5.7. SR 10-09-2006
City of Elk River Item Number
REQUEST FOR COUNCIL ACTION 5.7.
Agenda Section I Meeting Date Prepared by
\\1 orksession October 9, 2006 Lori Tollnson, City i\chninistrator
Item Description Reviewed by
Pay Plan Reclassification Study.
Introduction
-L\t sev-eral previous meetings tlle Cit)T Council has re\Tie\ved a proposed Ilierarcll)' and pay plan prepared
by Rod I(elsey of Riley, Dett1nann, and I(elsey. Tile third step in tile process is to dev'elop an
impleluentation plan.
.i\gain, it is important to relnember tllat dus study \vas done to address internal issues in dle city's pay
stlucture due to tile reorganization and to clleck our pal; against tile market and to adjust it accordingly.
Tile study cOlnpleted by ~lr. I(elsey produced a proposed pay plan tllat provides internal balance and
places tile city.'s pay in tlle 60th percentile of dle comparable cities used for dle market study. i\S a result,
pay range adjustlnents \"vere lnade to lnost positions.
Discussion
TIle Council has already re\Tie\ved tlle proposed hierarcITY and pay plan and recei\Ted copies of proposed
rev'isions to bodl dle hierarcI1Y and dle pay plan. TIle rev"ision to tlle pay plan addresses tlle concern of
SOlne Councillnen.lbers about tlle pay for tlle finance director and tlle police chief.
The Council has also recei\Ted information on a proposed itnplelnentation plan. Tile city Ilas modified its
pay plan sev'eral times in dle past. TIle proposed implelnentation plan for tile 2007 pay plan is consistent
\VitIl past itnplelnentations. In sUlnmary, tllat lneans tllat elnployees recei\Te a cost of living increase on
January 1 (a tlltee percent CaLL\. is built into tlle proposed 2007 pay plan); elnployees continue to recei\Te
steps on July 1 if tlleir performance is satisfactory, including elnployees \vl10 \vere at tile top of tlleir pay'
range but no longer are because tlleir pay range Ilas increased; no employee llas his/ller pay reduced
belo\v last year's pay rate ev.en if tlle reclassification caused lus/ller pay range to decrease; and employees
\vl10 are abo've tile pay plan continue to recei\Te a pay increase equi\Talent to tile cost of liv'ing increase
\vitll one-llalf of it being applied to tlleir base pay. -L~dditionally, unlike in tile past, tllere are se\Teral
employees \vl10 are currel1tly paid belo\v tile bottoln of dleir ne\v pay grade. -LL\fter exploring se'veral
options to deal \vidl this issue, tlle Personnel COlmmttee is recolmnending that tllese employees recei\Te
step lllcreases on J anua!y and July as long as needed to bring tllelll up to Step ..t\. of tlle pay plan.
Ob'viously, there are many \'lays to itnplement dle pay plan; eacll \v.itll a different cost. On the lo\v side,
tile total cost for ilnplementing based on one \Tal1.ation is approxilnately $36,000, \\lhile on tile higll end it
could range up to $141,000 or lnore. Using tlle approacll reconunended by dle Personnel Committee, tlle
cost is approximately $68,000 (including benefits) for all affected employees. TIle actual cost \'lill cllange
depending upon tlle adjust1nents tIle Council makes to tile proposed itnplementation.
S:\Council\Lori\200G\Pay Plan Study 1009 GG.doc
Finally, tlle Council may adjust the proposed implementation plan in any \vay it cllooses. .l'\s I stated
earlier, tllere are many \vays to transition to tlle ne\v pay plan. For exalnple, tlle Council may clloose to
cllange tlle \vay elnployees belo\~l step .L"\ are paid or tlle \vay employees ov"'er the top of tlleir pay range are
paid. .L~fter tlle Council decides on an implelnentation plan, the final cost can be deterrnined.
Financial Impact
Financialitnplications Y"ary depending upon tlle ilnplementation metllod selected.
Attachments
None
Action Requested
Council is asked to proY-ide input and direction to staff on tlle final hierarcllY, \vhicll version of tlle pay
plan tlle Council prefers, and tlle proposed unpletuentation plan. Follo\ving furtller direction from the
City Council, tlle dOCUlnents \vill be revised as needed and presented at a regular meeting for final
appro\ral.
Council Action
J\Io cion bv
Second by
\Tote
Follow Up
S:\Council\Lori\2006\Pay Plan Study 1009 OG.doc