COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

Total Compensation Report

 

 

SUBJECT/PROPOSAL/REQUEST:

Acceptance of updated market data for use in budget development for FY 08-09, subject to available revenues

 

 

STAFF CONTACT(S):

Messrs. Tucker, Foley, and Davis; Ms. Suyes,  and Ms. Gerome

 

 

LEGAL REVIEW:   Yes

 

 

AGENDA DATE:

October 11, 2007

 

     ACTION:     x             INFORMATION: 

 

CONSENT AGENDA:

     ACTION:                   INFORMATION:   

 

 

ATTACHMENTS:   Yes

 

 

REVIEWED BY:

 

 

 

BACKGROUND:

In November 2000, the School Board and Board of Supervisors approved a Total Compensation Strategy to target employee salaries at 100% of market median and benefits slightly above the market.  The adopted market approved by the Boards is shown in Attachment #1.  

 

This report details the supporting analysis for the recommendations to achieve the adopted Total Compensation Strategy for last year and for the Boards to consider in giving budget guidance to the County Executive and Superintendent.  These projections are presented to the Boards for their information regarding the FY08-09 budget process.  It is noted that all final funding is subject to, and based upon, available revenues and Board direction.   This report provides information on:

 

1)       Compensation Strategies

2)       Benefits Strategies

 

Staff recognizes that due to the projected revenue shortfall due to the recent downturn in the housing market, funding to support these recommendations may not be available.  However, this information is provided based on the Joint Board’s adopted process to maintain our Total Compensation strategy.

 

STRATEGIC PLAN: 

Goal 1:  Enhance the Quality of Life for all Albemarle County Residents. 

By June 30, 2009, the Board of Supervisors and general government employees will increase collaborative efforts with the School Board and with employees of the schools system to assist the School Division to achieve recognition as a “world class education system.”

 

DISCUSSION:

To maintain competitive compensation based on the adopted strategy, two separate, but related actions are required: 

 

1)   Ensure a competitive salary scale so that the County is able to attract and recruit new employees. 

 

2)   Ensure current employees are rewarded for performance by maintaining internal equity in their pay range and also maintaining market competitiveness for similar skills.

 

To adhere to the Boards' adopted strategy, the following processes are implemented each year:

 

1)       Annually survey the adopted market to determine the salary scale adjustment implemented in those localities/schools for the current fiscal year.

2)       Annually survey the adopted market to determine the average total salary increase granted employees in those localities/schools for the current fiscal year.

3)       In addition, on a tri-annual basis, the process includes surveying our adopted market not only on scale adjustments, but gathering information on ranges and actual average salaries of a number of benchmark positions. This data identifies positions that may need further review, and is used to set priorities for the long term classification plan. The tri-annual benchmark survey occurred last year.

4)       The data from the above steps is used to determine if the budget actions implemented in the current year have achieved competitive positioning.

5)       The data from the above steps is analyzed to ascertain where the salary scales (both classified and teacher) for Albemarle County stand relative to the adopted market and arrive at recommendations for next year’s salary increases.

6)       Obtain data on what other organizations are projecting for salary increases for the next fiscal year through a compensation database (WorldatWork, Eastern Region).  This data is used to project the merit increase percentage and develop the teacher scale, including step increases.

 

In March 2004, the Joint Boards adopted compensation strategies for different positions to address competitiveness in certain areas as follows:

 

1)       Teachers - Target market position at top quartile of adopted market.

 

2)       Positions recruited from outside of our adopted market - Identify competitive market as the specific localities within our adopted market that may also be competitors for those positions.  This subset of our adopted market should address cost of living issues and target competitive market position.  These localities represent areas that are in Metropolitan Statistical Areas (MSAs) both above and below Albemarle County in cost of living and currently include: Hanover County, Loudoun County, City of Charlottesville, Prince William County, Spotsylvania County, Chesterfield County, City of Chesapeake, James City County, and City of Roanoke.  

 

Section 1:  Board Adopted Process for Compensation Strategy:  Market Analysis and Projections 

The following information is provided to both Boards to consider regarding development of the FY08-09 budget.

 

Step 1:  FY07-08.  Survey the market to determine if the scale adjustment implemented for classified/administrator and teacher pay scales achieved the strategy.

 

Classified/Administrator Scale Adjustments - Target median of adopted market

A competitive scale is important in attracting new hires.  For classified employees, the scale adjustment impacts new hires and any employees with pay rates that might fall below the new minimums. The Albemarle County scale was adjusted by 3% in FY07-08.  In reviewing the salary scale data for FY07-08, our adopted market’s median scale adjustment was 3%. However, we started last year at -0.76 below market, therefore our current scale remains slightly below market by -0.76%. 

 

Step 2:  FY07-08.   Survey the market to determine if the total salary increase implemented for classified pay achieved the strategy.

 

Classified Total Salary Increases - Target median of adopted market

Our salary increase for the FY07-08 merit was 4.0%. The median salary increase amount implemented by our adopted market in FY07-08 was also 4%.   However, we started last year at

-0.35 below market, which results in our 07-08 salaries remaining below market by -0.35%.

 

Teacher Scale Adjustments - Target top quartile (75th percentile) of adopted market

For teachers, the scale adjustment impacts actual salaries.  Data indicates that our teacher scales are in the top quartile at the following steps: minimum, 5 years, 10 years, 25 years, and 30 years.  Although we did not quite reach the top quartile at both T15 and T20, we are very close (at T20 our scale was $122 less than the bottom of the top quartile).  This is shown in Attachment # 2.

 

Step 3:  Projections for FY08-09.   Based on current market position and scale/salary projections, determine the changes necessary to achieve the Board approved strategy using the WorldatWork, Eastern Region data. 

 

Classified/Administrator Scale Adjustments

The scale adjustment impacts new hires and any employees with pay rates below the new minimums.

·         Adopted Market Salary Scale Median:3%

·         Albemarle Scale Relative to Market:-0.76%

·         WorldatWork projection: 2.8%

·         FY08-09 Recommended scale adjustment: 3% 

 

Classified/Administrator Salary Increase (merit percentage)

·         Adopted Market Median increase:4%

·         Albemarle Salary Increase Relative to Market: -0.35%

·         WorldatWork projection for Eastern Region (including Virginia): 4.0% 

·         FY08-09 Recommended increase: 4.35%

 

Teacher Scale and Teacher Average Salary Increase

The teacher scale is based on the projected total increase obtained from WorldatWork. This survey projects a 4% salary increase.  Any increase would include the step increase.   Our strategy regarding the teacher scale has been to target $1000 above at minimum.  Specific scale recommendations will be brought forth as part of the budget process.

 

Section 2:  Benefits Strategy:  Projections for Medical and Dental Insurance Premiums

The Joint Board adopted benefits strategy is to maintain a benefit program that is slightly above market.  As the medical plan is a critical component of the benefits package, the plan design and employee premium levels of our medical plan are carefully reviewed every year.  

 

FY07-08 Plan Year

The Boards approved the 2007-2008 medical insurance premiums and annual budgeted Board contribution of $6,153.  Three different medical plans are offered to allow employees plan options and premiums to best meet their needs.  Claims were stable for most of this year.

 

FY08-09 Plan Year Projections - Medical and Dental

Based on claims data and reserve balance, along with trend information provided by our benefits consultant, Tom MacKay with Keiter, Slabaugh, Penny & Holme, LLC, our estimated medical costs increase for FY08-09 is 11%.  Our dental insurance cost increase is estimated at 6%.  As we have just started the new plan year, staff will continue to monitor claims experience and develop recommendations for both plan design and premiums as part of the County Executive's and Superintendent's budget proposals.

 

RECOMMENDATIONS:

Please note:  Staff is not providing a recommendation at this time.  These projections are based on the Joint Board process and adopted strategy.  The County Executive and Superintendent will work together to determine the degree to which the Total Compensation strategy can be achieved the FY08-09 budget in light of the anticipated revenue shortfall as a result of the housing market downturn. It is noted that all final funding is subject to, and based upon, available state and local revenue. 

 

1)       3% increase in the classified salary scale.

2)       4.35% merit increase for classified staff.

3)       Fund teacher increases to reach and/or maintain top quartile (including 4.0%) to be distributed along the scale.

4)       Continuation of a longevity increase for teachers and lump sum merit increase for classified employees.

5)       Anticipate a 11% increase in medical plan costs.

6)       Anticipate a 6% increase in dental plan costs.

 

 

ATTACHMENTS

1– Competitive Market List

2 – Teachers’ Scale – Top Quartile Graph

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