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AGENDA BILL Agenda Item No. 5(G) Date: November 20, 2012 To: El Cerrito City Council From: Mary Dodge, Administrative Services Director/City Treasurer Subject: Amendment to El Cerrito Municipal Code Section 2.04.300, Financial Advisory Board ACTION REQUESTED Introduce by title, waive any further reading and approve an ordinance amending El Cerrito Municipal Code Section 2.04.300 Financial Advisory Board, to delete references to the former redevelopment agency and further clarify the Financial Advisory Board’s function and duties. BACKGROUND El Cerrito Municipal Code Section 2.04.300, the enabling legislation for the Financial Advisory Board (FAB) was initially adopted in 2000 for the purpose of providing citizen input on financial matters related to the City. An ordinance was adopted in 2007 that revised the Municipal Code relating to the appointment of FAB members and in 2010 to clarify their duties and responsibilities. With the dissolution of the El Cerrito Redevelopment Agency (Agency) the current ordinance requires revisions to remove references to the former Agency. Additional changes are also proposed to further clarify the FAB’s mission and include an annual review of City Council Compensation. ANALYSIS The proposed changes in the revised ordinance reflect the dissolution of the Agency as well as other wording changes recommended by the FAB, primarily for clarification of functions. The addition of wording regarding the annual review of City Council compensation as a part of the Annual Operating Budget would clarify the City’s procedures for compliance with the Contra Costa Grand Jury Report No. 1104 regarding City Council Compensation consistent with the county-wide Contra Costa County Grand Jury Report No. 1104. The proposed changes were discussed at the regular Financial Advisory Board meetings on October 9, 2012 and November 13, 2012. The changes are intended to reflect the current scope of review performed by the FAB and clarify for future members, the FAB’s duties and responsibilities. Second reading of the ordinance is scheduled for December 18, 2012. ---PAGE BREAK--- ---PAGE BREAK--- Agenda Item No. 5(G) Attachment 1 ORDINANCE NO. 2012–XX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF EL CERRITO AMENDING EL CERRITO MUNICIPAL CODE SECTION 2.04.300 – FINANCIAL ADVISORY BOARD WHEREAS, the Financial Advisory Board was established by Ordinance 2000-3 and codified as El Cerrito Municipal Code 2.04.300 for the purpose of providing citizen input on financial matters related to the City; and WHEREAS, Ordinance 2007-2 was adopted to revise El Cerrito Municipal Code Section 2.04.300 relating to the appointment of FAB members; and WHEREAS, Ordinance 2010-1 amended El Cerrito Municipal Code Section 2.04.300 to further clarify the duties and responsibilities of the Financial Advisory Board; and WHEREAS, the Financial Advisory Board recently reviewed El Cerrito Municipal Code Section 2.04.300 and recommends deleting references to the Redevelopment Agency due to the dissolution of the Redevelopment Agency by the State of California and also recommends further amendment of the El Cerrito Municipal Code to further refine and clarify the Financial Advisory Board’s duties and responsibilities, including an annual review of City Council compensation. NOW THEREFORE, the City Council of the City of El Cerrito does hereby ordain as follows: SECTION 1: Chapter 2.04.300 of the El Cerrito Municipal Code is hereby amended with the following additions and deletions to read as follows (additions in underline; deletions in strikethrough): 2.04.300 Financial Advisory Board. A. There shall be a financial advisory board consisting of five members who reside in the city and have demonstrated expertise in financial management, accounting, fiscal analysis, computer applications, economic analysis or related skills. The financial advisory board shall have the powers and duties stated below, and such other duties as the council shall decide: 1. To conduct a review and make recommendations on the proposed annual budget and long-term financial plan for the city and the redevelopment agencyall component units each year to assist the city council and redevelopment agency in making decisions on major expenditures and revenue sources, and to include a review of theCity Council compensation consistent with county-wide recommendations included in Contra Costa Grand Jury Report No. 1104; 2. To monitor the city and redevelopment agency expenditure and revenue patterns and recommend adjustments to the long-term financial plans as necessary; ---PAGE BREAK--- Agenda Item No. 5(G) Attachment 1 3. To conduct an annual review of the city’s Comprehensive Financial Policy and city's investment Investment policies Policy and make recommendations regarding the managing of the city's financial reserves to assure maximum returns on approved investments; 4. When requested by the city council, redevelopment agency board, or staff to evaluate proposals, programs and contracts for both long- and short-term financial consequences, assess alternatives and make appropriate recommendations; 5. To review the annual audit and management letter and provide the city council and the redevelopment agency with recommended changes in financial practices; 6. To review and make recommendations on all proposed bonds, or other debt instruments or long term obligations to be issued or assumed by the city or the redevelopment agency; and 7. To review the form and format of budget documents, agenda bills and other recurring financial reports prepared by the city and issue recommendations to the city council and the city manager regarding how the form and format of these documents may be modified to allow for greater clarity in the manner financial information is reported. SECTION 2 This rdinance shall take effect and be enforced thirty (30) days after the date of its adoption, and prior to the expiration of fifteen (15) days from the passage thereof, the ordinance or a summary thereof shall be posted or published as may be required by law, and thereafter the same shall be in full force and effect. The foregoing ordinance was introduced at a regular meeting of the City Council on November 20, 2012, and approved by the following vote on December 2012: AYES: NOES: ABSENT: ABSTAIN: APPROVED: William C. Jones III, Mayor ATTEST: Cheryl Morse, City Clerk ---PAGE BREAK--- Contact: Linda Chew Foreperson (925) 957-5638 Contra Costa County Grand Jury Report #I104 ELECTED BOARD MEMBERSHIP Public Service or Public Employment? TO: Cities and Towns in Contra Costa County (see distribution list) Independent Special Districts (see distribution list) SUMMARY Given the difficult economic challenges facing local government, the Contra Costa County Grand Jury conducted a survey about compensation for elected Special District Boards (Board) and City Councils (Council). The Grand Jury looked at the use of funds and if the total amounts spent by these agencies for elected officials' compensation seemed reasonable. The study revealed significant compensation disparities among elected Boards and Councils within Contra Costa County (County). For example, while Martinez and Oakley both have similar populations of about 35,000 residents, the Martinez City Council total compensation is $13 1,326, while Oakley's is only $28,544. San Ramon with 60,000 residents pays $163,190 to its entire Council while Pittsburg, with more residents, pays its Council $40,035. Richmond and Antioch, both with around 100,000 residents, pay their entire Councils $267,139 and $1 12, 591 respectively. The Grand Jury recognizes those agencies that pay nothing or minimum compensation and thus demonstrate the spirit of public service. At the same time, there are a large number of Boards and Councils that are being con~pensated amounts which may be viewed as exorbitant. Board and Council members are elected to serve their constituents. They set policy, oversee programs and services administered by professional employees and are accountable to the public for their actions. The Grand Jury believes the public should be aware of the compensation paid to their elected officials, what benefits are provided and whether the compensation structure indicates that the spirit of public service has changed to an entitlement of public employment. Contra Costa County 2010-2011 Grand Jury Report 1104 Grand IUN Reports are posted at htto://www.cc-courts.ore/erandiun, Page 1 Agenda Item No. 5(G) Attachment 2 ---PAGE BREAK--- BACKGROUND County residents are living in very difficult economic times, in which both public agencies and individuals have had to cut spending. The Grand Jury surveyed all 19 cities in the County as well as the 27 largest independent special districts that have their own publicly elected Boards of Directors. Population information for the analysis was obtained from Local Agency Formation Commission reports. The survey collected data for Fiscal Years (FY) 2008-09 and 2009-10. Information was requested for the following categories pertaining to annual expenditures for elected officials: salary and/or meeting fees, health care insurance costs, pension or deferred compensation, life insurance premiums, car allowance or mileage, cell phone and/or internet access and travel & conference costs. The total amount spent county-wide in FY 2009-10 on compensation for the surveyed Boards and Councils was $2,419,169. The following data is grouped by cities and special districts. Data reported are the total amounts for each Board or Council regardless of the number of elected members. All cities have five elected Council members with the exception of Richmond, which has seven. All special districts have five Board members except the Byron-Bethany Jrrigation District, which has nine, with two vacancies. The average annual amount spent for each Council was $77,895. Lafayette, Moraga and Orinda had minimal expenses for their elected leaders. Eight cities compensate their elected leaders more than the average for all surveyed. These cities spent an average of $136,145. Of that amount, 76.4% was paid for salary andlor meeting fees and health care benefits. See table below. Twelve cities pay for elected officials' pensions or other forms of retirement benefits. Twelve cities pay for elected officials' health care insurance costs. Eight cities pay life insurance premiums for elected officials. Six cities pay for elected officials' cell phone or internet access. The following table summarizes the compensation data collected for the cities. Contra Costa County 2010-2011 Grand Jury Report 1104 Grand lury Reports are vosted Page 2 ---PAGE BREAK--- Total Council Compensation Expense I salary 1 Health Cities City of Lafayette , Town of Moraga I City of Richmond 102,1861 $267,1391 $152,130 1 $53,700 1 $0 ( $61,309 / City of Orinda City of Oakley City of Clayton City of El Cerrito City of Pittsburg Town of Danville City of Pinole City of Walnut Creek I Total of 19 Cities 1 $1,480,012 / $748,166 1 $429,502 1 $82,622 1 $219,721 1 Population 24,500 16,800 17,600 34,000 10,784 23,596 63,004 42,601 19,193 66,000 Special Districts City of Brentwood City of Hercules City of San Pablo City of Ailtioch City of Concord City of Martinez City of San Ramon I Average of 19 Cities I The average annual amount spent for each Board was $34,784. and/or Meeting Cost $2,801 $28,544 $29,590 $37,613 $40,035 $54,998 $59,965 $6 1,798 $77,895 1 $39,3771 $22,605 1 $4,349 1 $11,564 1 Nine special districts paid their elected leaders from zero to less than $100 in total. They are: Crockett Community Services District, Diablo Community Services District, Kensington Police Protection & Community Services District, Town of Knightsen Community Services District, Kensington Fire Protection District, Rodeo-Hercules Fire Protection District, Bethel lsland Milnicipal lmprovement District, Green Valley Recreation and Park District, and Moraga-Orinda Fire District. $63 1 $2,673 50,614 23,000 30,950 100,150 124,780 36,179 59,002 Note: Richmond has seven Council members; all other cities have five Council members Eight special districts compensate their elected officials more than the average for all surveyed. These districts spent an average of $99,089. Of that amount 87.7% was paid for salary and/or meeting fees and health care insurance costs. See .the table below. Other Costs $63 1 $2,673 Care 1 Pension & Insurance Deferred $0 $0 $0 $27,924 $23,400 $26,7 10 $33,240 $40,064 $17,862 $35,100 Eight out of the nine most generous special districts are water or wastewater providers that pass on their costs to rate payers. Costs 1 $0 ) $0 $9 1,998 $93,69 1 $100,961 $112,591 $128,262 $131,326 $163,190 Three special districts contribute to pension or other form of retirement benefits for one or more elected officials. Comp $0 $0 $0 $0 $0 $0 $5,220 $1 1,764 $41,396 $0 Contra Costa County 2010-2011 Grand Jury Report 1104 Grand Iury Reports are posted at http://www.cc-courts.ore/erandiury $34,155 $5 1,960 $45,210 $53,746 $74,580 $46,200 $47,935 Page 3 $0 $0 $4,640 $3,574 $0 $1,502 $0 $16,086 $2,801 $620 $1,550 $7,329 $1,575 $1,668 $707 $10,612 $42,425 $34,14 1 $37,906 $1,922 $42,303 $71,416 $59,768 $2,186 $5,059 $6,555 $5,576 $10,720 $9,697 $12,457 $13,232 $2,531 $1 1,290 $5 1,346 $659 $4,012 $43,030 ---PAGE BREAK--- Nine special districts pay for health care insurance costs for one or more elected officials. Four special districts pay life insurance premiums for one or more elected officials. The following table summarizes the compensation data collected for the 27 special districts. Total Special District Board Compensation Expense Special District Crockett Community Services District Diablo Community Services District Kensington Police Prot & Com. Serv. Dist. Knightsen Town Community Serv. Dist Kensington Fire Protection District Rodeo-Hercules Fire Protection District Bethel Island Municipal Improve District Green Valley Recreation and Park District Moraga-Orinda Fire District Popu- lation 3,500 1,200 Byron Sanitary District Contra Costa County 2010-2011 Grand Jury Report 1104 Grand Iurv Reports are posted at 5,000 1,500 4,936 30,000 3,000 473 42,000 995 ( $4,425 1 $4,425 1 $0 1 $0 ( $0 I Diablo Water District Ambrose Recreation and Park District Rodeo Sanitary District San Ramon Valley Fire Protection Dist Pleasant Hill Recreation and Park District West Contra Costa Healthcare District Los Medanos Comm. Healthcare District Discovery Bay Community Services Dist Stege Sanitary District Mt. View Sanitary District Mt. Diablo Healthcare District East Contra Costa Irrigation District Ironhouse Sanitary District Contra Costa Water District Byron-Be.thany Irrigation District Central Contra Costa Sanitary District West County Wastewater District Total of 2 7 Special Districts Average of 2 7 Special Districts Note: Byron-Bethany Irrigation District has Page 4 Salary & Total Meeting Cost Fees $0 $0 $0 $0 $0 $0 $50 have five Board members. Contra Costa Water District reported no pensions paid but has a provision in their retirement plan to pay a pension for Board members at age 62 after 10 years of service. 3 1,000 23,000 8,7 17 158,071 40,003 201,196 81,953 15,000 40,000 18,253 191,452 60,000 35,350 550,000 3,000 451,900 124,398 nine Board Health Care Insurance Costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $7,365 $7,858 $8,975 $12,331 $15,226 $16,385 $20,500 $22,661 $30,670 $41,283 $42,498 $76,227 $94,070 $99,826 $105,380 $158,174 $175,254 $939,158 $34,784 members, of Pension $0 $0 Other Costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $7,300 $5,150 $8,975 $8,085 $12,500 $8,200 $20,500 $22,500 $22,540 $19,307 $0 $3,605 $28,220 $36,700 $5,360 $52,156 $93,934 $359,45 7 $13,313 which two are $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $4,188 $0 $0 $0 $12,593 $42,498 $72,192 $62,780 $41,177 $99,684 $90,435 $44,277 $469,823 $1 7,401 vacant; all $0 1 $0 $0 $0 $0 $0 $50 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,05 1 $0 $0 $0 $18,823 $20,8 73 $773 other special $65 $2,708 $0 $4,246 $2,726 $3,997 $0 $161 $8,130 $9,383 $0 $430 $1,020 $21,949 $336 $15,583 $18,220 $89,005 $3,296 districts ---PAGE BREAK--- Professional hll-time managers are hired to run each agency. Historically, elected officials have looked upon their work as public service for the betterment of the community. Agencies have provided their elected leaders with benefits. These include health care insurance, employer paid retirement benefits, life insurance premiums, payments for cell phonelinternet access, aiid mileage reimbursement or car allowance. The total dollar amounts are small in relation to agency overall budgets. However, services to the public are being reduced in most agencies which usually means staff reductions. Although service reductions have been implemented, governing boards have continued to enjoy the same level of benefits. They should demonstrate their leadership by eliminating or reducing benefits. FINDINGS AND RECOMMENDATIONS Each agency named needs to respond only for its own practices. Finding # 1: Sixteen cities and eighteen special districts provide benefits to their elected leaders in some fashion. These benefits may include salary, meeting fees, health care insurance costs, pension or deferred compelisation, life insurance premiums, cell phone usage, and internet connections. Recommendation # 1: All cities and special districts should conduct an annual public review of compensation provided to their respective elected Councils and Boards. This review should include such items as salary, meeting fees, health care insurance costs, pensionldeferred compensation, life insurance premiums, cell phone usage, aiid internet connections. The public review should address whether or not changes in compensation are warranted. Finding # 2: Eight cities spend more than the county-wide average ($39,377) for salary and meeting fees. They are: Antioch, Concord, Danville, Hercules, Martinez, Richmond, San Pablo and San Ramon. Recommendation # 2: These cities, as part of the annual review in Recommendation 1, should consider whether it would be appropriate to implement reductions of salary and meeting fee expenditures to bring them in line with other cities. Finding # 3: Eight special districts spend more than the county-wide average ($13,3 13) for salary and meeting fees. They are: Central Contra Costa Sanitary District, Contra Costa Water District, Discovery Bay Community Services District, Ironhouse Sanitary District, Los Medanos Community Healthcare District, Mt. View Sanitary District, Stege Sanitary District and West County Wastewater District. Recommendation # 3: These special districts, as part of the annual review in Recommendation 1, should consider whether it would be appropriate to implement a Contra Costa County 2010-2011 Grand Jury Report 1104 Grand jury Reports are posted at http://www.cc-courts.orn/prandiury Page 5 ---PAGE BREAK--- reduction of salary and meeting fee expenditures to bring them in line with other special districts. Finding # 4: Health care benefits are provided to elected Board members by twelve cities and nine special districts. Recommendation # 4: The policy of paying health care insurance costs for Council and Board members should be reviewed to determine whether this practice is appropriate. The agencies following this practice are: Cities: Antioch, Brentwood, Concord, Danville, Hercules, Martinez, Pinole, Pittsburg, Pleasant Hill, Richmond, San Pablo and San Ramon. Special Districts: Byron-Bethany Irrigation District, Central Contra Costa Sanitary District, Contra Costa Water District, East Contra Costa Irrigation District, Ironhouse Sanitary District, Mt. Diablo Healthcare District, Mt. View Sanitary District, West Contra Costa Healthcare District and West County Wastewater District. Finding # 5: Pension benefits, with potential long-term financial implications for the agency, are provided to Council and Board members by twelve cities and three special districts. Recommendation # 5: The policy of paying pension or deferred compensation for Council and Board members should be reviewed to determine whether this practice is appropriate. The agencies following this practice are: Cities: Antioch, Brentwood, Clayton, Concord, Danville, El Cerrito, Hercules, Martinez, Pleasant Hill, San Pablo, San Ramon and Walnut Creek. Special Districts: Central Contra Costa Sanitary District, Ironhouse Sanitary District and West County Wastewater District. REQUIRED REXPONSES Findings and Recommendations: Cities and Towns Antioch Brentwood Clayton Concord Danville El Cerrito Hercules Martinez Oakley Pinole Pittsburg Pleasant Hill Richmond 1,2,4 and 5 1,4 and 5 1 and 5 1,2,4 and 5 1,2,4 and 5 1 and 5 1,2,4 and 5 1,2,4 and 5 1 1 and 4 1 and 4 1,4 and 5 1,2 and 4 Contra Costa County 2010-2011 Grand Jury Report 1104 Page 6 Grand lury Reports are posted at http://www.cc-courts.ore/grandiury - - - - ---PAGE BREAK--- San Pablo San Ramon Walnut Creek l , 2 , 4 and5 l,2,4and 5 1 and 5 Independent Special Districts: Ambrose Recreation and Park District Byron-Bethany Irrigation District Byron Sanitary District Central Contra Costa Sanitary District Contra Costa Water District Diablo Water District Discovery Bay Community Services District East Contra Costa Irrigation District Ironhouse Sanitary District Los Medanos Community Healthcare District Mt. Diablo Healthcare District Mt. View Sanitary District Pleasant Hill Recreation and Park District Rodeo Sanitary District San Ramon Valley Fire Protection District Stege Sanitary District West Contra Costa County Healthcare District West County Wastewater District 1 1 and 4 1 l,3,4and 5 1,3 and 4 1 1 and 3 1 and 4 1,3,4and5 1 and 3 1 and 4 1, 3 a.nd 4 1 1 1 1 and 3 1 and 4 1,3,4 and 5 Distribution List: Cities and Towns Antioch, Brentwood, Clayton, Concord, Danville, El Cerrito, Hercules, Lafayette, Martinez, Moraga, Oakley, Orinda, Pinole, Pittsburg, Pleasant Hill, Richmond, San Pablo, San Ramon and Walnut Creek. Independent Special Districts: Crockett Community Services District, Diablo Community Services District, Discovery Bay Community Services District, Kensington Police Protection and Community Services District, Knightsen Community Services District, Kensington Fire Protection District, Moraga-Orinda Fire District, Rodeo-Hercules Fire Protection District, San Ramon Valley Fire Protection District, Los Medanos Community Healthcare District, Mt. Diablo Healthcare District, West Contra Costa County Healthcare District, Byron-Bethany Irrigation District, East Contra Costa Irrigation District, Bethel Island Municipal Improvement District, Ambrose Recreation and Park District, Green Valley Recreation and Park District, Pleasant Hill Recreation and Park District, Byron Sanitary District, Central Contra Costa Sanitary District, Ironhouse Sanitary District, Mt. View Sanitary District, Rodeo Sanitary District, Stege Sanitary District, West County Wastewater District, Contra Costa Water District and Diablo Water District. - - contra Costa County 2010-2011 Grand Jury Report 1104 Grand lury Reports are posted at http://www.cc-courts.or&randjury Page 7