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HomeMy WebLinkAboutCity Treasurer - Modify Salary Benefits - Shari L. Freidenr Council/Agency Meeting Held: Deferred/Continued to: roved ❑ Con ition I Approved ❑ Denied C?Te-rk;4 Sign dtb re Id%p Council Meeting Date: 01/16/07 Department ID Number: CT 07-05 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: SHARI L. FREIDENRICH, CPA, CITY TREASU� PREPARED BY: SHARI L. FREIDENRICH, CPA, CITY TREASUF� SUBJECT: ADOPT RESOLUTION TO MODIFY SALARY AND CERTAIN BENEFITS FOR THE ELECTED CITY TREASURER E ment of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: Should the resolution that authorizes the salary and benefits for the Elected City Treasurer be modified? Funding Source: Funding included in the FY 06/07 budget City Council Recommended Action: Approve Resolution No. 2007-5 a resolution of the City Council of the City of Huntington Beach, modifying salary and certain benefits for the elected City Treasurer. Alternative Action(s): Do not approve attached Resolution and maintain the current salary and benefits for the Elected City Treasurer. Analysis: Proposed modified salary and benefit changes for the Executive Management employees are before City Council this evening. These are for salary adjustments which include a 4% Cost of Living Adjustment and an increase to the medical payments cap. Salary and benefit changes are also proposed for the City Treasurer and include linking the City Treasurer salary with the Finance Director position and setting the City Treasurer salary at 95% of the Finance Director Control Point amount. Background and Prior Technical Qualifications: I was appointed in May 1996 as the first CPA to hold the position of City Treasurer and have served the City for ten and one-half years. Prior to joining the City, I was a Controller with McDonnell Douglas Travel Co., an Audit Specialist with McDonnell Douglas Corporation in their Internal Audit Department and previous to that was a manager at Deloitte & Touche (one of the largest public accounting firms). I graduated summa cum laude from Washington State University with a Bachelor of Arts in Business Administration and an emphasis in Accounting. I passed the CPA exam on my first try and became a licensed CPA within two years of college graduation. Financial Accomplishments at the City: I have saved the City or increased revenue for the City of over $13 million. I have identified a few areas below and the complete list is provided on Attachment 2. • Increasing grants, aggressively collecting severely delinquent Debts, escheating of unclaimed funds $1.2 million • Instrumental in changing unitary taxes to being locally allocated For a former public utility plant and assessing plant properly $2.3 million • Safeguarding, Diversificating and Safely enhancing interest income on operating and bond investments $9.3 million Leadership/Certifications: In addition, I have been active in several technical and professional organizations on behalf of the City during this period. I have listed a few items below and have included a complete list at Attachment 3. • California Municipal Treasurers Association Officer- 1999-2005 (Treasurer, Secretary, President-Elect, President, Past Pres.) • Ass. Of Public Treasurers of the US & Canada — (At Large Director) 2005-2007 • Quest/JD Edwards Special Interest Group— Utilities (Pres.NP) 2001-2003 • Certified Public Finance Administrator 2002-2007 • Investment Policy Certification 1998/2006 All of the above items represent firsts for the City of Huntington Beach in the specific area above and all positions above were elected by peers. Increase in Investing Responsibilities: Since being appointed in 1996, the City Treasurer's direct investment responsibilities have increased by 290%. The average daily balance of investments has increased from $56 million to $198 million and the City Treasurer now additionally invests the Bond proceeds, and various Joint Powers Authorities funds where the City is the Administrator. The City Treasurer is also a member of the Deferred Compensation Committee for the City's 457 and 401(a) plans. In addition, if the City Treasurer were to outsource the investing and reporting of the City funds, the additional cost to the City based on the outstanding amount of the directly managed investments of $198 million is estimated between $138,000 and $237,000. The City Treasurer position would perform due diligence, and also continue to forecast cash needs in addition to all of the other Charter responsibilities of the position. I have attached a summary of these changes in investing responsibilities at Attachment 4. Market Survey/internal Alignment of City Treasurer: The City hired a consultant to review the salaries of the City's Executive Team (which includes the City Treasurer), using market data from 12 cities and internal alignment comparisons. The market survey for the position of City Treasurer resulted in only three cities out of the 12 having comparable market data. The consultant recommended to not use the limited market data, and has proposed a salary for the City Treasurer based on her review of the City's internal alignment and did not propose any linkage between the City Treasurer's and the Finance Director position's. Expanded Market Data Survey: In all of the Orange County cities, there are only two City Treasurers, the City of Anaheim (appointed and reports to the City Council) and the City of Huntington Beach (elected and reports to the Voters directly) that are full-time Department Heads. Even outside the County and around the State, there are only seven cities (including Huntington Beach) with populations of 150,000 or greater with a full-time City Treasurer as a Department Head. They are Oxnard, Glendale, Anaheim, Sacramento, San Francisco (City and County) and Los Angeles. I have excluded San Francisco and Los Angeles, with populations of 800,000 and 3.9 million, from the following market survey. The salaries in the other four cities (three in the consultant study) are as follows: Oxnard ($10,645), Glendale ($10,187), Anaheim ($12,255) and Sacramento ($16,066). The market mean of these four cities (adding in the 4% COLA) is $12,780. The current consultant proposed City Treasurer salary (including a 4% COLA) would then be approx. 8.5% below the market mean. This update provides the City Council with additional market information on which to base the City Treasurer's salary. In addition, as the survey market data for cities over 150,000 is limited for this position, I have attached an article from CFO Magazine from the November 2006 edition at Attachment 5. This article includes a survey by Mercer Human Resource Consulting on average pay for the private industry finance executives which include the positions of Corporate Treasurer (base pay at $205,000 + incentives) and Corporate Investment Executive (base pay at$283,900 + incentives). Internal Alignment: A variety of items are reviewed in this area, but two factors should be more closely considered: First, Citywide financial impact and second, technical qualifications. • Citywide Financial Impact: Three key factors are important in regards to the position of the City Treasurer having a Citywide financial impact. o Investment of Public Funds o Receipt of public funds o Collection of public funds The City Treasurer is the City's fiduciary of all public funds. The City Council pursuant to Government Code Section 53607 can delegate the investment responsibility to the local agency Treasurer (which the City Council has annually done). Any significant loss to this $220 million investment portfolio would have a Citywide financial impact. An example of a negative impact that previously occurred was the immediate loss of almost $10 million of the City's funds (which approx. 28% was never recovered) relating to investments the City had in the Orange County Pooled Money Market fund in 1994 when the County declared bankruptcy. The City Council relies on the technical expertise of the City Treasurer to ensure the safety, diversification and liquidity of the City's public funds. The second key risk is the risk of loss of cash from theft of the City's funds. The City Treasurer is the charter officer whom receives and deposits all public funds ($304 million in revenue in 06/07) and also ensures that adequate funds are available when disbursements ($348 million in 06/07) need to be made and is the custodian of public funds. The City Treasurer needs to understand the entire approved budget and then works with various Department staff to identify when cash is needed for timely purchase of goods and services in the budget. The technical knowledge of sound internal controls and accounting principles is key in setting the policies for all of the City Departments that receive funds in the City's $304 million budget. Finally, the area of collections is also a charter responsibility of the City Treasurer. The City bills over $60 million annually and if delinquent accounts were not followed up timely and appropriate collection steps taken, a significant loss could occur. An example is the Charter Center development fees of approximately $250,000 which were severely delinquent when I was appointed, but I subsequently successfully collected them in full including interest. • Technical Qualifications: This technical expertise associated with the above areas can be unusually difficult and complex in nature and involve highly specialized financial issues. These and the remainder of responsibilities of this position are critical in order to effectively fulfill the Charter Obligations. As stated earlier, this position has functional authority responsibility for overseeing activities that have a Citywide financial impact. These skillsets required fall into the Accounting and Financial Management category and are very similar to the technical requirements for the Finance Director. In all Cities which don't have a separate City Treasurer Department, this function is a division of either the Finance or Administrative Services Department because of the closely related skillsets. To more closely align the department similarities, the Deputy City Treasurer position which reports directly to the City Treasurer, has education requirements just below the Finance Director requirements (BA versus a Masters), but a Masters is preferred for the Deputy position and the Finance Director requires a CPA, for the Deputy position, it is highly preferred. In addition, the experience requirements for the Deputy are only one year less of experience than the Finance Director position. Finally, the remaining staff classifications in the City Treasurer's Department are also job classifications in the Finance Department. As you can see from the above, the City Treasurer Department technical qualifications are closely aligned with the Finance Department. In addition, as you can see from the survey at Attachment 5, the Treasurer and Investment Officers are included with Finance related positions in reviewing pay. In the last survey done by Johnson & Associates in 1999, the consultants placed the City Treasurer salary 3.5% below the Director of Administrative Service's E step salary and currently the City Treasurer's salary is 95.1% of the Finance Director's E step salary. Based on the above, the City Treasurer requests the salary for the City Treasurer be maintained at 95% of the Finance Director's control point amount. Please note that a specific range was not able to be presented along with the alignment percentage as the results of the consultant's study has not been released to the City Treasurer, and the City Treasurer only knows the consultant's proposed amount for the City Treasurer position and not other Executive Management positions control point amounts. Environmental Status: REQUEST FOR ACTION MEETING DATE: 01/16/07 DEPARTMENT ID NUMBER: CT 07-05 Attachment(s): NumberCity Clerk's Page Description 1. Resolution of the City Council of the City of Huntington Beach No. 2007-5 x 2. Major Accomplishments since Appointment in May 1996 f 2 Y 3. Leadership Positions held on Behalf of the City/Awards Received/Other Miscellaneous Activities > 4. Changes in City Treasurer's Responsibilities from 9-30-95 to 9-30-06 5. CFO Ma azine November 2006 Article HARCA.doc 1/10/20071:13 PM (11) January 16, 2007 -Council/Agency Agenda - Page 11 E-8. (City Council) Adopt Resolution No. 2007-7 Modifying the Salary for the Elected City Attorney — Adopt Resolution No. 2007-7, "A Resolution of the City Council of the City of Huntington Beach Modifying the Salary for the Elected City Attorney." Submitted by the City Attorney. Funding Source: Funding is included in the Fiscal Year 2006/2007 budget. The estimated cost to implement this Resolution for Fiscal Year 2006/2007 is $36,875 and $12,292 in Fiscal Year 2007/2008. Councilmember Bohr pulled for discussion. Extensive discussion amongst Council, staff, and consultant. Approved as amended to set City Attorney salary at "Starting Point"identified in RCA, City Attorney to return to Council annually for review. 5-2(Carchio, Green —No) E-9. (City Council) Adopt Resolution No. 2007-6 Modifying the Salary and Benefits for the Elected City Clerk — Adopt Resolution No. 2007-6, "A Resolution of the City Council of the City of Huntington Beach Modifying Salary Benefits for the Elected City Clerk." Submitted by the City Clerk. Funding Source: Funding is available in the current Fiscal Year 2006/2007 budget. The burdened cost to implement the salary requested in Resolution No. 2007-06 at Control Point for the remainder of the current Fiscal Year is $34,142. The Fiscal Year 2007/08 will be further impacted in the amount of$11,381. Councilmember Bohr pulled for discussion. Discussion ensued amongst Council, staff, and consultant. Approved as amended to set City Clerk salary at "Starting Point"identified in RCA. 7-0 Ni"L e t•E sr3' ' -10. (City Council) Adopt Resolution No. 2007-5 Modifying the Salary and Certain h Benefits for the Elected City Treasurer — Adopt Resolution No. 2007-5, "A Resolution of the City Council of the City of Huntington Beach Modifying Salary Benefits for the Elected City Treasurer." Submitted by the City Treasurer. Funding Source: Funding included in the FY . 06/07 budget. Councilmember Bohr pulled for discussion. Discussion ensued amongst Council, staff, and consultant. Approved as amended to set City Treasurer salary at "689 Pay Grade, Step B"as identified in RCA. 4-3(Bohr, Carchio, Coerper—No) F-1. (City Council) Adopt Resolution No. 2007-4 Approving and Implementing the Memorandum of Understanding (MOU) Between the City and the Huntington Beach Marine Safety Officers'Association (MSOA) Covering the Period October 1, 2006 Through September 30, 2009. Communication from the Deputy City Administrator transmitting the following Statement of Issue: Should the City and the Huntington Beach Marine Safety Officers' Association (MSOA) enter into a new Memorandum of Understanding (MOU) covering the period October 1, 2006 to September 30, 2009? ATTACHMENT # 1 RESOLUTION NO. 2007-5 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH MODIFYING SALARY BENEFITS FOR THE ELECTED CITY TREASURER WHEREAS, the City Council of the City of Huntington Beach desires to modify the salary level for the elected City Treasurer, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: SECTION 1. All benefits provided non-associated executive management employees shall be granted to the elected City Treasurer. SECTION 2. The salary for the elected City Treasurer shall be set as reflected in Attachment"A" hereto. SECTION 3. Any existing provisions in conflict with the foregoing, whether by minute action or resolution of the City Council, are hereby repealed. SECTION 4. All benefits and salary ranges established herein shall continue until modified by City Council action. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 16th day of January , 2007 Ma APPROVED AS TO FORM: ty Attorney •l l p REVIEWED, INITIATED AND APPROVED: le reasurer Meso/Treasurersalary ATTACHMENT A Salary Range for City Treasurer: Range Hourly 681-13 68.70 07Resolrreasurer salary Res. No. 2007-5 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) 1, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 16th day of January, 2007 by the following vote: AYES: Cook, Green, Hansen, Hardy NOES: Bohr, Carchio, Coerper ABSENT: None ABSTAIN: None City (Ark and ex-officio C16fk of the City Council of the City of Huntington Beach, California ATTACHMENT #2 City Treasurer, Shari L. Freidenrich, CPA, CCMT, CPFA Major Accomplishments since Appointment in May 1996: Savings/Increased Revenue Savings to the City of Huntington Beach To City over 10 years Increased grants to City from SB 90 from $3000 to$231,000 over a 2 year period $370,000 Various Bankruptcy Related Claims/Settlements $40,910 Savings from contracts by going out to bid/interagency $414,000 Aggressive enforcement of delinquent oil tax collections (delinquent penalties) $425,000 Aggressive endorcement of severely deliquent taxes and fees(including Charter Center fees of$250,000) $410,000 Increased property taxes from AES Electric Generating Facility $2,233,000 Escheating of funds (implemented program required by State Law) $135,000 Restructured bond reserves to match liabilities with investment terms $1,500,000 Implemented cash management/investment diversification/enhanced interest revenue $7,800,000 $13,327,910 Other Financial impacts: Total interest earnings in 10 years,with$32 million budgeted during the same period $49,000,000 Identified/lobbied local/federal Treasurer/Finance Org. against 3%tax in proposed legislation which would cost the City 3%of expenditures(vendor payments estimated at$130 million) $3,900,000 Increased average daily balance of investments from$56 million to$198 million Separated City funds from other Joint Powers Authority funds for investment purposes(previously pooled without permission) Successfully lobbied Federal Agency to not change 1999 Orange County GSA per diem rate which would have lost the City of Huntington over$250,000 annually of Transient Occupancy Taxes in lost Boeing/Government business $1,500,000 Blocked possible investment scam in 1999 by investor soliciting funds who directly had contacted Mayor of Huntington Beach Provided information to Bond Buyer who did an article on various scams aimed at local government. Coordinated refund of$1.3 million back to residents for utility deposits which had never been refunded Implemented Direct Deposit for Employee Paychecks in 1998 Implemented AutoPay for Utility Payments in 2005 Early implemented GASB 31 (Financial footnote disclosure in Comprehensive Annual Financial Report) Early implemented GASB 40(Financial footnote disclosure in Comprehensive Annual Financial Report) Invested project funds for Bonds issued by City under Community Facility Districts for Developers(Bella Terra, Boeing, Hyatt) and exceeded expectation of developer and additional funds were able to be applied to project from interest earnings ATTACHMENT #3 City Treasurer, Shari L. Freidenrich, CPA, CCMT, CPFA Leadership Positions held on behalf of the City/Awards Received / Other Miscellaneous Activities: Since being Appointed in 1996 California Municipal Treasurers Association Officer- (1) 1999-2005 (Treasurer, Secretary, President-Elect, President, Past Pres.) Ass. Of Public Treasurers of the US & Canada —(At Large Director) - (1) 2005-2007 Quest/JD Edwards Special Interest Group— Utilities (President) - (1) 2001-2003 Certified Public Finance Administrator- (1) 2002-2007 Investment Policy Certification - (1) 1998-2006 2003 Distinguished Service Award Recipient- Quest/JD Edwards User Group 2003 Ceritified California Municipal Treasurer (recertify every four years) - (1) 1999 /2003 Certified Cash Handler (certified by the Association of Public Treasurer's Association) - (1) 2001 /2005 Maintained CPA certification which requires ethics training and technical training 1996-2007 County of Orange Treasurer's Host Committee member (inaugural member) 1999-2001 Testified at the California Coastal Commission for City of Huntington Beach on Financial Matters 2006 Testified at the Board of Equalization regarding utility assessments/methods of assessment 2000-2006 Testified at the California State Legislature Assembly 1999-2000 Speaker/ Panelist at Annual Chamber of Commerce Planning Retreat 2000-2005 Speaker at Chamber of Commerce Winner's Circle Breakfast as City Representative 2006 Speaker/Moderator at various State and National Treasurer's/Revenue Association conferences 1998-2006 Speaker at various civic and community service organizations 1996-2006 One of several elected officials that represented City on 20th Anniversary trip to Anjo, our Sister City 2002 Citizens's Police Academy attendee 1998 Instituted Annual Joint meeting with Investment Advisory Board (IAB) and City Council 1998-2006 Implemented Annual Report for IAB (as required by Municipal Code) 1998 Implemented Fraud Training Class with FBI or Police Department & plan to do training annually for all staff handling cash Implemented Positive Pay (fraud deterent) which has successfully caught forged checks on the City's bank account 1998-2006 Instituted written reporting of all the City's investments as required by State Law 1996-2006 Active in various Community Organizations as member and in leadership capacity 1996-2007 (1) First time a City of Huntington Beach employee held this position or received this certification ATTACHMENT #4 City Treasurer, Shari L. Freidenrich,CPA, CCMT,CPFA Changes in City Treasurer's Responsibility from 9/30/95 to 9/30/06 Description 9/30/1995 9/30/2006 %Change from 9130/95 Investment Portfolio: $55,996,878 $196,067,063 250% Average Daily Balance $56,449,785 $197,785,478 250% Bond Investments * $20,364,077 100% West Orange County Water Board ** $343,143 Central Net Operations Authority ** $1,447,955 Total Managed Investments $55,996,878 $218,222,238 290% Deferred Compensation $75,505,085 100% Total City Treasurer Responsibility $55,996,878 $293,727,323 425% Managed Advisor Range Average 7-12 Basis Points(1) Low Ave. Range Amount on Total Responsibility $152,755.57 High Ave. Range Amount on Total Responsibility $261,866.69 Minimum Range Amount on Managed Investments only $138,500.71 Maximum Range Amount on Managed Investments only $237,429.79 City Revenues 198,999,325 $ 304,932,005 53% City General Fund Revenues 97,278,915 $ 179,289,154 84% *Not handled by the City Treasurer in 1995(a charter responsibility or pursuant to Gov.Code Section 53607) **Previously pooled with City investments (1) Estimate obtained from Chandler Asset Management as range for outsourced investments between$100 and$200 million NOTE: City Treasurer is the custodian of all funds and responsible for receipting,depositing and collecting of all revenues including taxes and fees. In addition, under Gov't Code Section 53607,the City Council can delegate their investment responsibility to the local agency Treasurer. ATTACHMENT #5 Which finance executives have scored the sharpest gains in pay? .t =} then Payment - uch of that incentive pay � r To has a closer link to per- " f 7`0 th formance than in the One group of finance executives saw its pay rise more than any other last year,but past. For example,some i it wasn't CFOs.It was controllers. ��:� CFOs receive options Between2003 and 2005,the average base salary for corporate controllers only if their companies'stock price rises faster rose 22 percent,from$30S,7o6 to$340;600.Bonus and long-term incentive pay than that of their peers.Others aren't allowed mentsclimbed even more sharply,bY37 percent and.29 percent,respectively. to cash in restricted stock grants unless they It's a.- simple matter of supply hit certain financial targets.Even qualifying for and demand;says John Wilson,CEO of- a bonus—which traditional) involves a er- � � Y J` Y P la "; recruiting firm JC Wilson Associates. formance component—is more challenging. � � � tc5r5te Still worried about the possibility of „This is a common theme among my damaging accounting slipups;directors clients;'says Cross,who estimates that more I are pushingCFOsto hirethe most quak than half of the(mostly manufacturing)firms ' } ified controllers they can find.Indeed,_a with which he works are now using pay that controllers 27 recent survey of finance executives con- is more closely linked to performance.Hur- f ; 5arbox specialists 21 " ducted by CFO Research Services(a= dles are typically market-based.Under the i A Finan ialanalysts 20 division of CFO,Publishing).andAjilon 10-year-old plan that governs SteveChazen's kPE r" Senior-level finance 1,4 finds that executives rate demand'as _ - pay package,for example,the compensation 10 g�' (CFOs W/finance) stronger for controllers than for any of committee reviews Occidental's total share- - Inter auditors yankT&„ 9 a CFO's other direct reports. - holder returns for the previous four) and Clerical 3 Controllers are in no greater ranks them against a peer group, which Temporary/seasonal 2 supply today than they were five years includes companies such as ExxonMobil and 5u orE pp osltions '`p ago,however.Given aggressive hiring Kerr-McGee.If Occidental ranks first,exec- by accountingfirms,theremay-even be utives receive 200 percent of the target .,.�,. - fewer. amount of options(10,000).Poorer perform- "Controllers—especially the really good ones—are highly prized these ance means gradually fewer shares. If the days,"says Wilson."It's driven bythe board's fear of surprises.As CFOs spend more company ranks last or second-to-last,execu- time on strategy,directors want a strong controller as asecond line of defense, tives get nothing. knowing that the,CFOwon'tbespendingmuchtimeon,green-eyeshade activities." At other times,companies'internal met- i And as the numbers show,they're wilLingto pay to get one.—D.D. rics determine the measures.As part of his compensation plan at transportation concern CSX, Oscar Munoz(#14 on this year's list) Instead,many companies pass out restricted stock as well.The will receive performance units only if the rail company meets move away from options isn't new,of course;it began after the predetermined cash-flow targets over a two-year period.Insur- dot-com crash pushed many options programs underwater and er Conseco does something similar,tying the vesting of options investors noted the role of options in high-profile accounting to the achievement of operating ROE over a three-year period. scandals.FAS 123R,which requires options expensing,acceler- Oshkosh Truck now splits CFO Charles Szews's bonus ated the shift.Because options no longer confer an accounting between an earnings-per-share target and return on invested cap- benefit,boards consider options a less-attractive approach com- ital as compared with competitors'returns.Before 2002,bonus- pared with other forms of equity pay, es were based 25 percent on net sales growth,60 percent on EPS, And since the alternatives are costly,boards are studying and only 15 percent on predetermined(not relative)ROIC. them more closely as well."Options expensing has caused firms to think about equity programs in a more strategic way;'says -� v cr Cross.Companies now make fewer employees eligible to receive S 0 1,1 F` ��-� ��f nti v s stock.The 2006 data shows that within finance,compared with ra? oes it make sense to link CFO pay to such goals? two years ago,those executives less likely to get stock-based After all,Chazen notwithstanding,most CFOs long-term incentive plans include top accounting executives,risk lack the operational influence of a business-unit managers,cost-accounting managers, and payroll managers. 31RI, head. Internal Revenue Service commissioner j Going forward, companies are more likely to provide stock- " — Mark Everson is among those who raise gover- i based pay to CFOs,treasurers,divisional controllers,and the top nance concerns about CFO compensation that includes stock or tax,internal-audit,and financial-analysis executives. other variable incentives. Speaking before the Senate Finance j I C F O NOVEMBER 2 0 0 6 83 COMPENSATION: PART 2 - ------_ _.; Committee in September,Everson argued that finance chiefs, i top corporate attorneys, board chairs, or other executives INSIDE responsible for"minding the cookie jar"should receive gener- 1�1�T A1�T ( ' f ous,fixed cash payments only.Take away any incentive for mis- chief,runs his argument,and less fraud will result. Average pay for your peers in the finance department. Neither CFOs nor compensation consultants like that idea,of course.Steve Van Putten,who runs the East Coast executive-com- Base Salary :.Short-term Incentive Long-term Incentives pensation practice of Watson Wyatt Worldwide,notes that as the 1 CFO's job expands into areas of strategy,variable pay is appropri- • 100 200 300 400 ate."The CFO helps drive the performance and strategic dire.- Corporate 184:3 j tion of the company,"he says."And the best way to get the CFO to Controller _ 4UMMII ;86.4 do that is with long-term incentives linked to shareholder value" 173.3 ------ ----- -------- ------ ------------------------------- Slimmer paychecks for finance executives,moreover,could Corporate 205 mean that the smartest candidates opt for more-lucrative work. Treasurer 95 A;AK 91.1 j "I think you would see a lot of ex-CFOs out there;'says Chazen. 196 _-__ -___ - 4 - -------------_----- - --- ------------------------ + "Of course;'he adds,laughing,"I'd gladly take all of my compen- Top Corporate- 192.9_ sation in cash,including the Black-Scholes value of the options:' Tax"-Executive c 75 bNEWASWMOMM For now,at least,incentive pay for CFOs shows no sign of -_- _„- _--_ - - - 147.7 -- ----- ---- ------- ----- disappearing.In fact,some experts believe we'll see more of it Top Corporate 177.3 next year when the Securities and Exchange Commission's new Internal-Audit UWW 65.6 . compensation-disclosure rules take effect and CFOs will have to Executive 115 3 + --- ------ =-- -- - -- be included in the proxy statement's compensation table.Cur- Top Corporate- 283:9" i rently,the five highest-compensated managers—a group that Investment � a �� 210.2 doesn't always include the finance chief—must appear. Executive -- 380.5 "Now that CFOs are required to be listed with the top-five Top Financial- 164.8 list,you'll see many of them getting raises;'says Van Putten. Analysis �_"z&A 66.9 Executive VzOOM 74.S That's because CFOs will be able to compare their pay with that ------------- ---------------------------------------- - of their peers and lobby for an increase.Also,some boards may Top Corporate 140.1 Credit${ :E 34.9 decide to increase CFO pay to levels similar to that of the other Collections Exec. XMW 48 listed executives. ------ - ------------------------------- Top Corporate 1583 Higher CFO pay would leave some executives with another 1 Acco4nting challenge:what to do with the bonanza."Now I need to figure Executive 82.8 out how to give away all this money;'says Chazen. "I want to -- — - --- Top Risk Mgmnt. 1S4.3� I arrange it so that when I die my hand opens up and the last quar- &cls reve, - 63.7 - ter rolls out and into some charity's pocket" CFO tion Executive 74:"S ---- ------ --- ------------------------------------------------- -------- --- Division CFO FlUM 192.6 DON DURFEE(DONDURFEE@CFO.COM)IS RESEARCH EDITOR 91:3.+` OF CFO. UNISINUMMMM l"18.4 - t ---- -- -- ----- -----. ------- --- (MORE CHARTS ON PAGES 86 AND 88) Division ROMMMOMM 128 5 + Il Controller. RUM 511 Assistant 130 2 l- Vint www cfq porYt/payday far ae(dltional ctrverage'including ; Treasurer 89:6 FAREWELL TQ PE1 I�5 'v 43 - -- ----- Tow ii`ew miles"dould"eiYd sonie,gld habits Assistant 116.2 HUF FI IN G THEE jJITY"" Controller 30;5 " Q " —-- p NAM 41.9 Whicht"finance `osltlonsare ehglble to repeive. -- - --- --- -- -- long-term incentives? Cost-accounting 86.2 { _ Manager A10.9 - "WHO:WE$URUEYEW 9.8 ------ ---- ------ ------ - ------- -- H�uiwe�f©>�pd out what yQu: et.pa>d. payroll 05OLUM 7s.8 "-PAY°"DART" Manager.. 91D.7 IYllsxed;part One"bf this'three-part'corape.`nsati©n14 repo t�Find It online, Source for all charts,except on page 83:Mercer Human Resource Consulting i 84 CFO NOVEMBER 20 0 6 RCA ROUTING SHEET INITIATING DEPARTMENT: City Treasurer SUBJECT: Salary & Certain Benefits for the Elected City Treasurer COUNCIL MEETING DATE: January 16, 2007 Ordinance (w/exhibits & legislative draft if applicable) Attached Not A licable Resolution (w/exhibits & legislative draft if applicable) Attached Not Applicable ❑ Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable Attached ❑ Contract/Agreement (w/exhibits if applicable) Not Applicable (Signed in full by the City Attorney) Attached ❑ Subleases, Third Party Agreements, etc. Not Applicable (Approved as to form by City Attomey) Certificates of Insurance (Approved by y y)the City Attome Attached ❑ Not Applicable Attached ❑ Fiscal Impact Statement (Unbudget, over$5,000) Not Applicable Attached ❑ Bonds (If applicable) Not Applicable Attached Staff Report (If applicable) Not Applicable Commission, Board or Committee Report applicable)If a Attached ❑ p ( pp ) Not Applicable Find in s/Conditions for A roval and/or Denial Attached g pp Not Applicable N�� W Administrative Staff Assistant City Administrator Initial City Administrator (Initial) ) ) [City Clerk Only)(Below Space For City Clerk's Use RCA Author: slf Resolution No. 2007-5 ATTACHMENT A Range Salary Range for City Treasurer 95%of Finance Director ntrol Point Amt. CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION CITY TREASURER'S DEPARTMENT TO: City Clerk Honorable Mayor and City Council FROM: Shari L. Freidenrich, CPA, City Treasurer DATE: January 16, 2007 SUBJECT: LATE COMMUNICATION I am submitting a revised chart showing the updated salary survey market mean compared to the original survey. I am also showing a comparison of that market mean to the proposed salary based on 95% of the Finance Director's Control Point amount. Placing the City Treasurer here represents a market competitive salary consistent with the goal of the executive management salary study. The salary will ensure attraction and retention of qualified individuals to help ensure the safety of the City's public funds. t RECEIVED FROM AS PUBLIC RECORD OUNCIL MEETING OF CITY ULERK OFFICE JOAN L FLYNN,CITY CLERK XA& c' Revised market survey data results Hourly Amount Difference Consultant survey results market mean $67.93 Market mean from updated survey $73.73 8.5% which includes all cities greater than 150,000 in population (excludes SF and LA) 95%of Finance Director Control Point $74.58 Market mean from updated survey $73.73 1% Several key data facts: FTE's: 12(10 Full-time employees and 4 part time employees) Divisions: Cashiering, Collections and Investments Investment Portfolio: $218 million Education of Deputy City Treasurer(City Treasurer is elected and Deputy duties represent more closely Qualities needed for the position): Bachelor's degree in accounting, finance, business, public administration or a closely related field. A Master's degree is preferred. A Certified Public Accounting credential is highly preferred. Five years increasingly responsible administrative and supervisory experience in accounting, finance or auditing. Emphasis in cash management, investment management and accounts receivable and a strong background in accounting, with an emphasis in internal controls are preferred. Experience in or with a public agency is also desirable. Must be able to be bonded. 4 FOB. CITY OF HUNTINGTON BEACH RECEIVED FROM MEETING AS PUBLIC RECOR OF CITY CLE OF E ,pAN L FLYNN,CITY CLERK TO: Honorable Mayor and City Council Members FROM: Penny Culbret raft, DPA,City dinizu tra or DATE: January 16,2007 SUBJECT: Late Communication for Agenda Item E-10- Adopt Resolution to Modify Salary and Certain Benefits for the Elected City Treasurer I have been requested by City Council members to prepare additional information in conjunction with Agenda Item E-10. Specifically, I was asked to provide a comparison of costs for the proposal and provide a comparison of responsibilities between the City Treasurer and the Finance Director. Attached for your information(Exhibit A) is a spreadsheet of costs for the salary range proposed by the Treasurer and the costs for the salary range recommended in the salary study. The salary range proposed by the Treasurer.provides for an annualized salary expense of$155,126.40, resulting in an increase of$19,739.20 (12.72% increase). The annualized salary expense for the salary range recommended in the salary survey is $141,294.40,resulting in an increase of $5,907.20 (4.18%increase). Exhibit B includes the summary of duties for the City Treasurer and Finance Director. This also includes information regarding the number of employees for each department,budget allocation for their departments, and job qualifications. Should the Council desire a more extensive comparison, I would engage our study consultant to prepare further information for your consideration. Attachments cc City Treasurer Finance Director PCG:pf C Exhibit A Salary Range for City Treasurer Recommended Current %"Increase Range Hourly Hourly Hourly m, (Recommended Per Study) 67.,W 85.09 4.18% Position Cost for City Treasurer Requested Current % Increase Annual Annual Annual Salary 141,294.40 135,387.20 4.18% Salary Related Benefits 33,741.10 32,330.46 4.18% Health Insurance Medical 10% 2,640.00 2,400.00 Dental 5% 1,031.10 982.00 Vision 5% 221.55 211.00 Total Annual Cost 178,928.15 171,310.66 4.26% -------------------------------------------------------------------------------------------------- Salary Range for City Treasurer Requested Current % Increase Range Hourly Hourly Hourly 95%of Finance Director 74.58 65.09 12.72% Position Cost for City Treasurer Requested Current % Increase Annual Annual Annual Salary 155,126.40 135,387.20 12.72% Salary Related Benefits 37,044.18 32,330.46 12.72% Health Insurance Medical 10% 2,640.00 2,400.00 Dental 5% 1,031.10 982.00 Vision 5% 221.55 211.00 Total Annual Cost 196,063.23 171,310.66 12.62% EXHIBIT B CITY TREASURER The City Treasurer receives on behalf of the city all taxes, assessments, license fees and other revenue from whatever source, and all monies collected for the use of the city or coming into the hands of any officer of the city. Pays out monies only upon proper orders or warrants in the manner provided for in the charter. Prepares and submits to the Director of Finance monthly written reports of all receipts, disbursements and fund balances, and shall file copies of such reports with the City Administrator and City Council. The Treasurer, by City Council authority, shall assume full responsibility for the investment of surplus money in the treasury and shall make a monthly report of such transaction to the legislative body. Responsible for the appropriate distribution of all payroll and warrant checks. Requires extensive analysis of future cash requirements and forecasting investments to meet these requirements. Analyzes and evaluates appropriate investment ventures for city funds, consistent with applicable law. Performs economic research and studies rates of return, working capital and investments as well as other related duties as assigned. FTE's 10 (1 vacancy—Analyst) Budget $1,040,403 Divisions Receivables Education The minimum qualifications for the position of City Treasurer shall be a combination of education and experience in an area related to fiscal management. Requires that the incumbent in this position can be bonded. EXHIBIT B FINANCE DIRECTOR The Finance Director performs responsible supervisory and administrative work in planning, organizing, coordinating and directing the financial and central services activities of the City, which include accounting, budget and research, utility billing, accounts receivables, business tax management, central stores/warehouse, purchasing, reprographic and mail delivery services, coordinates assigned activities with other City departments and outside agencies; and provides highly responsible and complex administrative support to the City Administrator. Plans, directs and coordinates the administration of the City's finance, purchasing, utility billing, business licensing, reprographic and mail services, recommends policies and implements procedures to conduct activities; ensures that all activities are conducted in accordance with related laws, ordinances, rules and regulations. Raises funds through creative financing, bond issues, certificates of participation and lease purchase financing; evaluates alternative financing methods for all major acquisitions; supervises and controls capital financing projects. Advises department heads and the City Administrator in the review of estimates and proposed budget allocations for the City and the Redevelopment Agency; estimates anticipated revenues; conducts fiscal analyses and submits data and reports for use in evaluating operating department proposals. FTE's 31 Budget $9,314,685 Divisions Accounting, Central Services, Fiscal Services Education Equivalent to a Master's degree from a college or university with a major in accounting, business or public administration including courses in advanced accounting, auditing, cost accounting, business law.