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Home My WebLink AboutIR 10093 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10093 To the Mayor and Members of the City Council January 23, 2018 h�T�i7 Page 1 of 4 �i �i7 Y *a SUBJECT: CITY EMPLOYEE COMPENSATION #qrF rn 10,?5 The purpose of this report is to address a request concerning total compensation that was made by Councilman Jordan. What is Total Compensation? Total compensation is the sum of all benefits and salary that an employee receives as a part of their employment with the City of Fort Worth. Salary includes base salary, overtime, and leave taken/paid (i.e., vacation, sick, major medical, compensatory time, etc.). Benefits include any City paid health, pension, life, taxes or other payments paid on behalf of the employee. The amount of total compensation is dependent upon many factors including: • The amount and level of benefit the employee may have selected. For example, an employee choosing employee + spouse health coverage on the City's health plan will have a higher total compensation than an employee choosing employee only health coverage — given the same salary. Similarly, an employee choosing the Health Center Plan over the Consumer Choice Plan will have a higher total compensation given similar salaries. • Pension costs are a major expense for the City of Fort Worth, as it expects to contribute over $90 million to the Pension Fund on behalf of employees in FY 2018. Since contributions are calculated as a percentage of salary, the more an employee makes the higher the contribution associated with that employee. And not all employee groups receive the same pension percentage contribution. For Fire Sworn personnel and General employees, the City contributes 19.75 percent and for Police Sworn personnel, the contribution is 20.05 percent. • The City also provides one-times each employee's salary in life insurance. The cost of that life insurance is based on 6 cents per $1,000 of coverage. Therefore, based on how much an individual makes determines how much benefit that employee receives from the City. Higher salary, higher cost, higher total compensation. While it is often desirable to study total compensation in a singular effort, due to the complexity of pay, pension, health benefits, and leave benefits in the public sector, the City has been conducting independent in-depth analyses of each element. The objective is to target market median in each category while often stepping back to consider the aggregate impact of the benefits. In addition, the conclusions are routinely weighed against the results in recruitment in retention. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10093 To the Mayor and Members of the City Council January 23, 2018 h�T�i7 Page 2 of 4 �i �i7 Y *a SUBJECT: CITY EMPLOYEE COMPENSATION #qrF rn 10,?5 Calculating Total Compensation - Purpose The purpose in calculating total compensation is primarily to let the employee know how much the benefit the employee receives for working at a particular employer. Most employees have no idea, beyond their direct pay, what the City pays on their behalf or how much that represents of the City's total budget. For the City of Fort Worth, over 36 percent of the City's budget is paid in the form of direct pay and benefits to employees. Benefits currently represent 43.11 percent of wages compared to the national average for public sector employers of 37.4 percent. The City of Fort Worth generated total compensation statements to employees from a period of 2001 — 2008. Human Resources is planning to reinitiate these statements in 2019 for the 2018 calendar year. External Equity Prior to 2014 the City of Fort Worth went through a period of six years where General employees received only two raises and one year in which they received a pay cut in the form of forced furlough days. Police and Fire employees continued to receive contractual pay adjustments based on competitiveness with other cities. However, over the past four years the City of Fort Worth has made a significant investment in compensation to maintain its competitiveness for General employees as well. Below illustrates those initiatives: • August 2014– Initiated Civilian r • January 2016– , P — Average increase Pay Plan Study 3.3/: Matrix based • September 2014– on tenure and January 2017–Pay 4%across-the- placement in range for Performance board Matrix: -January 2015–14o Solution: • October 2016– Addressed positions that were Structure adjustment Based on at least 1090 behind the market increases to performance and �— AND had significant turnover minimum) placement in range -August 2015–Implementation , of New Pay Plan Structure: Raised all employees to minimum of new assigned pay range Other measures have included: • Utilizing both public and private pay information to measure competitiveness (weighted 50/50) • Allowing department management more discretion in determining starting pay for new hires • Enabling departments to address individual salary inequities ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10093 To the Mayor and Members of the City Council January 23, 2018 h�T�i7 Page 3 of 4 �i �i7 Y *a SUBJECT: CITY EMPLOYEE COMPENSATION #qrF rn 10,?5 Comparison to the Market Every other year, the City's Human Resources conducts a survey to gauge its competitiveness with the market - 2017 was a year in which this comparison was done. The overall results of the survey indicated that the average pay for the City was within a one-half percent of the market for similarly situated positions and has made significant improvement from its position in 2014. City of Fort Worth Civilian Pay Market Comparison _ Pay Family ' = 2017 1 Executive 106.3% 111.9% Exempt 1 91.3% 98.3% Exempt IT 92.0% 99.5% Non-exempt 95.8% 96.4% Grand Total 95.1% 99.6% Additionally, as a result of this request, a study was commissioned to track employee raises over time to determine whether the City has kept pace with respect to compensation raises. Increases of the three major employee groups (General and Police and Fire Sworn) were compared to the Consumer Price Index, on a regional and national basis, and the Bureau of Labor Statistics (BLS) since those data became available in 1997. As indicated in the chart below, the City for Fort Worth has been more that competitive in providing salary increases. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10093 To the Mayor and Members of the City Council January 23, 2018 h�T�i7 Page 4 of 4 �i �i7 Y •a SUBJECT: CITY EMPLOYEE COMPENSATION #qrF rn 10 75 Cumulative Salary Increases and CPI FY98- present 40.0% 20.0% ti��$ 1 �� 1®ti �°°tii°" ��4°a ry ry pro° �` +o� ry4,e � ti °,ti1~ °$,y °o-,'`a -Police Cumulative Increases -Fire C.UmUlative Increases General Cumulative Increases -US CPI Cumulative DF',N CPI Cumulative _DFVu Cumulative NleanAnnual'Nage Increases -US Cumulative MeanAnnual'Nage Increases Next Steps: The City has invested considerable time and effort evaluating compensation, healthcare and pension in recent years and those efforts will be on-going. In addition, this year staff will complete a study of the City's leave policies. This is necessary as we continue to evaluate the leave that employees accrue, the cost of paying for those benefits upon an employee's departure, the cost to the pension plan for service credit, and the impact to the workforce for excessive absences. This review will also consider alternatives for disability insurance as an alternative. In the coming months, a task force that includes representatives from public and private employers will be engaged to assist with this analysis and present conclusions to the City Council by the end of calendar year 2018. If you need additional information, please contact me or Brian Dickerson, Human Resources Director, at 817.392.7783. David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS