Franklin County FY 2016 Recommended Budget

Transcription

1 Franklin County FY 2016 Recommended Budget Pay Plan and COLA Discussion The issue of the County Pay Plan has been an issue for several years, and most recently the County Administrator has brought presentations before the County Commission to discuss this issue. The most recent discussions were presented last month (May 2015) with the intent to begin the discussion with the Commissioners, and to create a budget with the pay plan recommendations made at that time; the final numbers and recommendations would then be seen in place in the budget in order to assess the final impact these numbers would have on the budget going forward. The information presented to the Board at the study session in May has been included in this Recommended Budget Book, in this section, so that the reader may refresh themselves with the substantive information around this issue. The initial discussion provided some very rough numbers, and three (3) recommendations. Recommendations: 1. Implementation of an annual 2.5% Performance/Merit Increase base on a positive Annual Performance Evaluation. Revision of Employee Handbook and Pay Plan would need to be completed to finalize this process. 2. Annual consideration of a Cost of Living Adjustment (COLA) to be recommended by the County Administrator, and final approval of the Commission regarding the percentage placed into the annual budget. 3. Freezing of the Longevity Pay benefit for all employees currently receiving it, and elimination of this benefit for all employees not receiving it currently. Overview As the reader looks at the following information, please keep in mind that the numbers are based on projected non-tax revenues and Ad Valorem revenues based on last year s assessments and tax levy. The final property assessment numbers are still coming in and the final levy will be calculated after those numbers are available. The result is that the Recommended Budget as presented accounts for the personnel dollars discussed below, with a minimum amount of changes, and projecting minimal impact to the tax levy.

2 Franklin County FY 2016 Recommended Budget Recommendation #1: 2.5% Annual Performance/Merit Increase The numbers originally presented were very rough, and when the final numbers were calculated, they were significantly lower. The numbers presented contain both the salary increase and the resulting increases to the Employee Benefits Fund. 2.5% Annual Increase Salary and Benefits Administration $ 1,953 Appraiser $ 3,372 Clerk $ 2,815 County Attorney $ 7,412 Commissioners $ 3,045 District Court $ 263 Election $ 828 Emergency Dispatch $ 4,539 Emergency Management $ 413 Environmental Health $ 1,313 Information Technology $ 1,842 Jail $ 9,966 Juvenile Detention $ 5,640 Maintenance $ 3,018 Planning & Building $ 2,923 Register of Deeds $ 1,623 Sheriff $ 20,365 Treasurer $ 1,406 Total General Fund $ 72,737 Health $ 8,229 Road & Bridge $ 19,240 Annex $ 530 Motor Vehicle (benefit costs excluded) $ 1,717 Motor Vehicle (salary costs excluded) $ 336 Noxious Weed $ 1,174 Ambulance $ 12,660 Solid Waste $ 4,618 Total Non-General Fund $ 48,503 Totals $ 121, The initial roughly estimated dollar figures were more than double this amount for just a performance/merit increase alone. By drilling down and figuring the start date of each employee, we were able to determine what the exact level would be for this pay adjustment and the financial impact. By doing this we were able to reduce the initial estimates drastically down to a workable number. For the 2016 recommended Budget, these numbers have been factored in, as well as the recommended COLA.

3 Franklin County FY 2016 Recommended Budget Recommendation #2: Annual Consideration of A COLA. For FY 2016, a COLA of 1.5% is being proposed. Below is the impact that the recommended COLA has on the budget. As above, the amount has been included in the budget numbers so the Commissioners may see the impact on the budget, and subsequently the tax levy. 1.5% COLA Jan Salary and Benefits Administration $ 4,208 Appraiser $ 5,285 Clerk $ 2,255 County Attorney $ 7,782 Commissioners $ 2,900 District Court $ 193 Election $ 601 Emergency Dispatch $ 6,755 Emergency Management $ 1,695 Environmental Health $ 1,425 Information Technology $ 2,727 Jail $ 13,490 Juvenile Detention $ 7,827 Maintenance $ 3,273 Planning & Building $ 2,898 Register of Deeds $ 2,167 Sheriff $ 25,643 Treasurer $ 2,801 Total General Fund $ 93,928 Health $ 8,219 Road & Bridge $ 21,271 Annex $ 604 Motor Vehicle (benefit costs excluded) $ 2,198 Motor Vehicle (salary costs excluded) $ 430 Noxious Weed $ 1,714 Ambulance $ 18,200 Solid Waste $ 4,755 Total Non-General Fund $ 57,391 Totals $ 151,318.50

4 Franklin County FY 2016 Recommended Budget Recommendation #3: Freeze and Elimination of Longevity Pay Benefit As has been stated in the presentation, the Longevity Payout for employees is almost $140,000, and growing. Based on current employees, this benefit will grow to almost $240,000 within five years. It is important to remember that two of the key objectives for a competitive pay plan are to reduce turnover by retaining employees, and the ability to recruit talented new employees with a completive, upwardly mobile pay plan. Currently only 50% of our employees receive the benefit of Longevity Pay, but as you can see it is almost equal to the proposed 2.5% increase for this year, yet that benefits all employees. What needs to be pointed out is that both plans cannot be sustained into the future. A balanced approach has been recommended that will eliminate the longevity benefit over time through attrition, and allow for the dollars that were being expended for a small percentage of the employees to be redirected to the benefit of all employees. This will slowly address the issues of pay compression, and lower market share as has been previously discussed.

5 Pay Plan Discussion May 2015

6 o 2005 Wage Study - $20,000 70% of Market Included Annual Performance Evaluations Merit Raise increases Move to implement but cancelled Economic Downturn of 2009 and following o 2012 Wage Study - $30,000 60% of Market Revision of Pay Scales Revision of Job Descriptions Address wage adjustments according to Market

7 Acknowledgement of a Problem o Listening to the concerns of Management Team and employees o Realization of competition - In & Out o Acknowledging the costs associated with: o Poorly performing employees o Constant turnover o Understaffing o Lack of experienced and seasoned staff Consequences?

8 Acknowledgement of a Problem Consequences: Increased Management/Supervision of Staff Decreased productivity Increased cost of operations Decreased efficiency of services to customers

9 Discussion Points Why give raises? Private vs Public Priorities and Objectives COLA and Pay Raises Current pay plan Recommended Changes o Annual Performance Evaluations o Annual Pay Increases o Longevity Bonuses

10 Why Give Raises?

11 Priorities Private Sector (Business) o Increases Productivity o Management of Workforce o Market Niche(expand share of the market) o Cost Leadership (Lowest cost of Operation) o Organizational Ethics Public Sector (Govt.) o Increased Productivity o Management of the Workforce o Organizational Ethics o Cost Leadership (Lowest cost of Operation) o Increased services/products

12 Private Sector and Public Sector Priorities Private Sector Public Sector ENDS $$$$$$ Products/Services MEANS Products/Services $$$$$$

13 Priorities Private Sector (Business) o Increases Productivity o Management of Workforce o Market Niche(expand share of the market) o Cost Leadership (Lowest cost of Operation) o Organizational Ethics Public Sector (Govt.) o Increased Productivity o Management of the Workforce o Organizational Ethics o Cost Leadership (Lowest cost of Operation) o Increased services/products

14 Increasing Productivity Proficiency New Tasks/More Duties Proficiency Learn Basic Tasks/Duties New Employee

15 Rewards - Increasing Productivity Private Sector: Profits Measurement? Proficiency New Tasks/More Duties Proficiency Learn Basic Tasks/Duties New Employee

16 Rewards - Increasing Productivity Private Sector: Profits Measurement? Proficiency New Tasks/More Duties Proficiency Learn Basic Tasks/Duties New Employee Public Sector:?

17 Private Sector and Public Sector Priorities Private Sector Public Sector ENDS $$$$$$ Products/Services MEANS Products/Services $$$$$$

18 Priorities Private Sector (Business) o Increases Productivity o Management of Workforce o Market Niche(expand share of the market) o Cost Leadership (Lowest cost of Operation) o Organizational Ethics Public Sector (Govt.) o Increased Productivity o Management of the Workforce o Organizational Ethics o Cost Leadership (Lowest cost of Operation) o Increased services/products

19 Merit Increases & COLA s Merit Increase Based on: Performance Annual Evaluation Expanding/Developing Job KSA s (Knowledge, Skills and Abilities) Increasing Productivity Contribution to Departmental and Organizational Goals Cost of Living Adjustment (COLA) Based On Adjustments made to keep pay current with the increasing cost of living. It's applied to wages, salaries and benefits. COLA s are also used for retirees and recipients of Social Security benefits. COLA s strive to maintain a viable standard of living in the face of inflation. Austin Peters provides recommendations for both types of pay adjustments

20 Merit Pay - Current Pay Plan in Personnel Handbook Performance Evaluation o Conducted annually Merit Increases o Pay increases based on results of performance evaluations o Increasing scale - Scoring 1% to 3% Pay Increase possible Based on Merit Score Distributed as a lump sum Non-cumulative

21 History: Results Pitfalls with the plan emerged Employee Evaluations Pay structure not fully implemented The issues/problems remained

22 COLA s Commission consider these annually Part of the Budget Process

23 History: 2012 Austin Peters Group, Overland Park, KS was engaged to perform a study of the County pay plan Cost: $30,000 Compensation Study was completed and presented Summer of 2013

24 History: Goal was set for 60% of the Market 40% above 60% below Other Work Rewriting Job Descriptions and Assistance with policy issues Classified 104 positions Determine market adjustments needed Reviewed 18 Counties 9 Cities (incl. Ottawa) Local employment competitors and the State State of Kansas Wage Survey Data, U.S. Labor Statistics Cost-of-living statistics for the area

25 Findings Pay Compression Issues Realignment of pay scales to meet 60% market Implementation of those recommendations Pay compression Addressed in December 2013 Follow up in December 2014 Implementation of the new pay ranges

26 Current Situation: Pay compression Refers to the situation that occurs when there is only a small difference in pay between employees regardless of their skills or experience. Pay compression is the result of the marketrate for a given job outpacing the increases historically given by the organization to high tenure employees. Therefore, newcomers can only be recruited by offering them as much or more than senior professionals.

27 Pay Compression Example - Hypothetical Bud Jones Hired 2005 Pay rate: $13.45 COLA every year avg. 2.25% $16.39 Longevity? $750/2080 hrs. = $.36 Real salary $ $.36 = Bill Knight Hired 2015 Pay rate: $16.07* * Austin Peters recommendation 6/2013 Difference 4% Consequences: 10 year Employee 1. Market Rate and Inflation has outpaced pay increases 2. No merit raises New Employee 1. Starting Salary lower than 40% of the market 2. No plan for merit increases as Knowledge, Skills, and Abilities Develop

28 Current Situation: Pay compression Refers to the situation that occurs when there is only a small difference in pay between employees regardless of their skills or experience. Pay compression is the result of the marketrate for a given job outpacing the increases historically given by the organization to high tenure employees. Therefore, newcomers can only be recruited by offering them as much or more than senior professionals.

29 Current Situation: No plan in place Continuing Trend: Increasing competition for quality employees Turnover is constant Understaffing = Overtime Lack of experience in several areas efficiency = time on a task effective = done right & minimal mistakes Trickle effect Employee Evaluations Increasing complexity of job related tasks Growing employee frustration and apathy Repeating trend Pay Compression Not staying competitive in the marketplace

30 Recommendation Three Points for Recommendation 1. Annual Merit Pay Increases 2. Changes to Longevity Pay 3. Annual Consideration of COLA

31 Merit Pay Merit pay Objectives Based on: Performance Annual Evaluation Expanding/Developing Job KSA s (Knowledge, Skills and Abilities) Increasing productivity Contribution to Departmental and Organizational Goals Recommendations Incremental Pay Increase of 2-2.5% Annually Budgeted Tied to Annual Performance Evaluation Satisfactory Performance Evaluation Revised Personnel Evaluation Form In process Training for Supervisors regarding Annual Evaluation practices

32 Merit Pay Recommendations Working with Current Pay plan from Austin Peters Range spread for positions: Beginning Top End Approximately 42% Small Adjustment 2.5% = 16 Steps Top Out?

33 Merit Pay Annual Impact on Payroll and Benefits: Projections for % Merit Increase Year Salary Benefits Total DIFFERENCE 2015 $ 9,241,035 $ 4,533,173 $ 13,774, $ 9,472,060 $ 4,646,502 $ 14,118,563 $ 344, $ Please 9,708,862 See Updated $ 4,762,665 numbers $ at 14,471,527 $ 352, $ the 9,951,583 beginning $ of personnel 4,881,731issues $ 14,833,315 $ 361, $ section 10,200,373 FY 2016 $ Recommended 5,003,775 $ 15,204,148 $ 370, $ Budget 10,455,382 $ 5,128,869 $ 15,584,251 $ 380,104 5 Year Totals $ 1,214,348 $ 595,696 $ 1,810,044 $ 1,810,044

34 Merit Pay Annual Impact on Payroll and Benefits: Projections Avg. Franklin County Employee Salary: $35,658 Merit Raise 2.5% = $ % Merit Increase Year Salary Benefits Total DIFFERENCE 2015 $ Please 9,241,035 See $ Updated 4,533,173 $ numbers 13,774,207 at 2016 $ 9,472,060 $ 4,646,502 $ 14,118,563 $ 344,355 the beginning of personnel issues 2017 $ 9,708,862 $ 4,762,665 $ 14,471,527 $ 352, $ section 9,951,583 FY $ ,881,731 Recommended $ 14,833,315 $ 361, $ 10,200,373 $ 5,003,775 $ 15,204,148 $ 370,833 Budget 2020 $ 10,455,382 $ 5,128,869 $ 15,584,251 $ 380,104 5 Year Totals $ 1,214,348 $ 595,696 $ 1,810,044 $ 1,810,044

35 Trickle Effect Retention Issues Turnover Short Staffed Effect on leave Effect on Morale Overtime Budgeting? Controllable? 2014 OT Actuals All Dept. $ 292, Public Safety OT Actuals $ 250,338 All other Dept. OT Actuals $ 42, PS OT Budgeted $ 135,500 OT Public Safety Deficit Actuals ($114,838)

36 Discussion?

37 Longevity Pay - Current Longevity Pay Objectives Based on: Longevity pay rewards employees according to years of service. Work performance has no bearing on longevity payments, as they are based solely upon time on the job. Current Longevity Plan 5 th Year 6 th -10 th Year 11 th 15 th Year 16 th and higher $500 $750 $1,000 $1,500 Hourly Equivalent $0.24 $0.36 $0.48 $0.72

38 Longevity Pay - Projections Projections Longevity projections Year Long. Bonus - Static 2015 $ 138, $ 151, $ 167, $ 196, $ 225, $ 238, $ 244, $ 251, $ 263, $ 274, $ 287,000

39 Longevity Pay - Recommendations Longevity Pay Objectives Based on: Longevity pay rewards employees according to years of service. Work performance has no bearing on longevity payments, as they are based solely upon time on the job. Recommendations Longevity to become part of Annual Merit Increase Begin Phase Out No New Additional Employees No increasing amounts Employees Current Receiving - Continue Attrition Other options?

40 Longevity Pay - Attrition Longevity projections Year 2015 $ 138,000 $ 7, $ 130,824 $ 6, $ 124,283 $ 6, $ 118,069 $ 5, $ 112,165 $ 5, $ 106,557 $ 10, $ 95,901 $ 9, $ 86,311 $ 8, $ 77,680 $ 7, $ 69,912 $ 6, $ 62,921 $ 6,292 Reduction (projected) $ 81,371 Long. Bonus - Attrition Long. Bonus - Reductions

41 Longevity Pay - Recommendations Longevity Pay Objectives Based on: Longevity pay rewards employees according to years of service. Work performance has no bearing on longevity payments, as they are based solely upon time on the job. Recommendations Longevity to become part of Annual Merit Increase Begin Phase Out No New Additional Employees No increasing amounts Employees Currently Receiving - Continue Attrition Other options?

42 Questions Discussion?

43 COLA - Recommendations COLA Objectives Based On Adjustments made to keep pay current with the increasing cost of living. Often Based on the Consumer Price Index (CPI) It's applied to wages, salaries and benefits. COLA s are also used for retirees and recipients of Social Security benefits. COLA s strive to maintain a viable standard of living in the face of inflation. Recommendations COLA s be discussed annually as part of the Budgeting process Used to adjust pay plans periodically Based on CPI County Administrator Recommendation

44 Questions Discussion?