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CITY COMMISSION AGENDA ITEM |
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Department: |
Human Resources/City Manager’s Office |
Commission Meeting Date: 11-6-2018 |
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Staff Contact: |
Lori Carnahan, Human Resources Manager |
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Two Actions Requested: |
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2018 Longevity Compensation Make a discretionary[1] longevity payment in December 2018 to employees who have completed five or more continuous years of regular employment as of January 1 of the current fiscal year. Longevity payments vary according to length of service, and are calculated using the following formula:
Completed years of service (as of December 31 of the current fiscal year) x rate/year = Longevity payment Example: 20 years of service x ($4/month*12) = $960 (minus withholdings for taxes, KPERS/KP&F, etc.)
Longevity Compensation, Employee Handbook Section II-J effective January 1, 2019 Adopt the Longevity Compensation Policy (Section II-J of the Employee Handbook, see attached) effective January 1, 2019 for all employees hired before January 1, 2019, in an eligible employment status prior to January 1, 2019, and not covered by any Memorandum of Understanding (MOU) as part of the regular compensation program. Employees not covered by an MOU hired January 1, 2019 or after will not be eligible for the Longevity compensation program.
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Executive Summary: |
The City of Lawrence City Commission has had a history of considering and in most cases approving a discretionary payment to employees paid in December of most years. This payment has been referred to as a Longevity Payment. There is documented history dating back to 1997 as illustrated in Table 1.
Longevity pay provides a compensation award for time spent with the organization. The City’s compensation program is better aligned with the City’s strategic plan and adopted values if it utilizes all available funds to award compensation for performance of its employees. In order to support the goal of aligning compensation strategies with the City’s strategic plan and adopted values, the City proposes moving the funds historically paid ($48/year of service) for the discretionary longevity payments to a flat dollar formula for current participants not otherwise covered by a Memorandum of Understanding (MOU) and eliminating it for future employees not covered by an MOU. This will allow the program to eventually end as current non-MOU employees retire.
The flat dollar amounts are proposed as follows:
All are subject to taxes and employment withholdings.
The City’s 2018 Compensation consultant, McGrath Human Resources Group, noted in their report on police compensation “Longevity is a traditional and tenured benefit found in the public sector that has not proven to be effective toward promoting efficient and effective services. Only one (1) other municipality [from five market cities reported in the 2018 Police Market Study Results Report] provides some type of longevity payment. The Consultant recommends the City eliminate Longevity pay. Financial resources would be better served providing employees market compensation or enhancing a specific benefit available to all employees. For employees who still receive Longevity, the Longevity pay should be rolled into the base pay, and placement onto the new salary system should be adjusted accordingly.”
McGrath goes on to indicate that if the City wishes to maintain a Longevity payment, it should cease for all future hires. They further indicate the payment should remain at its current level for current participants.
Beginning with the 2019 Memorandum of Understanding (MOU) with the Lawrence Police Officer’s Association (LPOA), the discretion of the payment was removed, and a flat dollar formula was instituted for all current employees covered by the MOU. As recommended by the city’s consultant, the program was eliminated for future employees covered by the MOU that goes into effect January 1, 2019.
The City proposes doing the same for employees not covered by an MOU beginning with 2019.
The City proposes that discussions regarding the 2019 longevity payment for the IAFF be held in conjunction with the upcoming MOU meetings that will begin in the spring of 2019.
The City proposes that savings between the amount that would be paid under the $4 per month per year of service formula and the flat dollar formula in 2019 (approximately $64,385) be placed into the available funds for the City to implement any recommended market adjustments for identified individuals from the upcoming market analysis and recommendations from McGrath Human Resources Group. In future years, the City would be able to divert the difference between the two calculations for those eligible for the Longevity payment to other compensation programs such as merit pools or market adjustments. The estimated savings for 2019 is contained in Table 2.
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Strategic Plan Critical Success Factor |
Effective Governance/Professional Administration Sound Fiscal Stewardship
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Fiscal Impact (Amount/Source): |
The 2018 fiscal impact to the City is $472,584 for MOU employees and employees not covered by an MOU. The 2019 fiscal impact for those employees not covered by an MOU is approximately $301,807.
This item was in the 2018 and 2019 budget.
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Attachments: |
Table 1. History of Longevity Payments 1997-2017 Table 2: Longevity Pay Cost Estimates 2018 and 2019 2018 Longevity Compensation - City Commission Parameters for Consideration 2019 Proposed Employee Handbook Policy – Section II-J Longevity Compensation |
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