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Home My WebLink About2006-02-28 - Agendas - Final Aldermen Ward I Position I - Robert Reynolds Mayor Dan Coodye;l Ward I Position 2 - Brenda Thiel Tayve Ward 2 Position I - Kyle B. Cook City Attorney Kit Williams Ward 2 Position 2 - Don Marr Ward 3 Position 1 - Robert K Rhoads City Clerk Sondra Smith Ward 3 Position 2 — Robert Ferrell ARKANSAS Ward 4 Position I - Shirley Lucas Ward 4 Position 2 - Lioneld Jordan Final Agenda Special City Council Meeting February 28, 2006 A Special meeting of the Fayetteville City Council will be held on February 28, 2006 at 6:00 PM in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Call to Order Roll Call Pledge of Allegiance A. New Business: 1. Cost of Living Adjustment: A resolution approving a 7. 1 % Cost-of-Living adjustment for all City employees effective January 2, 2006; suspending merit and step increases for 2006; and approving a budget adjustment for General Fund in the amount of $687,658.00 from Undesignated Fund Balance. No vote was taken on this item at the February 22, 2006 City Council meeting. RESOLUTION WAS AMENDED, PASSED AND SMALL BE RECORDED AS RESOLUTION NO. 33-06, Meeting adjourned at 7:35 p.m. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org 4� T T)onJ M �-n , • City Council Meeting February 21106 8 �' Subject: Lta 7`3 Motion To: Motion By: Seconded: Reynolds Thiel Cook Marr ✓ Rhoads `1 Ferrell Lucas / Jordan s/ Mayor Coody Subject: p Motion To: SCoLA P" 1 d / sm Mwa L13 S Motion By: � Seconded: Reynolds ff Thiel r/ Cook �j�,'A, ✓ "' � Marr r/ �f Rhoads Ferrell f/ Lucas Jordan Mayor Coody �� D Aldermen Ward I Position I - Robert Reynolds Mayor Dan Coody Ward I Position 2 - Brenda Thiel Cit Allomc Kit Williams Ward 2 Position 1 - Kyle B. Cook Y Y Ward 2 Position 2 - Don Marr Cit Clerk Sondra SmithTayvee;lile Ward 3 Position 1 - Robert K. Rhoads Y Ward 3 Position 2 — Robert Ferrell ARKANSAS Ward 4 Position I - Shirley Lucas Ward 4 Position 2 - Lioneld Jordan Final Agenda Special City Council Meeting February 28, 2006 A Special meeting of the Fayetteville City Council will be held on February 28, 2006 at 6:00 PM in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Call to Order Roll Call Pledge of Allegiance A. New Business: 1 . Cost of Living Adjustment: A resolution approving a 7. 1 % Cost-of-Living adjustment for all City employees effective January 2, 2006; suspending merit and step increases for 2006; and approving a budget adjustment for General Fund in the amount of $687,658.00 from Undesignated Fund Balance. No vote was taken on this item at the February 22, 2006 City Council meeting. 113 West Mountain 72701 (479) 521 -7700 (479) 575-8257 (Fax) accessfayettcviIIe.org FAYETTEVrIL 'E 1w THE CITY OF FAYETTEVIIEE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WRITAKER, ASST. CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGALDEPARTMENT TO: Dan Coody, Mayor THRU: Sondra Smith, City Clerk FROM: Kit Williams, City Attorney �C DATE : March 1 , 2006 RE: Passed Resolution from Special City Council meeting of February 289 2006 1. Cost of Living Adjustment & Merit/Step Raises: Resolution approving Cost of Living Adjustment in amount of 3 .5% for all employees retroactive to January 2, 2006 to implement normal step and merit raises, and to approve a budget adjustment of $439,753 .00. 2004 2005 Merit Raises 7 .60% 6 .63% Police 2004 2005 Captains 3 . 05% 5 . 83% Lieutenants 5 . 02 % 4.45% Sergeants 4 . 27% 3. 85% Corporal/Officer 6 . 86% 6. 10% Fire 2004 2005 Firefighter 4. 55% 4. 82% Driver 4 .42% 3. 61 % Captain 5. 70% 3. 11 % BC 5. 03% 2 . 95% Total 4. 93% 3. 62% A.1 . City of Fayetteville Cost of Living AAdjustment Page Staff Review Form City Council Agenda Items or Contracts 22-Feb-06 City Council Meeting Date Stephen Davis FIS Director Finance & Internal Services Submitted By Division Department Action Required: approval of a resolution approving a 7.1 % cost-of-living adjustment for all employees effective January 2, 2006, authorize no step or merit increase for 2006 and approve a budget adjustment in General Fund in the amount of $687,658.00 from Undesignated Fund Balance. This proposal is the temporary suspension of merit and step increases (for 2006 only) until a new compensation plan is implemented. $2,458,119.00 $ 1 ,770,461 .00 Personnel Services Cost of this request Category/Project Budget Program Category / Project Name Account Number Funds Used to Date Program / Project CategoryName $ 19770,461 .00 All Operating Funds Project Number Remaining Balance Fund Name Budgeted Item Budget Adjustment Attached Previous Ordinance or Resolution # D artm nt Direc or Date Original Contract Date: p Original Contract Number: z /D !M Received in City Clerk's Office 42 2 aL .o6 Fina ce and Inter al Service Director Date Received in Mayor's Office 211714 C Date Comments: This proposal is a 2006 solution only - Staff is proposing a complete re-evaluation of the City's Compensation Plan to address long-term issues. Please refer to corollary memoranda for additional information. Finance & Internal Services Department A.I . 113 W4*ttltldtnit *diustment aye eve Fayetteville, AR 2 of 72 Telephone: (479) 575-8330-8330 ARKANSAS Fax (479) 575-8257 City Council Meeting February 21 , 2006 Departmental Correspondence - TO: Fayetteville City C65uncil THRU: Dan Coody, Ma �A� FROM: Stephen Davis, Finance & Internal Services Dire cto DATE: February 11 , 2006 SUBJECT: 2005 Pay Plan Survey and Compensation Adjustment Recommendation Recommendation Staff recommends a cost-of-living pay adjustment of 7. 1 % for all City employees effective for payrolls beginning January 2, 2006, adjustment of all pay ranges to reflect this 7. 1 % increase and approval of a budget amendment for General Fund of $687,658. No additional step or merit increase will be implemented in 2006. Staff further recommends City Council neither considers nor adopts the 2005 salary and benefit survey conducted by Condrey & Associates. Back-round City Council requested Staff select by competitive procurement process a compensation consultant for the salary and benefit survey for 2006. Because of events external to the salary and benefit survey process, I opted to request a bid waiver in August 2005 for the City to continue to utilize Hay Group for the survey work. At the City Council meeting where the Hay Group agreement was considered, I accepted responsibility for the item being on Council's agenda and committed to obtain the survey services by competitive process. This process was completed and Condrey Associates was selected. The work product from Condrey was delivered too late for use by the City in developing the 2006 Annual Budget. After further review of the work product it was determined the results were not usable. Four significant questions arose on the survey results: 1 . Job match procedure; 2. No geographic adjustment to Fayetteville; 3. Cost of labor versus cost of living; and, . 4. Significant influx of new cities in the survey. • Discussion A.1 . Cost of living Adjustment Page 3 of 12 It is Staffs recommendation that City Council approve a contract with a compensation consultant to completely rework the City of Fayetteville compensation program. This request is submitted because the City's compensation philosophy and policies have not been articulated or documented for the benefit of policy makers and employees since at least 1989. - The compensation philosophy will need to address a number of items including: ❑ Is the City of Fayetteville's labor market the same for all positions? ❑ What is the purpose of the biennial salary and benefits survey? ❑ Should the City only consider hourly/weekly wages as the guide for proposed adjustments? ❑ Should City participation in health benefits be a consideration? ❑ Should increases in pension expense be a consideration? ❑ Should the survey results examine cost of labor or cost of living? ❑ Should the survey results be adjusted for geographic differences? ❑ Should voluntary turnover impact the recommendation? ❑ Should job applicant waiting list and time necessary to fill certain positions be considered? Because the City does not have a definable Compensation Policy, Staff cannot tell if the City is paying at market, above market or below market. The condition has existed for several years being generally noted in 1989 in the Hay Group study performed for the City that year (for additional information please see the attached memo).a number of years. Approval of an agreement with a compensation consultant by mid-2nd quarter 2006 will provide the City with the best option to correct this issue for 2007 and beyond. Additionally, the current pay plan needs to at least maintain our competitive position. By providing a 7. 1 % CPI adjustment the employee morale and purchasing power will be maintained relative to 2003. Budget Impact The cost of implementing this request can be funded within all funds except General Fund. A budget adjustment of $687,658 is necessary to fully fund this proposal. The source of the funds is as follows: $120,338 of previously undesignated revenue for 2006 and a use of reserves of $567,320. A.I . Cost of Living Adjustment Page 4 of 12 RESOLUTION NO. A RESOLUTION APPROVING A 7.1 % COST-OF-LIVING ADJUSTMENT FOR ALL CITY EMPLOYEES EFFECTIVE JANUARY 2, 2006; SUSPENDING MERIT AND STEP INCREASES FOR 2006; AND APPROVING A BUDGET ADJUSTMENT FOR GENERAL FUND IN THE AMOUNT OF $687,658.00 FROM UNDESIGNATED FUND BALANCE. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves a 7.1 % cost-of-living adjustment for all city employees effective January 2, 2006. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby suspends Merit and Step increases for 2006. Section 3. That the City Council of the City of Fayetteville, Arkansas hereby approves a Budget Adjustment for General Fund in the amount of $687,658.00 from Undesignated Fund Balance. tT y .Yt"� PASSED and APPROVED this 7th day of March, 2006. APPRO k I.' Fd w DAN DY, Mayq ATTEST: ' By: RA SMITH, City Clerk • City of Fayetteville, Arkansas • Budget Adjustment Form A.1 . t Budget Year Department: General Government Date Requested Adjustment Num��r ° 2 2006 Division: Miscellaneous 2/13/2006 Program: Miscellaneous Project or Item Added/Increased: Project or Item Deleted/Reduced: $687,658 is requested in the Salary Contingency account None. $687,658 from the Use 9f Fund Balance account. in General Fund. Justification of this Increase: Justification of this Decrease: The additional funding is needed for the 2006 Pay plan There is currently sufficient funding remaining in General increase of 7.1 %. Fund to meet City policy and 2006 objectives. Increase Expense Budget (Decrease Revenue Budget) Account Name Account Number Amount Project Number Salary contingency 1010 6600 5100 01 6870658 Decrease Expense Budget (Increase Revenue Budget) Account Name . . Account Number Amount Project Number Use of fund balance 1010 0001 4999 99 687,656 Approval Signatures Budget Office Use.Only _ Type: A B C C E Req�uestedBy Date / - - " Budget Manager Date Posted to General Ledger Initial Date Department Director Date Posted to Project Accounting Initial Date mance & MTErnal Services Director Date Entered in Category Log Initial Date Mayor - Date A.1 . FAYET I'EVILLE CosfofLivngage6of12 Page 6 of 12 THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE TO: Fayetteville City until THROUGH: Dan Coody, FROM: Stephen Davis, Finance & Int 1 S rvices Director DATE: February 13, 2006 �/ " Subject: Fayetteville Pay Plan — Additional Background and Detail In 1986, the Fayetteville Board of Directors contracted with PARA, Inc. to conduct a Classification and Compensation Study. The City implemented numerous changes as a result of the 1986 report. In 1989, the City contracted with the Hay Group to conduct a pay plan study and provide tools for Staff to begin an internal pay classification program. The Hay Group recommendations included the establishment of a process to maintain adequate compensation for all employee groups. This essentially defined the survey methods which were in place until 2002. These methods were: Employee Group Market General Employees, except Executive Establish pay ranges that are consistent with the "local" market Executive Employees Establish compensation ranges with comparable "regional" cities Police and Fire (Uniformed) Establish compensation for comparable public safety jobs which are competitive with the average of 8 Arkansas cities and 21 "regional" cities This proposal was adopted as policy on March 20, 1990 by Resolution Number 42-90. The City continued with the biennial compensation surveys, conducted in odd numbered years and adjusted pay in close adherence to this policy until With the biennial surveys until 2002, the 2001 when the Uniformed personnel raised questions market surveyed for comparison to the City of concerning the accuracy of.the survey results. As a Fayetteville was local in nature. This meant result the City Council authorized additional study by that there was no need for regional modifiers the Hay Group and the Mayor created an Oversight to adjust for differences in the costs of living, Committee comprised of representatives of all i.e. wage rates in New York, California, Texas, employee groups with the Hay Group providing West Virginia, Iowa, etc. are different based technical guidance. During this subsequent study upon the cost of living in those areas. There (2002 Survey) of the City's survey and methods a are acceptable modifiers which relate costs of decision was made to change the group of cities living and wages to a national baseline which surveyed to more closely align with Fayetteville, i.e. a can then be used to compare different geographical areas. A.I . Cost of Living Adjustment Page 7 of 12 university city, above average growth, etc. This expanded list of survey cities reached into a multi- state area. The survey results were not adjusted to account for regional cost of living differences. Adjustments were made to the Uniformed pay ranges based upon the 2002 Survey results. Following this adjustment to the pay plan, the Oversight Committee was reconstituted into a smaller Wage and Benefit Committee (with all employee groups represented). On 1 -3-2003 this Wage and Benefit Committee proposed an amendment to the City's Compensation Policy to add "The Mayor's recommendation to the Council shall set the proposed pay range mid-points at 100% of the surveyed market average." On 2-10-2003 Mayor Coody issued a Policy Statement, The Mayor 's budget recommendation regarding proposed pay ranges for city employees shall be accompanied by the results of the market survey with full disclosure of midpoint compensations identified by the benchmark employer survey. The budget recommendation shall clearly delineate any deviations f rom this number that are mandated by budget considerations. " The 2005 Salary and Benefit Survey was initiated in early October and a preliminary report was delivered on 12-9-2005. The 2005 survey further refined the survey cities to those that meet the previous guidelines but also had populations that were Again no regional modifiers were used to between 49,000 and 91 ,000. A total of 23 cities adjust for regional cost of living participated in the 2005 survey; 9 (39%) cities in the differences. No evaluation was performed survey group participated in the 2002 or the 2003 survey; which may have raised or lowered the 61 % were new for the 2005 survey. results. Neither the Hay Group nor our most recent consultant, Condrey and There is no doubt that during the late 1990's and early Associates brought forward the issue of 2000's that the City of Fayetteville was beginning to regional cost of living issues. change from a town into a city. The issues brought forward by the employee groups reflected this change and the City Council responded favorably. This transition began though in the mid to late 1980's as indicated in the recommendations from the earlier compensation studies. From the PARA Report in 1986: In general, we would characterize the City of Fayetteville municipal organization as an organization in transition. The City and municipal government have experienced a great deal ofgrowth during the last 15-20 years, and that growth had a great impact on both the City and the municipal organization. From the Hay Group in 1989 Substantial changes have occurred in the City in the last five years, including a comprehensive reorganization. City services have expanded, departments have reorganized, program emphasis has changed, and positions have restructured without corresponding changes in the formal classification and compensation systems since they were reviewed in 1986. However, it is apparent that the Hay Group since 2001 and Condrey and Associates this past year did not bring forward relevant issues concerning the compensation survey and reporting practices and A.A . Cost of Living djustment Page 8 of 12 methods. The lack of this "regional difference" not being addressed may have impacted Pay Plan Adjustments since 2001 . With this context, brought forward by questions to Condrey and Associates by Councilperson Marr, and the perhaps significant impact of the methodology used by the Hay Group from 2001 though 2004 and Condrey and Associates used on 2005, it is clear that more survey data, more analysis of the data, and a clearly articulated Council approved compensation policy is necessary before significant adjustments are made to the City's Play Plan and Compensation Practices. Issues that should be addressed before significant changes are: 1 . What is our comparison market? a. Is that market different for various positions? For example: Who are we competing with • for CDL Vehicle Operators • for Maintenance Workers • for Accounts • for Secretaries • for Planners • for Engineers • for Firemen • for Policemen • for a Parks Director • for a Planning Director • for a Fire Chief b. The market competition must be determined for each unique group of employees. Once that market is determined, then the market can be surveyed. Not understanding the market can result in some positions being over-compensated and others being under-compensated. 2. What is the City of Fayetteville's policy to address regional differences in cost of living and cost of labor? Not understanding these differences may result in the entire pay plan under- compensating or over-compensating the entire work force. 3. City employees are permitted to live anywhere within the area and are not required to reside within the Fayetteville City Limits. This policy affects the cost of living and the cost of labor and should be considered. Immediate Concern Based upon the issues that should have been addressed during the past 15 years by various HR consultants the validity of the most recent survey is in question and should not be implemented. The Employee Wage and Benefit Committee has participated in the review of the most recent Pay and Compensation Survey by Condrey and Associates. A.I . Cost of Living Adjustment Page 9 of 12 The City Council by its actions since 1990, following the guidance of Resolution 42-90, has created the appearance to the various employee groups that biennial pay plan adjustments are automatic. As a result the employee morale and resulting productivity is and issue to consider with any action concerning the pay plan. — The Cost of Living Index (BLS, U. S. City Average, All Items, NSA) increased by 7. 1 % from November 2003 to November 2005. BLS Series ID: CUUROOOSAO 12 Months Percent Change — Not Seasonally Adjusted November 2003 to November 2004 3 .5% November 2004 to November 2005 3.5% Compound Effect of the 2003-2004 Change 0. 1% Total % Change Historically, the General Government Employees have received pay adjustments on their employment anniversary and then as a percentage based upon the individual's placement within their positions pay range based upon their work performance evaluation. Simply put, the lower the individual is in their pay range the greater their annual pay adjustment. This results in fairly new employees receiving significant pay adjustments, while high performing experienced workers' pay may not maintain pace with inflation. Historically, the Uniformed Employees have received have received a pay plan adjustment on January land then a fixed step increase on their anniversary. This January 1 adjustment has allowed the Uniformed Employee pay to maintain equity with what has been assumed to be the prevailing competitive wage and the cost of living. The employee tum-over rates (quits only) nationwide between 2002 and 2005 have averaged 8.98% 12 Months Percent Change - Sodas let JTUOOOOOOOOQUR (4,8) Not seasonally adjusted Irdustn! Total nonfarm Regent Total US Data Element Quits RatisLowet Rata s s 11 .8 s s - -147.4 . 147.4 12.28333 s -6. -6.7 -11.8 -11.1 -5. -10.5 -16 0 6.3 0 -62.1 - 62:1 ' 5.175 to k`i3 . . - _ . .. 111 ill 9.25 ,121 2 1 21. 7.1 6.3 5.9 11.1 S. 12.5 20 11 .86.3 _ 4 : The quits rate is Ute number of quits es a percent of total employment 9 : These estimates are not seasonally adjusted 2.9 421 .8 r 0,001620 preliminary (BLS, 12month %Change- Series ID JTUOOOOOOOOQUR(4,9)) and for 2005 alone was 9.22%. A.I . Cost of Living Adjustment Page 10 of 12 The City of Fayetteville turnover, (quits only) has averaged as indicated in the table below: Police Fire General 2000 7.22 2.38 22.66 2001 2.00 4.60 24.40 F 3.85 1 .94 11 .49 3 .48 0.99 10.80 irectors and Chlefs The data presented above would seem to indicate that since 2002 our retention rate for Police and Fire Uniformed employees is well superior to the national average for all and that our retention of general employees is improving. This would seem to indicate that our pay practices for Uniformed employees is at a minimum comparable to or superior to the regional market. This would also seem to indicate that major improvements in General Employee retention has occurred since 1999 when the voluntary turnoff rate was 34.79%, the 2005 quit rate of 10.80% is still above the national average for all employees and would seem to indicate a need to focus on the retention of that group of employees. Summary The City's past pay and compensation practices may have been flawed but they have improved retention and the worker productivity and work quality among all employee groups. Retention of the Uniformed employees is above the national average. Past practices have created an expectation among all employee groups. Recommendations I . In March 2006 retain adequate HR consultant to review and recommend changes to our Pay, Compensation, and Classification System and to lead the City Council through the development and adoption of a Program and Policy which can guide the City for the next several years. This Program and Policy should be complete by October 15, 2006. 2. Implement an across the board cost of living pay range adjustment of 7. 10% effective on the employee anniversary. Merit and step increases will not be granted for 2006. 3. New hires starting salary will be based on the pay ranges as adjusted by the cost of living adjustment. A.1 . Cost of Living Adjustment Page 11 of 12 - Budget Impact The anticipated study cost is $80,000. The Pay Plan adjustments and merit saving cost is discussed in a separate memo from Stephen Davis. A.1 . Cost of Living Adjustment Page 12 of 12 U.S. Department of Labor Bureau of Labor Statistics htto://www.dol.gov/ Bureau of Labor Statistics Data hM://www.dol.gov/ Lx FRFIoosAO Data extracted on: February 13, 2006 (5 :36:35 PM) Consumer Price Index - All Urban Consumers Series Id: CUUROOOOSAO Not Seasonally Adjusted Area: U.S. city average Item: All items Base Period: 1982-84=100 Year Nov % Change from 2003 to 2005 1995 153.6 1996 158.6 1997 161 .5 1998 164.0 1999 168.3 2000 174. 1 2001 177.4 2002 181 .3 2003 184.5 2004 191 .0 2005 197.6 (197.6-184.5)/184.5= 7.1 %