D Amendment/City of Chanhassen Pay Compensation Plan
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone 952.2271100
Fax 952.2271110
Building Inspections
Phone 952.227.1180
Fax 952.227.1190
Engineering
Phone 952.2271160
Fax 952.227.1170
Finance
Phone 952.2271140
Fax 952.2271110
Park & Recreation
Phone 952.2271120
Fax 952.2271110
Recreation Center
2310 Coulter Boulevard
Phone 952.227.1400
Fax 952.2271404
Planning &
Natural Resources
Phone 952.2271130
Fax 952.2271110
Public Works
1591 Park Road
Phone: 952.2271300
Fax 952.2271310
Senior Center
Phone 952.227.1125
Fax 952.227.1110
Web Sile
www.ci.chanhassenmn.us
1)
MEMORANDUM
TO:
Todd Gerhardt, City Manager
FROM:
Justin Miller, Assistant City Manager-s #\
July 15, 2005 ~tJ ,
~
Amendment to City of Chanhassen Pay Compensation Plan
DATE:
RE:
BACKGROUND
The City of Chanhassen has a pay compensation plan that has been in place for
several years. It is based upon a grade and midpoint system, where each
employee is classified in one of ten grades and a midpoint is determined for each
grade. The midpoints were established many years ago as an average wage for
similar jobs in the private and public sector. For the most part, these midpoints
have been adjusted for inflation each year.
Below is an outline of how the current plan is set up:
Annual Cost of Step Increase (up Lump Sum
Living Increase to 3% based on Payment (up to
performance) 2% based on
performance)
If salary is <100% Eligible to receive Eligible to receive Eligible to receive
of midpoint
If salary is > 100% Eligible to receive Not eligible to Eligible to receive
of midpoint receIve
This system has created several problems. One, it only allows the city to
compensate employees up to the average wage of comparable jobs. Second, it has
allowed a majority of employees to "top out" in their current range. In 2005, 52
of 73 employees were above 100% of the midpoint, allowing them to receive only
the COLA and lump sum increases. Lastly, it has created a system where
employees performing the same jobs are paid different rates, and does not allow
the lower paid employee to ever catch up. Below is an actual example:
Em loyee A
Em loyee B
2005 Salar
$21.92
$22.53
2005 Mid oint
$21.51
$21.51
% of Mid oint
102%
105%
Since both employees are above 100% of the midpoint (due to their salary being
higher than the midpoint when the system was established), and their hourly wage
will be adjusted for inflation at the same rate as the midpoint, Employee A will
never be able to catch up to Employee B
The City of Chanhassen · A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
This situation raises an issue for two reasons. One, employees performing the
same duties should at least have the opportunity, based upon performance, to be
paid at the same rate. Second, the city is periodically required to submit a pay
equity report to the State of Minnesota. This report informs the state of any pay
discrepancies among similar employees, focusing especially on differences
among male and female employees. Under the current system, the city faces the
possibility that we could not comply with the requirements of this report.
For the past several months, staff has been meeting with representatives of each
department to come up with a solution to these issues. The recommendations
coming out of this committee are:
. Increase the maximum allowable rate of pay from 100% to 110% of the
midpoint.
. Re-classify 13 employees to a higher pay grade. The duties of these
employees are more comparable to the higher grade that they will be
moved into.
These recommendations will put all employees at or under 110% of the midpoint
and will allow employees performing similar duties the opportunity to catch up to
those earning a higher wage. During this process, staff also compared our wages
to similar communities. The Association of Metropolitan Municipalities annually
conducts a compensation survey of all area public sector employers. For the most
part, the City of Chanhassen's wages are comparable to the market. However, the
city is currently classified as a Group Six city, which puts us in a class with cities
under 25,000 in population. As the city crosses this threshold, the midpoints may
need to be adjusted to more accurately reflect market conditions.
If the above recommendations are implemented, staff estimates that 2006 salaries
would be roughly $60,000 above and beyond the normal increases that are
budgeted. About 63% ($37,800) would apply to the general fund, with the
remaining amount being applied to enterprise funds.
RECOMMENDA TION
Staff is looking for feedback from the City Council, but recommends that the
changes outlined above be adopted and factored into future operating budgets.