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Item 8D CITY OF ATLANTIC BEACH ~' ~ CITY COMMISSIONER MEETING STAFF REPORT AGEND ITEM: Mayor and City Commission Pay Adjustments SUBMITTED BY: George Foster, Human Resource Manager 0 DATE: January 3, 2006 AGENDA ITEM #8D JANUARY 9, 2006 BACKGROUND: In October 2002, Section 2-20 of the City Code (attached) was changed to require annual reviews and adjustment of the Mayor's and Commissioners' salary starting in November 2003 and in October thereafter. Based upon Section 2-20 of the City Code, the salary of the Mayor and Commissoners has been adjusted as follows: EFFECTIVE MAYOR COMMISSIONER 10/OS $ 10,772 $ 6,556 ,~, 10/04 $ 10,464 $ 6,365 11/03 $ 10,159 $ 6,180 09/00 $ 10,000 $ 6,000 ,~„ 1993 $ 5,000 $ 2,500 Section 2-20 of the City Code requires that salary be adjusted using the "same cities" as included within the prior year's survey. As participation within these surveys is on a voluntary basis, the number of "same cities" is becoming increasingly small and, in my opinion, may no longer be statistically valid. BUDGET: Funds are not required for this action until next fiscal year. ATTACHMENTS: 1. Section 2-20 of the City Code 2. CPI-U information RECOMMENDATION: Have staff prepare a change to current City Code, effective October 1, 2006, that will annually, in October of each year, adjust the salary of the Mayor and City Commissioners using the June CPI-U for the South Region area for the previous 12 month period. The CPI-U represents the buying habits of about 87% of all urban consumers within the total U.S. population. Pay increases for the Mayor and Commissioners would be limited to the lessor of the CPI-U or to the cost of living adjustment provided to City general employees. "" CITY MANAGE AGENDA ITEM #8D JANUARY 9, 2000 ~. MAYOR AND CITY COMMISSIONER PAY ADJUSTMENTS BACKGROUND: In October 2002, Section 2-20 of the City Code was changed to require annual reviews of Commissioner salary. Section 2-20 of the City Code states that: ,~. Effective August 1 of each year, the basic salary of the mayor and commissioners shall be reviewed and adjusted to the average salary reflected in the Florida League of Cities Cooperative Salary Survey, ~. Group II, for cities often thousand (10,000) to forty-nine thousand, nine hundred ninety-nine (49,999) population, adjusted to delete full time positions and compare only the same cities as included within the prior year's survey. Adjustments, if any, shall not exceed the cost of living adjustment provided to general employees, and shall be effective on November 1 in the year 2003, and on October 1 of each year thereafter. Pay adjustments for the Mayor and Commissioners have been as follows: EFFECTIVE MAYOR COMMISSIONER 10/OS 10,772 6,556 10/04 10,464 6,365 11/03 10,159 b,180 09/00 10,000 6,000 1993 5,000 2,500 ~. ~. +~. AGENDA ITEM #8D JANUARY 9, 2006 CONSUMER PRICE INDEX (Reference: www.bls.gov~ The Consumer Price Index (CPI) is a measure of the average change in prices over time of goods and services purchased by households. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers ~" households of wage earners and clerical workers that comprise approximately 32 percent of the total population and '""' (2) the CPI for All Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI- U), which cover approximately 87 percent of the total population and include in addition to wage earners and clerical worker households, groups such as professional, managerial, and technical workers, the self- employed, short-term workers, the unemployed, and retirees and others not in the labor force. The CPIs are based on prices of food, clothing, shelter, and fuels, transportation fares, charges for doctors' and dentists' services, drugs, and other goods and services that people buy for day-to- day living. Prices are collected in 87 urban areas across the country from about 50,000 housing units and approximately 23,000 retail establishments -department stores, supermarkets, hospitals, filling stations, and other types of stores and service establishments. All taxes directly ,~,, associated with the purchase and use of items are included in the index. Prices of fuels and a few other items are obtained every month in all 871ocations. Prices of most other commodities and services are collected every month in the three largest geographic areas and every other month in ~,,, other areas. Prices of most goods and services are obtained by personal visits or telephone calls of the Bureau's trained representatives. ~„ In calculating the index, price changes for the various items in each location are averaged together with weights, which represent their importance in the spending of the appropriate population group. Local data are then combined to obtain a U. S. city average. For the CPI-U and CPI-W separate indexes are also published by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for 271oca1 areas. Area indexes do not measure differences in the level of prices among cities; they only measure the average change in prices for each area since the base period. For the C-CPI-U data are issued only at the national level. It is important to note that the CPI-U and CPI-W are considered final when released, but the C-CPl-U is issued in preliminary form and subject to two annual revisions. The index measures price change from a designed reference date. For the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The reference base for the C-CPI-U is December ~* 1999 equals 100. An increase of 16.5 percent from the reference base, for example, is shown as 116.5. This change can also be expressed in dollars as follows: the price of a base period market basket of goods and services in the CPI has risen from $10 in 1982-84 to $11.65. AGENDA ITEM #SD JANUARY 9, 2006 Regions Defined The states in the four regions shown in Tables 3 and 6 are listed below. The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York, New Jersey, Pennsylvania, Rhode Island, and Vermont. The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. !*' The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia. The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. A Note on Seasonally Adjusted and Unadjusted Data '~' Because price data are used for different purposes by different groups, the Bureau of Labor Statistics publishes seasonally adjusted as well as unadjusted changes each month. ~`" For analyzing general price trends in the economy, seasonally adjusted changes are usually preferred since they eliminate the effect of changes that normally occur at the same time and in about the same magnitude every year -such as price movements resulting from changing '~ climatic conditions, production cycles, model changeovers, holidays, and sales. The unadjusted data are of primary interest to consumers concerned about the prices they actually pay. Unadjusted data also are used extensively for escalation purposes. Many collective bargaining contract agreements and pension plans, for example, tie compensation changes to the Consumer Price Index unadjusted for seasonal variation. Seasonal factors used in computing the seasonally adjusted indexes are derived by the X-12- ARIMA Seasonal Adjustment Method. Seasonally adjusted indexes and seasonal factors are computed annually. Each year, the last 5 years of seasonally adjusted data are revised. Data from January 2000 through December 2004 were replaced in January 2005. Exceptions to the usual revision schedule were: the updated seasonal data at the end of 1977 replaced data from 1967 through 1977; and, in January 2002, dependently seasonally adjusted series were revised for January 1987-December 2001 as a result of a change in the aggregation weights for ~~ dependently adjusted series. For further information, please see Aggregation of Dependently Adjusted Seasonally Adjusted Series," in the October 2001 issue of the CPI Detailed Report. The seasonal movement of All items and 54 other aggregations is derived by combining the seasonal movement of 73 selected components. Each year the seasonal status of every series is reevaluated based upon certain statistical criteria. If any of the 73 components change their seasonal adjustment status from seasonally adjusted to not seasonally adjusted, not seasonally .~ ~' AGENDA ITEM #8D JANUARY 9, 2006 ~,. adjusted data will be used for the last 5 years, but the seasonally adjusted indexes will be used before that period. Note: 43 of the 73 components are seasonally adjusted for 2005. Seasonally adjusted data, including the All items index levels, are subject to revision for up to five years after their original release. For this reason, BLS advises against the use of these data in escalation agreements. Effective with the calculation of the seasonal factors for 1990, the Bureau of Labor Statistics has used an enhanced seasonal adjustment procedure called Intervention Analysis Seasonal Adjustment for some CPI series. Intervention Analysis Seasonal Adjustment allows for better estimates of seasonally adjusted data. Extreme values and/or sharp movements which might distort the seasonal pattern are estimated and removed from the data prior to calculation of seasonal factors. Beginning with the calculation of seasonal factors for 1996, X-12-ARIlVIA software was used for Intervention Analysis Seasonal Adjustment. For the fuel oil, utility (piped) gas, motor fuels, and educational books and supplies indexes, this '" procedure was used to offset the effects that extreme price volatility would otherwise have had on the estimates of seasonally adjusted data for those series. For the Nonalcoholic beverages index, the procedure was used to offset the effects of labor and supply problems for coffee. The ~" procedure was used to account for unusual butter fat supply reductions, changes in milk supply, and large swings in soybean oil inventories affecting the Fats and oils series. For Dairy products, it mitigated the effects of significant changes in milk, butter and cheese production levels. For Fresh vegetable series, the method was used to account for the effects of hurricane-related disruptions. For Electricity, it was used to offset an increase in demand due to warmer than ~. expected weather, increased rates to conserve supplies, and declining natural gas inventories. For new vehicle series, the procedure was used to offset the effects of a model changeover combined with financing incentives. Consumer Price Index data are scheduled for release remainder of 2006: Feb. 22 Mar. 16 Apr. 19 May 17 June 14 July 19 Aug. 16 Sep. 15 Oct. 18 Nov. 16 Dec. 15 Jan. 18, 2007 For additional information on seasonal adjustment in the CPI, please write to the Bureau of ~,. Labor Statistics, Division of Consumer Prices and Price Indexes, Washington, DC 20212 or contact Daniel Chow on (202) 691-6968 by a-mail at Chow.Daniel@bls.gov. If you have general questions about the CPI, please call our information staff at (202) 691 - 7000. ~.