Board Work Session March 8, 2018 Custodial Program Update - PowerPoint PPT Presentation

Board Work Session March 8, 2018 Custodial Program Update

Background and Options Moving Forward • For the past 13 years, DPS has contracted with Service Solutions for custodial services and program management • The current contract is nearing the end of its term, and DPS is faced with a choice between several options: 1. Continue with outsourced services at the current budget 2. Continue with outsourced services at a higher cost, to increase pay and add some paid sick days/holidays 3. Shift to an in-house model, providing custodians with DPS salaries and full benefits 4. Shift to an in-house model, but mitigate the cost increase by paying part-time custodians based on state salary schedules 2

Option 1: Contracted Services, Same Budget • The cost of custodial services is driven by personnel salary and benefits • Cost savings in the current contract are achieved through very low wages for most part time employees and minimal paid time off for full-time custodians • Staff does not recommend continuing w/ the current salary and benefit structure Contractor's Current Salary and Benefit Structure Service Solutions Hourly Wage $15 Paid Sick Leave 0 Paid Holidays 0 Full-Time Annual Leave 5-10 annually Employees $121/month for individuals; Health Insurance $407/month for families Retirement 401K: Employer contributes max of 2.1% Hourly Wage $8 - $9 for most employees Paid Sick Leave 0 Part-Time Employees Paid Holidays 0 (less than Paid Annual Leave 0 Days 30 hours per week) Health Insurance N/A 3 Retirement N/A

Option 2: Contracted Services with Enhanced Pay & Benefits • DPS requested quotes from bidders to increase the minimum part-time wage to $11/hr. and add 5 paid sick days and 5 paid holidays for all custodians • The quoted additional cost to the district is $620k with Service Solutions and $850k with GCA Service Solutions GCA Vendor’s Updated Quotes with $11/hr. minimum part-time $7,578,806 $7,813,135 wage; 5 paid sick days and 5 paid holidays for all custodians Additional Cost to the District $616,762 $851,091* Above FY 2017-18 Budget *The additional cost would rise to $1.2 M if all full-time employees elect health care benefits 4

Comparison of Vendor & DPS Wages and Benefits Contractor's Salary & Benefit Structure Under Option 2 w/ Comparison to DPS Benefits Service Solutions GCA Durham Public Schools Hourly Wage $15 $15 $13.07-$16.00 1 per month; 10-12 per Paid Sick Leave 5 annually 5 annually year Paid Holidays 5 annually 5 annually 11 per year 1.17 per month; 12-14 per Vacation Days 5-10 annually 5 annually year Full-Time Employees $121/month for $247/month for $25/month for individuals; Health Insurance individuals; $407/month individuals; $598/month for families for families ~$1,500/month for families Defined Benefit (pension): 401K: Employer 401K: Employer Retirement employer contributes contributes max of 2.1% contributes max of 3.5% 18.44% $13.07-$15.52 w/ DPS Hourly Wage $11 $11 schedule; $11.22 - $14.86 w/ state salary schedule 1 per month; 10-12 per Part-Time Paid Sick Leave 5 annually 5 annually year (prorated) Employees (less than 30 hours Paid Holidays 5 annually 5 annually 11 per year (prorated) per week) 1.17 per month; 12-14 per Paid Annual Leave Days 0 0 year (prorated) Health Insurance N/A N/A N/A Retirement N/A N/A NA 5

Option 2.1: Contracted Services with Enhanced Pay & Benefits • The vendors also included quotes to increase the full-time wage to $16.12/hr., add 5 paid sick days and 5 paid holidays for all custodians, and increase the minimum part-time wage to $11/hr. • The quoted additional cost to the district is $776k with Service Solutions and $1.1 M with GCA Service Solutions GCA Vendor’s Updated Quotes with $11/hr. minimum part-time $7,738,372 $8,093,181 wage; 5 paid sick days and 5 paid holidays for all custodians Additional Cost to the District $776,328 $1,131,137* Above FY 2017-18 Budget *The additional cost would rise to $1.5 M if all full-time employees elect health care benefits 6

Option 3: In-House Model with DPS Salary Schedules • Moving to an in-house model under Option 3 would increase program costs by approximately $1.5 M , but would provide parity with other classified staff (e.g., cafeteria workers) • All custodians would earn at least $13.07/hour and receive 10-12 paid sick days, 12-14 paid vacation days, and 10-11 paid holidays annually • Full-time staff would also receive state employee health and retirement benefits DPS Custodial Pay and Benefits Hourly Wage $13.37-$16.00 Paid Sick Leave 1 per month; 10-12 per year Full-Time Paid Holidays 11 per year Employees Vacation Days 1.17 per month; 12-14 per year Health Insurance $25/month for individuals; $598/month for families Retirement Defined Benefit (pension): employer contributes 18.44% Hourly Wage $13.07-$15.52 w/ DPS salary schedule Paid Sick Leave 1 per month; 10-12 per year (prorated) Part-Time Employees (less Paid Holidays 11 per year (prorated) than 30 hours per Paid Annual Leave Days 1.17 per month; 12-14 per year (prorated) week) Health Insurance N/A Retirement NA 7

Option 4: In-House Model with DPS & State Salary Schedules • If budget constraints preclude moving forward with Option 3 in FY 2018-19, Option 4 presents the possibility of paying part-time employees based on the state salary schedule with a minimum wage of $11.22/hr • All other parameters are the same as in Option 3. The estimated cost increase under Option 4 is $1.1 M DPS Custodial Pay and Benefits Hourly Wage $13.37-$16.00 Paid Sick Leave 1 per month; 10-12 per year Full-Time Paid Holidays 11 per year Employees Vacation Days 1.17 per month; 12-14 per year Health Insurance $25/month for individuals; $598/month for families Retirement Defined Benefit (pension): employer contributes 18.44% Hourly Wage $11.22-$14.86 w/ state salary schedule Paid Sick Leave 1 per month; 10-12 per year (prorated) Part-Time Employees (less Paid Holidays 11 per year (prorated) than 30 hours per Paid Annual Leave Days 1.17 per month; 12-14 per year (prorated) week) Health Insurance N/A Retirement NA 8

In-House Considerations Key considerations for a transition to in-house custodial services include: • Budgetary Risk > Reallocation of $1.1 M to $1.5 M in existing funds or a new money request will be required to implement an in-house model > The district would also incur a one-time start-up cost of approximately $1.2M to purchase durable custodial cleaning equipment along with fleet vehicles and phones > Unforeseen overages could push actual program expenditures above staff estimates • Cost Escalation > Annual program costs may increase more rapidly under an in-house model, due in part to salary increases and the rapidly escalating cost of state health insurance and retirement contributions • Logistics > The district will need to establish a transition team, determine staffing schedules, hire and train management personnel, hire and train head custodians, hire and place nearly 300 additional custodians, and procure all necessarily equipment and supplies • Timeline > Senior staff cannot realistically envision clearing all of the logistical hurdles to properly implement an in-house model by June 1st. 9

Principal Survey • The administration surveyed all DPS principals to gather their input on satisfaction with current custodial services and decision points moving forward • Roughly half of principals (23 out of 45 responding) expressed dissatisfaction with the quality of service provided by Service Solutions > Elementary school principals were mostly dissatisfied, while secondary principals were mostly satisfied. • Similarly, a majority of elementary school principals could support moving to an in-house custodial program, while a majority of secondary principals could not • In addition to the DPS principal survey, 13 principals also responded to a supplemental survey administered by DAE: > The most commonly expressed concerns voiced by principals in the DAE survey included high turnover among evening custodians, inadequate staffing, and inadequate cleaning > Ten out of thirteen principals responding to the DAE survey support bringing all custodians under the DPS umbrella if there was a centralized, in-house management team > All thirteen respondents stated that it is very important for all employees working in their building to receive living wages and good benefits 10

Custodial Meetings • Senior DPS staff conducted two meetings with approximately 60 contract and DPS custodians to discuss options moving forward • Most custodians favored moving to an in-house model • Some common concerns and allegations under the current program include: > Inadequate pay and benefits, especially paid time off > Lack of manpower and supplies to perform the work efficiently > Lack of help during the summer months > Lack of regular evaluations by supervisors > Performing extra work without pay 11