[bouldercouncilhotline] Hotline: Repost with FTE Table as Attachment - Response to Janitorial Service Questions to Staff Sent via Hotline on 10/18/16

[cmosupport at bouldercolorado.gov]

Sender: Bannon, Dave

We recently learned the table that was embedded in the email text and comprised part of the answer to Question #11 may not have been able to be viewed by all.  We are re-posting our 10/28/16 response on the Hotline and have attached the table as a separate file in Adobe format.

Please note there is no change to the information that was originally posted.

From: Bannon, Dave
Sent: Friday, October 28, 2016 11:51 AM
To: HOTLINE <HOTLINE at bouldercolorado.gov>
Subject: Response to Janitorial Service Questions to Staff Sent via Hotline on 10/18/16

Please see below for answers to janitorial service questions sent to staff 10/18/16.



From: <cmosupport at bouldercolorado.gov<mailto:cmosupport at bouldercolorado.gov><mailto:cmosupport at bouldercolorado.gov>>
Date: October 18, 2016, 2:14:16 PM MDT
To: <bouldercouncilhotline at list.ci.boulder.co.us<mailto:bouldercouncilhotline at list.ci.boulder.co.us><mailto:bouldercouncilhotline at list.ci.boulder.co.us>>
Subject: [bouldercouncilhotline]  Hotline: janitorial services 2017
Sender: Morzel, Lisa

Dear Council colleagues,

Tonight we will be asked to continue considering our 2017 budget.

While much of what is proposed in the budget may be fine, one glaring moral and mechanical hole in the proposed 2017 budget is the proposal to keep janitorial services as outside contracted services, despite the fact that janitorial services are services that are a permanent daily need in the city and that for decades these employees were in house (until 2003 when we had a serious economic downturn) and a part of the city organization.  Up until that time, our employees in janitorial services were dedicated city employees and performed their jobs well.

Last spring council discussed and was supportive of pursuing self-sufficiency wages and bringing our janitorial services back in house.  Somehow now, staff's recommendation is to not bring these permanent and daily needed employees in house.  I have serious problems with that perspective and, in that vein, I ask the following questions:


1.  Why would we contract permanent daily employees serving a critical need of the city when they are doing permanent in-house services?
Outsourcing has been a widely accepted best practice in the industry. This approach allows us to more cost effectively employ skilled workers who are thoroughly trained to know their business.  Outsourcing gives the City of Boulder access to a specialized set of skills, resources and efficient processes already in place so we can be flexible, agile and adaptable.  We are able to allocate resources in response to business needs and budget.
    *   What criteria does the city use to determine who is in-house (city planner, parks' employee, IT, etc) vs contracted (janitorial services, services the city does not have a permanent need or skill for, etc.)?
Like many organizations, needs that fill the core competency and mission of the organization tend to be staffed with in house employees.  Public and private organizations have tended to contract positions that are outside their central mission or are considered to align with specific needs.  In addition, contracted employees will fill talent needs that may not necessarily exist in the organization at the time of need.

   *   Does not outsourcing a critical service in the city reduce the city's accountability, transparency, and clarity?  Is the city trying to avoid responsibility for employing a group of workers who provide a critical, daily, and permanent need of the city?
The city expects and demands the same level of performance (including accountability, transparency, and clarity) from both in house employees and contracted workers.  In some cases, the city may expect a higher level of overall performance from a contracted employee who has expertise in the field that an in house employee has not yet developed.

   *   Has any study or consideration been given to city vs contractor turnover (I know prior to 2003, many of our janitorial service workers were long-time city employees)?
In the May 24, 2016 Novak Consulting Group study, employee turnover was reported as 6.8% for Full Time employees and 20.3% for Part Time employees.  Contractual services turnover is variable.

   *   What consideration has been given to improving the city's Zero Waste goals, what the organization itself is actually achieving, and what the effect of having in-house, well trained with respect to our Zero Waste goals janitorial service employees?  BTW, how well is the organization doing currently in its trash volume?
In 2014, city departments recycled and composted 17 percent of its waste.  In 2015, recycling and composting was 23 percent.  For health reasons, the current janitorial contract does not have its employees sort trash, but they do place the segregated waste streams from inside the buildings into the appropriate dumpsters.  We would also not have in-house janitorial employees sort trash.


2.  What city department hires and interacts with contractors for janitorial services in the city?
The city will post a competitive solicitation (RFP) for areas that require janitorial services (library, recreation/senior centers, downtown campus, utilities buildings, OSMP buildings).  The proposals received are typically evaluated by a cross functional team that determine the best proposal to receive an award.  Following the award, the contract is typically administered by FAM, Purchasing, and staff of the department that is receiving the service.  The RFP will include all city departments with the exception of the Police Department who have in-house janitorial staff due to their 24/7 operation and security requirements.  Individual department personnel have typically selected and managed the services for the smaller areas requiring service (ex. select and more remote utilities buildings).

   *   How many city staff work with the contracts for the contractors?
It is estimated that 15 members of city staff interface with the janitorial contracts in some way.  The level of engagement can vary greatly depending on department and position.

   *   What is the total FTE the city spends currently in issuing and renewing these contracts?
The issuance and renewal of contracts is primarily handled by Purchasing staff.  The FTE equivalent for this activity is less than 0.1 of an FTE.

   *   Would these same staff continue to work in this area if the city hired a compliance specialist who will monitor and enforce the contractor compliance?
Purchasing staff will continue to issue and renew contracts, even if a compliance specialist is hired.

   *   How will this specialist and the city enforce compliance of the contract?
We expect the compliance specialist will primarily collect and review detailed payroll records that are submitted on a regular basis by all contractors that are subject to the living wage provision.  Telephone interviews with vendors indicate some already participate in these types of compliance activities for other jurisdictions and their existing payroll systems can accommodate this requirement.  On occasion, we expect the compliance specialist to complete a more detailed audit of the payroll records with the vendors to ensure accuracy and a continual high level of compliance.

   *   What are the "efficiencies" the city thinks it realizes with contracted janitorial services?  What are the "inefficiencies" the city suggests hiring janitorial services as in house would cause?
The city expects contracted janitorial services to result in the following efficiencies:
-Janitorial services can typically purchase equipment, consumables, and cleaning supplies at more favorable pricing levels due to their volume purchasing power.
-The overhead cost of running a professional janitorial operation can be spread over multiple organizations and a larger footprint of building space by combining our needs with other buildings serviced by the janitorial firm in     our area.  It is common for workers to move from one building and client to another as they complete their assignment.
-Experts in their industry, janitorial firms are continually improving their practices and efficiencies as they incorporate new equipment, green products, technologies, and techniques.

The city anticipates some inefficiencies with the in house model:

 -Cost to implement (staff, equipment, facilities, vehicles, etc.)
-Time: recruitment and staffing, onboarding, training and development, employee relations, performance management
-Additional staff need to supervise, coordinate absences, and schedule the work.
-Less flexibility to scale up or down operations in response to changing budgets, supporting special events, and other business needs.


3.  Why are the terms of the contract "negotiated" and not simply spelled out: "the minimum wage will start at $15.67/hour and the minimum benefits are x hours annual and sick leave or PTO (paid time off) and health package, maybe retirement" for a contractor to be retained by the city?
The Request for Proposals (RFP) and the resulting contract(s) will specifically spell out the requirement to pay an hourly rate of $15.67 per hour for non-management workers assigned to the City of Boulder account.  The city has not made it a practice to mandate benefits paid to a contracted employees in any service area.  This is typical of most contracted arrangements in a variety of industries.  Input received from the City Attorney's Office recommends to avoid mandating benefits because it may essentially dissolve the "contractor" relationship between the city and that specific contracted employee.


4.  How many contractor companies does the city use for janitorial services?  Is there more than one and, if so, how are their contracts distributed within the city?
The city currently utilizes four (4) companies for janitorial services, with one contractor (Kleen Tech) providing the majority of the services that includes library facilities, Parks/Recreation/Senior Centers, and FAM managed buildings.  Open Space and Mountain Parks (OSMP) and various utility facilities use smaller contractors for their specific facilities.


5.  How much is spent on contractors of janitorial services annually?
The total amount spent on contracted janitorial services is approximately $1.2 million annually.

6.  Does the city currently know:

   *   the range of janitorial services used,
Contracted services include daily cleaning, floor mopping, vacuuming, dusting and trash removal inside city facilities.  Services also include monthly carpet cleaning and refrigerator cleaning.  Other contracts are available for infrequent services such as deep cleaning, tile and grout cleaning, bio-hazards cleaning, pressure washing, and window washing.

   *   types of positions (eg., supervisor, floor maintenance, recycling and trash, bathrooms, plumbing, etc.),
We do dictate the staffing for day porters at our Recreation and Senior Centers to ensure a high service level.  The city does not currently have the segmentation of general janitorial positions by type.  It is our understanding employees are cross trained and provide a variety of janitorial services on a regular basis.  More specialized services like carpet cleaning and floor finishing service multiple clients on any given shift and travel from facility to facility.

   *   various salaries that these positions earn,

City Staff conducted telephone interviews with janitorial and landscape contractors (among others) in mid-2016 in support of the living wage project.  The following is pay information provided by the contractors at that time:
*  The hourly rate of pay for non-management janitorial workers ranged from $8.00 to $16.00 per hour.
*  The higher rates of pay for non-management workers were given to more tenured and skilled (ex. carpet cleaners) employees.
*  Our largest janitorial contractor (Kleen Tech) raised their starting wage for non-management workers from $9.00/hour to $11.00/hour in early 2016.  This was done to address staffing challenges and to reduce turnover.
*  The smaller janitorial contractors we use tended to have a lower starting wage for their employees and pay increases were more sporadic.

   *   any seniority wages vs new hire wages,
See the answer above for information regarding new hire wages.  The larger firms tend to have a more structured system for merit increases for their staff.

   *   where the employees of janitorial services live and if any use the city's affordable housing opportunities?
Based on our vendor interviews in mid-2016, approximately 65% of non-management contracted janitorial staff live within the City of Boulder.  We were advised this rate may change over time due to employee turnover.  We are unaware if any contracted janitorial employees live in City of Boulder affordable housing.

7.  How many individuals are currently employed by the contractors the city currently uses for janitorial services?
Based on our vendor interviews conducted in mid-2016, approximately 55 individuals provided contracted janitorial services to the city.  Approximately 75% of these employees were classified as part time employees.

   *   What is the average work week (# of hours) for the employee?
A calculated average was not provided by the vendors.  We were advised the typical work week for their employees could vary widely based on the needs of the employee and their availability for work.  We were advised many employees prefer the part time nature of this work, since they often use their custodial work as a supplement to their full time day job.

   *   What benefits does the worker earn (health care package, retirement, PTO or sick and annual leave)?
The larger companies offer benefit packages (at shared cost) to their employees.  These packages often contain health, dental, etc.  Most employees do not participate in these benefit programs because of cost.  Smaller janitorial firms typically offer their non-management employees benefits that are only mandated by law (Social Security, workers compensation, etc).  We did not receive detailed information on vacation/PTO benefits.
In addition, if an employer has 50 or more EEs, they are required to offer benefits as mandated by the Affordable Care Act or pay penalties.

   *   Where do they live?
At the time of the vendor interviews, 65% of the non-management contracted employees lived within the city limits of Boulder.  Employees that did not live in Boulder tended to live in Longmont or the northern Denver suburbs.


8.  Subtracting costs for the janitorial services employees, how much or what percentage of the contract does/do the contractors keep for their "services" (contracting) with the city?
These companies are privately held and their financial performance is confidential.  We did learn that most janitorial companies target direct labor cost to be 50% of their contract revenue.  The remaining 50% of revenue covers equipment, supplies, overhead cost, taxes, profit, etc.

   *   In other words, what do the contractors make in earnings?
These firms are privately held and do not disclose their earnings.


9.  Why cannot the city bring this group of permanent workers in house and provide benefits and fair wages, like our other permanent employees?
The city has the option to decide on what is the most efficient and cost effective way to run it's operations by insourcing OR outsourcing services depending on the business need and budget.
See answers to questions #1 & #2 above.
The decisions were supported by economic downturns in the early 2000s and the 2009/2010 Blue Ribbon Commissions for:

 *   Cost effectiveness
 *   Flexibility of solution to respond to current and future business need
 *   Outsourcing services not part of the city's core competencies.
These decisions can change in the future based on the business needs of the city and the direction of City Council.


10. Why are we proposing to include funding for a contractor compliance specialist who will monitor and enforce contractor compliance?  How much is this new in-house employee who will garner a high wage complete with benefits going to cost?  Please separate wage from benefits. I won't comment on my thoughts regarding this "new in house hire".
The Compliance Specialist will ensure contractors pay the mandated living wage and comply with our contracts.  It is our understanding other municipalities tasked with wage compliance in their contracts use auditors to ensure compliance.  We expect the cost of the compliance specialist, including benefits, to cost approximately $80,000 annually.

   *   Would this individual be doing the "auditing" of contracts?
The Compliance Specialist will primarily be securing and reviewing payroll records routinely submitted by vendors.  Detailed audits will also be completed on a regular basis.  We expect the Compliance Specialist will work with Purchasing on other contract compliance issues for not only janitorial contracts but all city contracts, including landscaping and emergency services.


11. In the current 2017 proposal is included the hiring of additional in-house staff.  Please provide a summary of the number of additional staff, what departments they would be employed in, and exactly the cost of those hires separated between their salary and the cost value of their combined benefits.
The net increase in standard staffing in the proposed 2017 budget is 8.12 FTE. The estimated salary costs for these is $491,581 and the estimated benefits cost is $175,419, for a total cost of $666,000. Of this, $37,723 was re-purposed from existing non-personnel budget, resulting in a total budget impact of $628,277.

Additionally, as a part of ongoing work to ensure the city's labor practices are within the letter and spirit of the law, staff have identified a number of positions in Open Space and Mountain Parks, previously categorized as seasonal employees, that have an ongoing pattern of partial year employment. These may meet the threshold for healthcare benefits under the Affordable Care Act. In the interest of full compliance, these positions are being reclassified to standard positions, which increases the standard FTE count by an additional 12 positions. These are not included in the net increase number provided above because the city has had these employees, albeit classified as seasonals, in place, doing the work, for years. The budget impact ($45,520) is only a net difference between seasonal pay and standard pay with benefits, and there is actually some overhead savings in managing standard versus seasonal contracts.

The table below shows the positions by department:


FTE Additions

FTE Reductions

Notes

Communications

0.75

Council video coverage position standard 3/4 time - previously a temp position (no additional cost)

Community Vitality

0.50

Energy

-3.25

End of fixed-term positions; deferral of positions based on  timing of PUC decision

Fire

-0.33

removal of vacant partial position - funding converted to non-personnel in support of Wildland Fire unit

Human Services

2.00

-4.10

Reduction relates to programs previously managed by city now managed by County and Longmont; increase of two positions for homelessness initiatives

IT

0.50

Library and Arts

0.99

Municipal Court

-0.88

End of fixed-term position

Parks and Recreation

2.75

Planning (PH&S)

1.32

Environmental Programs (PH&S)

1.25

Affordable Housing (PH&S)

1.00

Police

1.00

PW-Development and Support Services

1.32

Include additional code enforcement officer

PW-Transportation

2.25

Includes fixed-term position for Neighborhood Traffic Mitigation Program update

PW-Utilities

1.05



Subtotal:

16.68

-8.56

FTE reductions:

[cid:image002.png at 01D23393.A5E51AB0][cid:image004.png at 01D23393.A5E51AB0]
-8.56


Net:

8.12




Additional Questions from Lisa Morzel:

In addition to receiving answers to my questions below, I'd like to get a copy of a custodial service contract we currently have with one of the vendors.

A copy of the Library janitorial contract with Kleen Tech Division of HB Management services is attached.  This is representative of our typical janitorial services contract.  Kleen Tech is our largest provider of contracted janitorial services.

Could we get more information on the amount a contracted worker actually gets paid?
City Staff conducted telephone interviews with janitorial and landscape contractors (among others) in mid-2016 in support of the living wage project.  The following is pay information provided by the contractors at that time:
*The hourly rate of pay for non-management janitorial workers ranged from $8.00 to $16.00 per hour.
*The higher rates of pay for non-management workers were given to more tenured and skilled (ex. carpet cleaners) employees.
*Our largest janitorial contractor (Kleen Tech) raised their starting wage for non-management workers from $9.00/hour to $11.00/hour in early 2016.  This was done to address staffing challenges and to reduce turnover.
*The smaller janitorial contractors we use tended to have a lower starting wage for their employees and pay increases were more sporadic.
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