Taking a closer look at Peachtree City’s salary increases

Taking a closer look at Peachtree City’s salary increases

Microsoft Word - Document2.docx

The newly instated classification and salary changes for Peachtree City employees have caused some backlash, most of it questioning the underpinnings of the salary study which recommended the changes.

Council members Mike King, Terry Ernst, and Mayor Vanessa Fleisch voted to spend roughly $670,000 on top of the $270,000 already budgeted for salary increases in this year’s budget. Council members Kim Learnard and Eric Imker voted against the increase, with Learnard saying the council should have had more than a couple weeks to review the salary study and Imker questioning most of the assumptions within the study itself.

The study in question, completed by Condrey and Associates at a price tag of $40,000, suggested a wholesale change of the city’s classification system, a shift to a new pay scale, and pay increases for nearly all employees. The recommendation from Condrey also suggested salary bumps for employees based on their years of service: 2-percent for those with 1-3 years working for the city, 4-percent for those with 4-6 years, and 6-percent for those with 7 and up.

Dr. Stephen Condrey presented his findings to the council in a workshop in mid-September where he stressed that the city should not only increase its salaries to remain competitive, but should also address “salary compression,” or the problem of management/supervisory level employees not being paid significantly more than the people working beneath them.

The issue of salary compression, much studied in Condrey’s field of Human Resources Management (googling salary compression and human resources returns thousands of results), partially highlights the difference between Condrey’s recommended system and the 2-percent inverse scaled pay raise that Imker had proposed, which distributed most of the proposed pay raises to the lowest paid employees.

This difference on the matter of salary compression was one of many issues brought up by Imker, Learnard, and others who have questioned the wisdom and motivations behind adopting the Condrey recommendation.

Fayette Newspapers obtained a comprehensive list of every salary change for the city’s entire full-time and part-time personnel in order to dig into some of the numbers and shed some further light on the matter.

 

Compression

 

Dr. Condrey emphasized several times that one of his primary goals for the city was to resolve existing problems of salary compression.

If people in supervisory roles are not properly compensated for increased responsibility and years of service, he said, it can effect morale and effectiveness for an organization. In an organization with very serious salary compression, a supervisor might not make much more than a new hire in their department. Condrey said this was a problem for Peachtree City.

Imker’s 2-percent inverse pay raise, which gave a roughly 5-percent bump to the lowest paid employees while giving nearly zero to the highest (with a sliding scale in between according to distance from the average salary), was largely dismissed by Condrey.

Imker was not present at the meeting where Condrey presented, and later claimed he had slammed the 2-percent inverse raise, saying it “would make it worse,” just after saying he “didn’t really understand it.”

Condrey did largely dismiss the concept when he addressed council, but seemed to be referring specifically to compression in the context of saying Imker’s plan would “make it worse,” rather than offering a complete appraisal of the 2-percent inverse option.

So, how did Condrey’s plan affect salary compression?

Peachtree City’s Human Resources Director, Ellece Brown, was asked by Fayette Newspapers which positions would get the largest pay increases and which the smallest in the new system. Brown said the question was difficult to answer because both adjustments for classification changes (from the old pay grades to the new) and equity adjustments (for longevity) were factored in. Taking only adjustments for classification changes, Brown offered this sketch of who fared best:

“Limited Number of Middle Managers — Average annual increase of approx $7,000; Crew Leaders in Public Services — Average annual increase of approx $6,600 for those with fewer years of service; Buildings & Grounds Supervisors in Public Services — Average annual increase of approx $6,000; Maintenance Tech III (including B&G, Streets, & Cart Paths) — Average annual increase of approx $5,600 for those with fewer years of service; Maintenance Tech I (B&G) — Average annual increase of approx $4,600.”

That list includes mostly positions in supervisory roles, with the exception of Maintenance Tech I, a position cited as being especially hard to fill for the city.

Given that the largest gains went to supervisory and managerial positions, it seems the Condrey plan would alleviate compression.

 

Which departments benefited the most?

 

Based on the complete salary figures examined by Fayette Newspapers, the Building and Grounds department was the big winner in the new salary schedule.

It is notable that out of the 25 new possible pay grades, no city employee falls lower than a Grade 9. Sitting at Grade 9 is the Maintenance Technician 1, the lowest paid full-time position in the city and one that was cited by Condrey and Brown as being a difficult position to fill. It was cited numerous times that at least one of these positions took 18 months for the city to fill.

On average, these positions got an additional $5,000 a year, which amounted to a 20-percent bump up to nearly $30,000.

Grounds Maintenance Crew Leaders and Supervisors got similarly healthy bumps. One Supervisor got a $9,000 annual increase (24-percent) and the other $6,400 (17-percent). Crew leaders got similarly large bumps, around $5,000 (17-percent) annually.

Building and Grounds is the third largest city department behind police and fire.

In general, the fire department did a little better than the police in terms of raises.

Fire Lieutenants, making an average of around $59,000, got an average bump of 5-percent to roughly $62,000. The sizes of raises by individual vary for all figures, but among Fire Lieutenants it fell between $1,090 and $3,300 with most getting nearer the $3,000 mark.

Firefighter-EMTs got a healthy 10-percent bump on average, for an additional $3,673 a year on an average $36,213 salary.

Firefighter-Paramedics also got around 10-percent increases, for about $4,122 a year on top of a $41,000 annual salary. This classification showed a range of raises from $1,000 up to $6,000.

Raises in the police department were slightly less than those in the fire department, but new Police Chief William McCollom got the largest raise of any city employee, going up $22,000 to $115,000 annually. McCollom’s increase accounts for his step up in rank to Chief, however, whereas none of the other salary increases included promotions.

Police Corporals saw their average of $45,915 jump around $3,090 (6.7-percent). Individual raises were pretty closely bunched around the average for this group, with a couple outliers at only $2,000 and one at $5,500.

Police Lieutenants also got a roughly 6-percent increase, or around $4,000. This average excludes one Lieutenant, Matthew Myers, who got the single largest salary increase of anyone in the city (not including McCollom) at $13,735. That’s a 26-percent increase, though it still left him in the bottom half of pay among Lieutenants.

Police Sergeants similarly got $3,400 increases (6.4-percent) on average to go from around $52,700 to roughly $56,000.

Police Officers present an interesting case. Of the nine certified officers listed, one got an increase of $1,300 and another $3,000. The rest got either $550 or, in two cases, no increase. The pay for all these officers ended up bunched just under $40,000.

 

Who picked Condrey?

 

One of the criticisms of the Condrey plan was that it was chosen by a panel of employees, who could arguably have been incentivized to choose a consultant that would recommend a rich plan.

All but one of the seven person Selection Committee received raises of at least $3,000, based on the information provided by the city.

Fire Captain Ron Mundy, one of the most vocal proponents of the Condrey study, received no pay increase on his $87,000 salary. HR Director Ellece Brown got a $3,200 raise (4-percent). Library Administrator Jill Prouty got a $5,300 raise (6-percent). Public Works Superintendent Scott Hicks got a $4,300 raise (6-percent). Human Resources Analyst Janis Hooper got a $3,500 raise (6-percent).

Police Lieutenant Matt Myers and Purchasing Agent Angela Egan were notable standouts, receiving the largest and third largest (in dollars) raises, respectively, of any city employee (excluding McCollom).

Myers got a $13,735 (26-percent) and Egan got a $9,000 raise (17.6-percent).

 

Will retirement payouts sink the city?

 

The city pays retirement based on a formula that uses the average salary of the three highest pay years for each employee. Imker and Learnard have each expressed concern that these pay raises will prompt a series of retirements and, therefore, expensive payouts that could sink the budget.

Finance Director Paul Salvatore told Fayette Newspapers Thursday that he was still waiting on final actuarial numbers to determine the effect of retirement benefits on the budget. He did not, however, anticipate “some kind of big depth charge that’s going to blow it out of the water.”

Salvatore (who himself got a $6,500 raise) said the city’s retirement payouts are based on a set of assumptions that dictate how much the city should set aside to fund the future liability.

For the past several years, he noted, one of those assumptions has been an annual salary increase of around 2.5-percent. In reality, employees have not gotten raises in three to four” years, he said, so the pension fund accumulated around $2.2 million of its total $26 million that was earmarked for raises which never materialized.

Salvatore suggested that the salary increases are more likely to “put the city back on course” in terms of matching accumulated pension fund assets to expected liabilities.

On Friday, Salvatore said he had received some information from the city’s actuary. He said he had not fully dug into that information, but, at first glance, it seemed to confirm his assumption.

“Even in the years that no raises were given, the actuarial assumptions used to calculate plan contributions still assumed raises (2.5%),” Salvatore said in an e-mail. “Therefore, we had assets building in the fund that are now available to offset the impact of the raises that just went into effect. In fact, it appears that the impact of the raises was more than offset by the assets that accumulated, and that we will actually still see some decline in the required annual contributions – just not as much of a decline as there would have been if the raises were only two-percent (original budget).”

Salvatore also noted that a salary study and increase of a similar scale was last done 14 years ago, and the price tag then was in the $600,000 range. He said that, given inflation, he was not remotely surprised that Condrey would return a plan that cost around $1 million.

 

Who was Peachtree City compared to?

 

One of Imker’s primary criticisms of the Condrey study was its choice of comparison cities.

The study compared Peachtree City salaries and classifications to twenty responding governments, including 18 Georgia cities and two counties (Fayette and Coweta).

The study concluded that Peachtree City salaries came in at the 35th percentile of that market, which was described by Condrey as representing the market within which Peachtree City can expect to compete for employees.

Imker disagreed strenuously, saying that the study primarily compared Peachtree City to metro-Atlanta cities where the cost of living is higher and, therefore, salaries are higher by default.

While cost of living is a difficult thing to measure, there are a number of online resources which attempt to calculate differences in cost of living between cities.

Fayette Newspapers used one such resource, bestplaces.net, because it offered comparisons for all but one city on Condrey’s list (Peachtree Corners, which became a city very recently).

That online tool found, contrary to Imker’s assertion, that 12 of the 18 cities used in the study have lower costs of living than Peachtree CIty, some substantially lower.

Dunwoody, Alpharetta, Johns Creek, Roswell, and Sandy Springs were the only cities that were indicated to have a higher cost of living. It can also be assumed that Peachtree Corners would come in above Peachtree City.

As for the two counties on the list, Fayette and Coweta, the tool was not directly able to compare between city and county. It did compare from county to county, however, and Coweta County showed a lower cost of living than Fayette County. Other parts of Fayette County were also found to have lower costs of living than Peachtree City.

 

Now what?

 

Some questions remain unanswered or partially answered. In his presentation, Dr. Condrey suggested benefits for Peachtree City employees were comparable to the other cities and shouldn’t factor meaningfully in the city’s decision on a pay scale. That has been challenged, particularly in regards to the city’s use of a defined benefits plan, which not all governments offer.

Learnard sent a number of questions to City Manager Jim Pennington which were not addressed at the most recent city council meeting. He is reportedly going to address those questions at the November 6 workshop.

Condrey & Associates has, on two occasions, declined interview requests from Fayette Newspapers. One request in September was referred to the city’s Human Resources Director. Another request was made by phone and e-mail Thursday, with no response by press time Friday afternoon.

Josh Akeman

Josh Akeman is the managing editor of the Fayette County News, Today in Peachtree City, and East Coweta Journal. He is a graduate of Fayette County High School and the University of Georgia.