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HomeMy WebLinkAbout1992-11-10 - AGENDA REPORTS - EMPLOYEE COMPUTER PGM (2)City Manager Approve Item to be presented UNFINISHED BUSINESS DATE: November 10, 1992 SUBJECT: Employee Computer Purchase Program DEPARTMENT: Management Services/Information Resources George Caravalho Over the past several months, the City has been exploring the feasibility of an employee computer purchase program. The purpose of this program is to encourage employees to become more proficient with computers and software by offering assistance in the procurement of computer related purchases. The exploration included an interest survey of City staff, a roundtable discussion , a review of other cities' programs, and discussions with financial institutions. A summary of programs implemented by other cities is attached for your review. Also attached is a document listing employee financial assistance options. At the Council meeting on October 13, 1992, Council referred this item back to staff to secure better interest rates. Further discussion with the banks suggests that loans for personal computer purchases are high risk, unsecured loans. One bank was willing to offer a lower rate to City employees. Valencia National Bank will offer a loan of up to $3,000 at 10% interest for a period not to exceed 36 months. This option would enable employees to obtain loans without involving the City in the financial portion of the employee computer purchase program. Other options have been identified that involve City resources. Staff recommends that the City Council review and adopt the Employee Computer Purchase Program, using Option 1 or select another option, and delegate to the City Manager; or his designee, the ability to execute the documents for participants who qualify under the program. agncomp.jcg APPROWED Agenda Item: City of Santa Clarita Employee Computer Purchase Program Option Option Loan Amt Interest Loan Monthly Comments No. Rate Term Payment 1 Employee obtains loan directly from Valencia $3,000.00 10% 24 mo. $138.43 No risk or National Bank. Employee will be able to obtain liability to the 100% financing on an amount up to $3,000 at 10% City. Additional interest for a period not to exceed 36 months. cost to the employee is between $2.07 and $4.12. 2 Employee obtains loan from Transworld Bank, using $3,000.00 8.5% 24 mo. $136.36 Risks to the the City as a guarantor of the loan. Employee will City include be able to obtain 100% financing on an amount up loans in default, to $3000 at 8.5% interest for a period not to exceed and 36 months. The employee will be required to enter administration into an agreement with the City to allow for payroll cost to the City. deduction of the loan payments. Full amount is due However, the upon termination of employment. If final pay check cost to the is not sufficient to pay balance of loan, balance will employee is be due within a preset number of days. Employee $2.07 less than will waive all rights in small claims court. Option 1. 3 The City obtains a loan from Valencia National Bank $3,000.00 7% 24 mo. $134.31 City assumes and in turn makes a loan to the employee. full liability for Employee will be able to obtain 100% financing on loans. an amount up to $3000 at 7% interest for a period Administration not to exceed 24 months. The employee will be cost to the City. required to enter into an agreement with the City to Cost to the allow for payroll deduction of the loan payments. employee is amount is due upon termination of employment. less than If final paycheck is not sufficient to pay balance of Options 1, 2 LlFull loan, balance will be due with a preset number of and 4 by $4.12, days. Employee will waive all rights in small claims $2.05 and $.28 court. I I I I I respectively. Option No. Option Loan Amt Interest Rate Loan Term Monthly Payment Comments 4 The City provides loans to the employees. Loan $3000.00 7.21%" 24 mo. $134.59 The City will amounts will be provided from City funds. The gain exposure interest rate will be established and adjusted on for assisting January 1 of each year. The interest rate will be the employees. average earnings rate of the City's investment Cost is less portfolio during the previous calendar year plus 1 %. than Options #1 The employee will be able to obtain 100% financing and #2 by on an amount up to $3000 for a period not greater $3.84 and than 24 months. The employee will be required to $1.77 enter into an agreement with the City to allow for respectively. payroll deduction of the loan payments. Full The City amount is due upon termination of employment. If assumes final paycheck is not sufficient to pay balance of liability for loans loan, balance will be due within a preset number of and risks days. Employee will waive all rights in small claims existing funds. court. Computer loan amounts will . have to be budgeted. Uses funds that could be used . for other City business. Administration cost to the City. The 7.21 % interest rate equals the average yield of the City's investment portfolio for the 12 months from August 1991 through July 1992 plus 1%. This report summarizes the findings of asurvey of Cities offering various types of Computer Loan/Assistance programs. This information can be used as the City of Santa Clarita formulates an assistance program for employees interested in facilitating computer purchases. The following represents an overview of the -types of Computer Loan/Assistance programs as expressed by the various city representatives interviewed. F GLENDALE This City offers.a No -Interest Computer Loan for all full-time employees that have successfully completed six months of•their probation period. The program is also available for part-time employees who have completed 5 years of continuous service Loans in this program are granted up to $4,000 for equipment and software. There - is no limit to the number of loans an employee . can receive, but each employee is limited to the noted amount for any two-year period. Loans are administered by their Credit Union, and are issued for a maximum two year period.. The repayment is facilitated through payroll deductions. RESTRICTIONS• Glendale's program is liberal in orientation. They only require that the equipment purchased under the loan program to be new and under a nationally advertised brand name, and must conform to City standards and compatibility. Also, the loans may not be used to purchase games or game equipment. PROCESS: Employees must fill out a City Employee Computer Loan Application and submit it to Computer. Services with a bid from a commercial vendor. Computer Services reserves the option to determine the fairness of the submitted bid. If .the bid is considered unreasonably high, a new bid may be requested. (See Attachment A) Also required is a completed truth in purpose form, which ensures that the purchase is for the employees use, and not for resale. (See Attachment B) A credit application is also required to be submitted to the Credit Union being utilized,.and must meet their eligibility terms. Upon approval, a check is issued jointly to.the employees and the vendor for the amount requested. Payments on the loan are of the standard amortized loan type. The interest expense is included as extra pay on the employee's paycheck and is treated as taxable income. (1) SOF BAKERSFIELD This City assumespartial responsibility for repaying the interest on city sponsored computer loans. They offer 10 loans per year, using a lottery selection system to pick the recipients. The total loan amount available is $3,000, and is subject to, approval by. the Data Processing Manager. The term of the loan is 2 years. The Loans are administered by the Bakersfield Credit Union. The City pays 5% of the 10% interest on the acquired loans. The employees are chosen at random and are given three weeks to make up their minds as to which purchase they wish to make. RESTRICTIONS• Due to the fact that employees are chosen through a lottery selection process, not every one will have the opportunity to purchase a computer. The employees must be designated as full-time, and have already passed their probationary period. The loan is only good once, meaning that an employee cannot participate in the subsequent lotteries after being selected. The issue of compatibility is subject to the. interpretation of the Data Processing Manager. They generally are quite receptive to an effective argument.as to why an employee desires a specific model or brand name. PROCESS• Bakersfield employees who wish to participate in the lottery place their names in a revolving barrel. The Data Processing Manager then picks 10 names. These individuals are given applications for a computer loan, and must go out and acquire bids for their desired purchases. Upon approval from both the Data Processing Manager and the Credit Union, the loan amount is issued to the employee. Repayment of the loan is achieved through direct payroll deductions. This is required by the Credit Union due to the unsecured nature of the signature loan. The city informed me that the reason they use the lottery system is because of the caps placed on their General Fund Budget. CITY OF CLOVIS• The City of Clovis offers a computer loan assistance program to management only. They pay 100% of the interest, and offer a total of $3,000 for an approved.purchase. The loan is administered through the city directly and is extended over a 3 year term. The computer must be 100% compatible with city software. The purpose of this requirement is so the employee can receive a tax deduction for the purchase of the computer. CITY OF ANAHEIM• The City of Anaheim has the most well rounded of all Computer Loan Assistance Programs. They offer loans to all full-time employees directly through city general funds. The total amount of the loan offered is $3,000, and is paid over a two-year period. The employee.may pick any computer they wish as long as it conforms with the below standards. (2) s. RESTRICTIONS• The restrictions that accompany a loan from this city surround the completeness of the purchase. They require that the equipment purchased has the following: • A nationally recognised brand name with at least 1 megabyte of memory. • The employee must have or include within the purchase a printer. • The employee must have both a floppy and hard disk drive. • The employee must have at least one application of business software. • The employee applying for the computer.loan must be deemed computer competent by their immediate supervisor. • Each employee may -only take advantage of this loan opportunity once during the course of their employment. PROCESS: Employees must fill out a city. application and submit a cost quote. Upon approval, a two party.check is issued to both the employee and the vendor. The loan is repaid via 52 direct payroll deductions over a two year period. (3)