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SR-104-088 /// e _ ~CitYOf Santa Monica. City Council Report City Council Meeting: June 13, 2006 Agenda Item: H To: Mayor and City Council From: P. Lamont Ewell, City Manager Subject: Ballot Measures to Remove the Department Head Positions from the Classified Service and Convert the Positions to "At Will"; to Remove Reference to Specific Department Head Positions; to Grant City Manager Ultimate Authority to Make Appointments to All Department Head Positions without Obtaining Approval of a Board or Commission; to Change the Certification Process for Non-Promotional Recruitments; and to Eliminate the Time Limit on Temporary Appointments Recommended Action This report recommends that the City Council direct staff to prepare two ballot measures amending the City Charter. The first ballot measure would remove the Department Head positions from the Classified Service and make such positions "at will" with the change to be effective six months after approval by the voters as to existing employees and effective immediately for any newly hired Department Heads. The second ballot measure would amend four sections of the Charter: 1) remove reference to specific Department Head positions, some of which are no longer heads of a department; 2) grant the City Manager authority to make all Department Head appointments without obtaining the approval of the Personnel Board, Library Board, Recreation and Parks Commission or Airport Commission for currently specified Department Head appointments; 3) change the certification process for non-promotional recruitments from "rule of 3 names" to "rule of 3 ranks"; and 4) eliminate the gO-day limit on temporary 1 appointments to permanent positions, pending the completion of a recruitment to fill the position on a permanent basis. Executive Summary Antiquated City Charter provisions preclude the City from achieving maximum success in delivering high quality service to our residents. Amendments are proposed for five provisions within the Charter. The first provision currently places Department Head positions in the City's Classified Service, thereby affording them job protections which are inconsistent with Department Heads' current status as executives within the City's organizational structure. Most other cities have up-to-date personnel systems which classify Department Heads as "at will" employees. This structure is preferable because it ensures excellent service by maximizing our accountability. Additionally, it promotes public confidence. Accordingly, it is recommended that Council direct the preparation of a ballot measure that would make this change for current Department Heads effective six months after the measure's adoption by the voters has been certified by City Council and effective immediately following voter approval for any newly hired Department Heads. Approving this recommendation would have no financial impact. The second group of provisions that are equally outdated, no longer meeting the operational needs of the City and its ability to provide excellent service, list specific department head positions, some of which are no longer heads of departments. 2 The third area of recommended change is the requirement that the City Manager must obtain the approval of a board or commission before making an appointment to a specified Department Head position. This provision would be replaced with a Council policy directing that the City Manager seek input from appropriate boards and commissions on the qualifications, experience and characteristics desired prior to initiating a recruitment. The fourth recommended change is to eliminate restricting the number of qualified applicants an appointing authority can consider when filling a permanent non- promotional position in the Classified Service. The final change would be to remove language limiting the length of a temporary ("acting") appointment. This would allow the temporary appointment to continue pending the completion of a recruitment to fill a vacant position on a permanent basis. The second ballot measure, comprising the four recommended changes, would become effective upon the measure's adoption by the voters. Approving these recommendations would have no financial impact. Discussion Shortly after being appointed City Manager, I committed to the Mayor and Council that I would conduct reviews of various areas of operations within City government and provide recommendations for change that would enhance accountability and 3 productivity. One particular area of review involved the current provisions of the City Charter and Municipal Code which create the City's Civil Service system. As you are aware these were adopted many years ago. Some of these provisions are completely outdated, no longer meeting the operational needs of the City and, in some cases, have been superseded by state or federal law. The amendments being proposed to various provisions are to modernize the City's personnel structure and enhance accountability. Among the most significant provisions are those creating the Classified Service and establishing procedures applicable to its members. Generally speaking, members of the Classified Service have special rights which confer what amounts to a property interest in their continued employment. This interest entitles Classified Service members to various procedural protections in conjunction with any disciplinary action. When a City employee is performing poorly, current Civil Service procedures mandate a cumbersome disciplinary process. Often times when applying these mandated procedures, it can take as long as two years to remove a person from a position. In the case of Department Heads, this delay is not acceptable given their broad authority. At present, all City Department Heads, except the Police Chief, are in the Classified Service. City Charter Section 701, originally adopted in 1946 as part of the original Charter, provides that the City Manager shall appoint the Department Heads and establishes that their positions, except for the Chief of Police, shall be in the Classified Service. Charter Section 1102 limits the City's Unclassified Service to City Council 4 members, the City Manager and City Attorney and members of their offices, the Chief of Police, Board and Commission members, "persons employed to render professional, scientific, technical or expert seNice" and some temporary workers. Charter Section 1110 sets forth detailed procedures for the suspension, demotion, or dismissal of any member of the Classified SeNice. Together, these sections establish that Department Heads (other than the Chief of Police) are not "at will" employees and may be disciplined only through a specified and potentially lengthy process. Prior to the advancement of federal regulations, such protection may have been appropriate to ensure employees were treated fairly. Today, federal law protects the interests of an employee, ensuring that he or she cannot be removed for reasons such as race, gender, religion, age or nationality. There are sound policy reasons to begin the process of asking the voters to change the Department Head positions to "at will". The designation of Department Heads as Classified SeNice members is antiquated. In the years since the Charter designations were established, the Department Heads' roles have changed tremendously. When the present system was established, the City work force and budget were much smaller and Department Head responsibilities were much more limited. However, as the City's work and workforce have grown, so have the Department Heads' roles. At present, they oversee large numbers of employees, ensure that seNices are properly delivered to the public, and have responsibility for substantial public expenditures. In short, they seNe as the City's "executives" and have authority and receive compensation and benefits which reflect that status. 5 Other cities have recognized that "at will" status best reflects the expectations for employees with executive-level status. Many cities have made Department Heads "at will" positions simply because of the expanded responsibilities and the realization that, if their performance is deemed substandard, an elongated process of removal is simply not acceptable in the public interest. A survey undertaken for this report shows that, in eight out of ten cities in the region, department heads are exempt from Civil Service procedures. Cities categorizing their Department Heads as "at will" include Beverly Hills, Culver City, Burbank, Long Beach, Pasadena, Thousand Oaks, Simi Valley and Ventura. Following this trend by proposing to convert the Department Head positions to "at will" (with protection of federal law) would promote public confidence. It will send a strong message that the City expects excellent performance from its "executives" and expects them to be held accountable for their performance. Fortunately, the City's current management team would have no problem meeting such expectations. The team is composed of experienced and able professionals. The proposed change has been discussed with each of the present Department Heads. Some have indicated they understand the reason for such a change; others have stated that they would not object. I am very sensitive to the reality that such a change in classification status could be unsettling for each of the impacted individuals. However, given modern day management practices, there are ways to address potential concerns. 6 Legal advice has been requested and obtained from a law firm specializing in public sector personnel issues. The advice indicates that under existing California case law the City's voters have the right to restructure their government by converting Department Head positions to "at will" status even though that change would alter the rights of existing City employees. One alternative to having the change take effect six months after voter approval has been certified by City Council would be to propose a measure which would make the change prospective, and therefore applicable only to future Department Heads. However, applying changes prospectively would significantly delay the implementation of a change intended to promote the best possible services to the public. Another alternative would be to propose modifying the Charter so that Department Heads are no longer in the Classified Service but retain some level of due process in disciplinary actions. However, based on legal opinion, this alternative is not recommended. California law requires a "bright line" between workers who are "at will" and those who are not. The proposed recommendation would eliminate or decrease any legal risk which may be attendant upon altering the rights of current Department Heads. As previously mentioned, there are also Charter provisions that reference specific Department Head positions, some of which are no longer heads of departments. Given the ever-changing needs of the community, the City must have the ability to modify or restructure departments and the authority to determine Department Head designations in order to maintain operational flexibility. Current Charter language precludes periodic 7 restructuring of specific Department Head positions. The Charter currently requires a vote of the electorate to delete a Department Head position if the position is no longer required or deemed necessary. Examples of positions designated in the Charter which no longer serve as Department Heads include City Engineer, Street Superintendent, City Controller and Building Official. The proposed changes would always ensure compliance with the charter, while providing maximum flexibility. Another recommended change to the Charter would address provisions that require the City Manager to obtain the approval of a Board or Commission for specified Department Head appointments. Boards and Commissions with appointment approval authority in the Charter now are the Personnel Board, Recreation and Parks Commission, Library Board and the Airport Commission. The Board and Commission members are extremely valuable to our community. However, under the City Charter, the City Manager is held accountable by the Mayor and Council and should therefore have appointing authority for all Department Head positions. It is recommended that the Charter be revised to give the City Manager appointment authority for all Department Head positions, without requiring Board or Commission approval. However, because we value the Board and Commissions' role with respect to all other duties they provide, it is further recommended that Council establish a policy that directs the City Manager is to seek input from appropriate Boards or Commissions regarding desirable characteristics, experience and qualifications of Department Heads before appointments are made. This change would ensure the City Manager is held 8 accountable for the performance of all Department Heads while also ensuring valuable input on such appointments from Boards and Commissions. The Charter currently stipulates that only the top three candidates, based on the results of a Civil Service examination, shall be certified to the appointing authority to fill a permanent position in the Classified Service. The "rule of 3 names" applies to both open competitive recruitments and promotional recruitments. The Charter also requires the use of a promotional recruitment to fill a position in the Classified Service if there are three or more non-probationary City employees who meet the qualifications and pass the Civil Service examination for the position being recruited. While the City should be able to recruit and select the best qualified individuals for City positions, the City is also committed to providing career development opportunities to its current employees. It is therefore recommended that the "rule of 3 names" be changed to the "rule of 3 ranks" for non-promotional recruitments. This approach would still require the use of a promotional recruitment, with the top three names being certified to fill a position, if there are three, or more, employees who qualify for a position and pass the Civil Service examination for that position. However, it also provides City departments with greater flexibility in filling positions when there are fewer than three in- house candidates and a non-promotional recruitment is conducted. This change would allow us to respect upward mobility of our employees while also allowing more flexibility to hire outside candidates who are the most qualified for a position when there are fewer than three non-probationary City employees who are eligible for promotion. 9 Finally, at present the Charter places a 90-day limit on temporary appointments that are made to fill positions on an "acting" basis when eligibility lists are not available for permanent appointments. The filling of a permanent position subject to a Civil Service process cannot necessarily be completed within 90 days. It is nearly impossible for the City to maintain the same level of service if precluded from continuing a temporary appointment beyond 90 days. Having a 90-day limit also precludes the City from delaying the filling of a position for legitimate reasons (e.g., conducting a resource utilization review to determine appropriate staffing or difficulty in finding qualified candidates). The original intent of this provision was to ensure that permanent positions were filled through a Civil Service process. It is therefore recommended that this provision of the Charter be removed and that an Administrative Instruction be developed regarding the filling of vacant positions. The Administrative Instruction would include the criteria that must be met in order for a department to delay filling a position, to ensure that there are no unnecessary delays. This would protect the original intent of the Charter without negatively impacting our ability to provide service to our residents. These. are significant changes. I recommend them solely for the purpose of enhancing accountability and productivity within City government. I appreciate your considering them and hope you will allow the voters of Santa Monica to decide the government structure by advancing all or portions of these recommended changes to the November ballot. 10 BudgetlFinanciallmpact There are no financial impacts. Prepared by: P. Lamont Ewell, City Manager Forwarded to Council: 11