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HomeMy WebLinkAbout9A Attorney General Opinion O � PRIp � � v � 4646 Dakota Street SE Prior Lake, MN 55372 �jNNE50'� CITY COUNCIL AGENDA REPORT MEETING DATE: July 8, 2013 AGENDA #: 9A PREPARED BY: Kelly Meyer, Asst. City Manager PRESENTED BY: Kelly Meyer, Asst. City Manager AGENDA ITEM: CONSIDER APPROVAL OF A REPORT RELATED TO AN ATTORNEY GENERAL OPINION DISCUSSION: Introduction The purpose of this agenda item is to evaluate the information related to an Attor- ney General opinion regarding compensation and reporting compliance, and dis- cuss what (if any) further action is required. Historv In December 2012, the City received a complaint that its posting of the base sala- ries of its three highest paid employees in compliance with the statute (M.S. 471.701) intentionally misrepresented the wages employees would receive by ex- cluding other forms of pay. Upon receipt of the complaint, the matter was referred to the City Attorney to provide an interpretation of the law. The City Attorney did so and provided the analysis to the complainant. Subsequently, in a March 2013 letter, the complainant alleged that the City Attorney was not impartial in his analy- sis, and further alleged that the pay equity rules prohibited the City Manager from receiving longevity wages and called for "claw back" of wages inappropriately paid, as well as punishment of City employees if laws had been violated. At the City At- torney's suggestion, an inquiry was made requesting a finding by the Attorney General on the two matters. Current Circumstances The City Attorney received a response from the Attorney General on June 17th (at- tachec� and, at the request of the Mayor and City Manager, has prepared the at- tached memorandum with his evaluation of the Attorney General response. Conclusion Tonight, the City Council is asked to discuss the information provided and make a determination on the appropriate course of action. ISSUES: In addition to the original opinion from the City Attorney, the letter from the Attor- ney General, and the subsequent analysis by the City Attorney, there are a num- ber of additional factors the City Council could consider as part of its evaluation. 1. In April 2013, the Council acted to change the language the City uses to com- ply with M.S. 471.701 relating to posting of salaries of its three highest paid employees. Although the language appears to exceed the statutory require- ment, the Council determined that to err on the side of providing more trans- parency would be appropriate. This posting is presently on the City website. 2. In May 2013, the Council participated in a work session that provided a gen- eral overview of the City's employee groups, compensation plan, applicable statutes and regulations, market comparisons, staffing, benefits, and chal- lenges. Although not yet completed, the staff intends to provide some of the information from the work session as a web page on the City's web site. 3. The City has received a clear audit report from MMKR. The audit report does evaluate compliance with M.S. 43A.17, subd. 9 which sets a compensation maximum of 110% of the governor's salary. It does not specifically address other compensation rules or statutes as compensation is largely determined at the discretion of the City Council. 4. The City is required to report every three years to Budget and Management di- vision of the State to assure pay equity compliance. The City last reported in 2011. The data provided discloses that the City Manager and police officers receive longevity pay. The City was found in compliance with pay equity stat- utes. 5. Information on compensation is available to the public by: (1) making a re- quest of staff under the Government Data Practices Act; (2) staff is also gener- ally available by phone and email to answer questions; and (3) a wealth of in- formation can also be found on the City website in the Document Center, in- cluding the annual budget document, City Council staff reports and labor agreements, and City Manager contracts, all of which provide details on the costs for personnel. 6. In terms of the City Manager's performance and compensation, the City Coun- cil process for evaluating the City Manager has changed over the years. Cur- rently, Council members participate in a rather extensive evaluation process for the City Manager that includes individual written reviews/ratings by Council members, written reviews/ratings by management staff, an oral review with the City Manager in Executive Session, and a City Council subcommittee review of any contract changes or compensation adjustments. The final step is for- mal City Council approval of a new contract. Because the Council is so in- volved in the process, there is generally agreement among Councilors when the City Manager contract finally comes before the Council for formal ap- proval. Staff cannot remember a time in recent history that the City Manager's overall scores failed to meet or exceed standards, or when the Council did not vote unanimously to approve the compensation package recommended by the subcommittee. In fact, regardless of the City Manager's highly rated perfor- mance, the Council has acted in recent years to cap certain compensation items such as longevity and vacation accrual. Further, since 2010, the City Manager's increases to his base pay have been 0, 1%, 2% and 1% respec- tively. FINANCIAL Responding to public concerns is an inherent function of public service. Staff did IMPACT: not calculate the time spent in addressing these allegations, but it should be noted that such investigations are not without commitment of City staff time and other re- sources. ALTERNATIVES: The Council has two actions to consider: 1. Motion and second dismissing the complaints with no further action re- quired. 2. Motion and second directing staff or City Attorney to pursue additional in- formation or action. RECOMMENDED As the Council deems appropriate. MOTION: GREGERSON, ROSOW, JOHNSON & NILAN, LTD. ATTORNEYS AT LAW DAV[D W. GREGERSON• 650 THIRD AVENUE SOUTH ROSGRT l. LANG (1922-2012) RICHARD F. ROSOW+ SUITE 160Q ROGER A. PAULY (RETiRED) MARK J. JOHNSON• MINNEAPOLIS, MINNESOTA 55402 lOSEPH A. NILAN't 11Also admitted in Illinois DANIEL R. GREGERSON" TELEPHONE: (612) 338-0755 'Also admitted in Wisconsin JOSHUA A. DOROTHYt FAX: (612) 349 fAlso admiHed in North Dakota EMERiC J. DWYER +MSBA Board Cerlified Reat Property Specialist SARN 1 E. SCNWARZHOFF W W W.GRJN.COM THEODOREJPATTON DANIEI. A. EL4FRBROCKJI Writer's Direct Dial: 612-436-7477 IENN[FER M. SPALD[NG Writcr's E-mail: nosow@grjn.cam July 3, 2013 Mayor Ken Hedberg and Members of the City Council City of Prior Lake 4646 Dakota St. SE Prior Lake, MN 55372 RE: City Manager Tenure Adjustment Dear Mayor Hedberg and Councilmembers: I write to provide you with a legal opinion regarding several issues involving the salary of the Prior Lake City Manager. As you know, the City has received two letters from the graup Citizens far Accauntable Government. The first letter, dated December 10, 2012, argued that the City failed to comply with the salary disclosure requirements of Minn. Stat. § 471.701, because the City did not include a tenure adjustment and car allowance in its 2012 posting of the City Manager's "base salary." The second letter, dated March 11, 2013, contended that it was also illegai for the City to have paid the City Manager a tenure adjustment in the first place, and the group asked that this portion of the City Manager's salary be "claw[ed] back." Copies of the group's two letters are attached, along with my letter of December 21, 2012, responding to the first complaint. Following the goup's second letter, I wrote to the Off`ice of the Minnesota Attorney General, seeking its opinion regarding the above complaints and the proper interpretation and application of the statutes cited by Citizens for Accountable Government ("CAG"). By letter dated June 14, 2013, the Attorney General's Office declined to provide an opinion on these matters. The Attorney General's Office did note, however, that the City had already made a determination regarding the amount of base salary that must be reported "which is final absent a judicial decision to the contrary." A copy of nr�y request for an opinion and the Attorney General's June 14 response aze also attached for your review. I will not exhaustively review CAG's first complaint here. In my December 21, 2012 letter, I previously explained that both the plain language and legislative history of Minn. Stat. § 471.701 indicate that the City Manager's tenure adjustment and caz allowance are not part of the "base salary" that must be reported. The City's 2012 reparting was therefore in full compliance with the statute, and according to the response of the Attorney General's OfFice, the Mayor Ken Hedberg July 3, 2013 Page 2 City's reporting "is final absent a judicial decision to the contrary." I also note that, far the 2413 contract year, the City has chosen ta sepazately list out the tenure adjustment and car allowance that the City Manager receives in addition to his base salary, and I am aware of na complaints as to the adequacy or completeness of the 2013 reporting. I therefore believe that no further opinion or action is required with respect to the disclosure requirements of section 471.701. CAG's second complaint questions whether it was, and is, legal for the City to pay a tenure adjustment to the City Manager in the first place. The response from the Attorney General's Office did not attempt to resolve this issue. I note, however, that the Attorney General's Office described the Office of the State Auditor as having authority to oversee the financial affairs of local governrnents and identified a 2003 study by the Office of the State Auditor regarding the compensation of schoal district superintendents following their exclusion from the salary cap applicable to other units of government. That study does not undertake to apply or interpret state statutes regarding disclosur� or maximum compensation. It does, however, describe additional compensation in the for�n of vehicle allowances and bonus or performance pay as something other than base salary. Having reviewed the provisions cited by CAG and the guidance issued by the Offices of the State Auditor, Attorney General, and Mana�ement & Budget, I am of the opinion that the City's payment of a tenure adjustment is legally permissible. Minnesota Statutes § 412.111 gives the city council broad authority to "fix the compensation of all officers ... employees, and agents," unless otherwise prescribed by law. Nothing in that section prohibits the payment of a tenure adjustment or longevity pay to city emplayees. Nar did i find any other statute or agency guidance that calls such compensation into question. Ta the contrary, an opinion of the Attorney General has suggested that the payment of additional compensation based on "performance or longevity standards" is permitted. Op. Ariy. Gen. Feb. 6 1998 (informal letter opinion to Champlin) (noting, in the context of examining city's authority to provide in-kind recognition awards, that "an agreed upon monetary bonus might be provided as part of a salary plan to employees who meet performance or longevity standards"). CAG's claim that payment of a tenure adjustment to the City Manager is nonetheless illegal appeazs to be based on two sources. First, CAG references a May 7, 2012 report by the Assistant City Manager, whieh states that the "salary rate for the City Manager has always been under the maximum and, as proposed, remains under the maximum." (The maximum salary rate referred to in this report is the total compensation limit set for city employees by Minn. Stat. § 43A.17, subd. 9.) Second, CAG also notes that under state regulations, "longevity pay" is defined as "payment above the salary range maximum to employees with specified years of service or seniority." Minn. R. 392U.0100, subp. 6. Combining these two statements together, CAG argues that the City Manager was not entitled to receive "longevity pay," because his salary has always been below the salary range maximum. Neither of these provisions prevent the City from paying a tenure adjustment to the City Manager. The first provision (Minn. Stat. § 43A.17, subd. 9) does not specify the manner in which a city employee's compensation may be paid, ar prevent a city from paying a tenure adjustment or other compensation based upan an employee's years of service. It simply provides that a city employee's total campensation (however paid) "may not exceed 110 percent of the Mayor Ken Hedberg July 3, 2013 Page 3 salary of the governor," as adjusted for inflation. For 2412, the Management & Budget aFfice calculated that total salary cap to be $157,181, and for 2013, the salary cap is set at $160,639. As CAG itself agrees, the City Manager's salary is below that statutory ma�cimum. As such, nothing in section 43A.17 prevents the City from paying the City Manager his current salary (even if a portion of it is designated as a tenure adjustment or longevity pay). The second pravision cited by CAG {Minn. Rule 3920.0100) is part of a regulation promulgated by the Department af Management & Budget to implement the local government pay equity requirements of Minn. Stat. § 471.992. The particular sentence relied upan by CAG is part of the "definitions" section of those regulations. Minn. R, 3920.01 l, subp. 6. It defines what "longevity pay" means for purposes of the Dep�rtment's pay equity rules, and it includes such pay within the broader definition of "exceptional service pay" — a type of compensation which must be reported and compared across different classes of employees to ensure pay equity. Minn. R. 3920.0300, subp. SH (requiring reporting of exceptional service pay); Minn. R. 3920.0700, subp. 5(comparing availability of exceptianal service pay between classes). In short, the only purpose of the provision cited by CAG is as a definition set out ta ensure that accurate comparisons are made for pay equity analysis. It is not a limit. It does not prevent a city from providing longevity pay or tenure adjustments to its employees. Nor does anything in these regulations require an employee to be making the maximum salazy set by Minn. Stat. § 43A.17, subd. 9, before longevity pay may be received. CAG's argument ultimately depends upon linking Rule 3920's definition of "longevity pay" to the unrelated maximum salary cap set out in Minn. Stat. § 43A.17. Such a link is unsupported by either law. The pay equity regulations pravide their own sepazate calculation of a maximum salary range, to which the definition of longevity pay relates, Minn. R. 3920.0300, subp. SF, and nothing in Minn. R. 3920.0100 expressly or implicitly incorporates the maximum salary cap set forth in Minn. Stat. § 43A.17, subd. 9. In fact, to define longevity pay in this way would render all longevity pay a nullity. As CAG combines the concepts, a city employee receives longevity pay only if his salary exceeds the maximum rate allowed by section 43A.17. But under section 43A.17, no amount in excess of the salary cap can ever be paid. In sum, CAG's argument combines two distinct concepts from two very different laws in order to support its conclusion. Neither provision prevents the payment of the City Manager's tenure adjustment. Nor do the two provisions work together to create that result. I therefore conclude that CAG's argument does not prevent the payment of a tenure adjustment to the City Manager. It is my opinion that the tenure adjustment is legally permissible. Very truly youxs, GREGERSON, ROSOW, J�HNSON & NILAN, LTD. �%�-�ZW Richar F. Rosow , RFR/DAE December 10, 20}.2 Mayor Mike Myser, City of Prior Lake Mayor Elect Ken Hedberg, City of Prior Lake Priar Lake City Attorney, Richard Rosow Min�esota State statute 47I.701 mandate5 that a City with population of more than 15,000 must annually notify residents of the positions and base salaries of its three highest paid employees, T�e City's website claimed earlier this year to have met this noti�cation requirement by posting the City Managers salary for 2012 as $120,598, and posting salaries for two other individuais. (Ref. 1) According to a survey in which Prior i.ake was a participant, the average salary for City Managers of Cities with pQpulation of 20,0�0 to 24,000 is $iZQ,i65. ThiS would seem to indicate that City Manager B�yle's salary is about average. 7he prablem is that City Manager Boyles +s �ieing paid $1d8,498 for 2012, not $120,598 as reported on the City's website. 7he $148,498 "wages wlth tenure" #igure that includes $54D0 car allowance comes direetly from the Ci#y Manager's 2012 contract and an associated Staff report. 7he 5taff repart that was submitted to the Counci� t� obtain approval for the $�.48,498 fgure, acknowledges that "Mr. Boyfe's salary is significantly higher" than ihe average for other t+ty managers of cities our size, but justifies the difference based upan Boyles "years of service". {Ref_2} Most certainly the City Manager and key Staff rnembers understand that the intent of State Statute 471.701 is to create transparency in City Government, by specifically informing residents of hnw mucfi their City Manager anc! other key employees are being paid. When City Hafl cites the 5tatute and then posts false and misleading data, it would appear to �epresent infentional deception. To excuse the failure to repart the City Manager's total salary on the basis that a part of it is based an his years of service and therefore doesn't tount, is disingenuous. Mr. Boyie's 2012 contratt and saiary were approved at a City Council meeting on May 7, 20i2. As City Manager, Mr. Boytes is responsible far preparing the Cou�cil agenda. The saiary item was included in the Consent Agenda which is suppased to be used only for "routine and non-controversial" issues, and which therefore receive no public discussion or debate. According to the minutes #rom that meeting, tt�ere was no mention of any specifics regarding Mr. Boyles' salary or contract benefits. (Ref. 3} Whi{e overpaying a City Manager is fiscally irresponsible, it is probably not illegal, Sut falsifyi�g information is, and ihat needs to be dealt with. As a g�oup of Prior Lake residents dedicated io the principle of transparency and accountability in local governmertt, we are asEcing far an investigation of this matter. We are also asking for a written public report o# the tindings, includ�ng identification of the person(s} responsible, and disciplinary actian ta be taken for thn5e involved. Intentional malfeasance, if found, shauld result in a repart to ar� appropriate enfor�ement agency for further investigation and action. This is a serious breac#� of the public faith and trust in City Government. We ask that you ireai it as such, and take the necessary steps to restore the confidence that residents expect and deserve. teeri g Cammittee Citize s f r Accountab Government � k el Chair c tori Carlson, E i or, rior ta e m ric n REFEREN CE 1 7r.e rn�r LaMe iarmus Market ;akes Cace Sa..: aays'r�s+ 5 a m Fo nGa� Cet,vean Has::nys anA G6k ,:ts Gi ar 7,trn ?,ve rn d.-,,.�;:cwn �n�: Late ur,!.i :ne �rddGk ci O:tohAr.1.�� mus�c �s p:v,n;led aSmos! every wc�ekee.a as is hfeaF�as� .^.e:o��C en srca T'��� �.:, . are ma�y vendc;5. Cratts a?d prqects;or k�ds For i�iorrutticn dbout heconunq a v�nd�rartLVl Kari3 iiaugnn. City Wear Availabfe at Recreatian Department 7n� �liY ot pncr 4aae ot!r:s L:go c�•sh�ns. r»ea�snons t�n yann� aaul. �n� Enfarz! sres a^: saie at the Pnc; l.aka Recreauc, Jn�an,Kn: at Gity Ha}� � LC'lb' L7�aCSJ SI G- - � Apparel �neing � :.d:.� S�vCdlshart5�� f � 15 �� . �.. � .� �� euth S�.�e214�415 �a � � I � �. ��G-Jna:.=kd�.i:?•S�r�cs S'u " ;r.iar�t ShiAS � �.�8 � � ���. ��� � , . � r � �-' �� � � � � - i' s .. r• Si8t2 5t1LUt@ �47 t.701: ; n+y o: �.irs� :, nn a pepu�io� c+ mcre ^+an � 5�OO mus a�wa�ty r.cr ;� iis res�ee-.!s at :tsa F�cr.wns arr] Ca+e :,aiarres o: �s ihrae raghw �pad emaoyees fa' :. pencd ef f# k5s :ndr K� onsr..an��;e d3YS: rfior t.dite �:.ty ¢f anoger - 5120.598 Priar Lake Pdice CtnM • 5� 7 t t0a; An� Lake?ubFc N,t�r4cs t3Yeaa -.105.516 •t� ;� � a''-- �I . 11 r,� „_ ° •E ��:,; �� _� . E .�:=a_:'. . . .., w � t_;3a'°, . � = � � 4 �1� 6�. {tiw� ., .. .. _ ,rf ..t " .. { , i.s ':p.t '�65 a+t ,_ <.., _.,, 4='r 0?' �rti,3' ` � R�FERENCE � a � rRto� � � V � 4646 Dalcota Sireet S� Prior Lake. MN ��372 �� City Cot�nc+� Il�eet�ng a� Ci�/ Hall Monday, May 7, 2072 Ciry Counci� 1Nork 5ession Agenda 4:34 p.m. 1 < DISCUSSION ITEMS ti. Welcome Avenue Funding Firefighter Reception 6:30 p.m. Regular City Cauncil Meetiog Agenda 7 p.rrt. Repor�s inciuded with this agenda can be found in the Dacument Cenfer at www.citvofpriorlake.com. Please follow this file path: Gity of Prlor Lake��i�y Council, Planning Commissian and Advisory CommitteeslCi#y Councilt�ity Councii Agenda Pa�kets120111May 7, 20i2 1, CALL TO ORDER and Pi.EQGE OF ALL�G(ANCE 2. PUBL�C FORUM The Public Forum is irttended to af€ord fhe public an opporttiniiy to eddress concems fo �e City CounciM. �he Public Forum will be no fonger than 30 minutes in fer�gth and each presenter wil[ have na more than ter� (10� minutes to speak. 7apics of discussion are restricted to Gi#y govemmental topics rather than �rivat� or palitica! agendas. Tapics may be addressed at ihe Public Farum that are on ihe agenda except those to�ics �at have been ar are the subject af a scheduled public hearing or gublic information hearing befare t�e Gity Counci[� the Economic Development Authorify {EDA), Pfanning Commission, or any ather Cify Advisory Committea. The City Council may discu�ss but wlll not take iarmal actton an Pu�bfic �arum prese�tations. Matkers t�at are the subject af pending ii�gation are not appropriate zor the For�m. 3. APpfitOVAL OF AGENDA �. COd�SlDER APPROVAl. OF MEETING MINUTES �. AQriI 1�, 2�92 Regula� City Cauncil meeting B. May 1, 2�12 Loc�l Board of Appea�s and Equa{ization mesting 5, CONSENT AGENDA Those items on #he CounciE Agenda �Vhfch are consider�d rout�nR and non- controve�sial are #ncluded es par# of the Consent Agenda. Unless the Mayor, a Councilmember, or m�mbe� of Ehe public specifically requesfs t�►at an item on tf�e Consent Agenda be removed and� considered separatefy, Items on the Consenf Agenda are considered under ona motion, second and a ral[ cal( vo#e. Any item removec� from i�e Consent Agenda shail be placed on the City Coun�ii � Agenda as a separate category. A. Consider A{oproval of Claims Listing B. Cpnsider Approval of Frst Quarter 2012 Investment Report C. Consider Appraval of a Resolution Au�orizing the �rtayor and Cify Ma�eger #o �nter inta a Grent �. ti� q Agreement with the Minnesota Department of Natural Resouroes for Receipt of a$25,000 Cflmmunity Forest Bonding Grant. p. Consider Approval af a Resoluaon Authorizing the Execution of a Shared Use Agreement with Scott County for the Spring Lake Park Development E. Consider a Resolution Authorizing the City Manager to Pu�chase Fuel in Amounts Greater than $20,000 F. Consider Approval of an Employment Agreement with the City Manager Through 2012 G. Consider Approval of a Resolutlon Approving a Minor PUD Amendment for the Crystal Bay Planned Unit Development H. Consider Approval of a Resolution Authorizing the Mayor and City Manager to Enter into a Joint Powers Agreement with Scott County for Particlpation in the Sentencing to Service Program i. Consider Approval of a Resolution Authorizing the 2012 Insurance Policy Renewais J. Consider Approvai of a Resolution Adopting the Economic Development Revoiving Loan Fund Guidefines 6. ITEMS REMOVED FROM COP�tSSERfT AGEfdDA 7. PRESENTATIOPIS A. Badge Presentation Ceremany to New Firefighters 6. Firefighter Re6►ement - Clarence (Jim) Weber C. Discussion of a Concept Plan fo Subdivide an Existing 7.4Acre Comme�cial Lot into Four Commerr�a! Lots 8. PUBLIC HEARtNGS A. None scheduled 9. OLD BUS{IdESS A. Constder Approval of a Report and Pmvide Dir�ction for the Sonth Downtown Traffic Study B. Consider Approvai of Three Resolutions for the Boudin's Phase Il lmprovement Projecf (City ProJect #12-011) 1. Accepting Bids and Awarding the City's Standard'¢ed Construction Cantrac# 2. Accepfing Proposals and Authorizing Bolton and Menk to Provide Constrtrcdon Sfialdng 3. Accep6ng Proposais and Authorizing Element Materiais Technology to P�ovide Construction . Tesfing 10. MEW BUSItdESS A. Consider Approval of a Resolution Approving a Preliminary Piat to be Known as Eagis Creek Estates B. Consider Approval of a Resolution Approving a Preliminary Plat to be Knawn as Radermachers 2nd Addition C. Consider Approval of a Resolution Approving the Final Plat and Development Contract for Hickory Shores 3rd AddiBon 11. OTNER BUSINESS ! COUNCiLMEMBER REPORTS . 12. ADJOURNMENT o� �'�o.p R�FERENCE 3 �' �' 4b46 Dakota Street S.E. . F. v � Prior Lake, MN 55372-1714 � �ry�NESO� GITY �OUNCIL AGENAA REPOR'� MEETING �ATE: May 7, 20i2 AG�NDA #: 5F PREpAi2�D BY: Kelly Meyer, Asst. City Manager AG�AlDA ITEM. COfVS1DER APP�20VAL�OF AN EMP�,OYMENT AGREEM�I�l�JlTH THE C9TY MANAGER THROUGH 2O12. [}ISCUSSlON; Intraduction: The pur�ose o� fhis agenda item is to formally consider fhe extensiar� of the C€ry Manager's employment agreement and 2019/2012 compensation adjusfinents. Histo : Frank Boyles was appointed as the Prior Lake City Manag�r in 1993 and is naar approachir�g his t9� year �+rith the City. The City Manager is an at-w�11 ernpluyee appointed by the City Council. Terms of emp[oyment €or the City Manager are set out in an employment agreement approved by fhe C9ty CaunciE, Such approval is considered annually in connection with a performance review. Cur�ent Circumstartces: Councifinembers Erickson and Keeney serve as the appoin#ed members to the Manager Evaluatlor� Subcommlttee that fa�ilitafe th8 wrif#en revie+r� process, conduct the orak rsview, and make any recvmmendatEons regarding compensation. The evaluation process c�nsisEs of written revlews st�bmitfed by each City Council member, writfen c�mments submitted by department head sta�f an oral dis�ussion wikh the Cify Manager in Executive Session, and fina(ly, CouncEl action to update the employment contract. The Manager Evaluation Subcommit#ee has completed f�e performance evaluation. The n�il Council discussed pe.►formance wi�h the City Manager in Executive Sessian on Rpril 3, 2012, The City Manager was generally rated well above average in all responsibiEity areas, a recommendation far compensation adjusfinent was pravided, and dErecBon was given to staP� to prepare the attached contracf for formaf appraval. Gonc�usion: The recammendation is ouflined below. Councifinembers should review the materials and determine if the zecommendaUon Is appropriafe. Councilmembers �rickson and Keeney are also availa6[e to answer questions. 1SSUES: The major�iy of the City Manager's employ�ent contract remains subsEan�ively the same. Those items propdsed for change are a result of eitfier updates proposed by the City's employment law specialist, or (2} direc4on from t�e subcommittee related to campensation. i he proposed employment agreement is attached �nd recommends the follawing contract changes: Contrack i erm: .Eanuary 1, 20i 1 through Decer�ber 31, 2012. In 2011 th� subcomrq�t#ee�t¢af����farmance review for #he City Manager, but, rl� I��/� � nM1 ��.�.A • � ���. � �� . � .� .. • Y for a variety of reasons, the proposed contract changes we�e never formalized. The performance review generally rated the City Manager exceptionally high. The current V contract proposes to compensate retroacc#ively for 2011 based uRon the prior subcommittee recommendabon, as well as address compensation and benefits adjustments for 2012. Compensation: The City Manage�'s last salary increase was effective in January 2009. Given the economic c�nditions and cutbacks that were necessary in 2009 and 2010, the City Manager reoeived no.cost of living or perfarmance increases in 2010. As stated above, a modest adjustment was proposed, but not formalized for 2011. The revised contract under consideration proposes a 1% increase to the City Manager's base salary for 2011 retroactive to January 1, 2011, and a 2� inc�ease to the City Manager's base salary for 2012. � Year � inc E Base Wages � Wages with Tenure � � 2011 � 196 � S118,233 ($146,133 J � 2012 � 296 �$120,598 �$148,498 .. � Traditionally, City empioyees have recsived the same annual adjustments a�xoss employee groups. The primary reason is to maintain faimess across employee groups, and consistency within the City master salary plan. However, over the last 4 years, as t�e economy experienced a downtum, salary fnc�eases did as well and fluctuated depending . upon the empioyee group and any union conVact status. The table below shows oost of living adjustments over the last 6 years as cflmpared to the CPI-U for MinneapolislSt Paul. - I Year { Cily I Unrepresented I AFSCO� (NlaiM., I LELS (Patrol) I Team�s � CPW i I Rfanager (6Wnagers) Prof, CtetEca� (figksl (Ypisl3t� MnusP" � 2007 � 3.0 � 3.0 I 3.0 1 3.0 � 3.0 � 2.7 � � 2008 � 2.5 � 3.0 I 3.0 I 3.0 I 3.0 � 3.7 � 2009 I 2.5 I 2.5 I 2.5 I 3.0 1 3.D I -0.6 I �ma I o I o i z.s' I o I o i z.o E ��„ i' i�=�l o� � 2.5 � 2.5 �� f I 20�2 � 2 I z.o I c�nraao�en I conr,accoven I c�anraao�en I - I I Avg inc. I 1.83 I 2.17 su I 2.2 I 2.9 I 2.3 � 296 I •4.8% decxease in hours rrarked related to turloughs in 2010 "0.7546 oost of living allowance pa(d as fump sum - NOT Enduded as base wage adjusanent "'January to January CPI-U; US Dept of Labor, Bureau of Labor Statlstics While the increase proposed for the City Manager is not oommensurate with the Councii's high regard forthe City Manager's performance, the subcommittee did considered a number of extemai economic factors in �eaching its recommendation: 1. Economic Recoverv, Conservative irtcreases as the nationai and local economy slowly recovers; 2. Statutorv comoliance. Statute provides sa(aries of a persan employed by a City or State (excluding school districts) may not exceed 110 percent of the salary of the govemor, unless the City would appiy far and the State issue, a waiver. In 2011, the limit was $151,866; and in 2012 the limit is $157,181. The salary rate for the - City Manager has always been under the maximum and, as proposed, remains under the maximum. 3. CPI-U. See ta61e above. " 4. Market Com�arisons: In 2011, Springsted (for the City of Elk River) oonducted a review of salary data for City Administrators/Manage�s in Cit�s ranging in papu(ation from 20,000 to 24,000. The cities of Champiin, Chanhassen, Chaska, Lino Lakes, Prior Lake, Ramsey and Rosemount responded to the request. Springsted shared the results which found that the average actual salary among the group was $120,165, and the average years in the position was 6. Aithough Mr. Boyles' sa(ary is significantly higher, it can be directly attributed the years of service with the organization. Mr. Boyles is approaching 19 years of setvice when , the average among the group was 6 years; and the next dosest per�on in tenure was 12 years. Similarly, InfoRnation reported to the LMC annual salary study shows an average of $124,654.96 for metro ci�es between 20,000-30,000 population. What the LMC survey does not include is a measure of the years of service. Using market comparisons, particularly in this case, should be cansi��ried far fhe information it provides. However, it is also important to consider wh��t informatian is not provided. Cityr Managers/Administrators are contract employe�s and there are often different structures of compensation from contrack to contract. For example, one contract might include a lower base sa{ary, but pay for fult family health insurance premiums; another might include contributions to deferred � compensafion accounf or rebrement. Other benefifs contributions can impact the base salary numbers reported. � Tenure Adiustment: In recognition of his long tenure with the City, the City Manager receives additional compensation. in the pasE, the amount has been equivalent to 6 days pay for each year over 10 yea�s. The City has also made a direct contribution for tenure into the City Manager's deferred compensa6on account. in 2010 and 2011, the Coundl directed that the calculation for the tenure adjus6nent be frozen a# the 2U10 levels. For 2012, the subcommittee is proposing to simplify the calculation by eliminating the direct conVibuGon to deferred oompensation, and estabfishing a maximum tenure contribuaon not to exceed $22,500 per year. The amount wouid be paid as wages, and the City Manager would be responsible for defermining what pre-tax contribution he wished to make to his deferred compensation account. Except for establishing a cap, the language proposed in the contract does no# increase or decrease the benefit as it was adopted, only the way it is paid. PERA: The City Manager's cantract language for PERA has always been consistent with the PERA requirement for its Coo�dinated Plan. The change proposed simpfy eliminates the housekeeping step of having to change the number periadically when PERA changes the standard. Vacation Accrual: Over his long tenur�, the Cit�+ Manager has accumulated a signficant bank of unused vacation accrual. The contracf proposes to provide a cap for any future ._ accrual. It also adds language that contemplates an incremental buy down of the balance. The City Council directed that the Manager propose a plan for the next contract period, .� and staff has met already to discuss options. Other Contract Chanues: The other changes proposed a�e housekeeping in nature or have been made to simplify the contract language. The changes are outlined in ihe draft contract attac;hed and do not have addi6onal cost implications over and above the existlng contract provisions. FINAIdCiAl. Tf�e compensation package proposed wiil slightly overrun the 2012 budget due to fhe IMPAC'i: retroactive pay for 2011. The Impact is approximatefy $1200. ALTERtVATIVES: 9. Motion and Second fo Authorize the Mayor to Enter into an Employmenf Agreemenf with the City Manager for 2011 and 2092 as proposed. 2. Take no action and provide staff with specific direction. RECOMMENDED MOTION: Altemative �. " .� �6� . P�I 1.�', � 4b4b Dal;ota Sfreet S.E. u 7� Prior Lalce. MN 55372-1714 n � EMF'l.OYMENT AGREEMENT � TH1S AGREEf�ENT is made and ent�rec} inta lfiais 7th day of �lav ,�988-2012 by and befween the CITY 0� PRIOR LAKE, a po1(ncal subdiviston of �he State of Minnesota {"Cit}�`y, and Francis F. BoyEes. III ("Managef). IN CONSIDERATfON of the terms and cor+d[t[ons cantained harein, f�e pafies agree as fo[lows: 1. Emplovment. During the term oi this Agreement, the Mar�ager shall serve as City Manager of �he City, and shali assume and perform, in a consctentious and difigent tnanner at all times, aEl af the duties and rssponsibilities incid�ntal to such posi�on as defi�ed hereir� and as are reasonably asstgned #o hfm from time to time by the City CouncJ. Manager shell use his best e�or�s tn the perfarmancs of his duties, and shall spend suhstant�elly hls �Il time ]n cannectlon therewtth, except in the eve�k of iflness, dtsa8ility, vacafion or other absence permitted by the City. Manager ��all work such hou�s as are reasonab!y assigned to h1m by �he City Councif from time to time, ( 2. Term, Thfs Agreemenk shall be effeative as of January 1, ?99�2012 except as herein speci�e� and shall continue indefinitely unfess or un�l ea�lier kerminated as provided in Secfron 6�elow, ar untii such �ime as t�e Manager vo(untarily terminates employrRent by t�irty (3�) days written notice. Manager shall remain in the exc�usive emplaym�nt of the C3ty during the term of this Agreement. For t�e purposes of tF�is section, °exclusive employment�' shal[ excfUde any teaching, Umting, consulting, spesking or military res�rve service undertaker� by Manager during his non-Nrork hours. 3. Gomne�satlon. As compensatton for seN[ces rendered th� Manager shall receive #he following: 3,1 Base Salarv: Januarv 1. �99�-20� 1 throuQh Decem�er 3�. �2011: �Q per an�tum less wanes alreadv recenred for 209 i, -�a-�����! :^�;��,,~:�,'^ ^-� ��� �• �'fi� ^��pavable in lumn sum u�on contract adontion, su�ject to ail applicab[e taxes. JanuarV 1. �89�2012 throu4h December 3�. �89S20i2: $�8§�120.59$ per annum in equal insfailmenEs at the same br�e as lhe City pays its Cify Employees, subject ta aH applicabfe taxes. 3.2 3enure Adiustment; The City shall annually remit a sum equivalent #o �3000 qer vear for each yeaz in excess of ten years that the Manager has worked for �e Ci#v in an amaunf not to exceed S22.500. The payment shall be pald as wages at the same time as the City pays f�� Cify employees, subject to all applicable ta;;es. �� r . , t �-�is �ase-s���sa�e�- 4 8enefits. Manager shafl receNe the foHowing bene�its at no cost to him: ��ww.cityQfprlorlake.corn DN: ?.09869. v 2 ... ,... ,. . . _ _ _ _ _ _ . • ' • / (a) Vacation. The Manage�s paid vacation ac�ccruai shail be 25 days (in addifion to the paid public holidays as provided for other City Departrnent Heads). Carryover of unused vacation - Ume fmm one (1) contr�act year to another shall not exceed a maximum accrual of 1500 hours. The maximum accrual shall be adiusted downwani based upon anv incremental buYdown arranqement. ' . Anv unused acaued vacation time in excess of the ma�dmum acxrual shall be forFe�ted at the end of the contract vear. Any unused accrued vacation time shali be paid to Manager in cash at terminadon of empioyment at the then-e�as6ng base rate of pay, or at such other times as determined bv the Cfir Counr,il to allow for incremental buvdovm of accrued vacation time arior to termination.: (b) Sick Davs. Paid sick days and sick leave payment plan (including in+tiai thirfy (30) day bank) in accordance witl� City policy for Departrnent Heads. (c) Insurance. Medical, dental and Retir�ment Heafth Savings Plan contributions equivalent to those contributions made for other Department Head level City employees. (d) Life Insurance. In lieu of term life insurance ooverage the City shall pay an annual contribution of $1800 to a universal life insurance policy owned by the Manager. (e) Retlremerit Plan Contribu�on. 7he City shall contribute �9�6--a aortion of Manager's base salary to PERA in an amount mandated bv RERA for t�e Coordinated Plan. (fl Car ANowance. $450.00 car allowance per mont�, p{us mobile ceUular phorte with monthly fees paid for City related activities. (g) Professional Development. Dues and fees for the foUowing, provided that such items are reasonably necessary to the professional development of the Manager, and subject to City Council approval in the budget process or othenN(se: ➢ Licenses, joumals, publica6ons; ➢ Seminars, canferences and short courses within Minnesota and one semfiadconference per year outside the State of Minnesota; ➢ Membership in professional associations and service organ'rzations. � (h) Reimbursement of Exaenses. Reimbursement for r�asonable and necessary meals, travel (excent for bavel uslnq Manaaers vehlcte), lodging, and entertalnment expenses, properly documented and actually incurred by Manager in connecfion with the affalr� of the City or in connecHon with 1he pmfessional develapment descxibed 'm paragraph 4(g) above. (i) Manager shall also be efiglble for any other benefit plans or programs available to Deparbnent Heads now or in the futur�. 5. Pertormance Evaluatlon. The City Council may, at its discre6on, conduct quarterly performance � revieuus with the City Manager. The City Council will conduct an annual performance appraisal and salary review during the fir�t week in December. Information from this meeting will be used by the City Manager Evaluadon Subcommlttee of the City Council to formulate a salary recommendation for _ cansideration by the Cauncil at the last mee6ng in December. DN: 208869, v2 � � 6. Termination of EmploYmerrt. Manager is an at wili employee of the Cit}r. As such, he may be ` terminated by the City Counal in it,s sole discx�e6on at any dme, with or wit�out cause. Upon termination of Managers employment, and subject to the severance provisions of Section 7 below, al( rights and obiiga6ons under this Agreement shall cease at that time, other than those which have acaued prior thereto. This Agreement shall terminate immediately upon death of the Manager, fraud, theft, gross negligence ar gr�ss misconduct of Manager of his dutles, or conviction of a felony or a gross misdemeanor. 7. Severance. In the event this Agr�eement is terminated by the City in accordance wifh Secfion 6 above, uniess such termination is due to Managers conviction af a felony or gross misdemeanor, or due to ftaud, theft, gross negligence, or gross misconduct of Manager-e€-�ir�es, t�e City shall provide Manager with a minimum of thirty (30) days advance Hrritten notice and , severance pay as set ovt in subparagraph {A) below. If such terminatlon is due to Manaqe�'s convicfion of a felonv or Qross misdemeanor, or due to fraud, theft, Qross nealiQence, or aross misconduct of Manaaer, Manaper shall forfeit anv riaht to advance wriiten notice or severance pav. (A) Pavment f 1. Comnensation. The City shall continue to pay Manager an amount equivalent to his then e�dsting compensation as set out (n paragraph 3 herein, subject to al( applicable taxes, for six (6) months following the effective date of Manager's termination. 2. Benefits. During the period set farth in 7(A)1 above, the City will continue to pay __ Manager the City paid contribuution towards paymenf of Manager's medical, dental and �etirement health savings as set out in paragraph 4(c) he�in. 3. Vacation and Sick Pav. tlpon notice of voluntary or involuntary termina�on of employment, afi accrued vaca6on shali extend to the flnal date of employment as determined by the City Manager, and be paid accotdingly. No additional accrua! shall occur during this time period. Any balance of vacation accruai not taken in cash shall be deposited into the City Manager's Retirement Healt� Savings Plan. All eligible sick leave shafl be paid into the City Manager's Retir�ment Health Savings Rlan as per plan agreement. 8. L�a�. The parties covenant and agree that the pmvisions conEained her�eln ar� reasonable and are not known or believed to be in violaaon of any f�eral or state law or r�egulation. In the event a coutt af competent jurisdiction finds any provision cantained her�in to be illegal or unenforceable, such court may modify such provision to make it valid and er�fonceable. Such modification shai( not affect the remainder of this Agreement which shafl continue at all times to be va{id and eMorceab{e. No paymer� may be made under this Agreement in exoess of the ma�dmum amount permitted by applicable law. 9. Intemreta�on. This Agreement constifutes the entire agreement between the parties and � supersedes any prior oral or written agreemenis between the parties. Thls Agreement can only be madified in writing signed by both parGes. 7his Agneement shall be interpreted in accordance with the laws of the Stat� of Minnesota. oN: Zosess, �.z � +T + ` 10. Assismmenf. The rights and obligatians of the Ciiy to the Manager in thls Agreement may not be `�. transfer ar assigned by the Manager. 11. Arbitratlort. Any controversy conceming a question of fact arising under this Agreement shall be determined by arbitraiion in accordance wifh the Nles then in effect f�r the American A�bitrafion Associatlon. IN WI'fNE55 WHEREOF, the parties have caused the execuiion of this Agreement the day and year first above writ#en. This document excluding exhibits cansists of 4 pages. � CITY OF PRIOR LAKE gy: Mike Myser, Mayor Francis F. Boyles, III ��. � DN: 209889, v 2 4 ! � . GREGERSON, ROSOW, JOHNSON & NILAN, LTD. ATTORNEYS AT LAW DAVID H. GREGERSON• 650 THIRD AVENUE SOUTH ROBF.RT I. LANG (1922-2012) RICIIARD F. ROSOW+ SUITE 1600 ROGER A. PAUI.Y (REfIRED) MARK 1.lOHNSON•t MINNEAPOLIS, MINNESOTA 55402-4337 qAlsoadmiued in Illinois IOSEPH A. NII.AN't DANIEL R. GREGERSON TELEPHONE: (612) 338-0755 •Also admittcd in Wisconsin JOSHUA A. DOROTHYt FAX: (612) 349 tAlso admitled in Norlh Dakota EMERIC 1. DWYER W W W.GRIN.COM +MSDA Hoard Cehificd Real Property Specinlist SARAH E SCHWARZHOFF THEODORE J PATTON DANIEL A. ELLERBROCKq Writcr s Direct Dial: 612-036 JENNIFBR M. SPALDING Writer's E-mail: rrusow(a��r�'n.com December 21, 2012 Dick Felch 3531 Willow Beach Trail Prior Lake, MN 55372 RE: Salary Data Disclosures pursuant to Minn. Stat. § 471.701 Dear Mr. Felch: We are in receipt of your letter, dated December 10, 2012, arguing that the City of Prior Lake has failed to comply with Minnesota Statutes § 471.701, which requires the City to "annually notify its residents of the positions and base salaries of its three highest- paid employees." You contend that the City violated this provision when it reported the City Manager's 2012 base salary as $120,598, rather than $148,498. You further request that the City conduct an investigation into this matter to identify and respond to any deception or misrepresentations. We have reviewed your letter, the requirements of Minn. Stat. § 471.701, and the City's actions with respect to the salary of the City Manager. We conclude that the City fully complied with the reyuirements of the statute, and that it acted appropriately in reporting the City Manager's salary as $120,598. Minnesota Statutes § 471.701 (2012) states as follows: A city or county with a population of more than 15,000 must annually notify its residents of the positions and base salaries of its three highest- paid employees. This notice may be provided on the home page of the primary Web site maintained by the political subdivision for a period of not less than 90 consecutive days, in a publication of the political subdivision that is distributed to all residents in the political subdivision, or as a part of annual notice of proposed property taxes prepared under section 275.065. GREGERSON, ROSOW, JOHNSON & N1LAN, LTD. Mr. Dick Felch December 21, 2012 Page 2 of 3 Here, the City complied with section 471.701's disclosure requirement by posting the positions and base salaries of its three highest-paid employees on its website for the reyuired period of time. This online notice specifically and expressly included the Prior Lake City Manager, and it accurately set forth the City Manager's base salary for 2012: $120,598. In your letter, you argue that the City nonetheless violated the language or intent of the statute, due to its "failure to report the City Manager's total salary" of $148,498. Nothing in the statute, however, refers to, or requires the disclosure of, an employee's "total salary." Rather, the statute clearly and explicitly requires the disclosure of "base salaries." Minn. Stat. § 471.701. Here, the terms of the City Manager's contract with the City specifically set his base salary at $120,598. It is exactly this number that the City reported to its residents, in full compliance with the statute. Because the language of Minn. Stat. § 471.701 is clear and unambiguous, it is that language that provides the best evidence of the Legislature's intent. See, e.g., Klein Bancapora�ion, Inc. v. Comm'r oJRevnue, 581 N.W.2d 863, 866 (Minn. App. 1998) ("[Wle presume plain and unambiguous statutory language manifest legislative intent"); see also Caminetti v. United States, 242 U.S. 470, 471 (1917) ("When the language of a statute is plain and does not lead to absurd or impracticable results ... the language must then be accepted by the courts as the sole evidence of the ultimate Iegislative intenY'). Indeed, the Legislature itself has specifically instructed that its enactments must be construed in accordance with the plain meaning of the language that it has used. See Minn. Stat. § 645.16 (2012) ("When the words of a law in their application to an existing situation are clear and free from all ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit."). And here, the Legislature chose to require the disclosure of only "base salaries." By definition, this is something different from, and less than, total salary, and the additional, separate amounts provided to the City Manager as a tenure adjustment and as a car allowance are not part of his base salary. We further note that the legislative history of this bill and sunounding statutory provisions support this interpretation and application of the statute's requirements. As initially introduced, the salary disclosure provision required cities to notify residents of the "salaries" of its highest-paid employees. But the Legislature specifically changed the language of the provision prior to passage of the bill to state that disclosure applies only to "base salaries." The relevant committee hearing indicates that the intent in making that change was to clarify that compensation beyond an employee's base pay rate (even substantial compensation from sources such as consistent overtime}, did not come within the meaning of this statute. This is consistent with the way the Minnesota Legislature has used the term "base salary" in other contexts. In Minn. Stat. § 15A.086 (2012), for example, the Legislature defined "bonus payments" to mean "any cflmbination of inerit pay, achievement awards, or any other cash payments in addition to base salary," thereby making clear that merit GREG�RSON, ROSOW, JOHNSON & N1LAN, LTD. Mr. Dick Felch December 21, 2U 12 Page 3 of 3 pay and bonuses are something separate and above "base salary." Similarly, in Minn. Stat. �} 3528.02, subd. i 0(g)(4) (2012}, the L.cgislature defines "salary" to mean "base salary for the rank currently held, phrs longevity pay." This indicates the Legislature's understanding that additional compensation, based on time iu the position, is something different and above "base salary." See also Fr•aterira! Olcler oJ'Police, Lodge #7'3 v Cih� of Evansvi/!e, 829 N.E.2d 494 (Ind. 20(}5) (constniinb a similar provision and stating: "The terrn `base salary' means just that, the salary all patrolmen ceceive, without enhancement for longevity ... or any other items"). This provision also indicates that when the Legislature wishes to talk abaut additional compensation, like lonbevity pay or tenure adjustments, it does so throu�h the usc of the more general tcrm "salary," not "base sAlary." In Minn. Stat. � 471.701 ihough, the Legislature not only failed to use tlie more general tern� "salary"; it specitically rejected use ofthat term and dccidcd to use one that was more limited and qualified. Based on that tact anc� all of the above history and analysis, we thus conclude that the City Manager's tenure adjustment and car allowance are not part of llis "base salar[y]" �vithin tlle mcaning of� Minn. Stat § 471.70I . Tl�e City therefare fully reported t3�e City Manager's base salary as $120,598 on its websitc, in fuli conSpliance with the statutc, and we see nothing improper or inappro�riate with tt�e City's reporting in this re�ard. Very truly yours, GREGERSON, ROSOW, JUHNSON & NILAN, LTD. � 2ich rd F. Ros w RFR/DAE ce: Mike Myser, Mayor, City of Prior Lake Ken HedUerg, City Council Member & Maynr-Elect, City of Prior Lake Warren Erickson, City Council Member, City of Prior Lake Richard Keeney, City Council Member, City of Prior Laf:e Vanessa Soukup, City Council Member, City of Prior Lake Frank Boyles, City Mana�er, City of Prior Lake �"t � �( �� Gu �= �-e_ March 11, 2013 Mayor Ken Hedber� �nd Members of the City Cauncil, In December of last year, Citizens for Accountabie Government (CAG) filed a formal complafnt with the City of Prior Lake, alleging that City Hall was in violation of Minnesota State Statute 471.701 that requires public posting of the positions and salaries of the three highest paid City empEoyees. The allegation was hased upon the fact that City Hall posted City Manager Boyles 2012 base safary as $120,598 when in fact his contrect with the City required a minirnum payment of $14B,498. Instead of conducting an impartia{ invesiigation of the allegation, City Attorney Rosaw (who we understand was hired at the recommendation of City Manager Boyles) respanded for ihe City by letter dated December 21, 2012. We beiieve iYs inappropriate for a City Attorney, hired at the recommendation of the City Manager, to be the investigator of an allegation of possibte misconduct within City Hall. What is more disturbing is the extent to which the City Attorney attempted to stretch the meaning of State Law to iustify the alleged misconduct. As a r�lated matter, we c�ll your attention to State Statute 3920 titkd LOCAL GOVERNMENT PAY EQtJITY. This Statue provides adual st�tutory definitlons retated to local �ovemment compensatton issues, in contrast to Implied definitions that City Attorney Rosow creat�d from his resdin� of totally unrelated statutes. We call your attention specffkally to the atatutory de�in)tion for "longevity pay" that "means aavmeni �bove tht �Earv �ar�e maximum to employees with tpecified yean of strvice or seniority". Under this de�nition, City M�nager Bayks Is not entitled to receive bn$evity pay. Our earlier complaint to the city included as a reference a report by Assistant City Manager Kelly Meyer dated May 7, 2012 wherein she re#erenceti the salary range maximum that applies io City Manager Boyles. She ended th� reference with the statement that "the salary rate for the City Manager has alwavs been under the maximum and, as proposed, remains under the maximum". Simply stated, slnce Gity Mena�er Boylcs sal�ry is below. nat pbove the salsry range maximum, the $22,500 that he was given �s bngevity pay in 2�12 was inappropriate and possfbly Illtgal, and si�ce his salary "'��s #Iw�vs be�n �nde�" the salary nnge maximum, a�y and all longevity payments he has received fn the past, or is contlnuing to receive ar�e equally inapprop�t@. Obvlously this circumstance ought to be immediattly remedied. Recovery of sll compensation thst has been (abekd as Eac►gevity pay or longevity w�ges would seem to be the mini�num appropriate resolirtbn. Taxpa�rs should be entitkd to the use of a"claw back" procedurc to �ecover improper use of t�x dollars Just as stockhotders or (nvestors expett whtn their funifs are Mapproprfately used We a�e asking that ihe City Council act as a body to bring this matter, as well as the i5sues broughi forth in our earlier complaint, to a satisfactory resolution. We are asking that there be public disttosure regarding the remedy. We a�e hopeful that you wil! nat simpiy hand this matter off to the City Attorney who we believe has aiready demanstrated a lack of impartiality. Steering Committee, Citizens for Accountable Governrnent W es Mader, Chair cc: Lori C�rlson, Editor, Piriar Lak� American GREGERSON, ROSOW, JOHNSON & NILAN, LTD. ATTORNEYS AT LAW DAVID H. GREGERSON' 650 THIRD AVEMJE SOUTH ROBERT I. LANG (1922-2012) RICHARD F. ROSOW+ SLTITE 1 GOO ROGER A. PAULY (RETIRED) MARK]. IOEIIVSON' MINNEAPOLIS, MINNESOTA 5 5402113 3 7 JOSEPH A. NIIAN*t � #Also admitted in Illinois DANIEL R. GREGERSON TELEPHONE: (612) 338-0755 �n�so �,ccea � w;��on��o JOSHUA A. DOROTHYt tAlso admitted in North Dakota �E►�c J. �w� FAX: (612) 349-6718 +MSBA Boazd Certified Real Pro SARAH E. SCHWARZHOFF VJWVV•GRJN.COM perty Specialist THEODOREJPATTON DAMEL A. ELLERBROCK# Writer's Direct Dial: 612-436-7477 ]EMVIFER M. SPALDING Writer's &mail: nosowna,¢rin.com March 22, 2013 Ms. Lori Swanson Minnesota Attorney General 1400 Bremer Tower 445 Minnesota Street Saint Paul, MN 55101 RE: Request for the Opinion of the Attorney General Dear Attorney General Swanson: As City Attomey for the City of Prior Lake, I hereby request your opinion concerning the City's compliance with several statutory provisions relating to the salaries of city employees. Specifically, the group Citizens for Accountable Government ("CAG") has filed two complaints over the last several months with respect to the salary of the Prior Lake City Manager. In CAG's first complaint, the group contended that the City failed to comply with the salary disclosure requirements of Minn. Stat. § 471.701 (2012) because the City did not include a tenure adjustrnent and car allowance in its posting of the City Manager's "base salary." In CAG's second complaint, the group questioned the legality of the City Manager receiving any tenure adjustment or longevity pay whatsoever, and the group asked that such pay be "claw[ed] back" on behalf of taxpayers. I believe your opinion on these matters is important for several reasons. First, in its two complaints, CAG has questioned my own impartiality in this matter and has accused "City Hall" generally of misconduct and intentional deception. An opinion from your office will therefore provide an independent and impartial determination of the matters in issue and bring greater finality and resolution to the serious allegations made by CAG. Second, the questions presented also involve interpretations of state statutes and administrative rules that impact the annual salary decisions and data disclosures of cities throughout the state. Guidance on these matters is therefore of public importance, and I accordingly request your opinion under Minn. Stat. § 8.07 (2012) regarding the facts and questions presented below. FACTS AND BACKGROUND The City Manager of Prior Lake has served in that role since 1993. Following a review of the City Manager's performance and a comparison of other city manager salaries, the City rea.ched an agreement with the City Manager in May 2012 as to his compensaxion for that year. Under the terms of the 2012 contract, the City Manager received a base salary of $120,598, and a tenure adjustment of $22,500, in recognition of his long tenure with the City. The 2012 contract also required the City to pay health insurance and life insurance contributions, PERA retirement plan contributions, and a car allowance of $450 per month. A copy of the 2012 contract is attached as Exhibit A for your review. Minnesota Statutes § 471.701 (2012) requires the City to "annually notify its residents of the positions and base salaries of its three highest-paid employees." To fulfill this requirement, the City posted the base salaries of the City Manager, Police Chief, and Public Works Director on its website for a period of not less than 90 consecutive days. In that posting, the City listed the City Manager's base salary for 2012 as $120,598. A copy of the website publication can be found as Reference 1 to Exhibit B. On December 10, 2012, the group Citizens for Accountable Government ("CAG") sent a letter to the Prior Lake Mayor and City Attorney, complaining that the City's notification failed to satisfy Minn. Stat. § 471.701 and was misleading. Specifically, CAG contended that the City Manager's total salary of $148,498 (including his tenure adjustment and car allowance) should have been reported on the City's website. After reviewing Minn. Stat. § 471.701, its legislative history, and other statutory provisions, I responded to CAG's complaint on December 21, 2012, concluding that the City Manager's base salary had been properly reported. A copy of CAG's December 10, 2012 letter and accompanying documentation is attached as Exhibit B hereto. A copy of my December 21 letter in response is attached as Exhibit C. CAG has now brought forth a second complaint. By letter dated March 11, 2013, CAG azgued that my investigation of its prior complaint was not impartial and suggested that my conclusion that the City Manager's base salary had been properly reported "stretch[ed] the meaning of State Law to justify the alleged misconduc�t." CAG's letter also contended that the City Manager was not entitled to receive longevity pay and that the payment of the $22,500 tenure adjustment "was inappropriate and possibly illegal." In support of that contention, CAG relied upon the definition of longevity pay contained in Minn. R. 3920.0100, subp. 6, defining longevity pay as"payment above the salary range maximum to employees with specified years of service or seniority." It also referred to a report by the Assistant City Manager, describing the City Manager's salary rate as"under the maximum." From these two sources, CAG appears to argue that longevity pay is only pernutted for persons whose salary is at the salary range maximum, and that the City Manager's salary was not at said maximum. A copy of CAG's March 11 letter is attached as Exhibit D. The report of the Assistant City Manager relied upon by CAG is included as Reference 3 to CAG's earlier letter. CAG's second letter draws from Minn. R. 3920, which implements the local government pay equity requirements of Minn. Stat. § 471.992 (2012). CAG also appears to rely upon Minn. ' CAG's letter states that it is relying upon "Sta.te Statute 3920," but Minn. R. 3920.0100 appears to be the intended reference. Stat. § 43A.17, subd. 9(2012), which sets the maximum compensation for employees of political subdivisions, as this was the "maximum salary" that the Assistant City Manager was analyzing in her report. CAG's second complaint therefore appears to present the question of whether Rule 3920 sets a limit on the amount or type of compensation that a city may pay to its employees, independent from and in addition to the limit found in Minn. Stat. § 43A.17, subd 9. I therefore respectfully request your opinion as to the following questions: QUESTION ONE Does Minn. Stat. § 471.701 require a ciry to include tenure adjustments and car allowances in its annual reporting of the "base salaries of its three highest-paid employees," or was the City Manager's base salary accurately reported as $120,598 for 2012? QUESTION TWO Does Minn. R. 3920 limit or condition the amount a city may pay to its employees, either as longevity pay, tenure adjustments, or otherwise, or is the only limit on the salaries of city employees found in Minn. Stat. § 43A.17, subd. 9? I sincerely appreciate your consideration of the above questions and my request, and I look forwazd to your opinion and guidance regarding the matters sta.ted herein. Very truly yours, GREGE ON, ROSOW, JO N& NILAN, LTD. , Richar F. Roso RFR/DAE Enclosures Z The Minnesota Management & Budget Office's calculations of the annual Consumer Price Index adjustments referred to in subdivision 9(b) can be found at: http:l/www.beta.mmb.state.mn.us./comp-salary-cap-hr. For 2012, the statutory limit was $157,181. Effective January 1, 2013, the limit is $160,639. ���$~� :�ti� STATE OF MINNESOTA �,��.� � � �L���� ;�:- ,,� ,� �: OFFICE OF THE ATTORNEY GENERAL Fv�' � �' SUITG 1800 ���� �`'.�,�� + �,�?� s � A ' UL, ti T�ss i ui z ���� June 14, 2013 TELEPHONE: (651) 297-2610 Richard F. Rosow, Esq. Gregerson, Rosow, Johnson & Nil�n, Ltd. 650 Third Avenue South, Suite 1600 Minneapolis, MN 55402-4337 Re: Opinion Request Uear Mr. Rosnw: l thank you for your correspondence. The City of Prior Laice ("City") City Manager has served since 1993. T'he City Mana�er's negotiated compensation for 2012 included a base salary of $120,598. Pursuant to the 2012 contract terrns, he also received a"tenure adjustment" of $22,500,� health insurance an� life insw�ance contributions, PERA retirement plan contributions, and a monthly car allowance of $450. Pursuant to Minn. Stat. § 471.701, the City posted the base salaries of its three higt►est- paid emptoyees for 90 consecutive days on its website. The City Manager's base salary was listed �as $120,598 for 2012. A local citizens group, Citizens for Accountable Government ("CAG") dtallet�gecl the City's posting for the City Manager, claiming that his base salary should have inciuded his tenure adjustment and car allowance, bringing the total to $148,498. CAG also argued that the City Manager should not be entitled to longevity pay because his salary was not "above the salary range maximum" for employees with specified years of service, as defined in Minn. R. 3920. You ask this O#�ice for its opinion on the matter. Opinions of the Attomey General do not undertake to interpret the meaning of terms in a contract, resolve fact issues, decide moot questions or questions which my result in IitiEation. See Op. Atty. Gen. 629a (May 9, 1475) (enclosed). The amount the City is required to �eport as base salary is dependent upon how the payments are treated in the City Manager's contract. Interpreting the meaning of tetms in contracts often involve factual determinations as to the intent of the parties which is a quesiion of fact. Further, the City has already made a detetmination which is final absent a judicial decision to the contrary. The Office of the State Auditor has authority to review the financial at�'airs of lacal governments and I recommend that you contact that office for any guidance it can give. For exa�np�e, it appears that the State Auditor de�ned base pay or contract salary as "the amc�unt the ' The City Manager receivecl a tenure adjustment in prior years, but in 2012, the City changed the man�ier in which it was paid, from a lump-sum retirement plan contribution to biweekly payments inctuded with the City M�nager's wages. TTY: (651) 282-252i • Toll Frcr Lines: (SW) 657-37�i7 (Vvice), (AllO) 3fi6-4812 ('T'IY) •�vh<<v.ag.state.mn.us An Equal Opportunity [mploye� �Vho �'alucs Di��ersity 5 ,.�,. 7 �Print�K1 on SU`,:b recycled pape� (15i;. pust ccrosumer content) Richazd F. Rosow, Esq. June 14, 2013 Page 2 superintendent will earn on an annual basis, as written in the contract;' in a report on schon! superintendent compensation. Office of the Minnesota State Auditor, Special Study: Schoni Superintendent Compensation, at 9(2003). In discussing compensation, the State Auditor distinguished "base salary" from "additional compensation in the form of bonus or performance pay, salary in lieu of insurance, vehicle allowance, annual teave cash out, and other compensation." Id. at 1. Very truly yours, ld • �-�'�L., � CHRISTIE B. ELLER Depu#y Attorney General (651) 757-1440 (Voice) (651) 297-1235 (Fax) Enclosure: Op. Atty. Gen. 629a (May 9, 1975) ATTORPJEY GEtiI:It1'►Ls OPINIOtJS OF: Proper subjecta f�r opinions of Attorn�y Gen�ral disr_uased. PLEASE DO NOT RENlOVE �AS�'�� F�LE May 9, 1975 629-a (Cr.Ref. 13) ��homns M. 3we@n�:y, Esq . Elaine City Attorney 2200 �aerican National Sank Buildinq 101 Est�t Fifth Street r+ St. PAUl, Minnesota S�i01 Dear Mr. Bwe�ney: In your letter to Attorney General Warren Span�aus, you state r�ubatantiall.x the €ollowinq ' . FACTS At the qer.eral electiun in Novem�er 197� e pro- posal to a�end the eity charter of Hlain� was submitt�d to the city's voters gnd was appraveed. The a�aendment provides for the division af the city into three election ' diatricts �nd for the elect3.on of two council members from each diatrict. It alao provides th�t the popu3ntfon of ench distri.r.t ahall not be more than S p�rcent over �•, or uncter the t verage population per dfatrict, whfch is -' ' ca2cuiated by :�ividinq the total city populatfon by thz�c. The e�mendment c:�o states th�t if there is a population differenc� from district to dfstrict of mor� th�n 5 per- cent of �he average population, the charter commissfon must submit a reai�trictiny �roposal to the c3.ty council.. Th� Hlainc: Charter Commission in its preparation and drafting of tl�i� am�ndm�nt int�nded that the difference f.a popul�tion bet�w�en �lect+�n district� would not be a►ore than g p�rcent over or :�::1er the average population #or a distrfct. Therefore, the maxf�uutn allowabl� dlffer- �nce in pa�ulation between eiectfo� di,stricts could be affi qr�eat ns 30 percent �f the �veraqe populatfon. You ther, ask substantially the followi.ng QUESTIOiJ �oes the �.iaiae Cf ty Che.rter, �s �a�ended, permf t a maximum papulntion differertc� betweQn election dis- Thom�a M. Sweeney, Gsq. - 2 May 9, 1975 trfcts of 10 pereent of the avcrz���e population per. dietrict7 OPINION The answer to this question der�c��►ds entirely upon a construction of the Slaine Cf ty Chart�r. No cJuestion is presented concerning .he authority to adopt tllis provisian or involving the application or interpretation of state stntutory provisions. Moreover, it does not .` appear that the provision is commonly found in municipal charters so ar to bc of significance to home rule charter cities qenerally. 5ee Minn. �tat. § B.O� (1974�, providing for the issu�nce of opf.nfons on queations of "public impartance." In con�truinq e charter provision, the rules of atatutory con- struction aze generally applicable. �ee 2 NcQuillin, Manicipal � Corporations S 9.22 (3rd �d. 1966). The declared object of statu- tozy construction is to ascertain a�nd ef.f�ctuat� the intentioa of . th� legislature. Minn. Stat. S 645.16 (1474). When the wards of a i Minn. Stat. � 8.07 (1974) lists those officials to whom opinio�� may be isaued. Th�t section provides as follows: The attorney general on application shall qive his opinfon, in writing, to county, city, town attorneys, ar the �ttorneys for the board of a school district or unorqa�ized territnr� on question� of pubiic import�ncep and on application of the commissioner of education he ahal� give his opinion, in writinq, upon any question arfasing under the laws rela�ing to public ffichools. On all achool matters such opinion sh�ll be deci�ive until the question involv�d st►n11 be deci�e8 othezwise by � court of competent jurisdiction. See al�co Minn. St�t. SS B.Oa (regardir+q opinion.� to the leqisl�ture �nd leqislative committeas and commission�a �nd to state officials and aqenci�s) and 270.09 (regarding opinions to the Con�missioner of Revenue). Tho�aa M. �weeney, �aq. - 3 May 9, 1975 statute are not explicit, the legislature's fntent msy be aacertafned by considering, a�mong other things, the occaslon �nd nece�sity for the l�w, the circwastances under which it was �nact�d� the mi�chief to be remedie�, and the obj�ct to be attained. Id. Thu�, �n interpretation of a charter provfsion such as that ref�rred to in the facts wo�ld require an examination of a number � of factors, many of which �re of a peculiarly local nature. Local ` officiala� rather than state officials axe thus in the most advan- tag�oua position to recognize and evai�s�te the factora which have to be ceneidered in construing such a provision. For these reasons, the city attorney is the appropriate official to analyze questions of khe typ� preaented and provide his or h�r opinion to the munici- pnl council or other municipal agency. The same is true with . reapect to queationa concerniriq the mc3aninq of other local l�gal provieions such as ordinances and resolutions. Similnr consiclar- _ atione dictate that provieions of federal law generally be conatrued by the appropriate fed�ral �uthority. For purposes of summariaing the ru1Q: discussed in this and prior opfnions, we note that rulings of the AttornQy General do not or3in�rily undertake to: (1) D�termine the constitutionality of stat@ ststutes since this office may deQm it appropriate to inter- ` vene and defend cha�ilenges to the con�titutfonality og statutes. See Minn. Stat. ��55.11 (i974); Mittn. R. Civ. ApE�. P. 144= Hinn. afst. Ct. (Civ.) R. 24.�4s Op. Atty. Gen. 73�G, July 23, 1945. (2) Make factual determinatfons since thfs oft�ice is not equipped to investiqate and evaluatQ questions of fact. 3ee, e.g., Ops. �,tty. Gen. 63a-11, May 10, 1955 end 1?.la-G, April 12, 1946. Thomas M. Sweeney, L��. -� May 9, 1975 (3) Interpret the medninq af term� in contracts and other �qreements since the terms aro genera?ly adopted for the purposQ of preserving the intent of the parties ` and construing their m�aning often involv�a factu�l deterrainatfons as to such int�nt. See Op. �tty. Gen. 629-a, July 25, 19 73. (4) Decide questions wliich are likely to arise in liti- gation which is underway or is ir�minont, sir�ce our opinions are advisory and we must deEer to the judi- ciary in such cases. See Ops. Atty. Gen. 519M, Oct. 18, 1956 and 196n, March 30, 1951. r.^"�� � (5) Decide hypoth�tical or moot questions. See ap. Atty. Gen. 519M, Mey 8, 1951. (6) Make a qeneral review of � loca2 ordinance, requlation, r�solution or contxact to determine the vdlidity th�reof or to asc�rtaia po�sible legal problems, aince the task of makinq :uch a review is, of co�irse, the re- eponsibility of lacal official�. 5ee Op. Atty. Gen. �77b-14, Oct. 9, 1973. (7) Construe provisions of federal law. See textual di�cue�aion su ra. (B) Construe the meaninq of tenas in city charters and local ordinances and resol�rtions. See textual dfa- cussion �W ra. "' ' We trust that the for�going gene*_ral statem�nt on the nature of opi.nions wi31 pro��e to bc informative and of quidnnce to those reqneating apinia�s. Very truiy yours, WAItRL•'N SPANNAUS Attorney General ' TNOMAS G. MI�TTSOIJ Assistant Attorney General WS:TGMsbw