Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Diane Stoddard, Assistant City Manager
CC:	Cynthia Wagner, Assistant City Manager
DATE:	November 16, 2010
RE:	Recent History of Pay Plan Adjustments

The City of Lawrence has three pay plans: one for police, one for fire and one primary pay plan.  The pay plans set forth the salary ranges for all of the City’s job classifications.  A range has a minimum and maximum rate of pay and employee pay is within this range.  Routine adjustments to the pay plans can typically be made in two ways.  First, the range itself can move.  A range adjustment means that the minimum and/or maximum amounts associated with each pay range may adjust, but employee pay within the range is not necessarily adjusted, unless the employee pay now falls under the new range, in which case employee pay is typically brought up to the new range minimum.  Another way to adjust the pay plan is to apply a wage and range adjustment.  This wage and range adjustment increases the actual wages that employees are paid and moves the minimum and/or maximum amounts associated with each pay range. Both wage and range adjustments have typically been made in response to market conditions in order to maintain competitive salaries and have been made at the beginning of the calendar year. 

Another component of employee compensation is the merit program, which provides compensation adjustments to employees based upon performance.  While the merit programs do not directly impact the pay plan structure, merit adjustments have provided additional movement within an employee’s salary range.  Merit pay has typically been awarded on the employee’s anniversary date of employment.  However, when the merit pool for employees covered by the primary pay plan was established in 2009, employees were awarded adjustments at the beginning of the calendar year. 

The following provides a history of recent adjustments to the City’s three pay plans: fire, police, and the primary pay plan.  Unless otherwise noted, the range adjustments indicated below were increases to both the minimum and maximum of the salary ranges.

2005:  During this year there was a reconstruction of the city’s pay plans, three pay plans were established (fire, police and primary) with the primary pay plan experiencing significant changes (from 7.7% between pay ranges to 12%, fewer pay ranges and several classification changes). A 4.5% range adjustment was made to the police, fire and primary pay plans.  Subsequently a 2% wage and range adjustment was made to all three pay plans.  Dependant on placement in the new pay plans, some employees received additional wage increases or experienced a wage freeze in order to move them inside their newly assigned ranges.  All city employees not at or above top of scale were eligible for a 2.5% or 5% pay adjustment on anniversary date based upon merit. A total amount of approximately $1.6 million in the General Fund was allocated to provide for the wage adjustment. Merit adjustments were an additional amount. 

2006:  During this year, a 3% range and wage adjustment was made to all three pay plans.  All city employees not at or above top of scale were eligible for a 2.5% or 5% pay adjustment on anniversary date based upon merit. 

2007:  During this year, a 3% range and wage adjustment was made to all three pay plans.  All city employees not at or above top of scale were eligible for a 2.5% or 5% pay adjustment on anniversary date based upon merit. 

2008:  During this year, a 2% range and wage adjustment was made to all three pay plans. All city employees not at or above top of scale were eligible for a 2.5% or 5% pay adjustment on anniversary date based upon merit.  A total amount of approximately $1.5 million in the General Fund was allocated to provide for the wage adjustment and merit adjustments. 

2009:  During this year, a 1.5% range adjustment was made to the police and fire pay plans.  MOU-covered employees received a 1.5% wage adjustment.  A 1.5% range adjustment was made to the primary pay plan.  There was no wage adjustment applied to the primary pay plan.  Police and fire merit programs for MOU-covered employees provided for 2.5% or 5% pay adjustment on anniversary date based upon merit.  A 2% merit pool was provided for employees within the primary pay plan and all non-MOU employees.  The merit pool offered opportunities for increases ranging from 0%-5% for non-MOU employees at the beginning of the calendar year.  The total cost for MOU-covered employee compensation adjustments (wage adjustment and merit program) was roughly equivalent to same amount as a 2% merit pool would have been for the MOU groups.

A total amount of $880,000 was budgeted for 2009 in the General Fund for compensation adjustments, representing a 2% merit pool.  Of that amount, the following was budgeted for MOU-compensation adjustments in the General Fund:  approximately $213,000 for the police MOU-group compensation adjustments, including the wage adjustment, merit program and new competency pay adjustments; approximately $185,000 for the fire MOU-group compensation adjustments, including the wage adjustment and the merit program.  

2010:  During this year, a 0.5% range adjustment was made to the MOU-covered positions in the police and fire pay plans.  MOU-covered employees received a 0.5% wage adjustment.  A range adjustment of 0.5% on minimum salaries and 1.25% on maximum salaries was made to the primary pay plan and non-MOU positions in the police and fire pay plans.  There was no wage adjustment applied to the primary pay plan and non-MOU positions in the police and fire pay plans.  Police and fire merit programs for MOU-covered employees provided for a 2.5% or 5% pay adjustment on anniversary date based upon merit.  A 1.25% merit pool was provided for employees within the primary pay plan and all non-MOU employees. The merit pool offered opportunities for increases ranging from 0%-5%. The total cost for MOU-covered employee compensation adjustments (wage adjustment and merit program) was roughly equivalent to same amount as a 1.25% merit pool would have been for the MOU groups. 

A total of approximately $650,000 was budgeted for 2010 in the General Fund for compensation adjustments, representing the 1.25% merit pool.  Of that amount, the following was budgeted for MOU-compensation adjustments in the General Fund: approximately $101,000 for the police MOU group, including the wage adjustment, merit program and new competency pay adjustments; approximately $94,000 for the fire MOU-group compensation adjustments, including the wage adjustment and the merit program. 

2011: The approved budget for 2011 provides for a 1.5% range adjustment for the Police Officer position only and no range adjustment for Detectives within the police pay plan.  Police Officers also are to be provided with a 1.5% general wage adjustment.  No general wage adjustments were made for Detectives.  The budget also provides for the addition of a 2.5% step at the top of the range for the MOU-covered positions in the fire pay plan, which effectively provides a 2.5% adjustment to the top of the range for these MOU-covered Fire Medical employees.  A range adjustment of 0.5% is budgeted for the primary pay plan and non-MOU positions in the police and fire pay plans.  There is no general wage adjustment budgeted for the primary pay plan or the non-MOU positions in the police and fire pay plans.  Police and fire merit programs for MOU-covered employees provide for a 2.5% or 5% pay adjustment on anniversary date based upon merit.  A 1.5% merit pool is budgeted for employees within the primary pay plan and all non-MOU employees in the police and fire pay plans.  The merit pool offers opportunities for increases ranging from 0-5%.  The total cost for MOU-covered employee compensation adjustments (wage adjustment and merit program, not including the police competency program) per employee are roughly equivalent to the merit pool for non-MOU employees per employee. 

A total of approximately $586,000 was budgeted in 2011 in the General Fund for compensation adjustments, representing the 1.5% merit pool.  Of that amount, the following was budgeted for MOU-compensation adjustments in the General Fund:  approximately $213,500 for the police MOU group, including the Police Officer wage adjustment, merit program and new competency pay adjustments; approximately $115,000 for the fire-MOU group compensation adjustments, including the merit program and addition of the new step at the top of the range in the fire pay plan for MOU-covered employees.