Mayor Broun said it was not necessary for the Town to expand services this year to meet maintenance of effort criteria. He said that Council Member Andresen's point was that increasing services too far would result in establishing a new pattern for maintenance of effort. Mr. Horton said it was possible that State funding would be lost. Ms. Thompson noted that State library aid formulas favored county and regional libraries. Council Member Andresen expressed appreciation to the staff for their comments on the proposed merging of Town and Orange County library services. Council Member Werner said he did not think the staff was proposing an extensive expansion of services. He noted that many people did not currently use the library due to a lack of parking availability. Council Member Werner said he favored the library opening at noon on Sundays, rather than 1 p.m. as proposed. Council Member Werner commended Ms. Thompson for a really good presentation.

Council Member Capowski said he was delighted with the proposed changes in Sunday and holiday hours. Council Member Capowski inquired whether proposed salary increases were included in the estimated figures for library operations. Mr. Horton said salary increases were excluded from departmental budgets. Noting that operating expenses for the new library would recur annually, Council Member Capowski said he wanted to discuss Orange County's relationship with the library facility. Mayor Broun noted that he had sent a letter earlier in the day to Orange County Commission Chairperson Moses Carey, requesting additional library funding from the County. Council Member Herzenberg said he thought the Mayor's letter was good as far as it went. He stated that the increase in the number of patrons might very well be greater than the staff's estimate of thirty percent. Council Member Herzenberg also noted that many Town residents used the Durham County library system. Council Member Andresen said the Council was asking for a fair balancing of library service costs by Orange County. Council Member Capowski noted that Orange County was also experiencing significant budget challenges.

Council Member Brown inquired about the possibility of using volunteers for various library services. Ms. Thompson said the expanded facility would offer wonderful opportunities for the use of volunteers. Council Member Brown inquired about using volunteers in lieu of hiring additional personnel. Ms. Thompson said the library could look into the possibility of using additional volunteers for a variety of tasks. Council Member Brown inquired about the possibility of reducing bookmobile services. Council Member Werner noted that the bookmobile was especially important to persons who could not get to the library. Council Member Andresen noted that people might be interested in volunteering at the library's reference desk. Ms. Thompson said it might be possible to use volunteers behind the scenes at the reference desk.

Council Member Chilton said being able to keep the library for an additional eight Town holidays at a cost of only $3,500 was a good deal. Mr. Horton noted that this change in scheduling would be compatible with the Parks and Recreation Department's scheduling. Council Member Capowski inquired how much in library fines was collected annually. Mr. Horton said about $60,000. Council Member Capowski inquired whether the level of fines was too low. Noting that the fines were in line with other libraries, Ms. Thompson said she would be happy to provide a comparison of fines at other area libraries. Council Member Capowski inquired whether non-residents objected to paying a fee for library services. Ms. Thompson said some objected while others were happy to pay the fee. She noted that about six hundred cards per year were purchased. Ms. Thompson introduced Public Services Librarian Mark Bayles and Secretary Donna Sayers.

Police Department

Police Chief Ralph Pendergraph briefly reviewed the Police Department's budget request and related statistical information. Council Member Werner inquired about reimbursements to the Town for security arrangements at University-related special events. Mr. Baker said total costs and revenues from these events were about $75,000 and balanced each other. Chief Pendergraph noted that no increase in personnel, other than a part-time contract crisis counselor, was proposed. He also noted that $10,000 in additional training funding was being requested for training of senior staff and supervisors. Chief Pendergraph added that funds for patrol overtime and replacement of two vehicles was being requested. He added that there had been a forty-seven percent increase in major crimes during the past five years. Chief Pendergraph added that over seventy percent of crimes committed were drug-related. He noted that drug investigations were the most demanding type of work for police officers.

Council Member Herzenberg inquired about the number of full-time crisis counselors in the Police Department. Chief Pendergraph said there were three full-time positions. Council Member Andresen inquired about the extent to which major events interfered with the department's ability to carry out regular patrols. Chief Pendergraph said that staffing for major events often severely hampered or slowed down the delivery of other services.

Council Member Rimer inquired how much of a typical officer's time was devoted to paperwork. Chief Pendergraph said approximately twenty percent. Council Member Rimer said it would be useful for the Council to examine the issue of utilization in the future. Council Member Werner requested additional information concerning major crimes reported and patrol utilization. Police Administrative Analyst Jane Cousins provided clarifying information. Council Member Werner inquired whether it was correct that major crimes accounted for about ten percent of all calls. Ms. Cousins said this was correct. Council Member Capowski inquired about the department's budget request. Chief Pendergraph said $39,000, not including automation funding, would be requested.

The session concluded at 9:42 p.m.