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Item 2.
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| City Council Work Session | |
| Date: | 09/16/2024 |
| Title: | Employee Pay (CM Kennedy Initiative) |
| Presented by: | Chris Kukulski, City Administrator |
| Department: | City Hall Administration |
| Presentation: | Yes |
| Legal Review: | Not Applicable |
| Project Number: | N/A |
RECOMMENDATION
No action is requested. The conversation is intended to describe and answer questions regarding the City's pay systems.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Attached are wage tables for the City’s non-union, Teamsters, police and fire employee groups for Fiscal Year 2025. We've also attached 3 Payfactors Market Pay Analysis examples. Karla will walk us through the Payfactors examples. The Payfactors data is used to understand pay for key benchmarked positions that our pay system is built around.
The City’s compensation system is designed to maximize our limited taxpayer resources and to retain and recruit an excellent workforce.
The city uses a similar seven-step pay structure for our ~275 non-union employees and ~450 Teamsters.
The city’s current pay structures were established in 1994 after an analysis by Personnel Services. The following timeline identifies outside resources the city has used to help manage our compensation system over the past three decades.
· 1994 Personnel Services class and compensation study
· 2006 Fox Lawson – never implemented
· 2020 Gallagher Study was “aged” to January 2023. ($22,500)
o 15 Peer Cities shared data - Bend, Bismark, Boise, Casper, Cheyenne, Eugene, Everett, Fargo, Fort Collins, Greeley, Gresham, Meridian, Pueblo, Rochester, Yellowstone County
o Benchmarked ~50 positions
· 2024 PayScale.com subscription $6,100/yr (Class & Comp Committee used data to update the non-represented and Teamster matrixes)
We use a Class and Compensation Committee made up of HR, admin, finance, PW, library, aviation & transit, and planning to help administer the program. They help ensure decisions are thoughtful, retaining fairness and equity across our organization with approx. 1,100 employees.
The pay matrix has seven (7) steps. Each step generally represents one additional year of experience and or expertise the employee brings to the job. Each step is 5% higher than the prior step. Except for assistant directors and directors whose step 7 is set at 60% of the “market” for peer jobs; the remaining ~725 jobs are 60% of “market” at step 5.
When individuals are either promoted or hired into the organization, we determine where their expertise places them within the 7 steps. As the job market has tightened over the past few years, and turnover rates have nearly tripled, we now commonly start employees between steps 2-5.
Each year the pay matrix has an inflationary adjustment. Over the past decade this has averaged 3%. The three labor contracts (Teamsters, Police and Fire) and inflation are all considered when the administration makes the annual adjustment to the matrix.
In 2023 we began implementing a more “market” driven pay approach while also phasing out longevity pay. Longevity pays equated to an automatic hourly increase from years 7 – retirement. Meetings were held in early 2023 with council members to take feedback prior to implementing the new approach to compensation. We also negotiated this same approach in the Teamsters union contract (FY25-FY28). All employees hired after June 30, 2024, are not eligible for longevity pay. Longevity pay was discontinued for assistant directors and above in 2023 when their market adjustment was implemented.
Implementing this new approach started in April 2023 with the assistant city administrator, department directors and assistant directors. This group’s percentage increases ranged from 0.7% to 16.1% with an average of 6.6%.
Effective July 1, 2024 - Teamsters market pay adjustment ranges from 3.5% to 14% with an average of 6.7%. The non-represented employee market adjustments range from 3.5% to 14.1 with an average of 3.9%. No market adjustment was made to the ACA, directors and assistant directors since those adjustment was already made in April 2023. Therefore, they each received a 3.5% inflation increase for FY 2025.
The City’s compensation system is designed to maximize our limited taxpayer resources and to retain and recruit an excellent workforce.
The city uses a similar seven-step pay structure for our ~275 non-union employees and ~450 Teamsters.
The city’s current pay structures were established in 1994 after an analysis by Personnel Services. The following timeline identifies outside resources the city has used to help manage our compensation system over the past three decades.
· 1994 Personnel Services class and compensation study
· 2006 Fox Lawson – never implemented
· 2020 Gallagher Study was “aged” to January 2023. ($22,500)
o 15 Peer Cities shared data - Bend, Bismark, Boise, Casper, Cheyenne, Eugene, Everett, Fargo, Fort Collins, Greeley, Gresham, Meridian, Pueblo, Rochester, Yellowstone County
o Benchmarked ~50 positions
· 2024 PayScale.com subscription $6,100/yr (Class & Comp Committee used data to update the non-represented and Teamster matrixes)
We use a Class and Compensation Committee made up of HR, admin, finance, PW, library, aviation & transit, and planning to help administer the program. They help ensure decisions are thoughtful, retaining fairness and equity across our organization with approx. 1,100 employees.
The pay matrix has seven (7) steps. Each step generally represents one additional year of experience and or expertise the employee brings to the job. Each step is 5% higher than the prior step. Except for assistant directors and directors whose step 7 is set at 60% of the “market” for peer jobs; the remaining ~725 jobs are 60% of “market” at step 5.
When individuals are either promoted or hired into the organization, we determine where their expertise places them within the 7 steps. As the job market has tightened over the past few years, and turnover rates have nearly tripled, we now commonly start employees between steps 2-5.
Each year the pay matrix has an inflationary adjustment. Over the past decade this has averaged 3%. The three labor contracts (Teamsters, Police and Fire) and inflation are all considered when the administration makes the annual adjustment to the matrix.
In 2023 we began implementing a more “market” driven pay approach while also phasing out longevity pay. Longevity pays equated to an automatic hourly increase from years 7 – retirement. Meetings were held in early 2023 with council members to take feedback prior to implementing the new approach to compensation. We also negotiated this same approach in the Teamsters union contract (FY25-FY28). All employees hired after June 30, 2024, are not eligible for longevity pay. Longevity pay was discontinued for assistant directors and above in 2023 when their market adjustment was implemented.
Implementing this new approach started in April 2023 with the assistant city administrator, department directors and assistant directors. This group’s percentage increases ranged from 0.7% to 16.1% with an average of 6.6%.
Effective July 1, 2024 - Teamsters market pay adjustment ranges from 3.5% to 14% with an average of 6.7%. The non-represented employee market adjustments range from 3.5% to 14.1 with an average of 3.9%. No market adjustment was made to the ACA, directors and assistant directors since those adjustment was already made in April 2023. Therefore, they each received a 3.5% inflation increase for FY 2025.
ALTERNATIVES
NA
FISCAL EFFECTS
Pay makes up approx. $88.3 million of the city's $479.6 million FY 2025 budget.
Attachments
- Non-Union Pay Table
- Teamsters Pay Table
- Fire Union Pay Table
- Police Union Pay Table
- Sample Payfactors Market Pay Analysis