Discussion and possible action on any and all matters regarding strategy for implementing salary adjustments.  ITEM CONTINUED FROM THE REGULAR COUNCIL MEETING OF JANUARY 8, 2025.  (Adela Cortez, Director of Human Resources)

In early 2024, Public Sector Personnel Consultants conducted a Base Salary Study to assess the City’s salary competitiveness.  The findings and implementation options were presented at the City Council meeting on June 12, 2024. 
 
The study revealed that the City is not a competitive employer, with 83% of the benchmarked jobs paying more than 5% below prevailing market rates.  This shortfall affects 257 employees whose current salaries fall below the proposed minimum salary range for their positions.
 
The study proposed the following actions to address and improve salary competitiveness:

1. Adopt the proposed Salary Range (Pay Grade Structure) for FY 2024-2025 – this was approved during June 12, 2024, meeting.
2. Establish a salary competitiveness policy aligned with prevailing market rates.
3. Adjust salaries for all employees currently earning below the minimum salary range to meet the new minimum on the plan’s effective date.
4. Annually update the salary plan by reallocating job classes to appropriate salary ranges.
5. Use the salary range linkage guide for assigning non-benchmark job classes during annual updates.

Financial Analysis
Bringing all 257 affected employees to 100% of the minimum salary range would cost approximately $1,515,516 plus fringe benefits, totaling $1,924,705 annually.  It has been determined this is not feasible due to current financial status of the City.  After further assessment of the City’s financial status, the following recommendation was presented.
 
Recommendation
To promote staff stability and retention and enhance salary competitiveness, the following Salary Competitiveness Policy is recommended as was presented during the 2026 Budget Presentation in the Work Session of February 26, 2025: 

• Implement the 97.5% Salary Competitiveness Policy and provide a Market Salary Adjustment (MSA) to the 257 employees earning below 97.5% of the market minimum.
  • Adjust the salaries of contracted employees in alignment with the classified service adjustments.
  • The total annual budget impact is estimated at $1,513.172, including employer costs – ERs.
  • The total budget impact for the remainder of the Fiscal Year is projected at $510,000, including employer costs – ERs.
  • Depending on budget availability for Fiscal Year 2025-2026, further adjustments be made to bring these employees to 100% of the Market rate.   

 

• Pursuant to Policy HR-3-02, implement a Longevity Pay Plan to value employees’ dedication and years of full-time service.
  • For FY 2024-2025 and 2025-2026 only employees who are not impacted by being under the Market would be eligible to receive longevity lump-sum payments.
  • Total budget impact for FY2024-2025 is projected at $88,000, including employer costs, and for FY 2025-2026 is projected at $85,000, including employer costs.
  • Starting in FY 2026-2027 and thereafter, contingent on budget availability, all employees will be considered for longevity pay.

Should this recommendation be approved, salary adjustments and longevity lump-sum payments may be processed effective the beginning of the Pay Period, on March 22, with employees seeing the changes on their April 11, 2025, paycheck.