Remuneration and Benefits for Councillors (M. Phair)

Recommendation:
That this report be received for information.

Report Summary

  • This report provides a response to an Administrative Inquiry regarding salary and benefit arrangements for Members of Council.

Previous Council/Committee Action

At the March 2, 1999 City Council meeting Councillor Phair made the following inquiry:

I would like the following information regarding remuneration and benefits for Councillors.

  1. When were the current salaries and benefits set for City Councillors and when did they come into effect?
  2. A review of the compensation arrangements provided to Council members with a view to determining whether these arrangements remain competitive and appropriate by industry standards and the impact of inflation and cost of living.
  3. How does our salary and benefit arrangement including retirement benefits compare with other Canadian cities of comparable size?
  4. What process and criteria do other cities use to set remuneration and benefits?
  5. If benefit arrangements including retirement benefits for Councillors were to be established that had the same value as a City employee making a similar salary how could that be done? What would the estimated cost be? Would it be portable?

Report

On September 12, 1989, City Council passed a motion setting the current remuneration level of Members of Council based on the recommendation of the House Committee. The remuneration payable to an Alderman is $44,322 and the remuneration of the Mayor is twice that of an Alderman ($88,644). Attachment 1 provides a historical overview of salary levels for Members of Council.

Historically, City Council has addressed the issue of remuneration on the basis of reports of committees established for the purpose of conducting a remuneration review. Since 1986, House Committee has assumed this function. House Committee last reviewed the issue of remuneration in 1992 and recommended that (1) the increase in Aldermen’s salaries for 1993 be set at zero (0%), and (2) that the Office of the Aldermen’s Budget documents be revised to reflect no increase in Alderman’s salaries for 1993. The 1993 budget approved by Council did not allow for an increase in Councillors salaries.

On September 24, 1996, City Council passed Bylaw 8239 which established a benefit fund to provide Members of Council with the following benefits: group life insurance, dental benefits, major medical benefits, and provincial health care benefits. Participation is voluntary, but coverage under the dental, major medical and provincial health care benefit plans may only be elected as a whole. The cost-sharing arrangement for Council members, who chose to participate, is the same as that established for Management employees. The current contribution and cost-sharing arrangement is detailed in Attachment 2.

Since August 1980, the City of Edmonton has also provided Members of Council with Accidental Death and Dismemberment (AD & D) benefit coverage. The AD & D plan provides 24-hour coverage in the event of accidental and significant loss (e.g. loss of life, loss of limb, loss of sight). The City of Edmonton pays the full cost of this benefit. The total 1998/1999 premium amount was $750.00.

Benefits provided to Council Members are similar to those provided to Management and Out-of-Scope employees, with the exception of pension benefits and the 1/3 tax free allowance.

A number of different approaches have been adopted by Municipalities to address the matter of remuneration and benefits for elected officials. For example, a municipality may choose to charge the Chief Commissioner with forming a Committee (Calgary), establish a Citizens’ Compensation Committee (Mississauga), form an Independent Review Board (Winnipeg), or embody a mechanism for addressing the matter in Bylaw (Ottawa). The Members’ Services Committee is responsible for reviewing remuneration and benefit issues for Alberta MLAs. Some examples of the methods adopted for providing increases in remuneration are outlined in Attachment 3.

A comparison of the remuneration and benefits, including retirement arrangements for elected officials in other municipalities, is provided in Attachments 4 and 5.

On the question of retirement arrangements, Alberta MLAs elected after 1989 and Members of Council do not participate in a pension plan. Members of Council are not eligible to participate in the Local Authorities Pension Plan (Alberta Regulation 366/93) as they are not employees as defined under the regulation. Upon leaving elected office, Members of Council are also not eligible to receive Employment Insurance benefits, nor are they provided with a resettlement allowance.

City of Calgary and Mississauga Council Members and Alberta MLAs are provided with a transition (re-establishment) allowance when they leave office. Details regarding the resettlement allowance provided to Calgary Council Members and Alberta MLAs are provided in Attachment 6.

City Council considered the matter of establishing a pension plan in 1991 and 1997. In both instances, the matter of pensions was not pursued further by City Council.

The services of an actuarial firm would be required to establish and determine the cost of a pension plan of similar value to the pension plan currently provided to full-time employees of the City of Edmonton.

The cost to establish a pension plan for Members of Council would be dependent on the principal features of the plan (e.g. cost of living adjustments, vesting), the average age of the plan members, the past service of the plan members and the actuarial assumptions and methods used to develop a “best estimate” of the annual costs to fund future service.

The establishment of a formal pension plan would be subject to certain conditions and limits, registration under the Income Tax Act of Canada and the Employment Pension Plans Act (EPPA) of the Province. The EPPA governs the terms and conditions of the pension plan, minimum funding requirements, and the investment of plan assets. The EPPA requires that a plan member be given the option to transfer the commuted value of the deferred vested pension to another retirement savings arrangement on termination of employment before retirement age.

Background Information Attached

  1. History of Remuneration of Council Members
  2. Members of Council Optional Benefit Plan (Cost-Sharing Arrangement effective January 1, 1998)
  3. Adjustments to Remuneration of Elected Officials
  4. Mayor and Councillor’s Remuneration Survey (1999)
  5. Mayor and Councillors’ Benefit Survey (1999)
  6. Transition Allowance

Staff Hours to Prepare Report:17.00

Staff Cost:$476.00

Peripheral Cost:

Total Cost of Inquiry Preparation:$476.00

(Page 1 of Error! Bookmark not defined. 3)

Attachment 1

HISTORY OF REMUNERATION OF COUNCIL MEMBERS

  1. Moir Committee Report – July 28, 1978

Council decided that an independent five-member committee be established after each election to recommend salary levels for Council members for the next three-year period.

  1. Report of the Committee on Remuneration of Mayor and Councillors – February 16, 1982

Council ultimately accepted the Committee’s Recommendations that Councillors’ salaries be increased as of:

April 15, 1982 to $23,500

April 15, 1983 to $25,500

April 15, 1984 to $27,500

and that the Mayor’s salary be increased as of:

April 15, 1982 to $53,000

April 15, 1983 to $58,000

April 15, 1984 to $65,000

  1. Motion to freeze salaries for 1984 and no increase implemented in 1983.
  1. Motion to freeze salaries for 1984.
  1. Motion to freeze 1985 salaries at 1984 levels and Motion to reconstitute a special Committee to review Council salaries.
  1. Report of the special Committee on Council Remuneration – February 12, 1986

On June 25, 1986, Council received the report as information, and of the Committee’s recommendations, agreed only that the Mayor’s salary be increased to $60,000 effective January 1, 1987.

  1. At its meeting of February 10, 1987, Council agreed to increase Councillors’ salaries by 3.5% effective October 27, 1986 and by a further 3.5% effective January 2, 1987; that $6,000 be paid to Councillors on the Executive Committee for October 1986 to October 1989; and that further annual adjustments to the remuneration to Council Members be based on the average negotiated settlements with City unions and associations.
  1. House Committee determined on April 26, 1986, to include the Executive Committee stipend as part of the salary for the purpose of calculating increases, retroactive to January 1, 1988.
  1. At its meeting of March 14, 1989 Council approved the following:

That Councillor’s remuneration be equal to the remuneration received by the MLAs of the Province of Alberta.

That the increase be paid in equal installments on May 1, 1989, May 1, 1990 and May 1, 1991 (with the necessary adjustments for annual increases in the MLAs’ salaries over that time period).

That the remuneration for the Mayor be twice that of a Councillor.

On September 12, 1989 Council rescinded the March 14, 1989 decision and accepted the House Committee’s recommendation to set the Aldermanic salaries at $44,322.00 and that the increase be paid in equal installments on May 1, 1989, May 1, 1990 and May 1, 1991, and that remuneration of the Mayor be twice that of a Councillor.

Attachment 1 - Page 1 of 2

Attachment 2

MEMBERS OF COUNCIL OPTIONAL BENEFIT PLAN

Cost-Sharing Arrangement Effective January 1, 1998

BENEFIT

/ COST SHARING ARRANGEMENT / SINGLE COVERAGE / FAMILY COVERAGE
Council Member / City / Council Member /
City
/ Council Member / City
Alberta Health Care Group Insurance Plan / 50% / 50% / $17.00 monthly / $17.00 monthly / $34.00 monthly / $34.00 monthly
Major Medical & Supplementary Hospital Plan / 50% / 50% / $3.98 bi-weekly / $3.98 bi-weekly / $7.96 bi-weekly / $7.96 bi-weekly
Dental Plan / 35% / 65% / $6.47 bi-weekly / $12.01 bi-weekly / $16.17 bi-weekly / $30.03 bi-weekly
Optional Group Life Insurance / 100% / 0% / The premium payable is based on age, gender and smoker/non-smoker characteristics of the Council Member. / Nil / N/A / N/A

Attachment 2 - Page 1 of 1

Attachment 3

ADJUSTMENTS TO REMUNERATION OF ELECTED OFFICIALS

City of Mississauga

  • Effective January 1 of each year, the base salary of Councillors shall be adjusted to reflect the population in existence on that date. Such adjustment shall be based on the increased population from the previous year, multiplied by 10 cents per capita, and divided by the number of Councillors.
  • That salaries for the Mayor and Members of Council be subject to an automatic annual increase, reflective of the cost of living increase awarded to non-union City staff. Effective April 1, 1999, the remuneration of the Mayor and Members of Council was increased by a 2% economic adjustment.

City of Winnipeg

  • Remuneration is increased annually by the average increase in weekly earnings by industrial aggregate in Canada, as published by Statistics Canada (By-Law No. 5850/92).

City of Ottawa

  • The salary provided to members of Council shall be subject to an adjustment annually upwards or downwards on the basis of previous year’s percentage increase of the Weekly Earnings by Industries, Urban Areas, Average Weekly Earnings (excluding overtime), Salaried Employees, Industrial aggregate, Average of Ontario and Quebec as published by Statistics Canada in Catalogue 72-002 (monthly).

City of Vancouver

  • According to a system of remuneration approved by Council in 1995, compensation may be adjusted annually on the 1st of January of each year to reflect the average wage of a person employed full-time in the Vancouver area.

Alberta MLAs

  • Commencing April 1, 1999 and on April 1 of each subsequent year, MLA remuneration will be increased or decreased by the same percentage increase or decrease as in the Average Weekly Earnings for Alberta, as reported by the Statistics Canada survey of employment payroll and hours for the immediately preceding calendar year.

Attachment 3 - Page 1 of 1

Attachment 4

MAYOR & COUNCILLORS’ REMUNERATION SURVEY (1999)

Municipality / Population
(1996 Census) / No. of Councillors / Mayor’s Remuneration / 1/3 Tax Exempt / Councillors’ Remuneration / 1/3 Tax Exempt
Edmonton / 616,306 / 12 / $88,644 / Yes / $44,322 / Yes
Mississauga  / 544,382 / 9 / $78,757  / Yes / $43,682  / Yes
Calgary / 768,082 / 14 / $97,353 / Yes / $48,681 / Yes
Ottawa / 323,340 / 10 / $78,412 / Yes / $46,963 / Yes
Vancouver / 514,008 / 10 / $108,697 / 10% / $47,879 / 10%
Winnipeg / 618,477 / 15 / $92,803 / Yes / $49,500 / Yes

March 30, 1999

Note:

Effective October 1, 1998, the 5% reduction applied to all remuneration for Alberta MLAs in 1993/94 was reinstated. The current remuneration for Alberta MLAs is $57,502.50, of which $19,167.50 is tax exempt.

Members of Mississauga Council, who are members of Peel Regional Council, also receive remuneration from the Regional Council of $36,250. This amount is 100% taxable.

On April 1, 1999 the remuneration of the Mayor will be increased by a 2% economic adjustment.

On April 1, 1999 the remuneration of Councillors will be increased by a 2% economic adjustment.

Attachment 4 - Page 1 of 1

Attachment 5

Mayor & Councillors’ Benefit Survey (1999)

Municipality / Extended Health / Life Insurance / AD&D / Dental / LTD / Pension Plan / Other
Edmonton / City 50%
Mayor/Councillor 50% / No / City 100%
Benefit:
Mayor $200,000
Councillor $100,000 / City 65%
Mayor/Councillor 35% / No / No /
  • Optional Group Life Insurance – Mayor/Councillors 100%

Calgary / City 50%
Mayor/Councillor 50% / City 50%
Mayor/Councillor 50%
2x salary / City 100%
2x salary / City 50%
Mayor/Councillor 50% / No / Yes
Defined Benefit /
  • Elected Officials Savings Plan 9% contribution matched by City
  • Flexible Spending Account - covers specified medical, fitness and life-style expenses to a maximum of $3,000 per annum

Mississauga / City 100% / City 100%
2 x salary / City 100%
1.5 x salary / Basic – City 100%
Optional – City 50%
Mayor/Councillor 50% / City 50%
Mayor/Councillor 50%
(66 2/3 % of salary) / Yes
Defined Benefit
Ottawa / City 100% / City 75%
Mayor/Councillor 25%
3x salary / City 75%
Mayor/Councillor 25%
3x salary / City 75%
Mayor/Councillor 25% / Mayor/Councillor 100%
(75% of salary) / Yes
Defined Benefit
Vancouver / Mayor/Councillor 100% / No / City 100%
Mayor/Councillor
$150,000 / Mayor/Councillor 100% / No / Yes
Defined Benefit /
  • Optional Group Life Insurance - Mayor/Councillor 100%

Winnipeg / Mayor/Councillor 100% / City 50%
Mayor/Councillor 50%
2x salary / No / City 100% / No / No /
  • Travel Health Plan Mayor/Councillors 100%
  • Vision Care – City 100%

March 30, 1999

Attachment 5 - Page 1 of 1

Attachment 6

Transition Allowance

City of Calgary

  • As of July 14, 1997, Members of Council receive a resettlement severance allowance which provides for a payment equivalent to two weeks pay for each year in office, to a maximum of six months if they retire, voluntarily leave elected office or are defeated in an election.

City of Mississauga

  • That a severance allowance be payable upon retirement, defeat, resignation or death of a Member of Council, provided the said retirement is not for the purpose of assuming a position as an elected official in provincial or federal parliament, or is the result of involuntary removal from office other than defeat. The allowance shall be calculated at one month’s base salary for each year of service, subject to a maximum of 12 months base salary, payable in a lump sum.

Alberta MLAs

  • Each non-returning Member receives the equivalent of one month’s indemnity and expense allowance for every year of service from March 20, 1989, up to a maximum of 12 years of service. (Note: This deals only with MLA remuneration and not with additional allowances such as Ministerial compensation.)

Attachment 6 - Page 1 of 1