EMPLOYEE COMPENSATION BUDGET WORK SESSION APRIL 4, 2013 TOPICS FOR DISCUSSION COMPENSATION APPROACH DEMOGRAPHICS OF WORKFORCE PERFORMANCE MANAGEMENT FY 2014 CHANGES BENEFITS 1
TOTAL COMPENSATION APPROACH Promote the compensation philosophy with the strategic plan Continue to recognize the value of all employees by ensuring pay systems are equitable and compensation is competitive when compared to the regional labor market Create a balanced and sustainable benefits plan Begin shift to a pay for performance approach 2
DEMOGRAPHICS OF THE WORKFORCE FTEs by Lines of Business Child, Youth and Family 33% Public Safety 41% Transportation and Community Internal Development Services 14% 12% Roughly 71% of the workforce consists of General Schedule employees, and 29% are Uniform Personnel 87% of all City employees work full-time 3
DEMOGRAPHICS OF THE WORKFORCE City-Wide Age Distribution Employee Years of Service 600 600 51% GS, 47% PS 53% GS, 56% PS 500 28% GS, 6% PS 500 29% GS, 25% PS 400 19% GS, 38 % PS Employee Count 400 300 20% GS, 28% PS 300 200 200 100 100 0 0 25 or less 26-35 36-45 46-55 56-65 66 or 0-5 Yrs 6-10 Yrs 11-15 Yrs 16-20 Yrs 21-25 Yrs >25 Yrs greater General Schedule Public Safety General Schedule Public Safety Represents all Regular Active Full and Part-time Employees as of January 2013 Represents all Regular Active Full and Part-time Employees as of January 2013 4
DEMOGRAPHICS OF THE WORKFORCE Historical FTE Changes Citywide FTEs 2,700 120.0 2,665 103.8 100.0 2,650 FTE Count 80.0 66.7 2,581 60.0 FTE Count 2,600 45.9 40.0 2,549 2,545 26.0 30.0 27.8 2,540 19.8 23.1 20.1 2,533 13.0 12.9 13.3 20.0 2,550 0.0 2,500 2,450 FY09 FY10 FY11 FY12 FY13 FY14 FTEs Added Eliminated Since 2009 the City has added 141.1 FTEs and eliminated 261.3 FTEs The majority of the reductions over the past five years occurred during FY 2010 and FY 2011 in response to lower City revenue growth than previous years 5
CITYWIDE TURNOVER Public Safety Multi-Year Turnover General Schedule Multi-Year Summary Turnover Summary Turnover Retirement Turnover Retirement 12.0% 12.0% 10.0% 10.0% 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 6
ALEXANDRIA IS FINANCIALLY SUSTAINABLE, EFFICIENT, COMMUNITY ORIENTED AND VALUES ITS EMPLOYEES Objective: Maintain a competitive compensation program that attracts, retains and motivates a workforce that can deliver quality services and programs to the community, reflects the diversity of that community, and provides for the fair and equitable treatment of all those employees. 7
ResultsAlexandria 1. Plan & Define Measures 5. Report to and 2. Allocate Engage with the Resources to Public Accomplish the Plan 3. Deliver Services to 4. Evaluate and Accomplish the Plan Implement Ideas to and Measure Improve the City 8 Performance 8
WHAT ARE WE TRYING TO ACHIEVE Align work with the Strategic Plan Provides employees with greater understanding of how their work contributes to the Strategic Plan Foster accountability Amend pay practices and policies Recognize and reward performance 9
ALIGN WORK WITH THE STRATEGIC PLAN The City’s “destination” which defines the long term benefit and results of the City’s services to the public with City Strategic Plan measurable outcomes to track our performance The “roadmap” of how departments Work Plans will achieve the City’s strategic plan >Bus. plans including indicators to track performance Job Definitions of job duties so that Desc. employees know what work they are responsible for and how it contributes to accomplishing the work plans 10
RECRUIT, RETAIN, RECOGNIZE Amend Pay Pay For Policies and Performance Practices Pay Promotion Executive Pay Career Ladders Compression Policy Bands Professional Merit Pay Development Fund Innovation Fund 11
ADDRESSING PAY COMPRESSION Public Safety Work Groups (PSWG) identified compression issues in Police and Sheriff FY 2013 $400,000 allocated to address public safety pay compression Will impact 50 employees in Police and Sheriff • 34 Police Supervisors expected to receive an average salary increase of 7% • 16 Sheriff Supervisors expected to receive an average salary increase of 7.5% Elevations anticipated to occur April 2013 with pay retroactively adjusted to March 2, 2013 PSWG’s identified need to amend current pay policies to ensure compression does not continue in the future 12
ENHANCING CITY PAY POLICY Problems with current pay policies and systems: Results in backward movement on pay scale Pay increases are not consistent across the pay scale Creates a disincentive to promote Causes leapfrogging and pay compression 13
ENHANCING CITY PAY POLICY Increase between grades is approximately 5% Recommending promotional pay cap of 20% plus placement. Mitigate pay compression issues and eliminate the disincentive to promote. Will increase the cumulative earnings of employees who show leadership and move upward in the organization. Will enhance the City’s competitive position. Will be applied city-wide and also allows for the implementation of public safety pay compression solution. 14
CAREER LADDER PROGRAM Improve Service to Public Career ladders provide Develop upward mobility to Recruit and Highly Retain Top employees who grow in skill Skilled Talent Workforce and capability and demonstrate a readiness Career Ladders for increased job responsibilities. Increase Incentive to Flexibility to Increase Skills Manage Staff and Resources Competencies Provide Career Path Growth within Organization 15
CAREER LADDER EXPANSION • Currently we have 21 career ladders with 753 employees FY 2013 $500,000 PROVIDED in the ladders TO ELEVATE EMPLOYEES IN • Elevated 116 Employees (91 Positions in Public Safety) EXISTING CAREER LADDERS • Annualized cost of FY13 incorporated into FY14 budget • Expand career ladder program within General Schedule • Begin phased approach to the implementation of a FY 2014 $900,000 multi-level career ladders for Fire Fighters, Medics, and PROVIDED TO CONTINUE Deputy Fire Marshals COMMITMENT TO CAREER • FY14 increase pay grades to align existing jobs with LADDER IMPROVEMENTS the market AND EXPANSIONS • FY15 Fund full development and implementation of additional career ladder levels 16
EXECUTIVE PAY BANDS Introduction of two new pay bands 1) Deputy City Managers and 2) Department Heads In FY 2014 employees within new pay bands will be reviewed for merit adjustments based on the current system Places emphasis on performance management and accountability for those charged with leading the City’s strategic mission Will serve as a pilot program to determine how pay bands could be expanded to other levels of the organization 17
FY 2014 PROPOSED SALARY ADJUSTMENTS Full merit between 2.3%-5% for all eligible employees Average of 3.1% for General Scale and 3.6% for Public Safety Top of grade 2.3% one-time merit payment for all eligible employees on their anniversary date No across the board salary adjustment since FY 2008 There will be a 1% pay scale adjustment for VRS changes through FY 2017 for a total cost of $5.8 million 18
BENEFITS HEALTH INSURANCE VIRGINIA RETIREMENT SYSTEM PUBLIC SAFETY PENSION OTHER POST EMPLOYMENT BENEFITS (OPEB) 19
HEALTH INSURANCE DESIGN In prior years, the City worked to keep the health insurance plan designs consistent while addressing any increase in costs through annual premium increases Going forward, in an effort to provide a sustainable health insurance plan and give employees greater flexibility with how to spend their money, the City is now making a philosophical shift to plan redesign coupled with lower premiums 20
HEALTH INSURANCE WITH NO PLAN REDESIGN Multi-Year Projected Health Costs FY 2009 to 2012 - actual spending FY 2013 - FY 2019 - projected spending $50,000,000 9.5% or $2.7 million $45,000,000 increase $40,000,000 53% or $10.7 million increase $35,000,000 $38.1 $30,000,000 $34.8 $31.8 $25,000,000 $29.0 $26.5 $24.2 $20,000,000 $22.1 $18.6 $15,000,000 $18.3 $17.7 $17.4 $10,000,000 $10.2 $9.3 $8.5 $7.8 $7.1 $5,000,000 $6.5 $5.9 $4.4 $3.6 $2.6 $2.7 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Projected Projected Projected Projected Projected Projected Projected ($ Millions) Employee Health Cost City Health Cost *Does not factor in changes from Affordable Care Act
HEALTH INSURANCE METHOD FOR REDUCING COSTS Plan design and renegotiation with Kaiser and UHC Included the introduction of deductibles and increased copays for certain services within the plan The proposed budget reflected a 7.9% increase over FY 13; this included a savings of $1.6 million for the City This estimated savings provided funding for compensation adjustments (i.e., merit-step increases in FY14) Following the proposed budget, continued negotiations with health care providers is expected to result in additional premium savings of roughly $950K ($750K City; $200K Employee) The $750K City share will be used to reduce employee premiums and adjust the HMO City/Employee contribution ratio from an 80/20 split to 22 83/17
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