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HomeMy WebLinkAboutAgenda - 10-13-1998 - 1Orange County Board of Commissioners Action Agenda Item Abstract Meeting Date: October 13, 1998 Subject: Employee Compensation Work Session Department: Personnel Attachment(s): 1- Memorandum with follow -up information to October 6 Board of Commissioners' Meeting 2- Overheads from October 6 Pay and Benefits Report Previously distributed under separate cover, Employee Pay and Benefits Report 1 Action Agenda Item No. Public Hearing: Yes No X Budget Amendment Needed: Yes No X Information Contact: Elaine Holmes, Personnel Director Extension 2550 Telephone Number: Hillsborough 732 -8181 Chapel Hill 968 -4501 Durham 688 -7331 Mebane 227 -2031 Purpose: To discuss Orange County employee pay and benefits for fiscal year 1998 -99 and beyond. Background: In the June Budget Work Sessions, the Board decided to schedule a work session on employee compensation for October 1998. At the October 6, 1998 Board of Commissioners meeting, the Board received a report on employee pay and benefits in preparation for scheduled October 13 employee compensation work session. In the October 6 meeting, the Board requested additional information on several specific questions. This information is provided in the attached memorandum. A copy of the overhead slides from the October 6 report is provided as Attachment 2. Recommendation: As the Board decides H: \e \payabsa.doc October 8, 1998 Orange County Personnel Department 208 South Cameron Street Tel: 919 732 -8181 Post Office Box 8181 919 968 -4501 Hillsborough, NC 27278 919 688 -7331 919 227 -2031 Fax: 919 644 -3009 October 9, 1998 MEMORANDUM TO: Orange County Board of Commissioners John Link, County Manager Q FROM: Elaine Holmes, Personnel Direct `~ SUBJECT: Employee Pay and Benefits — Follow Up Information to October 6 Meeting In follow up to the October 6 Board meeting and discussion of the Employee Pay and Benefits report, enclosed is the additional information requested. 1. Teacher Pay Attachment 1 is information on the teacher pay plan. Commissioner Halkiotis asked how the Service Based Pay option presented in the Orange County Employee Pay and Benefits Report related to teacher pay. W In concept, the teacher pay plan is based on years of experience. This is described under the salary schedule section of Attachment 1. This means a teacher with more years of service and experience is paid at a higher level than a teacher with less service and experience. This is the same concept as that presented in the Employee Pay and Benefits Report, Service Based Pay option; that is, employees advance in salary as they gain additional service and experience. As outlined in the report, the County option presented would require that the employee's performance be Proficient before salary advancement occurred. This is different than the teacher pay concept in that a teacher advances in the salary schedule irrespective of performance rating. 2. 1998 -99 Cost for 1997 -98 Pay Plan If Continued In response to Commissioner Gordon's request, Attachment 2 shows the estimated 1998 -99 cost for the 1997 -98 pay plan (Career Growth and Performance Awards) if continued in 1998- 99. 3 3. Lower Performing Employees Commissioner Gordon asked for additional information on how lower performing employees would be addressed under the pay options and whether there would be gradations within the Needs Improvement category. As Commissioner Gordon points out, there would be a range of work performance in the Needs Improvement category. This would range from employees who need to improve in several job areas and can do so with additional coaching to employees who may be in the final stages of the disciplinary process. From the standpoint of pay administration, these may all be within the Needs Improvement performance- rating category. In none of these situations would the employee receive an in- range salary increase and no differentiation of levels is necessary for pay administration purposes. The different gradations of performance within the Needs Improvement category come into play in how the specific work performance needing improvement is managed rather than in how pay is administered. It is not necessary to have different performance ratings to address the performance management issues. For each Needs Improvement rating, the WPPR program could require a supervisory action plan to address the specific job needs, whether these are coaching, training or disciplinary, with the objective of improving work performance within targeted time frames. An additional element of this in the future will be that the Manager will become involved in situations where the lack of progress in work improvement has reached a critical status such as if work performance involves serious deficiencies that have not been corrected. 4. Handling of Gradations of Performance Within the Proficient Category Under the Department Based Pay Option, the supervisor would be making individual salary decisions within the Proficient performance category. Commission Gordon asked how gradations of performance within the Proficient category would be handled. In this context, Commissioner Gordon also had asked about the performance rating levels at UNC -CH. Attachment 3 shows the UNC -CH performance rating categories. These are Outstanding, Very Good, Good, Below Good, Unsatisfactory and Final Written Warning. If the Department Based Pay option were pursued, the policy itself would include any limits established by the Board for salary increases - such as for employees below the midpoint an increase could be from 0 —3 percent and for an employee above the midpoint an increase could be from 0 -2 percent Within the limits established by the Board and the department's funding allocation, part of the Department Based Pay option would involve the department head determining a plan for awarding increases for employees in the department. This would be based on the department head's knowledge of the types of work performance occurring in the department and the possible gradations. There would be gradations of performance within the Proficient level. The Proficient level would encompass the "Very Good" and "Good' categories on the UNC -CH scale. Within the 2 Proficient category, there would be employees doing a good job as well as employees doing a good job and, on occasion, doing an exceptional job - such as in customer service, achievement of a specific objective, accomplishment of a particularly heavy workload or the like - which could be documented. The gradation of the latter group within the Proficient category would be higher and the department head could take this into account in allocating in -range increases within the department. The COLA/Market Based Pay and Service Based Pay options would not provide pay recognition for any gradations of performance within the Proficient category. 5. Handling Pay - Related Appeals Some of the pay options provide for additional decision - making on the part of the department head. A concern is this may lead to more pay related appeals. Commissioner Gordon asked how this could be addressed in a way that would not discourage supervisors and department heads from pay decision - making. In general, whether the appeal is pay related or other performance related issue, the Personnel Department and the Manager have reached a successful outcome in addressing the appeal. Regardless of which pay plan options the Board chooses to pursue, appeals will be addressed and successfully resolved. We note, as with other appeals, the strength and quality of our response depends on the preparation and good judgment exercised by supervisors and department heads. As noted in the Pay and Benefits Report, training is an important component of this. 6. Cost Neutral Pay Options Commissioner Gordon asked if the pay options could be addressed in a cost neutral way or what would be a cost neutral approach. Below is additional information related to this. ❑ A cost neutral approach has to be a relative one rather than based on a specific dollar amount. Factors that influence the required funding for pay and benefits include growth in the work force/addition-of positions, changes in the cost of living, changes in the cost for benefits, and the like. These do not represent any change in the value of the pay or benefit. For example, a large part of the difference between the 1997 -98 and 1998 -99 amount budgeted for pay and benefits results from the addition of positions during the fiscal year. ❑ The cost for salary increases becomes a part of base pay and continues in future years. Lump sums do not become a part of base pay. The lump sum dollars are available to be awarded again the next year rather than appropriating new funding. Thus, giving dollars in fixed salary increases results in more cost over time than the same dollars as lump sums that do not become a part of base pay. The undesirable alternative is to reduce each year the number or amount of salary increases awarded to offset the continuing cost of the salary increases already granted. ❑ Strategically, it is important that pay plans respond to and reflect the economic times. A cost neutral pay plan, while it might retain the same relative compensation in terms of cost of living and such factors, does not address the impact of the market and market adjustments being made by other employers. 7. Benefits As A Percent of Salaries For the School Systems and UNC -CH Commissioner Halkiotis asked why the benefits as a percent of salary for the schools do not directly compare to Orange County. Budgeting for benefits in the school systems is different than for the County. Some benefits costs for schools are funded centrally by the State and do not appear in the school budgets. I understand this occurs in three areas: Workers Compensation, Unemployment Insurance and Disability Income Plan. The schools also do not have sworn law enforcement officers and the benefits do not include the legally required 401(k) contribution for these officers. As to the comparison with UNC -CH, the salary amount used to calculate the benefits percentage includes costs for consultants and others paid on a contractual basis who do not receive benefits. The UNC -CH representative was not able to adjust the salary data to exclude these payments. 8. Salary for Custodian Commissioner Halkiotis requested a comparison of the salaries of Custodians for the area employers surveyed. Attachment 4 is this comparison. This is the chart provided in the June work sessions updated to show increases effective in July. Orange County's current entry level Custodial salary is $17,561 -or $8.44 an hour. Following the October 6 meeting, Commissioner Gordon also requested additional spreadsheets relating to year -by -year costs of the pay options and benefits. I hope to have this information, as it can be developed, ready on Monday. Attachment 1 6 Teacher Pay Salary Schedule 1. The 10 -month salary is set based on the salary schedule adopted each year. 2. The 1998 -99 salary schedule provides for differential of about: ❑ 1.7 percent between employees based on years of experience; that is, an employee with eight years of experience is at a salary about 1.7 percent higher than an employee with seven years of experience. An exception is that at the three, four and five year steps, the differentials between steps are 6.5, 5.0 and 3.8 percent respectively. ❑ 6.25 percent for employees with a Master's license as compared to employees with a Bachelor's license. ❑ 12 percent for employees who have met the National Board of Professional Teacher Standards as compared to those who have not. For 1998 -99, the increase approved by the NC General Assembly averaged 6.5 percent, but it is not uniformly distributed in the salary schedule. For example, the five -year step increased 7'9 percent and the two -year step increased 4.2 percent. Generally the greatest changes occurred in the five to 10 year service group. The changes are part of a long- term plan to improve starting salaries and retention set out in the Excellent Schools Act. If no salary increase were approved by the General Assembly, the Department of Public Instruction would change the salary schedule so that the each step was reduced to the value of the next lower step. For example, the eight -year step would become the same as the seven -year step and no increase would be granted. In this way there is no increase associated with gaining a year of experience unless funding is approved for that fiscal year. 4. Each teacher receives the increase awarded for his or her step (education and experience) in the salary schedule without regard to work performance. For example, a teacher on the 13 -year step in 1997 -98 moves to the 14 -year step for the 1998 -99 school year. For a master degree teacher in this example, this equates to an 8.4 percent salary increase. (About 6.5 percent is the change in the step value and the remainder is the increase to the higher step.) Lump Sum Bonuses (ABC Incentive) 5. In addition, under the "ABCs of Public Education" program, teachers may receive lump sum bonuses. In the 1997 -98 school year, the State provided funding at the level of $750 for teachers in schools that met all of their growth expectations and $1500 for teachers in schools that attained the exemplary growth standard. The distribution of the bonus is at the discretion of the school as part of the school improvement plan. -2- 6. For schools in the Chapel Hill /Carrboro School and Orange County School systems, all schools but one met expectations and 17 of 20 were at the exemplary level. Local Supplements 7. In addition to the above, both Chapel Hill/Carrboro Schools and Orange County Schools provide local supplements to pay. 8. For Chapel Hill /Carrboro the supplements increase based on years of experience from six percent for 0 -4 years to 25 percent at 25 or more years. 9. For Orange County schools, the supplements are five percent for non - tenured teachers, 10 percent for tenured and 12.5 percent for those who have 10 or more years Orange County Schools service. Longevity Pay 10. In addition to the above, teachers receive Longevity Pay after 10 years State of North Carolina service (State agencies or public schools). The amounts are the same as those provided,for Orange County employee Longevity Pay. F: \e \teacher.doc October 5, 1998 ATTACHMENT 2 ' . - Pay and Benefits Options Worksheet - $ If 1997-98 Pay Plan Continued ��Y���'��' '� ��y� ��r�"1��"� " � ^y � �i�`"#'��,,K . ���„�J.�Jr "� .,� �" k,?�y��'� s�' � _�*, �r�F, � ,a �G a u � �,z� a�a a� �h ✓' "� , y �, - c���'�' a ..� - t'uf�^�:� � ����`"��r - �� s� � �'� �,� *�`g " r �. � �� .������ � � �E� � � ��� � ���'�������� '�995�9� '�1��8 9� '�99$`99 `` �"�4C[I# `����,,r s= ��,�� a���s� �m :s �� �� : �� � �z� s�� � � �; ,' �`�.-��� ����Z���� � �~��g �� ���� � E�u c�e�ec� N[�r�E�ec, � Budget�d 9T 98 Ra�Gont�. . � : s f'�.��� xs` _c.'M ������. ,,1�,,�-�°_,�. a,:� s.,..,'��."��w �� ����'€� _ 'a� �r: s �..., _z, ,.._.. ..,;- .:. ...�,,, r..�,s����.z �,a,,.�,�'at=r..��r� � , ,s��.�. ,`�s�,.��' ..�. .,,;. ,:�..�,. '.�. Career Growth (For 97-98, 1.25%for effective or 144,500 248,964 - 127,022 higher) Performance Awards (For 97-98, $400 or 1%for 217,000 100,000 - 218,734 highly effective, $800 or 2%for outstanding) Supplemental Income (ForProficientemployees) - - 127,022 Meritorious Service Awards (For top performing _ _ 100,000 �ve percent of employees) Equity/Retention (Mgr. awarded equity/market _ _ _ sa/ary adjustment�) Subtotal $ 361,500 $ 348,964 $ 227,022 $ 345,75fi Longevity Pay (For County service) 191,650 217,644 217,644 217,644 401(k) Plan (Supplementalretirement) - 127,538 - - Total $ 553,150 $ 694,146 $ 444,666 $ 563,400 • Additiona!Budget Required $ 118,734 10/9/98Payest2 Attachment 3 UNC- Chapel Hill Performance Ratings Ratings Outstanding Performance Performance is far above the defined job expectations. The employee consistently does outstanding work, regularly going far beyond what is expected of employees in this job. Performance that exceeds expectations is due to the effort and skills of the employee. Any performance not consistently exceeding expectations is minor or due to events not under the control of the employee. Very Good Performance Performance meets the defined job expectations and in many instances, exceeds job expectations. The employee generally is doing a very good job. Performance that exceeds expectations is due to the effort and skills of the employee. Good Performance Performance meets the defined job expectations. The employee generally performs according to the expectations doing a good job. The employee is doing the job .at the level expected for employees in this position. The good performance is due to the employee's own effort and skills. Below Good Performance Performance may meet some of the job expectations but does not fully meet the remainder. The employee generally is doing the job at a minimal level, and improvement is needed to fully meet the expectations. Performance is less than a good job. Lapses in performance are due to the employee's lack of effort or skills. Unsatisfactory Performance Performance generally fails to meet the defined expectations or requires frequent, close supervision and/or the redoing of work. The employee is not doing the job at the level expected for employees in this position. Unsuccessful job performance is due to the employee's own lack of effort or skills. Final Written Warning Attachment 4 10 Custodian Salary Alamance County $16,884 - $26,112 Carrboro * $17,472 - $26,603 Cary Not Applicable (Contracted Out) Chapel Hill Not Applicable (Contracted Out) Chapel Hill /Carrboro Schools $15,808 - $21,112 Chatham County Not Applicable (Combined with building maintenance) Durham City $15,700 - $21,842 Durham County Not Applicable (Contracted Out) Orange County $17,561 - $27,924 Orange County Schools ** $18,815 - $27,375 Person County * $14,809 - $22,464 Raleigh $15,351 - $25,017 State of North Carolina $15,822 - $20,331 UNC- Chapel Hill $16,211 - $20,331 Wake County Not Applicable (Contracted Out) * Adjusted from 37.5 hour weekly work schedule to 40 hour work schedule. * *$27,375 is the highest current salary paid. The salary range maximum is $34,541. i:\cornp\paysv4-I.doc October 9, 1998 ATTACHMENT 2 11 Orange County Employee Pay and Benefits Report October 6,1998 Report Overview 1 Information for October Employee Compensation Work Session, in follow up to June budget work sessions 1 Tried to address comments expressed collectively and individually by Commissioners in June 1 Issues are challenging 1 May take time to consider and address Report Overview 1 Purpose tonight - 1 Review report, focusing on pay elements 1 Respond to questions as the Board desires or bring back information for work session 1 As requested, report provides options with pros and cons 1 Options presented are sound and corroborated by literature and experience 12 Report Covers Pay Directions and Options 1 Benefits 1 Pay and Benefits Budget and Costs 1 Background information 1 Area employer pay plans Salary compression 1 WPPR 1 Orange County workforce I Promotion Pay Proposal Pay Directions and O General Recommendations I Meritorious Service Awards I Supplemental Income Fund 1 Equity /Retention Component Pay - Three General Recommendations ons Olmplement Stepless Salary Schedule 1 Each salary grade has a: Minimum (current Step 1) Maximum (current Step 11 B) Midpoint (halfway between min and max) 1 Increase amounts not tied to specific steps 1 Convert current stepped salary schedule 1 Adds flexibility /opens more options 2 13 General Recommendations Stepless Salary Schedule Example urade minimum I Midpoint awmum _58 ....18.437 _ 23.876..._..... ._29,319...._. .59 _..19;362 25.073...... .__30,763..... _...... .6Q.......;._.........20.328... ......_.:_..........26.326..... _ .............32,323........... :. .......87........;_......._.21; 345.........__ :............27. 642.._.. ._...1,......._33.939.........: 62 22,413 29,025 35,637 63 :" 23.532 30;476 37.419 64 24,709 31,998 39,286 65 25,945 _ _ 33 ,598...... - 4 1,25.1. 68 .......:........... 27.242........_........._..35. 278._.........,.......... x.,3.1.4_.._.... 67 _ 28,803 37,042 45.480 ....._.S8_.._ ...............30, 034................._......38. 894..-- _....;.....- 4T. -M ....._. 69 31,538 40,840 50,143 70 33,111 42,881 52,650 General Recommendations ©Reduce WPPR rating levels from five to three to simplify rating process Present WPPR Recommended WPPR 1 Outstanding 1 Meritorious 1 Highly Effective 1 Proficient 1 Effective 1 Needs Improvement 1 Needs Improvement 1 Unsatisfactory General Recommendations ©Cost of Living Adjustment (COLA) 1 Continue COLA as a primary component of the pay plan 1 Addresses changes in the cost of living and adjustments made by other area local government employers 14 Meritorious Service Awards 1 Board Direction - To provide significant pay recognition for highest performing employees 1 As structured, option: Directed at top performing five percent of employees (32 -35) 1 Funded at average of five percent salary increase with latitude for award to be salary increase, lump sum or combination Meritorious Service Awards 1 Provides for decision- making by the Manager as to who receives and the award amount 1 Provides for Manager evaluation of the following in determining award amount: Specific accomplishments Position of employee's salary in the salary range Employee's salary history Employee's salary in relation to the salaries of other employees Meritorious Service Awards 1 Pros /Cons Highlights 1 Addresses the salaries of top performing five percent of employees. Supports retention and better salary relationships for these employees 1 Creates an incentive for top performance to the extent employees perceive this as achievable E 15 Meritorious Service Awards I Relationship to Supplemental Income Options 1 Does not address the work performance and related salary adjustments of the majority of employees It is the majority who can most affect the County's performance as an organization 1 Important that Meritorious Service Awards be a component of a pay program rather than a pay program in and of itself Meritorious Service Awards 1 Relationship to Supplemental Income Options (Continued) Use Supplemental Income to address employees whose performance is not rated Meritorious but who nevertheless perform at a proficient level Recognize the performance of Proficient employees; that is, those who accomplish major objectives and demonstrate a high standard of knowledge and skill in completing tasks Supplemental Income 1 Board Direction - Staff develop and report back on options 1 Three types of options presented: OCOLA/Market Based Pay ©Service Based Pay ©Department Based Pay 5 16 Supplemental Income OCOLA/Market Based Pay Board adopts a total amount of cost of living and market based pay increase each year 1 Designates a portion as salary structure adjustment that applies to all employees and a portion as in range increase for Proficient employees 1 Example: Four percent COLA/Market Adjustment (Two percent salary structure adjustment and two percent in range increase) Supplemental Income OCOLA/Market Based Pay (Continued) 1 In -range portion may be effective with salary structure portion (July 1) or given with performance review 1 For 1998 -99, Board has awarded 2.5% COLA. Could designate an additional 1.75% to be awarded as in -range increase 1 This would provide a total COLA/Market Adjustment for 1998 -99 of 4.25% Supplemental Income ®Service Based Pay 1 Provides salary advancement based on service, if performance expectations met Similar to that provided for teachers in that recognizes value of additional service and experience 1 Option presented incorporates current Longevity Pay r 17 Supplemental Income dam, @Service Based Pay (Continued) 1 Use current longevity funding as base 1 Extends longevity to employees with less than 10 years service 1 Adds to and converts part of lump sum longevity to salary increase depending on position in salary range Supplemental Income Service Based Pay Using Longevity Pay Supplemental Income ®Service Based Pay (Continued) Longevity Pay already awarded in 98 -99 for July through Sept. This is barrier to 98 -99 implementation 1 One approach would be to pursue COLA/Market Based Pay for 98 -99 and Service Based for 99 -00. 1 If adopted, important to address employee concern that existing Longevity will not be lost. 7 1pqw� MOM �o0�000 Supplemental Income ®Service Based Pay (Continued) Longevity Pay already awarded in 98 -99 for July through Sept. This is barrier to 98 -99 implementation 1 One approach would be to pursue COLA/Market Based Pay for 98 -99 and Service Based for 99 -00. 1 If adopted, important to address employee concern that existing Longevity will not be lost. 7 18 Supplemental Income ®Department Based Pay 1 Provides a funding allocation the department head may use to grant in -range increases to Proficient employees 1 In addition to specific accomplishments, allows department head to take account of Relative position of the employee's salary in the salary range, The employee's salary history The employee's salary in relation to the salary of other employees Supplemental Income ®Department Based Pay (Continued) 1 Requires a process in which performance reviews completed during a set period each year (such as July 1 through September 1). 1 Following this the department head recommends increase amount, if any, for each Proficient employee Supplemental Income Options Summary 1 There are possible variations on each of the options presented 1 Each of the options could be structured to vary award amount depending on whether employee's salary is above or below salary range midpoint 19 Supplemental Income Options Summary 1 Common themes to all options 1 Address Proficient employees. They are the majority of employees, do good work and are critical to the County's performance 1 Seek to be competitive with area local government employers who grant salary advancement to the majority 1 Support retention of trained, knowledgeable employees Equity /Retention Component / To accompany any of pay options (Meritorious Service and Supplemental Income) 1 Fund for salary adjustments 1 Use to address: 1 Establishing /re- establishing equitable salary relationships among employees in a unit 1 Labor market conditions that may affect retention Pay Directions and Options 1 For each of the options presented, Tab I includes cost estimates for: 1 1998 -99 1 1998 -99 and five future years 1 With the Board's further direction from the employee compensation work session on October 13, staff will return with specific proposals E 20 Employee Benefits 1 Benefits as a percent of salaries in comparison to area employers 1 Review and comparison of individual benefits with area employers 1 Additional 401(k) Plan information including matching option Benefits As Percent Of Salaries - Survey Results Employer Percent Employer Percent Durham City 36.5 Chatham Co 26.8 Person County 32.3 Raleigh 26.3 Chapel Hill 30.6 Wake County 26.0 Durham Co 29.4 Orange County 25.8 Cary 28.0 Org Co Schs• 24.8 Alamance Co 27.9 CH /Carr Schs' 24.4 Carrboro 27.0 UNC -CH* 21.0 -Not directly comparable Orange County Benefits Compared to Area Employers Higher Middle Lower Retiree Health Health 401(k ) )Plan Insurance Insurance Contribution Dental Disability Insurance Insurance Life Insurance Longevity Pay Tuition Refund 10 21 Next Steps E Questions tonight? Information /questions you would like us to address in work session? 1 If individual questions arise as review report between now and work session? 11