Amended Item 6B.pdfItem 10B
January 9, 2017
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM:
SUBMITTED BY:
REPORT DATE:
BACKGROUND:
Salary Administration Plan Revisions
John M. Stinson, Commissioner, Seat No.2
19th of December 2016
On the 26th of September 2016, the City of Atlantic Beach, City
Commission was presented and approved the FY 2016 j 2017
Budget.
The referenced budget included the following:
1) An increase for personnel services of $806,694.00;
2) The addition of (3) new positions;
3) A 3% merit raise and a 1 o/o COLA;
4) A 10% increase in health insurance premium costs;
5) An additional $79,278.00 in pension costs.
The total cost of personnel services for the FY 2016 / 2017
budget is projected to be $10,482,633.00. The increase in
payroll costs is projected to be $220,494.00.
After approval of the budget, it became known to the sponsor
of this recommendation that the City currently employs 11
personnel that have achieved their maximum compensation
for their pay grade and who have little or no significant career
development opportunities to advance to a higher pay grade.
Of the 11 employees, 3 are governed by the police union
contract, and the salary cap for their pay grade has been
removed as a condition of the union contract.
Of the remaining 8 employees, the shortest length of service to
the City of Atlantic Beach is 21 years and 9 months and the
greatest length of service is 40 years and 3 months (as of
October 2016).
There may be other historical information, not presented in
this chronology and not available at the time of the drafting of
this report.
Item 10B
January 9, 2017
JUSTIFICATION: Employee retention is critical to obtaining and maintaining an
efficiently run organization. The historical knowledge long
term employees have may well be irreplaceable, but certainly
invaluable if the employee performs to expectations and
utilizes such knowledge to the benefit of the organization.
And, a well developed employee performance evaluation and
professional development program ensures that employees
who do not meet expectations are separated promptly from
the organization, to the benefit of both the employee and the
organization. Employees who meet or exceed expectations are
coached, mentored and developed for future leadership roles
within the organization.
Good managers who utilize proper evaluation tools, rarely, if
ever, have long-tenured employees who remain employed by
the organization that may be considered substandard in
performance.
Understanding the City of Atlantic Beach compensation
structure is important to make good judgments concerning
compensation changes.
Example (The following is an example chosen for ease of
understanding and is in no way represented to be an actual
example of City of Atlantic Beach Pay Scale, Compensation or
any Employee):
Salary Grade: AA
Minimum Pay Grade AA: $80,000.00
Midpoint of Grade Range: $100,000.00
Maximum Pay Grade AA: $120,000.00.
Assume the three following cases:
Employee X is at the minimum pay in Grade AA earning a
salary of $80,000.00. Using the most recent approved budget
compensation increases, this employ.ee's pay range would
increase to a minimum of $80,800.00, a midpoint increase to
$101,000.00 and a maximum of$121,200.00 based on a 1 o/o
COLA at the midpoint of the grade. Additionally, the employee
would receive a merit raise of 3% increase of the midpoint of
salary grade AA, in other terms, a raise of $3,030.00. The
employee receives an overall increase of 3.79%.
Item 10B
January 9, 2017
Employee Y is at the midpoint of pay in Grade AA earning a
salary of $100,000.00. Applying the same percentages used in
the prior example, this employee would receive the same
$3,030.00 because the increases are calculated using the
midpoint of the range. This results in an effective increase in
compensation for the employee of 3.03%.
Employee Z is at the maximum point of Grade AA earning a
salary of $120,000.00. Applying the same percentages used in
the prior examples, this employee would only be awarded a
COLA increase of $1,200.00 because this employee is at the
maximum compensation amount allowed for this grade. This
employee in affect receives a 1.00% raise.
Thus the questions become one of how long does it take an
employee to reach the maximum for his /her particular pay
grade; are there adequate opportunities for an employee to
advance into a higher pay grade; and, what is the cost benefit
analysis of the loss of the employee versus the cost to remove
the compensation restrictions for the employee?
Using an average of 1% COLA and 3% merit raise, it would take
an employee on average, 7 years (using the example above) to
reach the maximum compensation for the employee's pay
range, assuming a starting point of the midpoint of this pay
grade and the employee stays within the initial pay grade and
is not promoted.
Promotions and career development opportunities tend to be
more readily available for lower tier and newly recruited
employees than it does for senior level employees, if for no
other reason than the City of Atlantic Beach is a small
organization relative to its peers or other organizations.
Therefore, it should be unlikely for a newly recruited employee
to find his or her self stuck in a pay grade and at a maximum
compensation rate, except for the application of poor hiring
practices. This condition tends to present with employees who
have performed at a higher than expected level and have
chosen to consider the City of Atlantic Beach their ultimate
career path.
The answer to the cost benefit analysis lies in the BUDGET
section of this recommendation. Suffice it to say, this sponsor
believes the budget impact will be negligible. If budget
projections are indeed correct, a $7,000.00 increase over the
projected $220,494.00 is a 3.17% increase over payroll
Item 10B
January 9, 2017
BUDGET:
RECOMMENDATION:
ATTACHMENTS:
projections and is an approximate 2/100ths of a percent of the
entire budget.
Budgetary impact based on the facts presented in the
BACKGROUND section above indicates that an approximate
$7,000.00 would be required to fund this revision to the
compensation system. It is further believed, that based on
historical budget performance presented by the City Manager,
relative to open positions remaining unfilled during recent
fiscal years, that the budgetary impact could be significantly
less all while maintaining Personnel Services costs and Payroll
costs within the current approved fiscal year budget.
It is recommended for the City Commission to direct the City
Manager to charge the Director of Human Resources, Ms. Cathy
Berry, to review this proposal presented, and to prepare a plan
to implement the proposed plan consistent with the intent set
forth herein for presentation to the City Commission for
approval by the 23rct ofJanuary 2017.
The removal of the compensation maximum would apply to
employees who have achieved a minimum of 20 years service,
have received a performance appraisal supporting continued
employment and are currently not receiving compensation
increases comparable to approved budgetary increases due to
such increases in compensation exceeding the maximum
compensation levels set forth for the employee's pay grade.
Such compensation increases would be paid out at the end. of
each fiscal quarter in the following manner: 10o/o of the overall
annual increase paid at the end of fiscal quarter one (31 Dec),
15o/o of the overall annual increase paid out at the end of fiscal
quarter two (31 Mar), 25o/o of the annual increase paid out at
the end of fiscal quarter three (30 Jun) and the remaining SOo/o
paid out at the end of fiscal quarter four (31 Oct).
As an alternative to the 20 years of service requirement, 15
years of service could be considered, although, attaining the
maximum compensation level for a grade within 15 years
might be considered indicative of poorer employee career
development management. And currently, the City has no
employees that may benefit from this program that have
achieved less than 20 years of service.
None required.
Item 10B
January 9, 2017
PRESENTATIONS: None at this time.
APPROVAL:
Approved to form and correctness by:
John M. Stinson, City Commission, Seat No.2