FIRST 5 LA
SUMMARY MEETING NOTES
Executive Committee Meeting
August 14, 2014
COMMITTEE MEMBERS PRESENT:
Nancy Au (Chair)
Duane Dennis
Neal Kaufman (Vice-Chair)
Sandra Figueroa-Villa
COMMISSIONERS PRESENT:
Don Knabe
APPROVED: 10/06/14
STAFF PRESENT:
Kim Belshé, Executive Director
Gala Collins, Human Resources Manager
Maggie Martinez, Human Resources Director
Raoul Ortega, Finance Manager
Linda Vo, Executive Assistant
John Wagner, Chief Operating Officer
RECORDING SECRETARY:
Linda Vo, Executive Assistant
LEGAL COUNSEL:
Craig Steele, Attorney
1.
Call to Order/Roll Call
The meeting was called to order by Committee Chair Au at 10:21 am. Committee Chair
Au welcomed everyone in attendance. Roll call is completed.
2.
Review of Executive Committee Meeting Notes –June 02, 2014
THE ITEM WAS RECEIVED AND FILED
Note: Committee Chair Au is reminded by the meeting notes that there still needs to be
a follow-up with Commissioner Boeckmann regarding her concerns with the proposed
changes to the bylaws.
Ms. Belshé informs the Committee that both she and Mr. Steele had already spoken to
Commissioner Boeckmann soon after the end of the last Commission meeting to address
her concerns. Ms. Belshé also assures Committee Chair Au that staff will continue to try
and schedule a call/meeting to further address her concerns so that there is no further
hold up with the approval of the proposed changes to the bylaws.
3.
Standing Updates
1.
2.
3.
4.
5.
6.
7.
Review of Annual Operating Budget
Annual Audit
Review of Annual Report to the State Commission
Fiscal
Contract Compliance
Quality Assurance
Evaluation
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SUMMARY MEETING NOTES – August 14, 2014– PAGE 1
8. Policy and Advocacy
9. Personnel and Compensation
There is nothing presented for standing updates.
4.
Compensation and Benefits Study
Ms. Belshé informs the Committee that Mr. Wagner to give an update on where we are
at with the compensation study. Ms. Belshé says that the compensation study is one of
the last things that need to get completed in order to get First 5 LA to becoming a higher
preforming organization.
Mr. Wagner reminds the Committee that the compensation study was brought about by
the Harvey Rose Audit. Accordingly, First 5 LA hired the Hay Group to help them do
this work.
Ms. Wagner says that they did do comparisons with other First 5’s as well as an internal
staff survey to understand what were the best ways to address how First 5 LA’s current
Compensation and Benefits structure fares amongst other like/similar entities.
In addition, because there were questions raised by staff regarding how First 5 LA
compares to the LA County. Since this question was raised, Mr. Wagner informs the
Committee that they did look into how the County sets up and administers its benefits
and salaries structure.
To give the Committee a brief understanding of how First 5 LA sets up its benefits
structure, Mr. Wagner informs the Committee that it uses a broker who administers
staff benefits. First 5 LA uses Gallagher Associates as its broker for the handling of its
benefits as it relates to health insurance and retirement accounts.
And to ensure that the staff was properly doing an analysis of Hay’s recommendation as
it relates benefits, First 5 LA used Gallagher to test these recommendations. Any
findings were then brought back to the Executive Committee for feedback and discussion
back in April and May.
To date, Mr. Wagner reminds the Committee that they did endorse the Compensation
Framework which is a structure through which we can review the findings of the Hay
Group as well as the recommendations to ensure that they are aligned with it. He says
that this framework is also important because it ensures that First 5 LA has a structure
that is externally competitive and that is also informed and aligned with best practices
in order to be a higher performing organization.
With this structure, First 5 LA also acknowledges the internal disparities that should be
addressed. And that internal equity is very important for an organization to be high
performing. But, Mr. Wagner adds that the goal of First 5 LA would not be to eliminate
all internal disparity because they do understand that internal disparity based upon
performance is acceptable and important to have, which is why First 5 LA is seeking a
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SUMMARY MEETING NOTES – June 2, 2014– PAGE 2
manner as to how to award good performance (Merit increases), as indicated within the
framework.
Mr. Wagner continues on by informing the Committee that Hay’s findings showed that
with regards to salary, we were below market and with regards to benefits, we were
below market. As a reminder, First 5 LA pays 100% of the health insurance for its staff,
which the Hay Group found to be well above market given this is not a common practice
amongst other organizations.
In summary, the Hay Group’s findings were that overall salary structure currently fall
8.9% below First 5 LA’s comparable market. And with regards to benefits, the overall
benefit structure us at or above market with the following outliers:



Overall: value greater for those under $100,000
Health: generous benefits skew significantly above
Retirement: less competitive in ~1/3 market that is public (defined benefit)
Mr. Wagner continues his presentation by briefly going over the following chart:
Mr. Wagner explains that P50 means 50th percentile so that Committee members could
have a clear understanding of how to interpret the chart.
Mr. Wagner calls out that from this chart, it is clear the First 5 LA’s health benefit
offering is very generous.
Given the findings, Hay group recommended a salary structure for First 5 LA to
consider implementing.
To date, Mr. Wagner says that staff would like to make the following recommendations
to the Commission:
1. Adopt a First 5 LA Compensation Philosophy
2. Establish a formal classification system with a corresponding salary structure
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3. Institute Salary and Benefit changes to align with Compensation Philosophy
With regards to salary, staff would like to recommend the following to the Commission:
1. Bring employees below Salary Structure minimum to minimum
2. Address salary disparities
 Tenure
 Additional adjustment for disparities within grade within Department
3. Establish “Reward for Performance”
Staff benefits recommendation is as follows:
4. Establish a hybrid approach to retirement
 403(b) match up to 3% of pay
 Service-based contribution
5. Maintain current employee cost-sharing for health premiums; incorporate incentives
for healthy behaviors via benefit design
Mr. Wagner then reports to the Committee that these recommendations will have the
following fiscal impact:
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He reminds the Committee that the FY 14/15 estimated costs reflect a retroactive
implementation date of July 1, 2014, as endorsed by the Executive Committee.
Commissioner Figueroa-Villa would like to know why the amount is only $88,000 for
Merit pay for FY14/15 while the Annualized cost is $350,000.
Mr. Wagner informs the Committee that they will need a tool in place in order to
measure performance evaluations and this tool will most likely not be in place until the
4th quarter.
Commissioner Dennis notes that the merit pay cost is 3% of payroll. He would like to
know if some will receive a higher percentage than other, while still keeping within the
overall 3% of payroll.
Mr. Wagner responds to Commissioner Dennis by reminding him that by having the
flexibility to reward higher performing employees, they will be able to eliminate the
disparity in salary amongst employees. For instance, if someone is at the lower end of
the salary range, but are very high performing, then we can give them a 4% merit pay,
whereas if someone was at the high end of the salary range, then you can give them a
1% merit pay. Ideally, this would eventually close the disparity gap. And overall, there is
flexibility
Supervisor Knabe would like to know who would decide how much an employee would
receive for his/her merit pay.
Ms. Belshé states that it would be the supervisors, along with the Executive team whom
would make these decisions.
Supervisor Knabe asks how it would be possible to implement a reward performance
evaluation tool/process that would ensure no one is in cahoots with the other to get a
higher merit pay through a good evaluation.
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The Supervisor adds that merit should not be a part of disparity.
Mr. Wagner says that there are actually two parts that can be applied to disparity:
1. If you are at the lower end of the salary range and are high performing, then you can
structure the merit pay so that the employee can receive a higher merit pay than the
other employee whose salary is at the higher part of the range. Accordingly, this
person would receive a lower merit pay increase.
2. Mr. Wagner acknowledges that eventually, there will be a disparity in pay and that
this is a good thing. But by that time staff will understand that the salary is tied to
performance.
Supervisor Knabe comments that one cannot simply give an employee whose salary is at
the lower end of the range a higher merit pay than the employee whose salary is at the
higher end of the range if they are equally performing. Simply put, it would not be fair to
the employee whose salary is at the higher end of the range. He informs the Committee
and staff that he is very concern with the use of disparity issue and how the pool of
money is being used for merit pay.
Ms. Belshé says that potentially, staff would like to work with Hay to see if there is some
way to structure pay so that there is some acknowledgement of disparity.ie perhaps, if
you are still below the equity level, you can get a 4% merit increase versus a 3% merit
increase.
Vice Chair Kaufman offers one way of dealing with the merit increase that aligns with
staff recommendations. He says that the employee, whom is at the lower end of the
salary range, can receive a merit increase in salary while the employee at the higher end
of the range can receive a cash bonus. Eventually, this will close the disparity gap.
Ms. Belshé this is exactly the type of option that First 5 LA would like to work with the
experts to determine how best to approach the disparity issue as it relates to the merit
pay.
Vice Chair Kaufman would like to know how staff came to 3% as the merit pay amount
they would like to give to employees.
Mr. Wagner says that this amount is based on past Board approval with regards to
merit pay.
Commissioner Dennis says that one of the nuances of dealing with average performance
reviews is what amount of merit increase will this employee receive, given the only
employees whom will not receive merit increases are those whom perform below
average.
Vice Chair Kaufman would like to know why is it that First 5 LA not implement steps
increase the way the County does their merit increase.
Mr. Wagner says that what they learned is that by building a system with a wide range
that is based on performance, it meets the needs of First 5 LA and is less complex than
the step system.
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Commissioner Dennis says that the tool that would be used to evaluate the employee
has to be as objective and unbiased as possible in order for the evaluations being made
to be considered accurate.
Chair Committee Au says that if a measure is too objective, then you may miss
something that would be important that can only be understood through being
subjective. ie qualitative requirements that certain jobs require; need a mechanism to
evaluate the perception of staff members.
Ms. Belshé acknowledges that it will take some time to develop a proper and useful tool
that can be used to evaluate performance that will also require the input of Senior
Management.
Commissioner Dennis asks why the merit increase cost was not made retroactive to July
1, 2014 as with dealing with disparity.
Mr. Wagner says that it was a combination of trying to minimize costs as well as to
ensure that the new tool for performance evaluation is up and running.
Regarding next steps, Mr. Wagner goes over a timeline that breaks down how the
compensation study item will be brought before Committees/Commission:
Mr. Wagner now asks the Committee if there are any questions regarding what was just
presented.
The Supervisor ends the meeting by informing the Committee and staff that he is not
completely comfortable with what staff is recommending. He feels that he needs to fully
understand the impact these recommendations will have before being 100% comfortable.
There is no further discussion on this item.
5.
First 5 LA Values
Ms. Belshé goes over the Values proposal document that First 5 LA proposed to the
Commission at its last full Commission meeting. She notes that staff had made some
changes to the document per the Commission’s recommendations.
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The document now reads as follows:
DRAFT FOR BOARD OF COMMISSIONERS DISCUSSION
OVERARCHING ORGANIZATIONAL VALUE:
Collaboration
We believe joint effort towards common goals achieves trust and produces greater impact for LA
County’s youngest children and their families.
VALUES:
Integrity
We believe fidelity to our values builds credibility, trust, fairness, and consistency.
Respect
We believe in honoring and nurturing every individual and community.
Accountability
We believe results matter and that a focus on transparency and excellence yields improved
outcomes, work quality, and stewardship of resources.
Partnership
We believe by working with others who share our aspirations for young children, we can
maximize every child’s readiness for kindergarten and success in life.
Shared Leadership
We believe that together we can ensure that every child enters kindergarten ready to succeed in
school and life.
Learning
We believe learning never ends and so we are committed to critical thinking and continuous
innovation.
The Committee members are pleased with the changes that staff incorporated into the
Values document.
There is only one edit offered by Committee Vice Chair Kaufman. He says to correct the
following that is in highlight:
EXECUTIVE COMMITTEE
SUMMARY MEETING NOTES – June 2, 2014– PAGE 8
We believe joint effort towards common goals achieves trust and produces greater
impact for LA County’s youngest children and their families.
The correct wording should be:
We believe joint efforts toward common goals achieves trust and produces greater
impact for LA County’s youngest children and their families.
There is no further discussion on this item.
ADJOURNMENT:
The meeting was adjourned at 11:38 pm.
NEXT MEETING:
The next scheduled meeting will take place as follows:
Wednesday, September 3, 2014
2:00 am – 3:00 pm
First 5 LA
Conference Room B
750 N. Alameda Street
Los Angeles, CA 90012
Meeting minutes were recorded by Linda Vo, Secretary, Board of Commissioners.
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