HomeMy WebLinkAbout33-06 RESOLUTIONy.
RESOLUTION NO. 33-06
A RESOLUTION TO APPROVE A COST OF LIVING
ADJUSTMENT IN THE 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
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 •
3.5% Cost of Living Adjustment for all employees retroactive to January 2, 2006 and approves
the implementation of normal step and merit raises throughout 2006.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves
the attached budget adjustment in the amount of $439,753.00.
PASSED and APPROVED this 28th day of February 2006.
APPROV
By:
D:
I#1
7
N COODY, Mayor
di
ATTEST:
By: 4O�4Sd Iyux�&
SONDRA SMITH,��'iitty Clerk
.U • 6,73.16,73.1.•.
;FAYETTEVILLE: 3
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City of Fayetteville, Arkansas
Budget Adjustment Form
Budget Year
2006
Department: General Government
Division: Miscellaneous
Program: Miscellaneous
Date Requested
2/13/2006
Adjustment Number
Project or Item Added/Increased:
$687,658 is requested in the Salary Contingency account
in General Fund.
Project or Item Deleted/Reduced:
None. $687,658 from the Use of Fund Balance account.
Justification of this Increase:
The additional funding is needed for the 2006 Pay plan
increase of 7.1%.
•
Justification of this Decrease:
There is currently sufficient funding remaining in General
Fund to meet City policy and 2006 objectives.
Increase Expense Budget (Decrease Revenue Budget)
Account Name Account Number Amount Project Number
Salary contingency
Account Name
1010 6600 5100 01 687,658
Decrease Expense Budget (Increase Revenue Budget)
Account Number Amount
Use of fund balance
1010 0001 4999 99 687,658
Project Number
Approval Signatures
Requested By - Date
Budget Manager Date
Department Director Date
Irr�� 2 -/ 3-o6
mance & n
Mayor
ern._Servi -sDirector
Date
36
Date
Type:
Budget Office Use Only
B C
Posted to General Ledger
Posted to Project Accounting
Entered in Category Log
Initial Date
Initial Date
Initial Date
Stephen Davis
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
22 -Feb -06
City Council Meeting Date
FIS Director
Division
Action Required:
Finance & Internal Services
Department
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
Cost of this request
Account Number
Project Number
Budgeted Item
1,770,461.00
Category/Project Budget
Funds Used to Date
1,770,461.00
Remaining Balance
Budget Adjustment Attached
XX
Personnel Services
Program Category / Project Name
Program / Project Category Name
All Operating Funds
Fund Name
Fina ce and Internal Service Director
avy, Lata,
Date
21/6 /b
2 -iti6
Date
2/ 746
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Received in City Clerk's Office
Received in Mayor's Office
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.
Wei lie e -*the, — 4p. 474 A/f8/O
a e evi 1e
Y ARKANSAS
Departmental Correspondence
Finance & Internal Services Department
113 West Mountain
Fayetteville, AR 72701
Telephone: (479) 575-8330
Fax: (479) 575-8257
City Council Meeting February 21, 2006
TO: Fayetteville City
THRU: Dan Coody, Ma
FROM:
DATE: February 11, 2006
r
Stephen Davis, Finance & Internal Services Directo4]::,
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.
Background
City Council requested Staff select by competitive procurement process a compensation
consultant for the salary and benefit survey for 2006. Because of events extemal 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
•
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.
•
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.
PASSED and APPROVED this 7th day of March, 2006
APPROVED:
DAN dOiDDY, Mayor
SOIVDRA SMITH, City Clerk
FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
TO:
THROUGH:
FROM:
DATE:
Subject:
Fayetteville City ' ouncil
Dan Coody,
Stephen Davis, Finance & Inte .1 S-rvices Director
February 13, 2006
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
General Employees, except Executive
Executive Employees
Police and Fire (Uniformed)
Market
Establish pay ranges that are consistent with the
"local" market
Establish compensation ranges with comparable
"regional" cities
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
2001 when the Uniformed personnel raised questions
concerning the accuracy of the survey results. As a
result the City Council authorized additional study by
the Hay Group and the Mayor created an Oversight
Committee comprised of representatives of all
employee groups with the Hay Group providing
technical guidance. During this subsequent study
(2002 Survey) of the City's survey and methods a
decision was made to change the group of cities
surveyed to more closely align with Fayetteville, i.e. a
With the biennial surveys until 2002, the
market surveyed for comparison to the City of
Fayetteville was local in nature. This meant
that there was no need for regional modifiers
to adjust for differences in the costs of living,
i.e. wage rates in New York California, Texas,
West Virginia, Iowa, etc. are different based
upon the cost of living in those areas. There
are acceptable modifiers which relate costs of
living and wages to a national baseline which
can then be used to compare different
geographical areas.
•
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 from 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
between 49,000 and 91,000. A total of 23 cities
participated in the 2005 survey; 9 (39%) cities in the
survey group participated in the 2002 or the 2003 survey;
61% were new for the 2005 survey.
There is no doubt that during the late 1990's and early
2000's that the City of Fayetteville was beginning to
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 of growth 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
Again no regional modifiers were used to
adjust for regional cost of living
differences. No evaluation was performed
which may have raised or lowered the
results. Neither the Hay Group nor our
most recent consultant, Condrey and
Associates brought forward the issue of
regional cost of living issues.
between 49,000 and 91,000. A total of 23 cities
participated in the 2005 survey; 9 (39%) cities in the
survey group participated in the 2002 or the 2003 survey;
61% were new for the 2005 survey.
There is no doubt that during the late 1990's and early
2000's that the City of Fayetteville was beginning to
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 of growth 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
•
•
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 Man, 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.
•
•
•
•
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• CUUR000SAO
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
Lis
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 turn -over rates (quits only) nationwide between 2002 and 2005 have averaged 8.98%
12 Months Percent Change
Series It JT000000000QUR (4,9)
Not seasonally adjusted
Industry: Total nonfarm
Regiorc Total US
Data Element Quits
Rate/Levet Rate
Year
2001
2002 w-21::1
2003 0
014 ' "6`7'
21.4
-111.8
-6.7
x0
7.1
.-16:7
-6.7
.414'3
6.3
f 10:5
-11.8
raa13 3
5.9
18:2
r.attr-10
13012.5
"a-136
man -7 4
w-13;6
sr -.11'1
(cr'H6.7
'ra!&'6:7
-147.4
147.4
12.28333
-5.6
ual•1.8
5.3
-10.5
riir17,'.6
0
-16
ii 4;1'4.3
12.5
4 : The quits rate is the number of quits as a percent of total employment
9 : These estimates are not seasonally adjusted
p : preliminary
0
innitil 5 3
20
6.3
11.8
0
0.14.3
6.3(p)
0
!:1+1¢1473
-62.1
111
101.4
62,1
111
101.4
• 5175
9.25
:9.218182
2.9
421.9
•8.981629
{BLS, 12month %Change- Series ID JTU00000000QUR(4,9)} and for 2005 alone was 9.22%.
tv
The City of Fayetteville turnover, (quits only) has averaged as indicated in the table below:
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
1 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.
Police
Fire
General
, � i999 1
3.4 ' 111
4.79
2000
7.22
2.38
22.66
2001
2.00
4.60
24.40
�2002IAi
°
3.45_"
1.94
J
15:24
11.49
j
2003
3.85
20041
6.67Ti
3.48
3.06
`-
10
2005
0.99
10.80
Excludes Directors and Chiefs
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
1 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.
0
http://www.dol.gov/
http://www.dol.gov/
U.S. Department of Labor
Bureau of Labor Statistics
Bureau of Labor Statistics Data
CUUR0000SA0
Data extracted on: February 13, 2006 (5:36:35 PM)
Consumer Price Index - All Urban Consumers
Senes Id: CUUR0000SA0
Not Seasonally Adjusted
Area: U.S. city average
Item: All items
Base Penod: 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%
Clarice Pearman - Res. 33-06 Page 1
From: Clarice Pearman
To: Davis, Steve
Subject: Res. 33-06
Steve,
Attached is a copy of the above resolution passed by City Council, February 27, 2006. I will forward to
Budget & Research the original budget adjustment via interoffice mail.
Thanks.
Clarice
CC: Bell, Peggy; Deaton, Vicki
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