Discussion Regarding 2014 Non-union Wages and Non-union City Health Insurance Contributions

The purpose of this case is to discuss non-union employee’ wages and non-union health insurance contributions for 2014 – and to consider the comparison related to the City’s unionized employees.

This work-session case is a follow-up to to one that occurred  at the July 23, 2013, work-session, “Overview of 2014 Budget Process; as well as the Personnel Committee on October 15, 2013, "Discussion Regarding 2014 Non-union Wages and City Health Insurance Contributions."  

As background information, the City employs 68 employees, of which 65 employees are benefit eligible. Of the 65 benefit eligible employees, 24 are non-union and 44 are union. Again, this case is specific to the City’s 24 non-union employees and the 2014 budget; however, it is important to note that since the union contracts have been settled through 2014 the decisions made regarding the non-union group will have an impact on the City’s internal equity and compensation structure.

Note: The July 23, 2013, work-session minutes and October 15, 2013, Personnel Committee minutes are are attached; as well as a summary of the City's wages, health insurance and other related documents.

Note:  The position identified in the attached charts as Community Development Director is currently referred to as the Development Services Manager and the City Planner is currently referred to as the Associate Planner/Environmental Coordinator; both positions are slated for reclassification.   The position of Assistant to the City Administrator was not listed in the charts due to a lack of comparable data.  

Health Insurance
Historically, the City has always offered the same health insurance contributions to all employee groups, union and non-union alike.   Staff highly suggests continuing that practice in an effort to maintain internal equity, minimize the complexity of the budget, keep the payroll process streamlined, and to mirror other city's business practices.  

As background regarding the City's 2014 premium increases, the premiums were expected to be capped at 10% and the 2014 union contracts were negotiated based on that percentage.  However, staff was aware that there was a chance the increase would be slightly higher due to healthcare reform fees and the unions were given (and have requested) to have a re-opener to negotiate for the added fees, which came in at 3.3% or 13.3% all together.

Staff recommends the City Council consider authorizing the sharing of the premium increases with non-union employees as per one of the attached spreadsheets, limited to the Single, Employee + Spouse, and  Employee + Children plans.  These spreadsheet options represent the amounts previously negotiated with the unions, or, an option to include a portion of the remaining 3.3 percent that was added to the premiums due to healthcare reform fees.   Staff recommends holding the City's contribution on the Family plan at the level that was previously negotiated with the unions in order to reduce costs and work toward  more equitable contributions amongst the tiers. 

Staff recommends option C.  Option C falls within the 2014 preliminary budget while 1) maintaining 100% coverage by the City on the least expensive single premium (consistent past with practice and recommended by the City's benefits broker), and 2)  offers $130.00 toward the single VEBA contribution (but not $155 as was the case last year). 

Wages
Staff originally accounted for a 2.5% non-union cost-of-living-adjustment (COLA) in the preliminary 2014 budget.   Due to the need to drive down the 2014 preliminary budget the percentage was reduced to 2%.   Concurrently, staff has reviewed the most recent COLA data and found that most City's are coming in at a average COLA of 2%.  Staff recommends a 2% COLA be authorized for the non-union employee group.  

Market Study
Staff was asked to conduct a non-union market study.   A study was completed on every non-union position in the City.   The market area included similarly sized cities in the Metro Area, as well as Elk River (which is considered Central MN) and Andover (which is larger in population) but is very close in proximately. 

Non-union staff
Staff was asked about the make-up of the non-union group; the following list shows the city's non-union positions and F.L.S.A. status (Fair Labor Standards Act):

	Title	Eligible for Overtime / Covered by the F.L.S.A.
1	City Administrator (KU)	NO
2	Police Chief (JW)	NO
3	Finance Director (DL)	NO
4	Fire Chief (DK)	NO
5	City Engineer (BW)	NO
6	Public Works Superintendent (GR)	NO
7	Economic Development Manager (TL)	NO
8	Parks and Asst PW Superintendent (MR)	NO
9	Police Captain (JK) and (TF)	NO
10	Asst.  Finance Officer (DM)	NO
11	Human Resources Manager (CL)	NO
12	Development Services Manager (TG)	NO
13	Building Official (RJ)	NO
14	Assistant to the City Administrator (PB)	NO
15	PW Utilities Supervisor (JN)	NO
16	Civil Engineer (LL)	NO
17	IT Coordinator (JF)	NO
18	Fire Marshall (Vacant)	Yes
19	City Clerk (JT)	Yes
20	Police Dept. Office Supervisor (JW)	Yes
21	Env. Coord/Assoc Planner (CA)	No
22	Parks  Leadperson (MB) and (New in 2014)	Yes
23	Accountant I (CN)	Yes
24	Building Maint. Supervisor (DB)	Yes

At the October 15, 2013; Personnel Committee, the minutes reflect that the Committee was concerned about authorizing pay increases for the non-union group; it was stated that the non-union group is among the highest paid employees in the City.   There are factors that should be considered with regard to a decision not to authorize a COLA to non-union employees:  1)  Most of the above listed non-union positions are not eligible for overtime compensation and work a number of extra hours, including night meetings; 2) Most of the non-union positions require advanced education; 3) Most of the positions are already below the market when comparing 2013 data, and 4) considering that LELS will be getting 2% COLA plus a 2% market adjustment in 2014 and AFSCME will be getting 2% COLA plus 1% market adjustment in 2014, the wage scales show a narrowing margin.

Please see the attached graph documenting the market study.

A case to authorize the non-union wages and health insurance contributions will be brought forward at the December 10, 2013, regular City Council meeting to be adopted as part of the 2014 budget. 

The funding required for the non-union COLA and health insurance contributions are included in the 2014 preliminary budget and will be covered in detail as they related to the 2014 budget discussion this evening.

Colleen Lasher, Human Resources manager

Agreement on a contribution for health insurance for all employees, and a wage adjustment for non-union employees.  Discuss market comparisons.