#5 Discussion and possible action on proposal to authorize one-time merit
CITY MANAGER MEMORANDUM
November 28, 2011
TO: City Council
FROM: Eric J. Levitt, City Manager
SUBJECT: Discussion and possible action on proposal to authorize one-time merit for
Administrative Employees.
Executive Summary
The City Manager proposes that the Council authorize that the City can provide a one-
time lump-sum merit that will not be a part of the base pay in December to
Administrative Employees. The one-time lump-sum merit is proposed to be capped at
1.5% for sworn Administrative public safety employees and be capped at 2.25% for
non-sworn public safety and non-public safety Administrative employees.
The 1.5% one-time lump-sum merit for sworn public safety administrative employees
would have a maximum 2011 budget impact of $33,257. The 2.25% one-time lump-
sum merit for non-sworn public safety and non-public safety administrative employees
would have no budget impact for 2011 because the savings from employees
contributing 5.8% to the pension would offset the 2.25% one-time merit maximum.
Recommendation
The City Manager recommends the 2.25% one-time lump-sum merit for non-sworn
public safety and non-public safety administrative employees due to these employees
not receiving a merit increase this year and seeing a 5.8% reduction in net pay since
August. This 5.8% reduction will continue in 2012 without any salary increase.
The City Manager also recommends the 1.5% one-time lump-sum merit for sworn public
safety administrative employees due to compression concerns and the fact that the
unions will receive a 1.5% increase via their contract.
Suggested Motion
Move to approve a maximum one-time lump-sum merit for non-sworn public safety and
non-public safety administrative employees of 2.25% December 31, 2011 and a
maximum one-time lump-sum merit for sworn public safety administrative employees of
1.5% prior to December 31, 2011.
Background
The City budgeted for no merit increases in 2011 for administrative employees, but also
anticipated paying the full pension payment in 2011. With the change in state law this
brought a saving of $192,500 across all funds that was unanticipated in 2011. This also
resulted in a net decrease in pay of 5.8% for non-sworn public safety and non-public
safety administrative employees.
Due to economic constraints, the City is not budgeting for a cost of living or merit
increase for administrative employees in 2012. Union employees are receiving a 1.5%
to 1.75% cost of living increase in 2012 via the last year of their contract. This
requested action will do two things. It will address the compression issue in public
safety and provide a one-time lump-sum merit that will not be part of the base pay for
non-sworn public safety and non public safety administrative employees by utilizing
some of the unanticipated savings.
In evaluating how other cities in our region have addressed the pension contribution, it
appears that it ranges from providing increases up to the 5.8% in base to not providing
any offset to the pension contribution.
Due to Janesville’s economic climate, the City Manager cannot recommend providing a
base salary offset to the pension contribution. The future employee pension
contributions in part have helped the City to maintain certain service levels.
The one-time lump-sum merit is recommended due to the high quality work that many
employees have provided to the City over the last year. The City has been very
conservative in managing its personnel costs over the last 4 years by holding positions
vacant and eliminating positions, as well as the reduction in pension costs. We are
constantly asking our employees to do more with fewer resources.
Between 2009 and 2012 the City has had flat to a slight reduction in salaries. Also, the
decrease of 1% in wages and benefits
City has seen a over that 3 year period. In the
decreased
General Fund total personnel costs from $28.74 Million to $28.47 Million
decreased
over the last 3 years and total wages in the General Fund have from $19
Million to $18.96 Million. In comparison, total personnel costs in the General Fund
increased by 13% and wages increased by 9.8% over the 3 year period from 2005 to
2008.
With the above perspective, the City Manager believes it is important to continue to
reward employees for their quality work in some way and the one-time lump-sum merit
without an impact to the 2012 budget year would be the best mechanism to do this.