IPMA-HR and Fox Lawson & Associates, a division of Gallagher Benefit Services, conducted an on-line survey of IPMA members concerning their pay administration actions and plans in 2012 and 2013. Data were collected from 259 organizations across the country between June 19 and July 24, 2013. The percentage of data represented by the type of public sector organization is as follows: Municipalities/Towns 52.5% City/County 3.1% Counties 18.5% States 9.3% Special Districts 10.8% Other organizations 2.3% Universities/Colleges 1.9% School Districts 0.4% Federal 1.2% Overall, the trends for employee increase budgets and salary structure adjustments continue to increase in small amounts from those of the recession years. The increase amounts are small measured in tenths of percentage points. Actual employee increases increased slightly in 2012 over those of 2011. Also, actual and planned increases for 2013 appear to be even with or slightly higher than 2012. In 2012, fewer public sector organizations made pay cuts (1.5%) than in 2011 (4.5%) or what was planned for 2012 (3.6%). No average has been calculated because of the small number of organizations making pay cuts.
Salary structure increase amounts also moved up as reported during this survey cycle. Increases to salary structures were still under one percent as reported for 2012. The public sector appears to be optimistic for 2013 across most employee categories with the exception of one (Exempt, Union) reporting planned or actual salary structure increases in excess of 1.0% (with the exception of Police) for the first time since this survey began in 2010.
Organizations that have labeled themselves as Other Organizations have the lowest budget numbers among the organizational categories. However, in most cases all categories of organizations have increased their actual and planned expenditures for 2012 and 2013 employee and structure increases over those of 2011. Contrary to the private sector where budget planning numbers are more optimistic in the coming year, the public sector estimates slightly lower employee increases in 2013 than actually provided in 2012 although pay structure adjustments are planned to be higher for 2013. IPMA members responding to this year s survey continue to decrease their use of cost saving actions in response to economic conditions. With the exception of postponing employee promotions, all other categories had a reduction in use. However, public sector employers continue to utilize pay freezes (30.9%), postpone compensation studies (25.5%), institute hiring freezes (26.6%), and increase the employee contribution to health premiums (35.1%) to impact long term cost savings. Short term cost savings actions are also used to a large extent. Employers are reducing training expenditures (39.8%) and restricting travel (32.8%), overtime (39.8%) and conferences (33.2%). A larger percentage of respondents to this year s survey (9.3%) have made no changes due to economic conditions in 2012. This number is up considerably from 2010 where only 2.9% reported no changes or actions because of economic conditions.
While we are seeing a gradual increase in public sector organizations dealing with compensation issues, we are also seeing continued public pressure to constrain public sector pay. The fact that some organizations are seeing their revenues increase has certainly made it easier to deal with the issues that have developed over the past three to four years. At the same time, the biggest shift appears to be in how public agencies are allocating the new funds as most are reconsidering long held positions regarding longevity versus performance based compensation. We do not see this trend abating anytime soon. Bruce Lawson, Managing Director, Fox Lawson and Associates. If you have any questions regarding this survey, please contact Fox Lawson & Associates Managing Directors, Bruce Lawson (Bruce_Lawson@ajg.com or 602-840-1070) or Jim Fox (Jim_Fox@ajg.com or 651-635-0976).