Straight from the Mayor: Delving into the issue of city employee pay parity

Jeff Koehn's picture
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There seems to be two predominant pay parity issues currently facing the city when it comes to city staff.

One being internal, where the pay structure has seemed to have gotten off kilter in regards to one person’s pay versus their fellow employee’s pay based on seniority and other factors. The other, which is external and deals with pay parity with other area and state municipalities for employees of the city.

Let’s first talk about the internal issues and what has caused that.

There is a lot of compression. You have people that have been here one year and a person who has been here seven years making the same amount of money because we froze the pay back in 2007 or 2008. So, both kind of intertwine with each other and has created this issue we are experiencing today.

In regard to the compression, doesn’t that happen often in corporate America, as well? People who come into a company are bound by the rate they come in at. They get annual raises, but they are based on the amount that a person started at when they were hired. People who come in five years later may very well be hired at a higher rate than a person who was hired five years previously. Isn’t this a similar situation?

That is related to promotional raises. The step program is a promotion type of program. City employees had to meet certain requirements to be eligible for that pay raise. They had to meet certain educational requirements, etc. to meet that next step. It wasn’t an automatic. Not everyone would have met those requirements to move up.

However, what we have now is a very compressed workforce that all make the same for the most part that doesn’t receive raises, with no promotions. Everything except for a very few has been frozen for a number of years. Now we are looking at trying to distinguish between those who have performed well and those who haven’t and determine what each should be paid. Right now they are all being paid the same.

 

What is the first step in unraveling that complex issue?

The first step is looking at the Waters Canyon Classification Study that came out in 2007 or 2008. We paid $128,000 for the study and nothing was done with it. I have requested reviewing this study. I am being told it cannot work because it has been too long. We have over 100 different classifications for employees. I believe we can bring that way down. We don’t need three or four classifications for each job position. That would be the first step. Bring that down and simplify it. Let’s see what we can preserve from that study. I don’t want to spend any additional revenue for another study when we haven’t even determined if the old one is salvageable or not.

 

Is this the compensation study that you spoke about at a recent council meeting?

Yes and no. Yes, it is a compensation study. The study I spoke about was a classification study that was approved in April of last year. It was supposed to come back before the council in order to approve another compensation study. That never happened. Regardless we need to determine what we can use from the old compensation study. I would think there are things we can salvage from that study. From what I understand we have two of the three bargaining units completed in regards to the compensation study.

 

Now, let’s talk about the external issues and our city employee salaries in comparison to others across the county and state.

That is an issue. We are dealing with starting salaries being under what the average pay in other municipalities is. For instance, the police department is said to be $7,000 lower than the average starting pay in this area makes. That is an issue we need to take a hard look at. We are asking all of the bargaining units to help us determine where they are in relation to average pay for positions. Are they lower, right at, or over the average? The numbers I have heard when compared to across the state is our employees are in the 25 percentile when compared to positions across Florida.

The biggest problem we face now in regard to this situation is, how are we going to bring our employees up to a comparable level to their counterparts across the state? In terms of fixing everyone’s pay, you can’t go back and make them whole. There is just no way to accomplish that, nor would a private company even attempt that. The reality is we lost those years. The issue at hand is how do we fix that. Here in lies the problem. We don’t have a lot of money to go around. Do we increase their pay to be on a level with what the average makes? Or do we make it so the promotion and step programs go back in play? Or do we use the money to recruit new hires? There is a combination of needs and we cannot have them all at once. The trick is going to be to delicately balance all of the needs and create solutions to the issues without jeopardizing the morale of our entire operation. That is what I see as our biggest issue.

 

Taking the example of the $7,000 deficit the city’s police department has in regards to the average police officer salary in the state. Are you saying one option is to bump their pay $7,000 over the next year or would the city phase that $7,000 in over the next few years?

That is the question. How do we get there, and how much time it will take? It will be over a three, four, five, six year period to get to that point. I see this as a multi-year fix.

 

Since this is not just an issue within the police department, but the city as a whole, with a limited amount of dollars, how do you make a choice with what you are going to do with those funds first?

Everybody is a piece of the issue. You have police, fire, general union, non-bargaining unit employees. The key question is how do you keep the wheels on the bus and at the same time fix the problem. I don’t have those answers right now. It is going to take a great deal of discussions to determine what is the first step.

 

Where is the money going to come from to solve the issues we have talked about?

That is a whole other issue. We have, unfortunately, tied the Fire Service Assessment in public perception to roads and infrastructure, and capital needs. And really what we were trying to do was free up money from the only fund that we can use to do multiple things like pay, roads, etc.

 

Are you talking about the General Fund?

Yes, that is the only fund we have for those types of things. We were diversifying funds with the Fire Service Assessment to free up money in the general fund to do what we need to do for the best interest of the city. It could be road paving, capital improvements, raises. Whatever needs to be done to improve the city. They all come from that fund. You can’t use Water and Sewer Funds or Enterprise Funds for those directives.

 

One of the biggest messages given when the Fire Service Assessment and Public Service Tax were introduced was the fact the city needed $20 million for capital expenses that had been neglected over the past five years.

That is true. I can say that our employees are our capital as much as paving a road or buying new equipment. That is the way I see it.

 

So, then part of those capital expenses are salaries.

Yes, and the idea that they are not part of those capital expenses is a perception problem that we as the council are going to have to work hard to overcome. We can’t not take care of them at the expense of being afraid to step out and do the right thing for our employees. We have to do what is right.

 

On the other side, what would be the effects of not doing anything in the near future. What is the impact of saying we don’t have the money right now, people are going to have to make do with that they are earning until we have more money to give raises?

I will use police as an example. It is estimated to hire a new officer costs the city $90,000. That includes training at the academy, bringing them up to speed once they are on the job, uniforms, everything. Training dollars to me are the most non-measured expense we have. We are training officers to go somewhere else. Those police departments in other cities who are getting my well trained police officers did not have to spend $90,000 to train that officer. That is awesome for them and terrible for us. That is a back end expense that most people do not realize is there, because raises have to be approved.

Training costs are already in the budget. It has been easier to use the training dollars because they are already there then make the tough calls and do what is right by the salary. Which in my opinion would be a lot less expensive in the long run than using training dollars. We would train them and keep them and now we have this well trained workforce that is loyal and stays with us rather than going for greener pastures in other municipalities who benefit from our training program.

 

Looking ahead 3-5 years using police as an example. What do you see the department becoming in regards to salaries; where they are now, underpaid, or competitively paid?

They will be comparatively paid to maybe slightly under.

 

With the hopes of what in the longer term?

With the hopes of getting them to the 75 percentile in comparison to the rest of the State of Florida. That is the goal for any city or company. But, it is going to take years. It took us seven years to get here and it will take us at least that to get us out. It is not a quick fix. I was told to fix the pay parity issue right now would cost the city well over $10 million. We don’t have that.

 

That is $10 million plus per year, not just a one-time cost.

Correct. It would be reoccurring. Then not to mention the effects it has on the pension plan and the unfunded liability as you increase the pay. When they did the buyout of city employees a few years ago, it took our pension costs from $10 million to $25 million. While the short term view was the idea we are saving dollars today, the backend was it cost us a lot of money in the long term in regards to unfunded liability. Now we are also trying to fix that. People want to scream about pension reform, but that was our own doing. We have no one to blame but ourselves. I hate to put it out like that, but that is what happened.

 

Where do you view starting this process?

For the bargaining units, it will take place at the table. Hopefully, it will be over a three year period. We are looking at three year agreements for the different unions. Maybe stagger them in where we are negotiating labor contracts with one bargaining unit per year over a three year period. Anything longer than that would not be a benefit to either party. Too many things change once you go beyond that time frame. But, if we could get on that three year cycle I think that would be a huge benefit for all concerned.

Until the FSA is good to go and we can use that money. We also have the .75 millage reduction out there that the council is going to have to deal with. It was considered an offset of the FSA because it was diversifying, but not adding additional revenue. The Public Service Tax was about adding additional revenue.

But, wasn’t the Fire Service Assessment originally supposed to cover over 60% of the city’s fire service expense when the .75 millage rate was discussed? And, when they reduced that fee to cover 34% that took away the .75 millage reduction. If that is the case, why are people still talking about the .75 millage reduction in tie with the Fire Service Assessment?

That is for this budget cycle that we are currently in. For the next budget cycle, people are expecting a .75 millage reduction because the amount covered by the Fire Service Assessment will go back to the 60+% it was supposed to be this year.

 

This will be your first time involved with the budgeting process as mayor. Can you give the people an insight in regards to your style about how you are going to guide the city through it and what they can expect from you in that regard?

It is about patience and doing the right thing for the entire city, not just a particular group. Unfortunately, we don’t have the money to fix the whole thing right now. It is going to have to be in little increments that we make changes. I expect some backlash from doing it that way. However, we don’t represent one group. You have to approach this from a very centrist way.

We have to do what is right by the entire organization and we are not putting our city in a precarious position that will hurt us in the future, while at the same time taking care of our own employees in the process. It is going to be an interesting balancing act, but one that I am sure this council and management team will work its way through and set the city on the right track moving forward.