LEGISLATIVE AND FINANCE COMMITTEE
The Legislative and Finance Committee met on December 13, 1990, at 6:00 p.m. with Chairman Weyandt presiding. Members present were Councilmen Hall, Lynn and Mr. Leary. Other members of Council present were Councilman Daisey and council President Christiansen.
AGENDA ADDITIONS/DELETIONS
Mr. Hall moved to accept the agenda as presented, seconded by Mr. Lynn and unanimously carried.
PRIVATIZATION - CITY AUTOMOTIVE SHOP
Previously, staff presented the Committee a report on privatization of the City’s vehicle maintenance operation and recommended authorization to proceed with the implementation after negotiating a contract with either Lear Siegler or Ryder/Management Logistics Systems. Members of the Committee expressed concerns about the impact that such a transfer would have on existing maintenance shop employees, particularly in the areas of wages, pension and other employment benefits. The committee requested that staff proceed to negotiate a contract favorable to the city and existing employees but not to privatize the maintenance shop until details of the negotiations were reviewed and subsequently approved by the Committee.
Staff held meetings with representatives from each firm and discussed several issues relating to the proposed privatization plan. During those meetings, staff continually expressed the Committee’s concerns regarding the impact on employees as a method of encouraging each firm to be as flexible as possible in structuring an overall benefit package.
The overall fleet maintenance budget for FY90/91 excluding costs associated with the lease of the facility to the firm (water, electricity, local telephone, etc. ) would total $496,152.
Based upon an assessment of the meetings and final offers submitted by each firm., staff recommended that Ryder/MLS be selected to provide fleet management/repair services to the City of Dover. Ryder/MLS was chosen for a number of reasons. I.e.. Experience with local governments, sensitivity to employee concerns, proximity of headquarters, (located in Rockville, Maryland), and their professional approach. However, the most important factor was the firm’s willingness to respond to suggested changes in the overall benefits package.
If approved by Council, the Plan is to privatize the fleet maintenance/repair operation some time in January 1991. Three to four weeks prior to the effective contract date. Representatives of Ryder/MLS will to meet with employees and explain work procedures and benefits. The Project Manager will also begin to conduct an inventory of parts and equipment and set up the computer programs for billing, preventive maintenance schedules, and parts inventory. All employees will be asked to complete an employment application and take a pre-employment physical and drug test. Employees will also be given a written test and an oral interview to assess current skill levels in order to determine assignment to proper positions and to develop a training program for the entire shop.
Employees who choose not to seek employment with Ryder/MLS will have other options open to them. The City will encourage them to seek employment elsewhere in the City, and they will be considered for positions based upon merit. These employees will also have their seniority and benefits frozen for a period of up to one year if they are seeking re-employment with the City. If an employee is not re-hired within one year, he will lose seniority and other benefits. These provisions are similar to a lay-off policy except in this case, the employee are not technically laid off. An employee would have to declare his intention to transfer to Ryder or be placed on the lay-off list in order that no pyramiding of benefits occur.
If authorization to privatize is granted, it should be done with the expressed understanding that any new policies or procedures adopted relating to third-party pension contributions, maintenance of existing benefits under a lay-off policy or any other related changes shall only be applicable in similar contracting scenarios and will not apply to specific individuals or programs mandated by state or federal governments without the formal approval of City Council.
During the meeting of November 27, 1990, staff requested that consideration be delayed pending further discussions with Ryder/Management Logistics Systems regarding employee pension benefits.
Staff was contacted by Ryder/MLS indicating their ability to establish a separate 401K retirement plan for current vehicle maintenance shop employees which should be comparable to the City’s pension plan. Currently, the City contributes 6.8 percent of an employee’s salary to the pension plan, and the employee contributes 2.5 percent of his annual salary to the plan. All six employees currently participate in the pension plan, although participation is optional.
Ryder submitted a pension benefit proposal which matches the current 6.8 percent of an employee’s salary to the pension plan and the employee would continue to contribute 2.5 percent.
Mr. Worley stated that the City would still own the shop, equipment, and parts. If for some reason Ryder could not continue with the contract, the City would maintain the shop until another firm could be contracted.
Responding to Mr. Hall, Mr. Raymond Friedl, Representative for Ryder, stated that their Company would fund the employees’ schooling in Maryland, to better train them for the needed experience to continue their professional operations. Should the city decide not to contract with Ryder, Mr. Friedl stated that institutes for training are available through other sources; however, Ryder would be unable to assist them with employee training.
Mr. Leary stated that he has researched information pertaining to Ryder and felt the proposal is of sound quality. He voiced his support for the contract.
Mr. Lynn concurred with Mr. Leary, stating that the employees could improve their knowledge with the proposal of additional training by Ryder.
Responding to Mr. Christiansen, the Representative from Ryder stated that they offer different levels of positions with their Company and that City employees will be evaluated based on their experience and knowledge. A list of other municipalities who have joined Ryder by contract is available in the City Manager’s Office for review.
An employee of the City’s automotive shop, Eugene Ore, stated that the employees are very appreciative to the City for considering their objections; however, he stated his concern of future protection, feeling that the members of Council who are elected in upcoming years may not be as supportive as the current members of Council.
Responding to Mr. Daisey, Mr. Worley stated that should an employee wish to leave Ryder and return to the City, staff would be very considerate of their request and work with the employee to find a position within the City. Mr. Weyandt reminded council Members that they must protect the taxpayers by looking at the most economical method of maintaining City vehicles.
Mr. Levitt commended staff on their willingness to help the automotive shop employees and stated that he is pleased with the contract by Ryder.
Responding to Mr. Weyandt, Mr. Friedl stated that Ryder carries insurance which assumes the necessary liability needed to maintain the shop.
Mr. Lynn moved to recommend that Council approve privatization of the automotive shop and the contract with Ryder/Management Logistics, seconded by Mr. Leary and carried with Mr. Hall voting no.
A representative of the Dover Organization of Employees (DOE), Mrs. Weingard requested that the organization receive a listing at the endo for the year which would show the amount of money saved by the City by privatizing the automotive shop.
Mr. Lynn stated that when considering actual dollars saved, consideration should also be given to the value of the additional training these employees will receive.
Mr. Lynn moved to adjourn, seconded by Mr. Leary and unanimously carried.
The Meeting adjourned at 6:40 p.m.
Respectfully submitted,
Francis R. Weyandt
Chairman
FRW/dkh