5.4 ERMUSR 02-132024��i
Elk River
Municipal Utilities
UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
February 13, 2024
5.4
SUBJECT:
Compensation Study Update
ACTION REQUESTED:
Approve comparable peer utilities
for the 2024 Compensation Study.
BACKGROUND:
At the December 2023 commission meeting, the Commission approved entering into a
professional service agreement (PSA) with Baker Tilly to complete a company -wide
compensation study. The next steps outlined in the associated December commission report
included: 1) the review and submittal of job descriptions, and 2) the identification of
comparable utilities. After review by the respective manager, human resources, and the general
manager, all 35 job descriptions currently on file have been submitted to Baker Tilly. The
second step, identification of appropriate comparable peer utilities, is the subject of this report.
Future next steps, undertaken once the comparable peer utilities have been approved, are
provided at the end of the report.
DISCUSSION:
Baker Tilly has recommended a list of comparable and competitive peer organizations to
include in the study. Their recommended list, based on labor market competition, population
served, cost of living, and cost of labor, is provided in the table below.
Population
Cost of
Cost of
Utilities Organization Name
Served
Living
Labor
Anoka Municipal Utilities - City Owned
17,900
94.8
105.4
Austin Utilities
26,200
83.9
93.7
City of Chaska Utilities - City Owned
28,000
93.4
105.5
Connexus Energy
95.6
105.4
Great River Energy
98.0
105.6
City of Moorhead Utilities - City Owned
44,700
91.1
93.5
City of North St. Paul Utilities - City Owned
12,600
97.8
105.4
Owatonna Public Utilities
26,400
90.1
92.5
Shakopee Public Utilities
44,600
93.4
105.5
Wright Hennepin Electric
96.6
105.5
Elk River Municipal Utilities
26,200
95.4
105.4
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A custom market survey will be distributed to each of the recommended peer organizations
requesting base pay ranges for analogous positions. The survey will include a minimum
qualification and a summary of work performed by each position to assist peers in matching
their positions. Baker Tilly will review and validate survey responses to confirm a 75% overlap in
duties and responsibilities, as this is the best practice definition of a "good" match.
If needed, Baker Tilly recommends identifying two standby peers should any of the primary
peer utilities not respond to the market survey. Using the same criteria as before, Baker Tilly
recommends the City of Buffalo Utilities and Hibbing Public Utilities be used as standby peers.
If specific positions do not have adequate comparative data from the approved peer utilities,
Baker Tilly will use the following published compensation sources as private sector
representatives:
• CompAnalyst
• Economic Research Institute
• PayFactors
As is common in professional compensation studies, Baker Tilly may apply adjustments as
needed to establish consistency in market comparisons. These adjustments may include:
• Adjustments for differences in workweek hours
• Aging the data if it's not for the current fiscal year
• Geographic cost of labor adjustments
NEXT STEPS:
Baker Tilly will deliver three market reports once the compiled data has been analyzed for
quality assurance. First, an aggregate of the average minimum, midpoint, and maximum for
each benchmark; second, a comparison of ERMU's current midpoints against the market
average midpoint; third, a comparison of the full range against the market.
Baker Tilly will prepare a new pay structure for ERMU based on the results of the project. Grade
assignments will be established based on job evaluation results (per state law). The relationship
between internal and external data points will be measured through a regression analysis to
ensure an unbiased and equitable approach to establishing grade assignments and pay plan
adjustments. These results will be reviewed and finalized with ERMU's project team.
Baker Tilly will prepare and present a final report to explain the methodology followed, the
results produced, and recommendations to ERMU based on those results. The report will
specifically document position title recommendations, market survey results (average
minimum, midpoint, and maximums), proposed pay structure(s), recommended grade
assignments, and implementation costing calculations for each scenario. This report will not
document or publish employee -specific information.
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Baker Tilly's methodology is based on best practices outlined by World at Work and the Society
for Human Resources Management (SHRM). Baker Tilly stands behind the results of their
studies and will fully train appropriate staff to maintain the new classification and
compensation system. That said, we may still use Baker Tilly for ongoing maintenance or
updates to the compensation system such as new or significantly revised job descriptions.
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