Austin Police Association Cost of Living & Compensation Analysis. August 17, 2018

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1 Austin Police Association Cost of Living & Compensation Analysis August 17, 2018

2 About AngelouEconomics 220+ Economic Impact Studies Economic Research Feasibility Studies Cost / Benefit Analyses Labor & Workforce Studies

3 Agenda Introduction & Methodology Austin Police Officer Demographics Austin Police Take Home Pay Cost of Living Cost of Living & Take Home Pay Housing Housing & Wages Across Texas Cost of Public Safety Wage Recommendations & Conclusion

4 Introduction & Methodology The purpose of this study is to examine the cost of living, real wages, and affordability in Austin for Police Officers. Our goal is to answer three primary questions: 1) Are Austin Police Officer wages ahead or behind the true cost of living in Austin? 2) How do the wages of Austin Police Officers compare to other departments across Texas? 3) Over the next four years, what wage increases are needed to keep up with inflation? Methodology Gathered data pertaining to: o o o o o Police Demographics Police Wages & Pay City Staff Wages Police Expenditures Housing & Rental Costs o o o o Everyday Expenditures for Goods & Services Taxes Inflation Cost of Public Safety Sources: City of Austin Budget Office, Zillow, Austin Police Officers, Bureau of Labor Statistics, The Council for Community and Economic Research, Texas Comptroller, Other Texas Police Departments

5 Austin Police Officer Demographics Police Officers by Rank FY18 Police Officers by Tenure FY18 Rank Number of Officers 0 Years 8.3% Police Officer 1,247 Police Corporal/Detective 383 Police Sergeant 185 Police Lieutenant 69 Police Commander 18 1 to 5 Years 6 to 10 Years 11 to 15 Years 16 to 20 Years 20.8% 18.5% 18.4% 20.5% Assistant Police Chief 6 TOTAL 1, to 25+ Years 13.5% The majority of sworn personnel are Police Officers. Nearly 30% of Police Officers have tenure of 5 years or fewer. Source: Austin Budget Office

6 Austin Police Take Home Pay Police Officer Wage Components Base Pay Incentive Pay Benefits Taxes Each Officer is given a base wage, which directly corresponds to tenure and rank. Incentives include: Longevity pay Shift differential Field training officer pay Education incentive pay Bilingual pay Clothing allowances Phone allowance Other This analysis considers items deducted from Officer paychecks, which includes health and dental insurance, and pension contributions. Federal income taxes, FICA taxes, and Medicare taxes are deducted from Officer paychecks. Federal income taxes are estimated using 2018 rates for a married Officer with one child. *All incentive figures included in this presentation are based on FY18 budget projections and do not reflect any reductions or suspensions of incentive pays that have taken place since.

7 Austin Police Take Home Pay Base Pay Incentive Pay Benefits Taxes Take Home Pay Average Take Home Pay by Officer Rank FY18 $38,707 $48,247 $53,269 $56,993 $59,704 $63,740 $67,905 $74,547 $81,873 $106,006 $92,550 Rookie Police Officer 1st Year Police Officer 2nd Year Police Officr 6th Year Police Officer 10th Year Police Officer 14th Year Police Officer 16th Year Police Officer Corporal/Detective Sergeant Lieutenant Commander Source: Austin Budget Office

8 Cost of Living To estimate the Median Cost of Living within the city of Austin, the following expenditure categories are considered: Housing Costs (Rent vs. Mortgage) Food and Beverage Transportation Apparel & Services Entertainment Misc. Household Expenditures Personal Care Products & Services Utilities Healthcare Costs (Doctors Visits, Prescriptions, City Health Savings Account Contributions) Sources: Bureau of Labor Statistics, Zillow, The Council for Community and Economic Research, and City of Austin Median Cost of Living profiles are adjusted by Household Size

9 Cost of Living Median Cost of Living by Household Status 1 Adult $31,970 $35,276 1 Adult, 1 Child $38,318 $47,874 2 Adults, 0 Children $44,240 $47,546 2 Adults, 1 Child $48,121 $57,677 2 Adults, 2 Children $57,944 $66,175 Total Cost of Living: Renting Total Cost of Living: Owning Sources: Bureau of Labor Statistics, Council for Community and Economic Research, Zillow, City of Austin

10 Cost of Living & Take Home Pay $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $67, th Year $63, th year $59, th Year $56,993 6 th Year $53,269-2 nd Year $48,247 1 st Year $38,707 - Rookie Median Cost of Living & Officer Take Home Pay Police Officers, FY18 $35,000 $30,000 1 Adult 1 Adult, 1 Child 2 Adults, 0 Children 2 Adults, 1 Child 2 Adults, 2 Children Cost of Living: Renting Cost of Living: Owning Most Police Officer households consist of 2 Adults & 2 Children the average Police Officer needs 16 years of tenure to surpass the median cost of living threshold. Based on current Officer tenure and rankings, 85% of Police Officers (rank) and 56% of the entire force, do not currently meet this threshold. Sources: Bureau of Labor Statistics, Council for Community and Economic Research, Zillow, City of Austin

11 Cost of Living: Housing Current Housing Value Trends City of Austin, June 2018 All Homes 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5+ Bedroom City Median Value $348,800 $206,600 $323,600 $354,800 $480,400 $683,000 APA Single Earner $279,189 $325,000 $257,400 $258,664 $307,694 $314,375 APA Dual Earner $348,176 N/A $302,500 $322,891 $354,809 $450,568 Share of Officers* 0.1% 2.1% 41.8% 33.9% 5.9% *Please Note: 16.3% of Officers surveyed chose not to disclose this information. Among homeowners, Austin Police Officers currently own homes below the median value for all sizes, except for single earners in 1 bedroom homes, which represents just 0.1% of Austin Police Officers surveyed. Sources: Online Police Officer Housing Survey, Zillow

12 Cost of Living: Housing Current Rental Trends City of Austin, June 2018 Multifamily Apartment Single Family/Condo Rental City Median Rent $1,535 $1,831 APA Single Earner $1,352 $1,352 APA Dual Earner $1,410 $1,410 Among current renters, Officers occupy apartments below the city s median price for a multifamily apartment, single family home, and condo. Sources: Online Police Officer Housing Survey, Zillow

13 Cost of Living: Housing Geography Housing Price Ratio Rent Ratio Austin-Round Rock MSA Austin (City) Round Rock (City) Dallas-Fort Worth MSA Dallas (City) Fort Worth (City) Houston-The Woodlands-Sugar Land MSA Houston (City) The Woodlands (City) Sugar Land (City) San Antonio-New Braunfels MSA San Antonio (City) New Braunfels (City) Housing Price & Rent Ratios:!"#$%&'h) *"+,&-.%,/"/1"-2 32&2"4,+".%,/"/1"-2 Texas Median Home Price: $185,900 Texas Median Rent: $1,440 Police Officers Living in Austin face higher housing costs throughout the MSA than Officers living in other metro areas. Sources: Zillow

14 Cost of Living: Housing Sources: Zillow

15 Police Officer Base Wage Increases Police Base Wage Increases Across Texas & U.S. FY14 FY15 FY16 FY17 FY18 Houston 3.0% 4.0% 4.0% Fort Worth 1.0% 2.0% 1% (start of year) 2% (mid-year) Varies by Position Varies by Position Five Year Growth At least 11.0% 2.2% 2.0% 9.2% San Antonio 3.0% % 6.0% Austin 1.5% 1.0% 1.0% 2.0% % National Average Texas Inflation Rate 1.4% 2.9% 2.5% 2.8% % 2.1% 0.1% 1.0% 2.2% 2.3% 7.7% Austin Police Officer base wage increases have lagged behind other major metro areas in Texas and the national average for Police Officers. Neither Austin nor San Antonio have received base wage increases exceeding statewide inflation. Sources: City of Austin, City of Fort Worth, City of Houston, City of San Antonio, Texas Comptroller, Bureau of Labor Statistics

16 Cost of Living Adjusted Wages Across Texas Cost of Living Adjusted Wages Across Major Texas Police Departments FY18 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 $72,263 $61,890 $46,769 $34,415 $36,048 $49,038 $42,280 $58,559 $50,666 $71,963 $55,369 $68,083 $69,768 $87,302 $77,735 $67,203 $73,511 $72,526 $82,470 $77,918 Rookie Base 1st Year 8th Year 16th Year Austin Houston Dallas San Antonio Fort Worth Estimates include Base Wage by Tenure, Incentive Pay, and Health Insurance Deductions After adjusting for cost of living differences among major Texas metro areas, Police Officers from other departments are paid higher wages Sources: The Council for Community and Economic Research, City of Austin, Houston, Dallas, San Antonio, and Fort Worth

17 City of Austin Base Wage Increases City of Austin Wage Increases by Department FY14 FY15 FY16 FY17 FY18 Five Year Growth City Council 1.5% 4.7% 3.0% 2.9% 2.5% 14.6% Civilian Staff 1.5% 3.5% 3.0% 2.0% 2.5% 12.5% Austin Fire % 2.5% 2.0% 0.25% 5.75% APA 1.5% 1.0% 1.0% 2.0% % Texas Inflation Rate 2.1% 0.1% 1.0% 2.2% 2.3% 7.7% Since 2014, Austin Police Officer base wages have increased by 5.5%, compared to civilian staff wages at 12.5%. Over the same time period, the Texas inflation rate increased by 7.7%. City Staff will receive a 2.5% base wage increase in FY19. Sources: City of Austin, Texas Comptroller

18 Wage Recommendations Inflation Projection & APD Wages FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Texas Inflation 2.1% 0.1% 1.0% 2.2% 2.3% 3.0% 2.6% 2.7% 2.7% APD Wages 1.5% 1.0% 1.0% 2.0% % 2.6% 2.7% 2.7% Aggregate Cost of Base Wage Increase Not Available $8.1 M $5.6 M $4.9 M $868 K $10.3 M $6.5 M $6.8 M $7.0 M Given the absence of a wage increase in FY18, Austin Police Officers should be afforded a 5.3% increase in FY19 to, at the very least, maintain their current standard of living in Austin. In FY20, FY21, and FY22, AE projects a minimum base wage increase of 2.6%, 2.7%, and 2.7% respectively to keep at pace with Texas inflation. Taking into account new hires and wage increases, AE Projects that additional base wage expenditures will be $30.6 M over FY19 FY22. Sources: Texas Comptroller, Congressional Budget Office, City of Austin

19 Cost of Public Safety Across Texas $900 $800 $700 $600 $500 Cost of Public Safety Across Texas FY14-16 $ $ $ $ $ $400 Cost of Public Safety per Capita with Base Wage Increase Austin Dallas Fort Worth Houston San Antonio Austin Cost of Public Safety FY17 FY18 FY19 FY20 FY21 FY22 $ $ $ $ $ $ Sources: City of Austin, City of Fort Worth, City of Houston, City of San Antonio, U.S. Census Bureau

20 Wage Recommendations & Cost of Living $80,000 $75,000 $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 Median Cost of Living & Officer Take Home Pay Police Officers, FY14 FY22 $30, Adult, 1 Child (Own) Rookie 1st Year 2nd Year 6th Year 10th Year 14th Year 16th Year Sources: Bureau of Labor Statistics, Council for Community and Economic Research, Zillow, City of Austin, Texas Comptroller

21 Conclusion As development and change occurs, we must strive to contain Austin s cost of living, while increasing wages and the number of good jobs. - Imagine Austin, Core Principle for Action

22 Summary Summary of Results Currently, a Police Officer cannot afford to own a home and support a partner and two dependents until they near their 16 th year of tenure. For a 2 Adult, 1 Child Household, a Police Officer currently needs 6 years of tenure to afford to own a home. In 2014, a Police Officer needed 2 years of tenure and in 2022, a Police Officer will need 10 years of tenure. Police Officers in Austin, even those living in suburban areas, face higher housing costs than every other major metro areas in Texas. Over the last five years, the median home value has increased by 51% in total for Austin. Since FY14, Austin Police Department base wage increases have lagged behind other city of Austin civilian employees and other Police Departments across Texas. To maintain current standards of living, this study recommends that Austin Police Officers are provided, at the very least, a 5.3% base wage increase in FY19, which will make up for lost wage increases in FY18. In the subsequent years, Austin Police Officers should receive an increase of 2.6% (FY20), 2.7% (FY21), and 2.7% (FY22) to keep at pace with statewide inflation projections.

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