Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Diane Stoddard, Assistant City Manager
CC:	Cynthia Boecker, Assistant City Manager
Date:	July 21, 2009
RE:	Background on City Memorandum of Understanding Proposals with the Lawrence Police Officers Association and the IAFF Local 1596

The City Commission will be considering the MOU proposals with the Lawrence Police Officers Association and IAFF Local 1596 at the City Commission meeting on July 28.  It is important for the City Commission to have good background information as they hear the proposals and make a decision.  Attached are the following documents:

• IAFF Local 1596 Negotiations:
• Summary of IAFF Local 1596 impasse items and evidence supporting the City’s position
• Fire salary survey summary; Fire salary (detail) and benefit surveys
• City version of proposed Memorandum of Understanding (yellow highlights indicate variance with IAFF proposed language)
• Lawrence Police Officer Association (LPOA) Negotiations:
• Summary of LPOA impasse items and evidence supporting the City’s position
• LPOA salary survey summary; LPOA salary (detail) and benefit surveys
• City version of proposed Memorandum of Understanding (yellow highlights indicate variance with LPOA proposed language)

Key Negotiation Issues for the City of Lawrence:

The City values its employees and the services that they provide to the citizens of Lawrence.  The City is a good employer that provides competitive compensation and benefits in order to recruit and retain quality employees to deliver these services. 

The discussions on wages and benefits this year with employee groups cannot be undertaken in a vacuum from the current economic context of our local, regional, and national economy.  We are in a time when many employers are facing difficult decisions about laying off staff, or cutting wages and benefits in order to balance expenditures.  These difficulties are facing both public and private sector employers. 

The City of Lawrence has not been immune to these financial challenges, but the City has taken prudent steps in order to mitigate the impacts.  First, our own revenue challenges:  for the first time in at least a decade, the property tax base is declining.  Previously, we had been accustomed to an average annual growth of more than 5% over this past decade.  Other key revenue sources are not growing at past rates or are not experiencing growth.  However, expenditures have been cut back considerably over the past few years and, primarily through attrition, by the end of this year, the City will have cut approximately 24 positions since 2008.  The City has continued to provide annual upward movement in compensation for employees and retain its quality benefit package.  Importantly, the City has done all of these things and still directed resources at core services.

The City’s investment in public safety and attention to these core services is important to note.  While many departments and divisions are operating with less employees today than a year or two ago, the City has been filling all public safety positions.  Both the Police and Fire/Medical Departments are operating at full staffing in their sworn ranks.  The City is actively reinvesting in fire apparatus and investing in key equipment and capital improvements for the Police Department. 

The City believes that its compensation and benefits are keeping pace with the market.  It is important to examine all forms of compensation and benefits, not one element in isolation, and it is often challenging to make clear comparisons with our peer communities.  However, we believe that our retention and recruitment rates reflect that we are a quality employer.  We recently received approximately 90 applications for nine (9) entry level extra-board firefighter positions in the Fire/Medical Department, while enjoying a 3% total attrition rate over the past year.  This attrition rate is 0% if one excludes retirements, disability and involuntary separation.  In the Police Department, we received over 100 applications for our most recent Police Officer recruitment and enjoy a total 8% annual attrition rate, which falls to 4% excluding those leaving for retirement or disability. 

While we often conduct salary surveys to compare base salary ranges, it is also important to understand the total compensation package.  Gross wages take into account all forms of compensation, including skill incentives, longevity, overtime, etc.  The following are 2008 median gross wages for each position represented by the two employee groups. 

          Police Employee Group:

· Police Officer                                  $64,866.32

· Detective:                                      $89,006.41

          Fire Employee Group:

· Firefighter (Basic):                           $54,847.78

· Firefighter EMT-I:                            $46,262.83

· Firefighter Paramedic:                      $54.592.01

· Fire Engineer (Basic):                       $65,403.83

· Fire Engineer EMT-I:                        $66,934.24

· Fire Engineer Paramedic:                  $72,147.61

· Fire Lieutenant EMT-I:                     $77,959.04

· Fire Lieutenant Paramedic:                $85,974.23

· Fire Inspection Officer:                    $74,233.80

The 2009 agreements with the employee groups provided for a 1.5% general wage adjustment (across the board adjustment at the beginning of the year) and merit step opportunities in the amount of either 2.5% or 5% on anniversary date for employees who were not yet at the maximum of their pay range.  These adjustments would need to be made on top of the 2008 median gross wage information to reflect current wage status. 

The City’s compensation offer to the police and fire employee groups is fair and reasonable in our economic times and provides continued upward mobility in compensation.  The City’s proposal includes an overall 1% adjustment in salaries, which is sufficient to fund each employee groups step merit system, offering 2.5% or 5% adjustments to base compensation annually on anniversary date for employees who have not yet reached the top of the pay scale.  For those at the top of the pay scale, employees will receive a one-time bonus that will not accrue to base in the amount of $350 to $500, depending upon the number of employees at top of scale.  Additionally, the City’s 2010 budget includes full funding of longevity pay, a pay item which is determined annually at the City Commission’s discretion, and which recognizes our tenured employees by providing employees with over five (5) years of service with a payment commensurate with service.  At the rate of $4 per month of service, this equates to $480 for a 10-year employee and $960 for a 20-year employee.   The total estimated 2010 longevity compensation for each bargaining group is approximately $60,000, for a total of $120,000 for the police and fire bargaining groups.  Also, the City will continue to offer a variety of skill based incentives which enable additional compensation opportunities on top of base pay.  

City staff believes that the City’s proposals are supported by appropriate evidence that the City is a good employer and offers competitive salary and benefit opportunities.  The amount recommended for compensation adjustments is appropriate in terms of the City’s current financial situation and the context of our local and regional economy.  Given these factors, City staff recommends that the City Commission accept the City’s proposals for both employee groups.