4.2. ERMUSR 12-14-2010Elk River ~ .
Municipal Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
UTILITIES COMMISSION MEETING
Phone: 763.441.2020
Fax: 763.441.5099
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. - Director of Operations
John Dietz, Chair
Jerry Gumphrey, Vice Chair
D 1 Thom son, Trustee
MEETING DATE: AGENDA ITEM NUMBER:
December 14, 2010 4.2
SUBJECT:
2011 Wa e Pro oral
BACKGROUND:
The process for annual wage increase proposals is handled over two separate commission meetings. At
the November Commission meeting, management provided industry comparisons, economic trends, and
financial impact information. Included was the metro average survey of seven predetermined peer
utilities. Also, the Consumer Price Index (CPI) was provided. The employees were provided the
opportunity to address the Commission with suggestions and requests. At that time, a request was made
for the Commission to consider adopting a storm pay policy. This submitted proposed policy is attached.
The Commission then requested additional benefits analysis is done. Staff also was to provide an
additional comparison analysis of municipal utilities' wages.
DISCUSSION:
Not all of the metro seven utility's used in our metro average provided benefits information. Staff was
able to establish a relatively complete "big picture" of where ERMU's benefits package compares with
these other Utilities.
Many of the benefits were handled similarly with all of these utilities including ERMU. The minimum
call-out time, provisions for double time, sick days per year, holidays/personal days, life insurance, and
long term disability benefits were very similaz. There are a few azeas within the benefit packages that aze
worth highlighting. Of the seven, only one of the other utilities handles promotions and layoffs based
only on merit as does ERMU. The other six have seniority provisions as a primary part on those types of
labor decisions. This is important because under the current practice at ERMU, employees that work hard
and want to advance have equal opportunity as those with more years experience. Some of the utilities
have paid time off in lieu of vacation sick time. But the application of these different methods of time off
is similar. The total time off amount [hat can be "banked" at ERMU is more similar to that of the other
municipal utilities than the cooperative utilities in the survey. All the utilities have retirement plans of
one form or another. The other municipal utilities and ERMU have PERA and the cooperatives have
private retirement plans. The cooperative utilities have some other benefits that the municipals do not
have. There aze some provisions for meal tickets/per diem, storm pay, laundry service. One of the
cooperatives has an annual bonus that can range up to 10% which is based on multiple criteria including
system reliability, company financial strength, and customer satisfaction. There is at least one out-state
Minnesota municipal that also awazds an annual bonus which is based on employee performance
evaluation.
The biggest vaziation in benefits between these utilities comes in the health insurance provided. This also
is a very difficult benefit to compaze value and not dollars. The insurance plan that ERMU provides has
one of the highest premiums of the utilities in the survey. Of the municipal utilities in the survey that
provided information, ERMU is the second highest. Compared to the two cooperatives that provided
premium information, ERMU is in the middle. The value of having a more robust health plan with high
premiums is hazder to compare. Many of the utilities have or are in the process of transitioning to high
deductable/low premium health plans with healthcare savings accounts. These plans are difficult to
compare duectly to the co-pay type plans. This comparison may be premature because of the current
healthcare reform and uncertainty in the future of healthcare. In a very general compazison, ERMU offers
a very good health insurance plan which comes at a cost [o the company. This cost is not the highest of
the cooperatives or municipal utilities in the survey, but is neaz the top.
The wage increase numbers used in November for the metro average comparison appeaz to be good. One
of the cooperatives had not finalized their contract, but felt comfortable with the number staff had used in
the comparison. So as noted in November, the percent change in the metro average wage from 2010 to
2011 has an increase of 2.03%. This is the increase that would be required to not lose ground with the
metro average, but also not gain ground. An increase of 6.13% would be required to achieve the metro
average wage for the lineman position. As provided in November, the Consumer Price Index is 2.33%.
For sake of compazison, excluding the cooperative utilities and only analysis the municipal utilities in this
metro survey would result in an approximate 2% increase to achieve the average of these metro municipal
utilities. The additional analysis that has been done comparing municipal utilities from the metro and
those out-state is attached for commission review. This survey indicates that to meet the average of these
municipal utilities, a 0.263% increase would be needed.
Elk River Municipal Utilities is not a cooperative. And although municipal utilities and cooperatives are
both public power and have the same mission, there are differences because of our governance. Elk River
Municipal Utilities is more similar to a metro utility that anout-state utility. The metro average survey
has served ERMU well for over two decades as a tool used to establish wage increases. This does not
imply that the state wide survey isn't relevant. Both surveys offer different view and can both be used as
tools for making an informed decision.
There is some warranted discussion on difference and separation in governance between a municipal
utility and their City. The labor pool for the utilities is different from that of law enforcement, fire,
streets, and administration. This makes it difficult to apply the same logic uniformly. It should be
recognized that even though a municipal utility is government, the provisions of state statue aze applied
such that the municipal utilities aze meant to be operated as a business. As provided by state statue and
bylaw, setting of compensation should be given sepazate consideration. Of those metro municipal utilities
surveyed, half are handling wage increases differently than their City.
ACTION REQUESTED:
Management recommends awarding the 2.03% wage increase needed to not lose ground with the metro
average. Management also recommends approving a plan to reestablish the metro average in the future.
As submitted in November, committing to a 1.03% adder will reestablish the metro average in 4 years.
This scenario would result in an increase of 3.06% for 2011. Management recommends adopting the
proposed storm pay policy contingent upon legal review of the language.
Storm pay
Employees assigned to work at another distributibh system to assist writh
restoration following a storm, will receive time and one half (1/2) (double time on
Sunday) for all haurs worked. The Utility will use its best efforts to rotate and
distribute these assignments equally with priority on maintaining proper staffing
levels at Elk !liver utilities.
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Water Superintendent
Municipality 2010 Annual 2010 Hourly COLA 2011 Annual 2011 Hourly
Alexandria 0.0%
Anoka 70,595 33.94 sew<r znd wzrer s~c~ 0.0% 70,595 33.94
Brainerd 73,767 35.46 1.0% 74,504 35.82
Chaska 1.6%
Detroit lakes F 35.61 waver/wn:mwtr sup 3.0% 76,290 36.68
Fairmont 4.0%
Hutchinson 82,776 39.80 0.0% 82,776 39.80
New Ulm 0.0%
Willmar waz<r aye eeznng suo~ 0.0%
Worthington 76,440 36.75 2.0% 77,969 37.49
Average 75,529 36.31 76,427 36.74
60th Percentile 75,017 36.07 76,962 37.00
Eik River 81,854 39.35
Electric Superintendent
Municipality 2010 Annual 2010 Hourly COLA 2011 Annual 2011 Hourly
Alexandria 0.0% D 0.00
Anoka 0.0% 0 0.00
Brainerd 1.0% 0 0.00
Chaska 1.6% 0 0.00
Detroit Lakes _ ~~t 3.OYo 0 0.00
Fairmont 4.0% 0 0.00
Hutchinson 2.0% 0 0.00
New Ulm 0.0% 0 0.00
Willmar v,c,nr 0.0%
Worthington 2.0% 0 0.00
Average #DIV/0! #DIV/0! 0 0.00
60th Percentile #NUM! #NUM! 0 0.00
Elk River 86,838 41.75
Lineworker (Journeyman)
Municipality 2010 Annual 2010 Hourly 2011 Annual 2011 Hourly
Alexandria 0.0%
Anoka 71,926 34.58 0.0% 71,926 34.58
Brainerd 58,822 28.28 1.0% 59,411 28.56
Chaska 72,904 35.05 1.6% 73,998 35.58
Detroit Lakes 62,878 30.23 3.0% 64,765 31.14
Fairmont 63,336 29.85 4.0% 65,869 31.67
Hutchinson 2.0%
New Ulm 62,150 29.88 0.0% 62,150 29.SS
Willmar 0.0%
Worthington 2.0%
Average 65,336 31.31 66,353 31.90
60th Percentile 63,336 30.45 65,869 31.67
Elk River 71,400 34.33
12/03/2010
Water Operator
Municipality 2010 Annual 2010 Hourly 2011 Annual 2011 Hourly
Alexandria 0.0%
Anoka a,..
~ -' ~ Water/wastewater
0.0%
Brainerd 50,482 24,27 1.0% 50,986 24.51
Chaska 1.5
Detroit Lakes s ~~ °t'r 25.69 watedwasmwacer 3.0% 55,038 26.46
Fairmont 51,522 24.30 4.0% 53,582 25.76
Hutchinson 51,283 24.66 0.0% 51,283 24.66
New Ulm 51,916 24.96 0.0% 51,916 24.96
Willmar 54,579 26.24 0.0% 54,579 26.24
Worthington 2,p%
Average 52,203 25.02 52,898 25.43
60th Percentile 51,916 24.96 53,582 25.76
Elk River 54,382 26.15
2011 COLA
Alexandria "wages have not been set"
Anoka 0°~
Brainerd 1%effective 12/31/10 - if union approves
Chaska 1.6%
Detroit Lakes 3% -negotiated in 2009
Fairmont 4%
Hutchinson City 0%-water
Hutch Utl Comm 2% -electric
New Ulm "it looks doubtful"
Willmar they don't know
Worthington 2%
Data gathered via a-mail to HR, admin or finance staff,
Data highlighted in blue is from the League of MN Cities salary survey.