FIRST 5 LA
SUMMARY MEETING NOTES
Executive Committee Meeting
September 3, 2014
COMMITTEE MEMBERS PRESENT:
Nancy Au (Chair)
Duane Dennis
Neal Kaufman (Vice-Chair)
COMMITTEE MEMBERS ABSENT:
Sandra Figueroa-Villa [EXCUSED]
APPROVED: 10/06/14
STAFF PRESENT:
Kim Belshé, Executive Director
Gala Collins, Human Resources Manager
Raoul Ortega, Finance Manager
Linda Vo, Executive Assistant
John Wagner, Chief Operating Officer
RECORDING SECRETARY:
Linda Vo, Executive Assistant
1.
Call to Order/Roll Call
The meeting was called to order by Committee Chair Au at 2:00 pm. Committee Chair
Au welcomed everyone in attendance. Roll call is completed.
2.
Review of Executive Committee Meeting Notes –August 13, 2014
The notes were not reviewed and therefore will be pushed off until the next Executive
Committee meeting for a formal receive and file acknowledgement.
3.
Standing Updates
1.
2.
3.
4.
5.
6.
7.
8.
9.
Review of Annual Operating Budget
Annual Audit
Review of Annual Report to the State Commission
Fiscal
Contract Compliance
Quality Assurance
Evaluation
Policy and Advocacy
Personnel and Compensation
There are no standing updates.
4.
Compensation and Benefits Study- Staff Recommendations
Committee Chair Au informs the Committee that the goal of the meeting today is to identify
what are the factors that are preventing this item from moving forward before the full
Commission.
Ms. Belshé says that the intent of today’s meeting is not to revisit all the learnings that
have already been discussed. The intent is to talk about refinements of the presentation as
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SUMMARY MEETING NOTES – September 3, 2014– PAGE 1
well as language that would make Supervisor Knabe more comfortable of bringing it before
the full Commission.
She reminds the Committee that this is one of the remaining items that she/senior
leadership have been tasked to fix and that this is something that cannot wait any longer.
She then hands the presentation over to Mr. Wagner, whom will briefly go through some
slides that have changes from the previously presented version.
Mr. Wagner begins his presentation by going through slide 10 that highlights the following:



Adopt a First 5 LA Compensation Philosophy (endorsed by Exec Committee May 13,
2014)
Establish a formal classification system with a corresponding salary structure
Modify salary and benefits to address organizational legacy issues consistent with
our Compensation Philosophy
Mr. Wagner reminds the Committee how this work is foundational to the organization
and that it is important for First 5 LA to adopt a formal salary structure given the
current model does not reflect best practices at all. He informs the Committee that just
in the last month, First 5 LA has lost 15 employees in the last 22 months and that 7 of
the 15 left to work for the County or an academic institution that offers a defined
benefit.
Mr. Wagner says that although staff is not recommending that we move to a defined
benefit plan, he is simply highlighting how First 5 LA does lose its employees to other
organizations with a more competitive benefits package where some of them do have a
defined contribution plan.
On the point of modifying the salary and benefits structure, Mr. Wagner reminds the
Committee what the study found is that First 5 LA is above market when it comes to the
Health insurance benefits but below market when it comes to the retirement plan
benefits.
He says that this information is reflected from the data that has been identified by Hay
Group. Another recommendation that staff will be bringing before the Commission is a
formal merit structure.
And given that staff has been effectively managing the salaries savings from vacant
positions as well ways to be efficient internally, staff plan on using these savings to
implement the Compensation and benefits study recommendations. There will be no
additional monies requested to implement these recommendations. The approved FY 1415 budget would remain the same.
Mr. Wagner reminds the Committee how it was common practice to automatically give a
new hire 5% over what they were previously receiving from their previous employer. It
had nothing to do with their merit or their experience relative to the position that they
were hired for.
And with the strategic plan moving in a specific direction, it will impact First 5 LA and
its needs relative to staff.
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The three pieces that staff are trying to address are as follows:
1. Address internal pay disparities
2. Better align retirement to market reality
3. Adopt a “Reward for Performance” approach to compensation
Mr. Wagner that staff are trying to fix an organization problem that needs to be
addressed immediately. He says that the plan is for the implementation of the
recommendations would happen over a two year period.
1. Address internal pay disparities
 Spread over two years; est cost: $225,000 in FY14/15 (within existing
resources); $225,000 in FY15/16
2. Better alignment of retirement
 Address through mid-year FY14/15 budget adjustment (Spring, 2015),
est. cost $175,000 within existing resources
 Decrease current match from 6% max to 3%; add employer contribution
3%-7.5% based on years of service
3. Adopt Reward for Performance
 Implement a 3% merit pool through budget process beginning with FY 15/16
budget; est. cost $350,000
Mr. Wagner reminds the Committee that staff are not asking for any additional funds
and that this would be retroactive to July 1, 2014.
Mr. Ippolito asks staff why is it that the salary adjustments will be retroactive to July 1,
2014 when the merit pool would not be implemented until FY 15/16.
Mr. Wagner says that with the direction of the Executive Committee, staff were to take
their time with the compensation study process and to not rush it to simply get it done
before the approved budget because it is important work. Ultimately, it was a process
decision.
Mr. Ippolito says that he is concerned with the optics of making this retroactive to July
when it can be just implemented as of October 1.
Ms. Belshé would like to know to what extent would it make a big difference in getting
the Supervisor to be comfortable with the compensation study recommendations if staff
were to make an effective date of October 1 versus July 1.
Mr. Wagner would like to know what the big concern is over having the implementation
date as July 1.
Mr. Ippolito says that it is not the amount that he and the Supervisor are concerned
with; it is the optics and how it is viewed by the public that is important.
Committee Vice Chair Kaufman says that one of the ways that they have tried to
mitigate the optics is by indicating that the all the compensation study
recommendations would be done within the existing budget and would not require
additional funds. But, the flip side to this is that people can say that maybe the
Commission approved too much for the budget previously.
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To deal with this, Vice Chair Kaufman says that if we say that the funds were managed
efficiently and that the implementation of the recommendations will be done using the
salary savings from last year, it will imply a different optics.
Committee Chair Au says that no matter how we present the rationale, a large part of
the community are upset because we are ending their grants. She finds that it is
important for us to arm ourselves with what it is that we wish to achieve from this and
stand by it. The numbers are not important because there will be negative responses.
We just ultimately have to be confident with the decision that is made knowing that it is
a fair decision and waver through it.
Commissioner Dennis says that there is a strategic proposition in this as well. As part of
the strategic planning process, you would have to do an infrastructure realignment as
well. It is important to realign the infrastructure before implanting the new strategic
plan.
Commissioner Dennis responds to Mr. Wagner’s comments about vacancies. He says
that staff have to be careful about how they talk about the vacancy rates to ensure that
their rates are greater than those that they are comparing themselves to given vcies are
normal.
Ms. Belshé informs Commissioner Dennis that it is not the rate of vacancies that staff
are trying to highlight and instead it is that they are losing staff to these
county/government agencies because of the compensation offerings that they have that
we don’t. Furthermore, she says that half of the people whom we have lost have been to
public entities as well as private entities that offer a defined contribution plan.
Commissioner Dennis says that the only reason why he is bringing this up is because he
is concerned with other Commissioners asking about other entities vacancies rates
should this comment be made at a Commission meeting.
Ms. Belshé acknowledges the concern.
Commissioner Dennis would like to know if staff were to implement this over a two year
period, what kind of impact would this have on staff? Like the Supervisor whom is
concerned with the external optics, he, himself, is concerned with the internal staff
optics.
Mr. Wagner says that they are concerned with staff reaction to implementing this over a
two-year period given they had already informed staff that this was going to be
implemented retroactive to July 1.
Regarding the retirement aspect of the recommendations, the Executive team is not so
much concerned given the recommendation is not changing.
With regards to the merit being implemented, First 5 LA still needs a good performance
evaluation tool so he would be able to make a business argument for having to push
implementing it to FY 15/16. And it may help with retention given staff can expect to
receive a merit increase in the near future.
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Committee Chair Au would like to know if this is something that would have to be
brought back to the Commission once it is already approved with regards to
implementation.
Ms. Belshé says that it is the responsibility of the staff to implement the approved
recommendations and that it would not go back before the Commission.
Committee Vice Chair Kaufman says that he is not concerned with the retroactive date
of July 1.
Commissioner Dennis says to the extent that the Supervisor is concerned with it, then
we should be as well.
Committee Vice Chair Kaufman says that he is more concerned with the grade structure
given this is what staff is asking the Commission to approve. He thinks it is more
important to understand how the grade structure was developed.
Ms. Belshé says that it is not important to go into the process of developing the salary
structure. She says that what staff is asking for from the Commission is to affirm the
decisions that have been made with the direction of the Executive Committee.
Committee Chair Au thinks that the salary grade structure is more of a distraction from
getting the Commission to approve this item. She does not want too much focus on it
because that’s when the Commission will want to know the details of how it was
developed and why it is the way it is.
Ms. Belshé says that staff will reorder the current presentation that will be given to the
Commission.
Vice Chair Dennis says that you can place the salary grades in an appendix so that
attention is not drawn to this. Otherwise, people will be drawn to the nitty gritty details
of how large the disparities are between positions.
There is an agreement to restructure the presentation so that there is less focus on the
salary grade structure.
There is no further discussion on the item.
ADJOURNMENT:
The meeting was adjourned at 3:04 pm.
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SUMMARY MEETING NOTES – June 2, 2014– PAGE 5
NEXT MEETING:
The next scheduled meeting will take place as follows:
Monday, October 6, 2014
11:00 am – 12:30 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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SUMMARY MEETING NOTES – June 2, 2014– PAGE 6