Council Minutes

COMMITTEE OF THE WHOLE MEETING
Monday, December 2, 2002 (during city council recess)

The city council met as the Committee of the Whole during special meeting on Monday, December 2, 2002 in the council chambers in City Hall with President Gershman presiding. Present at roll call were: Council Members Brooks, Glassheim (teleconference), Gershman, Christensen, Kerian (teleconference), Kreun - 6; absent: Council Member Hamerlik - 1.

3.1 Ordinance amendment supporting a market-based salary plan as presented in FY salary
plan.___________________________________________________________________
Charles Bunce, HR director, stated they had the ordinance before them last week and also the 2003 salary plan, open market based plan, and that he, Mr. Duquette and staff are open to any questions they might have that might generate some other conversation.

Christensen stated he recalled the memo of October 3 with steps A, B and C, and is concerned after first introduction of this ordinance, when they will get the information re. the fiscal affect of the plan with our current employees and what they are being paid, that in the 2003 budget they have allocated approx. $230,000 for the first bite of the implementation of this plan. Mr. Bunce stated the number is $359,357 and the $204,000 and there were two separate ways that this money was to be looked at. Christensen stated the total increase from the 2003 budget to cover the plan was $447,000 and believes we have funded for that and was in the memo of Aug. 20, 2000; the issue is the increase based on experience levels for those over 5 years in a position and that is $204,000, and going forward with $447,000 in 2004, the effect of the increase on the $204,000 and what percentage that would be in 2004, 2005 and 2006, and would like to factor in a cost of living (only an assumption that there would be an inflation factor in the region of 1.5, 2, 3% so the future council maybe looking to fund and implement this plan. This is a change for everybody and in the past the employees were used to a wage negotiation, which is gone, and in the past there has been a cost of living increase as part of the wage negotiation and in the past used to steps - these have changed and important to have a feel for what we could be facing going forward so have a better feel of the issues we have to address in establishing future budgets and what the department heads are going to have to work with as they implement the merit portion of this plan.

Mr. Bunce stated that the wage study as recommended by the Wage Study Comm. and passed by the council is 2003, and that brings us to a base line level and what it does for pay for performance makes the prediction extremely easy for 2004 and beyond; that as early as April or May of any year go in and look at what the average increases in total salaries for cities our size is going to be between 3% and 6% and this can and usually includes the cost of living allowance, and they should be able to come to the council well in advance of any budget process by market study are saying that total salary increase for 2004 will be x%, and how that percentage goes throughout the population then depends upon a pay for performance system. He stated his personal opinion is that its fairly easy in year 2004 because have base line to work with.

Christensen stated the council's concern is that they get that sooner and sometime before June 1 of each future year because budgeting process starts earlier, and it will be important that the department heads get their evaluations done before that time so they have an idea of what the department heads are going to recommend for increases in salary for their people as pay for performance so then they get a finite figure, and then the council will have to decide how much of that they can fund because if the increase is 6% and they don't have the ability to fund that amount, the council will have to go x percent of the 6% and that is how he understands this to work. He stated it was important to get the two components finalized as quickly as they can so that the employees have a feeling how this is gong to operate in 2004. Mr. Bunce stated that one is not dependent upon the other, if they come up with a figure that can be adjusted until budget time as far as what percent is recommended for overall salary increases, then the pay for performance is a matrix number of measurement that then goes back into what they have to work with and comes out per employee and this is just an optional way to do it, nothing in stone, and if you do establish early on what is available and what is recommended on the market, then the other piece of it don't have to figure out per department anymore. The city auditor stated what he perceives in this is an easier way of getting a handle on what that new wage amount will be, based on the study, and would concur that they need to do it in March-May so they have it for the budget year, and the council will determine what the percentage of dollars available is and the matrix applies that dollar amount to the employees. Mr. Bunce stated the department heads would be in the process of evaluating their employees, and because of how lengthy the process can be, some examples say they do this in October so can have everything done by the end of December, that process does not depend upon money, it depends upon training, having the system in place and being able to work the system - nothing to do with money at that point.

Council Member Brooks stated that when they put this into place- the pay for performance and system they are developing, and for governmental body this is innovative, and to insure the success of this they should be looking at some quality circles within the department, need employee participation in this.

Mr. Bunce stated this is possibility and nothing in stone at this time, can have a system and have a job to do, sit down and come up with measurable, maybe three objectives and accept a contract and measurable might be having a land network in place in 6 months, if he gets it in place in 3 months or in 9 months, and he has a measurement of a goal that they established at the same time, and to make sure that favoritism doesn't come into play, can also add something like a one-up one-down system, that whatever you do is reviewed one-up and also reviewed one-down, meaning there is some - not peer review, that these are options.

Glassheim stated one general question is longevity and if not having longevity anymore, what is thought behind that and how does that affect retention. Mr. Bunce stated that longevity is a part of the 2003 salary plan and is in the computations, and up to the council for going forward and whatever salary plan that was recommended and approved, and not sure how that is going to work right now.

Christensen stated they way he envisions longevity working, it appears that it's gone because we're amending the ordinance - but it's not gone because the people who have more experience in their position than other are probably getting paid more, and what will happen going forward is the person with more experience and more efficient and in the pay for performance, he/she has a better opportunity to be compensated if they meet their goals as opposed to a person who has to learn more - but a young, upcoming person in the department who is a hustler, may get paid a little more within their salary range if they meet their goals - longevity as it was known is gone but those with knowledge in how to do their job and get it done quicker, will probably get paid even better. Glassheim stated that it will be in the performance, not specific years, but assume much of longevity will result in better performance. Christensen stated that is a management decision.

Ed Grossbauer stated the employee reps. are vehemently opposed to dissolving any portion of their longevity pay, now it's barely 1% of the total package and that it is a benefit as opposed to part of the salary plan; the consultants even recommend making it a one-time payment that's twice to three times what we're paying at this point - and don't want anything done with longevity unless you plan on implementing what the consultant recommended which would be the one-time payments. that start earlier and continue on and grow longer in your career, and behooves us to continue that and to grow that because we know we're losing employees; and if look at anything in longevity he suggested they look at what consultants says. that the one-time payments being a percentage of the mid-point as opposed to what's in place now.

Christensen stated as this moves forward and Mr. Bunce and Mr. Duquette give them some ideas as what their thoughts would be for pay for performance, the employee input as to how is longevity part of the pay for performance model that will be developing and is something they will consider. He stated he would have to defer to the professionals and the consultants to give them some different models for this pay for performance before saying they are against it.

Glassheim stated that the definition of classification is being taken away and to do with reclassification is deleted, and how that works in terms of your job description or changes to the job, and wouldn't you need to reclassify if you're doing a different job or if the category you're in changes the work requirements or if that is handled by individual contract you have with the department head. Mr. Bunce stated that is part of the draft and part of the duties of the HR director, that nothing keeps HR director as the responsible party from looking at and recommending reviewing positions and always a process under plan maintenance and also in some of the other duties that are described for the director of HR to do this, classifications disappear because we're no longer in the step system, and reclassifications also disappear, but there is a process that says if a job changes, that you re-evaluate that job as to where it fits in the salary plan, not stated specifically, but duty is periodically review positions to assure similarity of occupations in the market, and several other places under duties of HR director that says that what he does.

Mr. Swanson stated there are two holes in the ordinance: 1) there is no procedure in the draft that would allow anyone to modify the allocation of an employee within a pay range as a result of a change of duties mid-year; the language with regard to maintenance is for the annual plan and for approval of the annual plan. The second hole that there is no procedure for an employee or department head or others to raise questions regarding errors in the allocation of a position to a given salary range; the director of HR is charged with overall maintenance of the plan on an annual basis, the HR director under this draft has no authority to reallocate any position once it has been approved by the city council (annual pay plan). Mr. Bunce stated there is provision for amending the salary plan from time to time as presented to council, but if these holes are there, if Mr. Swanson can help fill those. Mr. Swanson stated he could if they tell him what it is they want, that was discussion they had - that some cities in a performance plan will use the term classification and have a system where you classify the positions into salary ranges, and he was advised by the HR Department that they no longer wanted to refer to class or classification because of a concern of confusion with the old class system, so this draft eliminates all reference to class or classification, it uses the term allocation which is for all practical purposes, the same thing, but the draft doesn't have any interim authority to change an allocation except by coming back to council. The city auditor stated that under the old code there was a process set in place where there would be a request submitted by a given date and Civil Service or someone else would say there was a change of allocation, and did that so wouldn't have mid-year changes because for budget process they struggled in the past so that when that change was made, it was made effective January 1 of the following year, and speaking for budget process, that would be good process if going to install something they can control. Mr. Bunce stated that 1 February is the date for proposed changes to be in. Kreun stated you wouldn't need mid-year changes because if there is a classification or another job, the salary range will already be there. Mr. Swanson stated not necessarily, as you may have a change in duties in a given position that is already allocated to a given class, that change may affect the pay range either upward or downward; that this draft does not envision mid-year changes in allocation without revisiting it. Kreun stated these are annual reviews and why have a mid-year change, not an issue.
Gershman stated if someone is doing substantially more complicated job in June, and we're saying there will be no compensation for it - Kreun stated if there's substantially more complicated job, there should be a position for that, and not take the same job and make it a higher job - but have a budgeted line item for that more complicated job. Mr. Bunce stated if someone picks up another chunk of duties that haven't existed in the city before or have and are reactivated, nothing says that when you get to the evaluations that's not part of the objective, and this person gets a much higher rating because they have added those duties to the job they are doing; Kreun stated that's in the mayor's portion that has that capability of doing that under extreme conditions and is covered there too. Mr. Swanson stated the money maybe in the budget but your position is allocated to a given salary range, the code you are referring to dealing with the pay plan and the request for reclassifications has been in effect for a number of years and you can go back and review civil service minutes to determine how many times in the past 10 years it has occurred - referring to reclassifications specific to job changes, not going to happen a lot, but will find that it did occur. Kreun stated that we have a line item in our draft to address that issue when it does occur. Mr. Swanson stated what he is pointing out is based upon direction he was given in drafting this are two areas that the old code had provisions for, that neither the salary plan or the draft contemplate, if oversight and is something you want to address, need to address it. He stated one that is more likely to raise the concern is mid-year change in a position and it does occur that a position will require different duties whether because of retirement or disability, or new job requirements, and except for an amendment to the overall annual plan, we have no ability in this draft to address that circumstance.

Council Member Kerian stated the annual salary plan may be amended in which case you might amend it later to change an allocation, and unclear if that would not solve that problem. Mr. Swanson that contemplates that the city council would amend the annual plan, nobody else would have that authority and if that is how council wants to handle that, that would be the process; the only warning he might give is that past history with the civil service commission demonstrates that employees may become creative in approaching the council at various time for various reasons as to why the current allocation would be inappropriate and doesn't know if council wants to put itself in that position to be handling those all the time - that's why under the former process there were very specific requirements that had to be met, specific timeline when request submitted and not effective until the following year, except for extreme circumstances. He stated he was pointing out the potential is there for issues to arise that were addressed under the old provisions that are not even contemplated in the new draft.

Christensen stated one of the main reasons for this salary plan and market base is to extricate ourselves from the old and going with an innovative way of compensating our employees, when going through interviews with consultants, several stated that in reviewing what had gone on in the past, they found an extraordinary number of reclassifications which they found to be highly unusual and things going on with the system they thought this would eliminate. He stated he is not concerned about the issue Mr. Swanson raised, because he believes this will go to the department heads and they will make the decisions internally, budget the monies we give them and that we set a budget on an annual basis, and there is another discussion as to the interface of the civil service commission in the implementation of this plan and there will be some continuing on-going interaction with the civil service commission in developing job descriptions. Mr. Swanson stated the civil service commission is no longer involved in either the job description creation, approval or any pay plan. Christensen stated the civil service commission is going to deal with terminations. Mr. Bunce stated appeals, grievances and everything else that's in the code. Christensen stated he didn't think we would have a problem as we budget from year to year if jobs change, but not get a chance to move and change your pay by changing your job description or changing your step and that's what this is about to get rid of that.

Glassheim stated that new job descriptions that are substantially changed will be approved by the mayor and not the city council, not sure about that as those carry a fiscal impact and that the council ought to be approving them, and some other changes throughout the draft where things are taken away from the council and given to the mayor but those seem to be substantially executive management decisions, but changing the job descriptions would have to hear why that's being done; and asked if the civil service commission is essentially bereft of function and doesn't know what its function would be. Mr. Bunce stated the function of the civil service remains the same with the exception of those items that are affected by the salary plan and the market based system. Council Member Brooks stated there is a fiscal impact on any reclassification and that requires a budget amendment so whether the mayor approves the reclassification or not, and budget amendment comes to the council. The city auditor stated if the mayor approved a new job description it would come in the budget process where council would have control.

Christensen stated in reviewing the proposed ordinance he would like to go to 6-031 salary policy, items A, B and C, and as this hasn't been introduced for first reading, and would suggest that paragraph B read as follows: Provide consistent and equitable (after word provide) salary administration based on the position requirements and the employee's related experience, skills, and performance. That this becomes part of our policy and is in the ordinance and part of the implementation of the plan. He stated on 6.0302 (1) add, the city council shall annually approve a salary plan for all classified and non-classified positions. Mr. Bunce stated we no longer have non-classified positions as of l January. Mr. Swanson stated the non-classified are not governed by the civil service code, they are employed only by virtue of a contract and this wouldn't apply.
Christensen stated under D) under that same section, a listing of all exempt positions for purposes of overtime compensation determination. He stated he was curious why an exempt position would be entitled to any overtime. Mr. Swanson states that D) intends to do is in the annual plan you identify each position as to whether it is exempt or non-exempt, and important designation is if you are exempt, they are not entitled to overtime. Christensen stated all they would need under D) is a listing of all exempt or non-exempt positions. Mr. Swanson stated it doesn't say exempt or non-exempt from what, only identifying what they are exempt from overtime compensation - trying to say that the annual plan must designate every position as either exempt or non-exempt. Christensen stated under minimum pay rates, 6-0304(1) where they have in the opinion of the mayor, there's been a demonstrated inability to adequately recruit, and if this is annualized it's not that important but if mid-term, then have to have approval of council because it becomes a budget issue but if go on an annual basis, wouldn't need it. He stated he had some other issues but would get with Mr. Swanson once they get the ordinance introduced.

President Gershman called upon employee reps. for an additional comments.

Carol Diamond Gerszewski, vice president of the employee representatives, stated they sent surveys out to employees as to their concerns, additional questions are still being completed, but biggest concern is loss of longevity as they know it, and was a negotiated item in lieu of raises, there is a plan to eliminate it. She stated there is also a concern how a pay for performance plan is going to work in the system that provides services and haven't received answers on how people are going to be measured on when providing service instead of a product. She noted that the employee reps will be meeting again this week and have updated survey.

Gershman stated there are measurable ways for service, that they will find those and there will be input on those. He stated this is not an open-ended process and need to get concerns out so they can address them.

Christensen stated the issue we're having is because been there longer doesn't mean you should get paid more, it's the job trying to pay and pay for the job at market and that's the problem that employees are having now, and hope that the 5-year person or the 15-year person as they move through the system get the rate increases but hope they will move up in the system if the job openings or move laterally within the city; and that's the fundamental compensation issue we have right now and why would someone get paid for doing the same thing for 15 years vs. 5 years and why get paid more because they've done it longer if it doesn't take any more skill to do it - pay for performance and pay the employee for the value of the service he or she is performing.

Council Member Brooks stated this is complicated process and talking about a pay plan but it goes far beyond that because we're also impacting the credibility and relationship between management and the employees and how this will go forward and how well the performances will be from all our employees and from department heads.

Kreun stated in the longevity situation that in 2003 there is longevity component and once that is put into the salary package and if someone here for 5 years they get x number of dollars and for 10 years x number of dollars, and if go to pay for performance program basically a percentage increase if you perform, and that longevity will always be there from now as long as you are with the City and paid a percentage over on top of that longevity every single year, and longevity will continue as long as an employee, and why put another longevity in it on 2004 and another on 2005, etc. - put longevity pay in for one year and then its percentage wise and that percentage is increased and getting a pay increase on the longevity every year. He stated new employees and existing employees will be based on their performance and question asked how a service industry can be rated - if you come in on time, show up for work every day, make suggestions on how to save supplies and reduce time, leader in your department - that becomes a part of your pay increase and if show those skills will be paid more than the next person that does not show those skills. He stated the current employee gets longevity pay, which will increase over and over, plus the ability for pay increase due to performance while the new individual coming in will only have pay increase on performance.

Mr. Bunce stated the employees have not seen the measurables they've collected from other cities, they have all the tools they want to provide to go forward and at a point in time it will either become evident that this is correct or that it's not and that we should continue with longevity. He stated they survey results were very helpful to staff.

Christensen stated they can move this ordinance tonight for first reading and the pay for performance and that he suggested how they get that in the ordinance by using the words
"performance, skills" etc. so it is part of the ordinance and has to be something that is considered and becomes part of our policy, and if pass the ordinance they it will be something the department heads will have to work with in developing a policy.

Kerian asked if it would be possible as working with the employees to come up with or run through some scenarios, including the merit and how that might be taken into account or not, and to try to see how they can move that to understand and if there are some ways that are acceptable if these items are considered and what might be some models for that. Mr. Bunce stated that start using the term experience level and that was equivalent of longevity and there are a lot of options to cover and for 2003 longevity is still there. Gershman stated that longevity is an entitlement but trying to get away from that to move over to performance, and person there number of years is more valuable and that is how end up compensating but thinks it is the institutionalization of it as an entitlement they have some concerns with.

Glassheim stated he sees longevity as a management tool where we desire to have people stay and it is an entitlement and we desire it to be an entitlement because we desire to make people plan to want to stay here over time and something we went into it as an agreement with employees because it was to their benefit as well as city's, when go to pay for performance it makes less commitment and less long range commitment when people considering their career plans.

It was moved by Christensen and Kreun to adjourn and to reconvene as the city council.

Ed Grossbauer asked if they knew how much they were talking about - 6 years $45/mo., and after 20 years $85/month. He stated it is funded for 2003 and will talk about this in 2004, but wants communication lines to be open and want to be able to talk about this, and consultant has recommended going to a different type of longevity plan and more expensive than what we have right now, knows we're under budget constraints; majority of employees live here and continue to pay assessments, etc. and cost of living for employees increases also; and longevity is vital part of the benefit package that is offered to the employees and should continue.

Glassheim stated there was concern by employees that they had a lot of unanswered questions and lot of uncertainties, lot of things answered, but if other items or issues that are uncertain. Mr. Grossbauer stated the communication lines have been reopened, when the wage study committee had met and after the consultant's report was accepted the committee was dissolved and HR was charged with completing the survey and to implement the program, and little communication with employees at that point; that Mr. Bunce and Mr. Duquette have opened those up and getting answers to the questions they have answers to, but not all of the answers are out there yet.
Glassheim asked if there were too many uncertainties to at least pass a first reading; Mr. Grossbauer stated they also want to get this moving forward so they don't hold this up past the end of December and if the council so desires and can get everything answered to the satisfaction of the council and the employees, and would encourage them to accept the first reading and have time to meet with Mr. Bunce and Mr. Duquette and council people but to move forward in January.

Mr. Swanson stated the vast majority of discussion tonight has had nothing to do with the ordinance, only to do with the pay plan which is not even on the agenda nor before you for action, procedurally what you are doing tonight, assuming you reconvene back to the city council, is only introducing the ordinance for first reading; that upon approval of first reading and upon approval of second reading of the ordinance, you would then adopt by resolution the 2003 pay plan. He stated that's where a bulk of the issues that have been discussed relate to, although many relate to the 2004 pay plan insofar as longevity is included in the 2003 plan. He stated they draw a distinction between the ordinance and the pay plan as they are not interchangeable. Christensen stated that at the last meeting they can pass this as far as the implementation of the pay plan under this ordinance that they pass in the year 2002, and if some issues that have to be addressed that don't get done between now and the end of the year, the pay plan can be retroactive in light of the policy we implement by resolution.

Upon call for the question to adjourn, the motion carried 5 votes affirmative.

Respectfully submitted,
John M. Schmisek, City Auditor