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Item Number: H.3. CITY COUNCIL REPORT SUBJECT: Educational Services, LLC Employee Staffing Agreement MEETING DATE: March 25, 2025 TO: Mayor and Council FROM: Wendy Jackson, Deputy City Manager/Employee Resources Director REVIEWED: Reyes Medrano Jr., City Manager PURPOSE: The City Council is requested to approve two agreements with ESI that establish a retire-to-rehire arrangement for Chief Technology Officer Stephen Holliday. The first agreement will be effective from April 1, 2025 through June 30, 2025, followed by a second agreement from July 1, 2025 through April 30, 2026. Under this phased approach, Mr. Holliday will seamlessly resume his leadership role with ESI, with his employment commencing on April 7, 2025. This arrangement is designed to ensure operational continuity and maintain stability within the City's technology department. BACKGROUND: The City is proposing a retire-to-rehire arrangement for Chief Technology Officer Stephen Holliday that offers significant strategic benefits. This approach generates cost savings not only by eliminating recruitment expenses—such as advertising, external search fees, and onboarding costs—but also by reducing benefit and employer pension expenses. Moreover, retaining an experienced director who is already well-acquainted with the City's operations and maintains established relationships with staff and stakeholders ensures continuity of leadership. This familiarity supports a smooth transition, minimizes operational disruptions, and enhances overall efficiency within the technology department, ultimately bolstering departmental morale and stability. DISCUSSION: Proposed Retire-to-Rehire Arrangement Benefits • Cost Savings: This approach avoids the significant expenses associated with traditional recruitment— including advertising, external search fees, and onboarding—thus easing budgetary pressures. • Retention of Institutional Knowledge: Stephen Holliday’s established experience with the City's operations preserves critical institutional knowledge and maintains key relationships, ensuring a smooth transition. • Continuity of Leadership: Re-engaging a proven leader minimizes disruptions within the technology department, supporting operational stability and sustaining staff morale. • Enhanced Operational Efficiency: By streamlining the re-engagement process, the arrangement reduces downtime and mitigates potential setbacks during leadership transitions, ensuring sustained departmental performance. BUDGET IMPACT: The fees to ESI, which include wages, will be paid over two purchase orders (POs). The first PO will cover fees and wages from April to June 2025, while the second PO will cover fees and wages from July 2025 to April 2026. Total not to exceed $200,000. Council’s approval will grant the City Manager budgetary authority to execute these payments and manage the financial obligations associated with this agreement. Fiscal Year Expense to include Staffing Fee: FY 25 $43,753.85 FY 26 $145,846.15 The retire-to-rehire arrangement is expected to yield favorable budget outcomes by reducing recruitment expenses—such as advertising, external search fees, and onboarding costs—while also eliminating the need for additional pension contributions of 12.27% and approximately $2,400 per month in benefit costs. Additionally, by leveraging the expertise of a seasoned professional who is already familiar with the City’s operations, this approach ensures the seamless continuation of ongoing projects, preserves institutional knowledge, and maintains leadership stability. Without this arrangement, the City would likely face an extended vacancy, increased workloads on existing staff, and potential disruptions to essential technology services. Furthermore, the structured contract term from April 1, 2025, to April 30, 2026, provides financial predictability, enabling precise budget planning, controlled expenditure management, and strategic resource allocation. This proactive approach mitigates unexpected fiscal impacts while sustaining operational efficiency and service delivery excellence. RECOMMENDATION: It is recommended that the City Council approve the retire-to-rehire agreement with ESI for Chief Technology Officer Stephen Holliday. Effective from April 1, 2025, through April 30, 2026—with Mr. Holliday commencing under ESI on April 7, 2025—this arrangement delivers cost savings by avoiding recruitment expenses, ensures leadership continuity, and preserves critical institutional knowledge, all of which are essential for maintaining the stability and efficiency of the City's technology department. ATTACHMENTS: 1. 03 25 25 ER - Employee Staffing Agreement - Educational Services LLC - End Date 06 30 25