The County of Santa Clara
California

Report
88469

Consider recommendations relating to proposed provisions for community-based nonprofit contractors. (Office of the County Executive)

Information

Department:Office of the County ExecutiveSponsors:
Category:Report

Multiple Recommendations

Possible action:
a. Receive report from the Office of the County Executive relating to a living wage policy for community-based nonprofit contractors.
b. Receive draft proposed revisions to Board Policy Section 5.5.5.5, Living Wage Provisions in County Contracts, relating to a living wage policy for community-based nonprofit contractors and forward to the Finance and Government Operations Committee for consideration.

Body

COMMITTEE RECOMMENDATIONS

At the August 22, 2017 special meeting of the Children, Seniors, and Families Committee (CSFC), Committee members requested that the Administration report back to an appropriate meeting in October on a clear definition for trainees, further clarification on the limited-term waiver process, and timing for implementing the remaining provisions of the policy.

FISCAL IMPLICATIONS

There are no impacts to the General Fund as a result of accepting this report.  The adoption of the proposed policy amendments would result in unknown General Fund impacts.

REASONS FOR RECOMMENDATION

The Administration’s prior report to the CSFC detailed proposed policy recommendations for the inclusion of community-based organizations (CBOs) into Board Policy 5.5.5.5, Living Wage Provisions in County Contracts as well as a brief background on the Problem-Solving Process leading to those recommendations.

Since the August 22, 2017 special CSFC meeting, the Office of Countywide Contracting Management (OCCM) has worked to clarify the definition of trainees, further explain the limited-term waiver process, and develop a timeline for implementation of the remaining provisions of the policy.

Trainees

OCCM reviewed the living wage policies of 18 municipalities that included exemptions for trainee programs. Of these 18 municipalities, five include a definitive time limit for trainee programs varying from 120 days to one year in duration. Additionally, OCCM reviewed current County contracts for the Parolee Reentry Services Program, which has a maximum duration of 12 weeks. Based on this review, the Administration recommends limiting the duration of the trainee exemption to three months to accommodate variations in potential program length.

Limited-Term Waiver Process

A select number of CBOs may be unable to raise their wages to meet living wage rates in the proposed timeframe and may petition for a conditional waiver for a specific contract. If granted, the conditional waiver would establish agreed-upon timelines that would, among other things, allow a CBO to come into compliance with the required wage rates on a longer timeline based upon an analysis of that CBO’s audited financial statements.

Evaluation criteria would include whether implementing provisions of the living wage policy will have a significant and detrimental effect upon that CBO.  In assessing that detrimental effect, the County would consider the following:

·        Current Net Assets to Current Net Debt Ratio: A financial ratio that measures whether an organization has enough resources to pay its debts over the next 12 months.

·        Debt to Net Asset Ratio: A measure of the total amount of debt divided by the amount of net assets, which provides an indication of leverage and how much of the organization’s capital structure is due to debt.

·        Surplus or Deficit: respectively, a measure of excess revenue over expenses or excess expenses over revenue during an accounting period.

The County will provide additional consideration to audit findings on an entity’s risk level, including past noncompliance with laws and regulations or a determination of serious deficiencies in internal controls that may lead to such noncompliance.

Implementation of Remaining Policy Provisions

OCCM met with County Counsel to discuss a proposed timeline for implementation of the targeted hiring, local hiring, worker retention, fair workweek, and labor peace provisions defined under the Living Wage ordinance but not yet effectuated in the Living Wage policy. OCCM and County Counsel have begun developing language to address these outstanding provisions and will meet with labor representatives to review the proposed implementation plan. Outcomes will be shared with members of the CBO community for additional feedback. Administration aspires to work with community partners to implement all five provisions by July 1, 2018, so they are implemented concurrently with the living wage policy for CBOs, but recognizes that each provision will require its own coordination and legal review.

CHILD IMPACT

The recommended action will have no/neutral impact on children and youth.

SENIOR IMPACT

The recommended action will have no/neutral impact on seniors.

SUSTAINABILITY IMPLICATIONS

The recommended action will have no/neutral sustainability implications.

BACKGROUND

Pursuant to Attachment C of the original policy recommendation for Living Wage Provisions in County Contracts, the Administration and the Office of Supervisor Cindy Chavez hosted the first Public Forum on Living Wage Policy for Community-Based Nonprofit Contractors on October 24, 2016. At the first of two public forums, the Administration presented an overview of the County’s Living Wage Ordinance as well as a review of the legal, policy, and economic considerations relating to application of the Living Wage Policy to community-based nonprofit contractors. Supervisor Chavez led the discussion and public comment on the development of a living wage policy for Nonprofits, and the convening closed with a potential timeline for policy development. The process also included a call for additional input from stakeholders via letters submitted to a designated County email addresses. OCCM also surveyed current CBO service providers to obtain wage data to inform the development of a draft Living Wage Policy for Community-Based Nonprofits for the Board’s consideration.

On Tuesday, March 7, 2017, the Office of Supervisor Chavez and the Administration hosted the second public forum. This meeting included discussion of the development of the Living Wage Policy for Nonprofits, and a presentation of the proposed draft policy. Significant time was allocated for public comment to ensure the Administration captured concerns and suggestions from all community stakeholders. This forum concluded with a recommendation for the Administration to present its proposed policy revisions at a special CSFC meeting.

On Tuesday, August 22, 2017, at the special meeting of CSFC, the Administration presented proposed provisions relating to a living wage policy for community-based nonprofit contractors. The Committee requested that the Administration report back to an appropriate meeting in October on a clear definition for trainees, timing for implementing the remaining provisions of the policy, and further clarification on the limited-term waiver process.

CONSEQUENCES OF NEGATIVE ACTION

The Committee will not receive the report on a Living Wage Policy for Community-Based Nonprofits and the proposed provisions will not be considered by the Board of Supervisors for adoption.

STEPS FOLLOWING APPROVAL

None.