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HomeMy WebLinkAboutFIN 2019-10-14 Item 2A - Discussion - Non-Represented Employees CompensationCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee CC: Mayor Ekberg FROM: Juan Padilla, Human Resources Director DATE: Updated October 9, 2019 — New content appears in underline SUBJECT: Non -Represented Employee Compensation ISSUE City Council adopted Resolution 1951 in November of 2018, which provides policy direction to the Administration regarding employee compensation. This is the first year this revised policy is being implemented and is also a "market" year for non -represented employees. The purpose of this item is to share the implementation steps to date with the Committee, seek additional guidance from the Committee on some areas of implementation and meet the timelines detailed in the policy. DISCUSSION Before going into the specifics of implementing Resolution 1951, below is a quick discussion of the changes made from the previous resolution, 1796. The biggest changes are found in the following categories: 1. Specific timelines and information due to the council for non -represented employees with data specifically to come from the AWC Washington City and County Employee Salary and Benefit Survey. 2. Expanded the number of comparable cities by increasing the comparable cities' annual assessed valuation from +50/-50% to +75/-50% and that comparable cities must have their own police departments. 3. Strict guidelines on how to deal with positions that are either more than 5% below the market and 10% above the market. 4. Simplified the language describing compression. 5. Review of the policy on an annual basis. Resolution 1951 is broken down in two main areas: "Information to be provided to the City Council" and "Compensation Policy." A copy of the policy is attached for reference. Below is a discussion of the implementation of the different areas to date. UPDATE: October 9, 2019 Staff has completed the analysis of the non -represented employee compensation, except for the Fire Chief and Assistant Fire Chief. Because the City is still bargaining with the IAFF 2088, staff is unable to complete a compression analysis of these two positions until that bargaining is complete. It is recommended that those two positions are reviewed once that contract is settled in order to address any potential internal compression issues, which may be a likely outcome. Below in underline is a discussion of any changes from the previous memo relative to the Council's adopted non -represented compensation policy, Resolution 1951. Also included are staff's recommendations on how to move forward, consistent with industry best practice. INFORMATIONAL MEMO Page 2 1. Al — "For Represented Employees": The information laid out in this section has been shared with the City Council during executive session by bargaining group throughout the process of negotiating the latest collective bargaining agreements. During this calendar year Human Resources has successfully negotiated new contracts with six bargaining groups. Of the two remaining, one achieved a tentative agreement this week and the other continues to bargain and the current contract does not expire until the end of this year. Al. No Change 2. A2 — "For Non -Represented Employees": Current internal salary trends show that represented employees are receiving an increase in 2020 and 2021 ranging from 1.53% to 1.7% (90% - 100% of CPI). Externally, while staff knows of no cities that have yet made a final decision on 2020 compensation, conversations with their staff indicate most are contemplating an increase for non -represented staff between 1.5% and 3%. The adopted City of Tukwila budget included a 2.5% increase from 2019 to 2020 for non - represented employees. Staff is seeking guidance from the Council to finalize the information based on challenges that have arisen in the implementation of this new policy. There are 39 non - represented employees that hold 36 different positions in 15 different bands. Previously the City had benchmarked approximately 12 positions. Staff has attempted to expand benchmarked positions to over 20 positions in order to provide a more complete analysis. The AWC Employee Salary and Benefit Survey is not comprehensive, leaving many positions unable to be benchmarked (benchmarked positions require finding at least five other comparable positions within our comparable cities). Staff can and has reached out to the other comparable cities to achieve a higher number of benchmarked positions, but such activity is outside of the policy direction given in the resolution. Going outside the AWC survey allows the City to better track total compensation, as the benefit information provided by AWC is incomplete. o Question for the Committee — Should staff go beyond the AWC survey in order to gather as much information as possible, which would include polling our comparable cities for information on each non -represented position? o Question for the Committee — Alternately, should the City contract with an outside firm for a full market study? A2. There was a change from the previous meeting where staff thought it could benchmark more than 20 positions. However, after further analysis and using the industry standard of five comparable cities to constitute a match, only 19 positions were able to be benchmarked. Recommended courses of action for future market system: 1. Contract for a new market -based non -represented compensation system to replace the current DBM system. To initiate this action, the City would conduct an RFP process. Staff would seek additional budget authority to be granted in the 2020 budget to develop the new market -based non - represented compensation system. 3. B1 — This section changed the jurisdictions defined as comparable cities from +50/-50% of Tukwila's annual assessed value to +75/-50% AV with a police department. This has resulted in the City now having 15 comparable cities, seven under Tukwila's AN and eight above. The comparable cities with their AV are attached. 2 https://tukwilawa-my.sharepoint.com/personal/juan_padilla_tukwilawa_gov/Documents/Bargaining/Non-Rep/2019 Non Rep memo Final.docx INFORMATIONAL MEMO Page 3 o Question for the Committee - the policy does not address Fire as only three of our comparable cities have stand-alone fire departments (Snoqualmie, Mukilteo and Bothell). This affects two employees, the Fire Chief, and Assistant Fire Chief. Staff believes there are two options: 1) the City can choose to not benchmark these positions, or 2) the City can use comparable fire districts/authorities with the same A/V direction given in section B1 of Resolution 1951. Neither of these are perfect options. B1. The table in B2 shows the regression results from the analysis not including the Fire Chief and Assistant Chief, as there were not enough comparable jurisdictions within the City's comps (there are only three) for those positions. As the table shows, there are some positions that are over market more than 10% and some positions that are under market in salary only by 4.44%. This does not consider internal compression that will be addressed in B6, nor does it consider non -salary compensation, common in higher ranking positions in the City's comparable cities. However, the regression analysis shows an average difference across the benchmarked positions as 5.57% above market which puts the whole of the non - represented employees as considered competitive with the market. 4. B2 - Staff is currently analyzing the salaries with comparable jurisdictions and will present the information to the Committee on October 14, 2019. Market Median Market Median Hourly Current Max Max Based on Regression Results % Diff DBM° B21 NA NA $34.74 $28.31 -18.50% B22 NA NA $36.99 $30.72 -16.96% B23 6511 37.56 $39.24 $33.12 -15.60% C41 6866 39.61 $47.76 $42.74 -10.52% C42 7374 42.54 $50.47 $45.14 -10.57% C43 8108 46.78 $52.72 $47.54 -9.83% C51 NA NA $55.54 $50.55 -8.99% C52 NA NA $58.91 $54.15 -8.08% D61 8734 50.39 $59.92 $57.16 -4.61% D62 NA NA $60.98 $59.56 -2.33% D63 9940 57.35 $63.14 $61.96 -1.87% D71 NA NA $65.84 $64.97 -1.33% D72 12686 73.19 $69.05 $68.57 -0.69% E81 NA NA $71.73 $71.58 -0.21% E82 13049 75.28 $73.90 $73.98 0.11% E83 13108 75.62 $76.04 $76.38 0.45% E91 13153 75.88 $78.70 $79.39 0.88% E92 NA NA $81.97 $82.99 1.25% F101 NA NA $85.23 $86.60 1.61% F102 15364 88.64 $86.37 $90.21 4.44% Average % Difference -5.57% https:lltukwilawa-mysharepoint.comlpersonal/juan_padilla_tukwilawa_gov/Documents/Bargaining/Non-Rep/2019 Non Rep memo Final.docx 3 INFORMATIONAL MEMO Page 4 4 5. B3 — Staff is currently analyzing the data per the item above. At the October 14, 2019 Finance Committee staff will provide all documentation defined in this section of the resolution. B3. As staff analyzed the data, we found several issues in using our current DBM system. One of the most important is that it is difficult when there is only one benchmark for several different positions: For example, at the C42 Band, there are four Analyst positions (Council Analyst, Human Resources Analyst, Parks & Recreation Analyst, Public Works Analyst) but only one, Human Resources Analyst, is a market benchmark with the AWC Survey. This causes the other three positions to be shown as overmarket more than 10%, as the City lacks true benchmarks with the other positions to determine whether this is an accurate reflection of the market. In other words, four employees in the band are being impacted by only having on benchmark out of 4 different jobs in the C42 band; this issue would be resolved with the market -based system. Staff recognizes that the lower banded positions in the current DBM system are over market whereas the higher banded positions are under market. This can be related to the obscurity of the AWC survey, in that the higher end bands are more common job descriptions across agencies within the market. Another reason behind the disparity between the lower and upper bands, is a result of over time the bands not moving together throughout the years, not maintaining the chart over time to show a true regression. As noted in the meeting on September 23, 2019, without a significant refresh of our system, the City is not able to provide a true market analysis for non -represented positions. When the City moves to the market -based system in 2020, and a new analysis is complete, positions that are found to be under market will be retroactively adjusted to January 1, 2020. Option 1:Due to the high value that the City places on the employees, as well as consideration of equity and parity with our represented staff, all non -represented employees receive 90% CPI-W (June to June 2019) 1.53% in 2020, in order to maintain the current market and allow time for the City to convert to the new market -based non -represented compensation system. Option 2: Freeze the positions that are over 10% and apply the 2020, 90% CPI-W 1.53% for the positions between -5% to +10%. Recommendation: Option 1 and conduct an RFP in the 1st quarter of 2020, to develop the new market -based non -represented compensation system. 6. B4 — This section, non -represented COLA for odd years, was implemented in November of 2018 for the 2019 Fiscal Year as a part of the biennial budget process. B4. No Change 7. B5 — Staff is not suggesting any changes to employee benefits at this time. The Administration expects there will be a discussion on health care costs during the 2021/2022 budget process. B5. No Change 8. B6 — Analysis to date shows that there is salary compression within the organization. Specifically, recent contract changes have resulted in compression between the Police https://tukwilawa-my.sharepoint.com/personal/juan_padilla_tukwilawa_gov/Documents/Bargaining/Non-Rep/2019 Non Rep memo Final.docx INFORMATIONAL MEMO Page 5 Commanders and Deputy Chief. Compression at this level has a cascading effect impacting other leadership positions. The full compression analysis will be presented to the Committee on October 14, 2019. B6. Recent successful negotiated contracts with the Police Commanders, which brought them to market, has created significant compression with the Deputy Police Chief and Police Chief. Currently, a Commander with 25 years of service makes more than the Deputy Police Chief. Even though our Deputy is close to market, the policy allows for the compression to be mitigated, which is standard best practice in the industry. Recommendation: Courses of action for Police Compression 1. The Police Chief and the Deputy Police Chief should receive the same longevity as the Commanders in order to mitigate current compression in the department. Internal compression not only affects the Police Department; it also impacts the Deputy City Administrator and the City Administrator; which we recommend to be reviewed during the Option 1 of B3 new market based non -represented compensation system implementation. 9. B7 — Staff strongly agrees that the compensation policy should be reviewed on a regular basis. In fact, implementing this policy has brought to light deficiencies in the City's Decision Band Method (DBM) compensation system. Like any major system, without a significant refresh on a regular basis, a static DBM system can become obsolete. In addition, after a review of comparable and neighboring cities, it is has become clear that most have moved away from a DBM system to market -based ones. While any employer needs to have a system — and the DBM one did work for the City for a number of years — it is clear that either the DBM needs to be updated or the City should move to a different system. Staff believes the City should explore moving to a market -based system and will be bringing a proposal to the Finance Committee in the fourth quarter of this year for a process exploring this option. Moving to a new compensation system — and even simply updating the existing DBM one so that can function as requested by Resolution 1951 — will require a budget amendment. B7: Staff strongly suggests that the City moves forward with researching and implementing a new classification and compensation system. Staff's recommendation is to move to a market -based system in 2020, that better allows for this policy to be implemented with transparency with the non -represented employees as well as our labor partners. RECOMMENDATION Staff is seeking answers to the questions raised above and will return to the next Finance Committee meeting with the full analysis discussed above. Recommendation: Implement the new market -based non -represented compensation system that will identify more accurate lob classifications and compensation levels. ATTACHMENTS Resolution 1951 Resolution 1796 (repealed by Resolution 1951) https://tukwilawa-my.sharepoint.com/personalljuan_padilla_tukwilawa_gov/Documents/Bargaining/Non-Rep/2019 Non Rep memo Final.docx 5 INFORMATIONAL MEMO Page 6 Comparable Cities per Resolution 1951 AV per Billion % of Tukwila's AV Snoqualmie 3469 51% Mill Creek 4128 62% Lake Stevens 4335 65% Des Moines 4356 65% Mukilteo 5129 77% Puyallup 6261 94% Tukwila 6685 100% Lakewood 6929 104% Lynnwood 7015 105% Marysville 7986 119% Edmonds 10223 153% Federal Way 11393 170% Bothell 11415 171% Auburn 11435 171% Issaquah 11567 173% Non -Represented Position Benchmarks Position Title DBM Band/Grade Assistant to the Chief B22 Assistant to the Director B23 Deputy City Clerk B23 Executive Coordinator C41 IT Systems Administrator C41 Human Resources Analyst C42 IT Systems Engineer C43 Records Governance Manager/City Clerk D61 Building Official D61 Municipal Court Administrator D63 Deputy Public Works Director/City Engineer D72 Deputy Police Chief E82 DCD Director E83 Finance Director E83 Parks & Recreation Director E83 Human Resources Director E83 Police Chief E91 Public Works Director E91 City Administrator F102 6 https://tukwilawa-my.sharepoint.com/personalljuan_padilla_tukwilawa_gov/Documents/Bargaining/Non-Rep/2019 Non Rep memo Final,docx Washington Resolution No. ) C L ) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ESTABLISHING A COMPENSATION POLICY FOR CITY OF TUKWILA EMPLOYEES AND REPEALING RESOLUTION NO. 1796. WHEREAS, the City believes that the purpose of a compensation program is to facilitate recruiting, retention, development and productivity of employees; and WHEREAS, the City desires to utilize standardized policies, procedures and processes, wherever possible, for compensating all employee groups, both represented and non -represented; and WHEREAS, the City recognizes that current economic conditions and forecasts, long-range City budget forecasts, and position rates for comparable jurisdictions, as well as internal equity considerations, should assist in guiding the compensation of employees; and WHEREAS, the City has made a determination to, when economic conditions allow, review and adjust non -represented employee salaries via a market analysis to that of the average of comparable jurisdictions in even -numbered years, and to provide a cost -of -living (COLA) allowance in odd -numbered years; and WHEREAS, the City has made a determination to, when economic conditions and negotiations allow, provide represented employees with salaries that reflect the average of comparable jurisdictions; and WHEREAS, the City has made a determination to, when economic conditions allow, provide benefits to represented and non -represented employees that are slightly above the average of comparable jurisdictions; and WHEREAS, the City Council will participate in setting negotiation expectations and reviewing and approving represented employee group contracts; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: W:\Word Processing\Resolutions\Compensation policy for City employees 11-14-18 Page 1 of 3 7 Section 1. The following statements and processes are adopted for the purpose of guiding compensation programs for employees of the City of Tukwila. A. Information to be provided to the City Council. 1. For Represented Employees. A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council. This presentation must be made to the Council prior to the commencement of negotiations with the bargaining units regarding salary and benefits. The City Council and Administration will discuss represented employee group negotiation expectations, negotiating points, salary and benefit change floors and/or ceilings prior to the beginning of, and at appropriate points during, negotiation sessions. 2. For Non -Represented Employees. A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council by Administration every year by the end of the third quarter that a non -represented salary increase is due. Relevant Association of Washington Cities (AWC) data from the previous year's Washington City and County Employee Salary and Benefit Survey, for the comparable jurisdictions, will be used in the salary market survey. B. Compensation Policy. 1. All Puget Sound jurisdictions with +75/-50% of Tukwila's annual assessed valuation, using the most current data from County Assessors, will be used to create the list of comparable jurisdictions for evaluation of salary information. A second criteria to be used to refine comparable jurisdictions is to only include cities with their own police department. It is desirable to use the same comparable jurisdictions for both represented and non -represented employee groups. 2. For non -represented employees, the City desires to pay the average salary for the particular pay scale, as derived from the comparable jurisdiction data described in Section B.1. If the City's pay scale for any classification does not represent the average of comparable salary ranges (+/-5%), written justification must be provided to the City Council. For represented employees, the City desires to pay salaries that are competitive to the City's comparable jurisdictions. 3. Positions that are 5% below the market and up to 10% above the market are considered competitive with the market and will receive a market adjustment the year the survey is to occur. Those positions more than 10% above the market will not receive an adjustment during the year the market adjustment is to occur and will warrant further evaluation. Documented justification of potential reclassification will be provided to the City Council for review and approval. If the documented justification results in reclassification, any adjustments will be made in alignment with City policy. W:\Word Processing\Resolutions\Compensation policy for City employees 11-14-18 Page 2 of 3 8 4. The cost -of -living adjustment (COLA) in odd -numbered years for non - represented employees shall be based upon 90% of the Seattle -Tacoma -Bellevue Consumer Price Index (CPI-W) Average (June to June). It is desirable to calculate represented cost -of -living adjustments the same way, unless a different method is authorized by the Council. Considerations for cost -of -living adjustment for odd - numbered years will be based upon internal equity with represented groups to determine if an adjustment is warranted. Administration will provide a written justification documenting that an adjustment is warranted for the City Council's review and approval prior to implementation. 5. The goal of the City is to establish parity between represented and non - represented employees' benefits. The City desires to provide employee benefits that are competitive to the comparable cities described herein. The City will endeavor to keep increases to annual health care costs under market averages. If costs exceed market averages, adjustments will be made to reduce benefit costs. 6. The goal of the City is to mitigate or avoid salary compression issues where possible. An example of salary compression is when there is only a small difference in pay between employees regardless of their skills, level, seniority or experience. Administration will provide a written justification documenting that an adjustment is warranted for the City Council's review and approval prior to implementation. 7. The City Council shall review the compensation policy described herein on an annual basis to assess efficacy and make adjustments if warranted. If the Administration determines that a deviation from the above process (in its entirety or for individual positions) is necessary, it will provide justification to the City Council for review and approval prior to the adoption of any process change. Section 2. Resolution No. 1796 is hereby repealed. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this / Gr714 day of r v,V P , 2018. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk APPROVED AS TO FORM BY: rk (LC._ Rachel B. Turpin, City Attorney Verna Seal, Council President Filed with the City Clerk: / Passed by the City Council: I 1-1q,- Resolution Number: IC-1,51 W:\Word Processing\Resolutions\Compensation policy for City employees 11-14-18 Page 3 of 3 9 10 City of Tukwila Washington / Resolution No. I 1 9b A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ESTABLISHING A COMPENSATION POLICY FOR CITY OF TUKWILA EMPLOYEES AND REPEALING RESOLUTION NO. 1387. WHEREAS, the City believes that the purpose of a compensation program is to facilitate recruiting, retention, development and productivity of employees; and WHEREAS, the City desires to utilize standardized policies, procedures and processes, wherever possible, for compensating all employee groups, both represented and non -represented; and WHEREAS, the City recognizes that current economic conditions and forecasts, long-range City budget forecasts, position rates for comparable jurisdictions, as well as internal equity considerations should assist in guiding in the compensation of employees; and WHEREAS, the City has made a determination to, when economic conditions allow, review and adjust non -represented employee salaries via a market analysis to that of the average of comparable jurisdictions in even -numbered years, and to provide a cost -of -living (COLA) allowance in odd -numbered years; and WHEREAS, the City has made a determination to, when economic conditions and negotiations allow, provide represented employees with salaries that reflect the average of comparable jurisdictions; and WHEREAS, the City has made a determination to, when economic conditions allow, provide benefits to represented and non -represented employees that are slightly above the average of comparable jurisdictions; and WHEREAS, the City Council will participate in setting negotiation expectations and reviewing and approving represented employee group contracts; W:1Word Processing\Resolutions\Compensation policy for City employees 5-29-1.3 final SB:bjs Page 1 of 3 11 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. The following statements and processes are adopted for the purpose of guiding compensation programs for employees of the City of Tukwila. A. Information to be provided to the City Council. 1. For Represented Employees. A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council. This presentation must be made to the Council prior to the commencement of negotiations with the bargaining units regarding salary and benefits. The City Council and Administration will discuss represented employee group negotiation expectations, negotiating points, salary and benefit change floors and/or ceilings prior to the beginning and at appropriate points during negotiation sessions. 2. For Non -Represented Employees. A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council every year that a non -represented salary increase is due. Relevant Association of Washington Cities (AWC) data from the previous year's Washington City and County Employee Salary and Benefit Survey, for the comparable jurisdictions, will be used in the salary market survey. B. Compensation Policy. 1. All Puget Sound jurisdictions with +/-50% of Tukwila's annual assessed valuation, based upon the Department of Revenue data, will be used to create the list of comparable jurisdictions for evaluation of salary information. It is desirable to use the same comparable jurisdictions for both represented and non -represented employee groups. 2. For non -represented employees, the City desires to pay the average salary for the particular pay scale, as derived from the comparable jurisdiction data described in Section B.1. If the City's pay scale for any classification does not represent the average of comparable salary ranges (+/-5%), written justification must be provided to the City Council. For represented employees, the City desires to pay salaries that are competitive to the City's comparable jurisdictions. 3. The cost -of -living adjustment (COLA) in odd -numbered years for non - represented employees shall be based upon 90% of the Seattle -Tacoma -Bremerton Consumer Price Index (CPI-W) Average (June to June). It is desirable to calculate represented cost -of -living adjustments the same way, unless a different method is authorized by the Council. W:\Word Processing\Resolutions\Compensation policy for City employees 5-29-13 strike-thru SB:bjs Page 2 of 3 12 4. The goal of the City is to establish parity between represented and non - represented employees' benefits. The City desires to provide employee benefits that are competitive to the comparable cities described herein. The City will endeavor to keep increases to annual health care costs under market averages. If costs exceed market averages, adjustments will be made to reduce benefit costs. 5. The goal of the City is to mitigate or avoid salary compression issues where possible. An example of salary compression would be when a non -represented supervisor earns less, or is projected to earn less than those that he/she supervises due to contracted wage increases. 6. If the Administration determines that a deviation from the above process (in its entirety or for individual positions) is necessary, it will provide justification to the City Council for review and approval prior to the adoption of any process change. Section 2. Resolution No. 1387 is hereby repealed. PASSED BY THE CITY COUNC LL�F THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this 3 r day of ,J ,A)(� , 2013. ATTEST/AUTHENTICATED: Christy O'Flah , MMC, City Cler APPROVED AS TO FORM BY: Shell- ersla -, C e •orney Kathy Ho g-rdy�Coli it President) Filed with the City Clerk: S' act—L3 Passed by the City Council: Resolution Number: 1 4] (lb W:\Word Processing\Resolutions\Compensation policy for City employees 5-29-13 final SB:bjs Page 3 of 3 13