Item 8C AGENDA ITEM # 8C
SEPTEMBER 13, 2010
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Employee Pay Adjustments
SUBMITTED BY: George Foster, Human Resource Manager
DATE: September 7, 2010
BACKGROUND: During the budget workshop, the City Commission requested that,
based upon the June CPI, 1.1% be added to the budget for employee pay adjustments. There are
at least three ways that this can be accomplished with each having advantages and/or
disadvantages as follows:
1. Merit Pay Adjustment. Merit pay adjustments are provided based upon performance.
PRO: Employees are normally hired at the starting pay for a job which has been
established below the "fully qualified" pay level. Merit pay adjustments should be
provided to employee based upon performance as they become more effective and
efficient until they reach the maximum pay established for their job. The last merit pay
adjustment was provided to our employees in October 2008.
CON: Based upon comments of the Commissioners at the budget workshop, it is believed
that this was not the intent of the Commissioners. Merit pay adjustments increase
employee base pay and commit the City to increases in future budgets for pay and/or
benefits; therefore, if future revenues are uncertain, this option increases the future
employee cost to the City. Merit pay increases are not provided to employees who have
reached the maximum pay established for their job and, based upon City policy, not
provided to employees with less than six months of service. Therefore, a merit pay
increase would not be provided to all employees.
2. Cost of Living Adjustment (COLA). A COLA is a pay adjustment provided to maintain
purchasing ability as adjusted for the cost of living. COLAs are separate from Merit Pay
adjustments.
PRO: A COLA is a method to allow employees to maintain their purchasing power and,
theoretically, keeps them "level" in terms of their finances.
CON: If a COLA is provided, the past practice of the City has been to provide such to all
employees and to increase the pay ranges for the City's pay plan. COLAs increase
employee pay, the pay scale and commit the City to increases in future budgets for pay
and/or benefits; therefore, if future revenues are uncertain, this option increases the future
employee cost to the City.
AGENDA ITEM # 8C
SEPTEMBER 13, 2010
3. Bonus. A onetime pay adjustment that would be provided to employees without
increasing their "base" pay.
PRO: If a bonus is provided, it could be a "lump sum" or a periodic payment and
included/excluded from an employee's pension calculation. Eligibility could be established
so only employees with a set amount of service, say 6 months or more, would receive a
bonus.
CON: Unless later added to an employee's base pay, this would only be a temporary pay
adjustment.
ISSUES: If a bonus is provided, the issues that would need to be decided are: when to
provide, how to provide (lump sum or in periodic payments), who would receive (all
employees, based upon length of service, seasonal employees, temporary, part time, etc.)
and would the bonus be included, or excluded, for pension benefit calculations.
In each of the above situations, it has been the City's policy that an employee must have a
satisfactory performance evaluation in order to receive a pay adjustment. Additionally, any pay
adjustments being considered for Union employees must be negotiated with and agreed to by the
union.
Separate pay decisions need to be made as pertains to the City Manager, City Clerk, and City
Commission. Both the City Manager and City Clerk are appointed officials with their pay
adjusted by the City Commission.
Additionally, Section 2 -20 of the City Code states that effective August lat of each year the salary
of the mayor - commissioner and city commissioners shall be reviewed and adjusted by the
Consumer Price Index for All Urban Consumers (CPI -U) released in August. Adjustments, if any,
shall not exceed the cost of living adjustment provided to general employees and shall be effective
on October 1 of each year. As of this date, the August CPI has not been released.
FUNDING: Funds for a 1.1% employee pay adjustment are included within the City budget.
RECOMMENDATION: That Commission considers options and advise.
CITY MANAGER:
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