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99 SEP 08.DOC CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. SPECIAL CITY COUNCIL MEETING - COMMUNITY CNTR - #5 MUNICIPAL DRIVE The City Council of the City of Jacksonville, Arkansas met in Special Session on September 8, 1999 at the Jacksonville Community Center. Aldermen: Elliott, Smith, Lewis, Gentry, Ray, Wilson, Fletcher, Williamson, Twitty and Howard were present. Mayor Swaim was also present and declared a quorum. PRESENT ten (10), ABSENT (0). Others present for the meeting were: City Attorney Robert E. Bamburg, Deputy City Clerk Melanie Green, Human Resource Director Dennis Foor, Director of Administration Murice Green, City Engineer Duane Reel, Finance Director Paul Mushrush, Finance Accountant Cheryl Erkel, Purchasing Agent C.J. Brown, Purchasing Assistant Angelia Blacklock, Police Chief Hibbs, Fire Chief Vanderhoof, Parks and Recreation Director George Biggs, Mrs. Judy Swaim, Mr. Dennis Sobba, Mr. Terry Sansing, Leader Reporter Robert Cox, Patriot Report Peggy Koury, Democrat-Gazette Report Larry Ault, Channel 11 News, and interested citizens. GENERAL: PRESENTATION BY PUBLIC SECTOR PERSONNEL CONSULTANTS Mayor Swaim asked that questions be held until the presentation is completed. He then introduced Mr. Bob Mulally presenting Public Sector Personnel Consultants citing credentials of Mr. Mulally and the firm. Mr. Mulally pointed out that his firm consults for the public sector only and that when completed the study belongs to the city. He related that it can be accepted or modified to accommodate the needs of each city, adding that every community has different needs with different structures in place. He stated that changes to the plan are not discouraged as long as they can look at those changes along with the administration and determine that it will not lead to long term concerns. He went on to say that his firm is not recommending the step program because of its inflexibility. He pointed out that step programs are difficult for both management and the employees citing that in good years you may have more but when things are not going so well it is based on the ability to pay. He related that a step plan falls out of favor very quickly usually within two or three years. He stated that he has not personally seen a step plan implemented in at least 15 to 20 years. He related that the survey for Jacksonville began in March mentioning the cities picked for comparatives along with Lonoke and Pulaski Counties. He referred to Arkansas Department of Employment Security representing the private sector of the study, 1 adding that it is preferable to include the private sector when the data is CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. available. He stated that the study is best when based primarily on population including both smaller and larger cities to offer a balance. He stated that there could be a discrepancy in the report or something perceived as a mistake when in fact it is a professional disagreement. He related that the report is the methodology of an administrative salary plan to build a good foundation. He stated that a good understanding of the study for managers and employees will help to overcome some of the differences that are based on misunderstanding of pay plans and how they work. He related that a periodical review of the pay plan is a good way to stay in sync and keep the plan current. He said that Benchmark positions are generally comparable across jurisdictions with respect to the position's survey data. He related that for example a fire chief is comparable to a firefighter, issue being the spread between chief and firefighter. He stated that survey data is just one wave of the system, adding that you also look at internal equity in comparison. He stated that it then comes down to subjective judgements by the consultants. He related that the best professional opinion of the consultants developed what they consider to be the most equitable distribution throughout the pay plan. He began a brief overview of the pay plan offering a basic understanding of how the report reads. He reviewed the executive summary of Title 1, Page 1. He pointed out that the prevailing rate is defined as 5% below or 5% above the mid-point of the range for that position surveyed. He stated that the figure of $68,388 reflects a fairly good personnel system already in place. He then reviewed the summary of recommendations as found in Title 1, Page 2 of the survey recommending that the City commit to maintain a percentage relationship to the prevailing rate. He cited a city in California that has committed to 110% while other cities commit to 85% of the prevailing rate. He said that Public Sector generally recommends 100% explaining that once you have obtained 100% it is easier to maintain. He referenced item 3 and noted a 15% spread from minimum to maximum range to maintain that data remains current for some length of time. He related that when the market reflects the need the salary range can be moved higher or lower as the market dictates. 2 CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. He then explained the schematic outline of occupational job class titles and the breakdown of that process on page 4. He related that positions were grouped according to job category and that job function makes it easier to manage the system when grouped according to commonality of function. He explained that it is an impersonal process which does not take into account individual performance or training. He cautioned that the study should not be taken personally, adding that they only take into consideration the job duties, responsibilities, certification and educational requirements that add value to the position. He related that the salary data is factored forward according to the American Compensation Association at the current nationwide rate for both private and public sector. He explained that this factor is .33% per month based on the various ages of the surveys. He stated that the Municipal League survey required a 6% forward factor; the County was 7% and 8% was added to the Department of Employment Security Services assuring that the data is current. He related that the mid-point range is the accepted standard in the compensation business as the prevailing rate. He then reviewed the comparison and summary of job classifications to the prevailing rates of the market on page 19. He referred to the external prevailing rates comparison as found on page 20 arranged from highest plus percentage to minus percentage. On page 21 he reviewed the recommended salary range structure which recommends a break between positions with a different level of responsibility such as fire chief and firefighter. He further explained that the break prevents "salary compression" where subordinates salary is as much or more than the person who supervises them. He stated that this is possible if an employee has a lot of longevity and a new supervisor, adding that generally you should try to avoid this situation by keeping the plan current. He presented a permanent salary range schedule on page 22 which is good through the next comprehensive study at which time it may be necessary to adjust the salary ranges. He noted that the City of Jacksonville salary range beings at number five with a grounds maintenance worker. 3 He concluded reviewing the Fiscal impact of the salary plan estimating total payroll at 5.5 million plus with twenty-four employees (23%) below minimum range. He estimated a total cost of $68,388.00 to reach minimum representing 1.23% of total payroll. CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. He further estimated 189 employees (78%) are below mid-point costing $704,204.00 to bring them to mid-point representing 13% of total payroll. At approximately 7:35 p.m. Mayor Swaim requested that the City Council convene to the stage area for question and discussion. City Clerk Susan Davitt recorded all members to be present and Mayor Swaim declared a quorum. Mayor Swaim asked that additional copies of the study be given to the press, department heads, and employee groups for detailed study. He then offered that Mr. Mulally would answer questions from Council and the audience, assuring that everyone would have an opportunity to participate in the process. Alderman Wilson asked for clarification of the chart regarding the fiscal impact plan and the time factor for implementation. Mr. Mulally explained that the data is forwarded to the year 2000 and that the study addressed methodology for implementation over a period of time. He said that he understands that it depends on the ability of the city to pay given all priorities at hand. He said that it is a basic maintenance business decision regarding a balance between no increase to a reasonably well increase toward the prevailing rate. He further clarified that the annual increase experienced by the City would count toward the salary increase schedule and noted that an incremental salary increase schedule is provided in the study for partial implementation. Discussion ensued regarding the 2000 budget and Mr. Mulally reiterated that the data is designed and recommended for the year 2000. Mayor Swaim requested that the slide featuring the summary of recommendations be placed for view and encouraged those with copies of the study to share. He then read from Title 1, page 2, item #6 "Bring the salaries of all employees to the minimum of the salary range for that position's job classification" as outlined on page 39. 4 Mr. Mulally stated that the $68,000.00 was the least salary recommendation. CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. Discussion ensued as to item #7 of the same page and it was related that monitoring the system on a time basis would result in fewer changes. Mr. Mulally then related that the recommended schedule should be current for five years. Mayor Swaim requested clarification regarding Public Sector not recommending a step and grade pay scale. Mr. Mulally stated that a step and grade pay scale has fallen into disfavor because it locks the employee into a level when in fact he might be able to do better, adding that it also locks management into a position when funds are not available. He stated that most jurisdictions including the private sector have moved away from the step and grade system because of its inflexibility. Discussion ensued regarding employees above a salary increase recommendation and Mr. Mulally related that the most common option is to freeze the salary until the market catches up. He added that because of internal structure you could have someone over recommended for an adjustment. He said that they put greater weight on internal equity than external data to maintain equal pay for equal work based on responsibility. He pointed out that sometimes the recommendation could look as if it is against the survey data which is why prior to thinking it is a mistake it needs to be discussed as to why the recommendation is as it is, adding that usually it comes back to an issue of internal equity. Alderman Wilson stated that given the experience dealing with communities nationwide how does Jacksonville rate being a city that has never conducted this type of survey in the past. Mr. Mulally stated that he is very impressed with the City of Jacksonville and that while you look at numbers like 73% you also have to consider how close or far it represents the prevailing rate and the fact that Jacksonville's internal structure seems to be pretty fair. He stated that results are consistent with good management based on the absence of any previous study. He then stated that he is aware of jurisdictions that are 98% and they are off the prevailing rate by a lot. Alderman Wilson suggested that with current work on the budget they need some time to look at salary considerations versus 5 capital expenditures and other situations. He suggested discussion for the commitment percentage recognizing what changes the proposals will create in providing community services versus the additional cost for the salary increase. He stated that a balance needs to be CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. brought forth. He related that he feels the City Council is committed to providing fair, reasonable and equitable salaries to attract and retain good employees. He suggested that more time be taken to look at trade-offs in the budget process. Mayor Swaim related that long term affect analysis and other factors will be brought back for consideration, making adjustments as directed by the Council. He stated that while he may or may not agree with different points in the study he is convinced that the process is correct and complimented that process. Mr. Tom Mayberry of the Jacksonville Fraternal Order of Police stated that the November ballot initiatives voted on by the citizens of the City directed that a pay scale be established for Police officers based upon rank and years of seniority, adding that the ordinance implemented by the City Council retained that requirement. He then stated that at the initial briefing by a representative it was said that there was specific pressure to develop a pay scale for the Police based upon rank and seniority. Mr. Mulally answered that rank and seniority is not in conflict with the recommended range system. He related that the manual has some suggested approaches for how an employee moves through the range which can be based on those criteria or other criteria. In response to a second question regarding assurance of growth in personal income as an employee remains with an agency for a certain amount of time from Mr. Mayberry, Mr. Mulally related that he can not say that there are any guarantees, adding that he is unaware of such guarantees elsewhere in his experience. He stated that he is aware of guidelines that can be established to mandate a certain level until they demonstrate inability to pay which is why there is no guarantee because of the way the economy is. In response to a question from Mr. Murice Green Director of Administration regarding table 4 on page 20, Mr. Mulally clarified that the chart is reflective of Jacksonville's current mid-point in comparison to the recommended prevailing rate. Mr. Larry Hamsher of the Jacksonville Fire Department said that his twenty-four years in service contributes to his pay amount, 6 however, he stated that his counterparts make ten thousand less than he does. He stated that by definition they are considered his counterparts but not in salary. He questioned the recommendation or rule of thumb to not compromise a compensation package for those employees on the lower end of the scale. He clarified by saying CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. that he is at the high end of the Fire Captain scale, however, he has counterparts who are newly promoted that make much less but still hold a position at the top of the list as a Fire Captain. Mr. Mulally related that the data reflects the surveys and not any individual pay level. He stated that if they are below minimum they should be brought to the minimum or mid-point if that is the plan of the Council which would narrow the gap. Discussion ensued and Mr. Mulally related that there are suggestions regarding compression which have been addressed in the survey. He also stated that there may be some issues of compression. Mayor Swaim related that Mr. Foor will be in contact with Public Sector to get definite answers to questions about the study, adding that tonight will not be the only time information will be available from the consultants. Mr. Martin Cass of the Fraternal Order of Police questioned if the salary information from Little Rock and North Little Rock and other cities that have a pay scale is related to the first level on the pay scale. Mr. Mulally stated that in those cases the mid-point is found regarding levels in pay scale. Mr. Cass questioned provisions for movement from mid to maximum level and Mr. Mulally said that there are different approaches offered in the study on how an employee moves through the range. He stated that adjustment of pay annually or every other year is as designed by the City. He stated that he is unaware of any other means except in the private sector where there is advancement based on commission. He stated that it is recommended to establish by policy the percentage to prevailing rate which is the guideline to be adjusted by the market. Mr. Cass asked if this would be the same as the quartile system which did not provide for provision to move within that system. 7 Mayor Swaim related that provisions do exist but it was not a guaranteed step every year. He related pay increases since 1989 ranging from 3 to 10 percent. He related that it is the decision of the City Council to fund raise. Mr. Cass stated that the quartile system did not provide incentives for longevity to move in the system. CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. Mayor Swaim related that when the City tried to operate in an adjusting system there was a law suit by an employee who complained when he received a lower salary increase. He then related that at that time the City Council chose to discontinue the opportunity to give raises based on that type of system. He stated the City paid $10,000.00 to settle the law suit. He said that he is not opposed to raises when funds are available, adding that this is not the time for that decision. He said he is willing to listen to the recommendations but is unable at this time to commit Council or the taxpayers to any specifics until the study has been reviewed. He clarified that the study recommends midpoint salaries as the standard and that once an employee reaches maximum change is directed by the market at the time of review by the consultants. He stated that there have been a lot of good questions and while all the answers have not been discovered as yet the Council will need to decide at what level to fund. He reminded that the purpose of the meeting was informational. He related that he is aware of the question as passed in the ordinance and Council will have to consider the recommendation of the consultant in that regard. He stated that Council is obligated to look at the proposal before making its decision. Mr. Mulally reiterated that the study is not to be taken personally but it is designed for an organization to maintain its ability to compete for and maintain good employees. He stated that the recommendation has the flexibility to put into place a performance appraisal or bonus system. He stated that the percentage to mid-point is a business decision. He related that one city established by ordinance its commitment to the prevailing rate at 85% and were able to attract and maintain good employees. Alderman Fletcher related that the study is a corner stone in planning for the future. He added that he would like to see the option that City Council set sub goals to reach the ultimate goal of 100% even if it take two or three years. He said let the employees know we are concerned for their families. He related that it was good money spent for the study and complimented the process. 8 Alderman Smith related that step increases have been moved away from and the Council needs time to absorb the information. He related that there needs to be an agreement as to what the percentage to mid-point should be bearing in mind the goals for the year 2000 and looking at capital expenditure. He said he wants to keep employee retention for the City. CITY OF JACKSONVILLE SPECIAL CITY COUNCIL MEETING SEPTEMBER 8, 1999 7:00 P.M. - 8:30 P.M. Alderman Wilson commented on information regarding turnover and fringe benefits. He questioned valid comparison without those factors. Mr. Mulally stated that generally the two are not considered in the same category. He stated that fringe benefits are a motivation in taking a position but generally only after they consider the compensation. He added that he has many clients that do consider compensation and fringe benefits together reasoning some trading back and forth with employees. Ms. Christine Diffie a Jacksonville resident thanked the Police Department for their efforts in the Sunny Side Addition regarding the crime rate. She related a better record for burglary in past years. She expressed interest for the level of quality police officers in Jacksonville even under a higher tax. Mayor Swaim commended the quality of Jacksonville Police Officers. He then offered attending press the opportunity for questions, being none he thanked every one for their attendance and participation. APPOINTMENTS: ANNOUNCEMENTS: ADJOURNMENT: Mayor Swaim, without objection, adjourned the meeting at approximately 8:30 p.m. Respectfully, ___________________________ ____________________________ Susan L. Davitt MAYOR TOMMY SWAIM City Clerk-Treasurer 9 10