Memorandum 17-062 Employee Benefits

Memorandum 17-062

TO:                        Mayor Zak and Homer City Council
FROM:                 Katie Koester, City Manager
DATE:                   April 5, 2017
SUBJECT:          Employee Wages and Benefits Worksession

Council scheduled a worksession on employee benefits in order to have a conversation outside of the regular budget cycle. At the March 28 Council meeting I asked Council for questions they may have. Many members asked for detailed information on the different benefits provided and what they cost the City. Others wanted more comparative data with other municipal employers. A comparison with other municipalities will take time to research. A parity study, which is one way of doing a comparative wage and benefit analysis, has been recommended for some time but can be expensive and time consuming to compile. When comparing the City of Homer to other areas, it is often complicated by the fact that you can almost never compare apples to apples. When comparing salary for a particular job, one job may have significantly more duties and responsibilities than another, which requires a detailed analysis of a job description, not title. Many jobs don’t have an equivalent in other municipalities. Additionally, a parity study can be damaging to an organization. When I was first hired at the City the HR Director surveyed of municipal jobs across Alaska and all the employees could talk about was how such and such was paid better or how they did things in X city (even if there were good reasons like longevity and increased duties and responsibilities that may have justified the difference). It fomented a lot of ill will and bitterness with employees. In order to provide Council with comparative data without the effort and disruption of a parity study, Human Resources director Browning has reached out to Peninsula municipalities in hopes of being able to take a sample set of employees with comparable job descriptions and analyze where we start and end those employees on our wage scale compared to our neighbors.

Questions from Council:

Information about every single benefit, vacations, PTO/sick pay, holidays, retirement, health insurance, etc.

See Personnel Regulations Section 6, employee benefits

For each one, how many employees are eligible.

-As of March 31, 2017 the City of Homer has 97 full time employees who are eligible for retirement and health insurance, but only 89 are currently enrolled.

-As of March 31, 2017 the City has 4 part time employees who are not eligible for life insurance or PERS but can participate in health insurance at an increased cost. Families of part time employees are not eligible for health insurance.

-As of March 31, 2017 the City has 7 temporary employees. These employees are not eligible for benefits such as retirement, health insurance or paid time off. The number of temporary employees grows in the summer for park maintenance, campgrounds, fire, and the harbor.

What is the cost of providing benefits?

See spreadsheet from 2017 budget with salary, wages, and fringe benefit line items

Information on benefits packages of other municipalities on the Kenai Peninsula and elsewhere in Alaska.

Collecting this comparative data from other municipalities will take time and resources. Staff is hoping to have a sample for you to assist budget conversations.

How are merit increases awarded?

Merit increases are awarded annually based on a written evaluation and satisfactory performance.

See section 5.3 of Personnel Regulations, Pay Increases

How much is budgeted for merit increases?

The 2017 budget includes $102,931 for merit increases city-wide. Merit increases are included in the budget even if they are not awarded.

Discussion of health care including increasing the employee share of health insurance. 

See attached chart from 2017 budget conversations detailing different employee contribution scenarios and the corresponding impact to employees.

The City of Homer budgeted $1,987,069 in 2017 for health insurance premiums. The actual cost of health insurance fluctuates depending on participation. The City incentivizes employees to decline coverage if they have alternative healthcare available to them individually or through their spouse's employer.  This helps pay their premiums on their alternate coverage. Similarly, the City encourages spouses to not be on the City of Homer plan by charging a penalty for spouses if they have access to other health insurance (through their employer, for example).

Enc:

Personnel Regulations, Chapters 5 and 6
Wage scale
Spreadsheet on salary, wages and benefits
Comparison of different employee contribution rates to health insurance premiums