COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

Total Compensation Report

 

SUBJECT/PROPOSAL/REQUEST:

Acceptance of market data for use in budget development for FY 09-10, subject to available revenues

 

STAFF CONTACT(S):

Tucker, Foley, Davis, Suyes, Gerome

 

LEGAL REVIEW:   Yes

 

AGENDA DATE:

October 1, 2008

 

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 for the coming fiscal.  These projections are presented to the Boards for their information regarding the FY09-10 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, 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:

 

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

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

Step 3:        This market data 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.

Step 4:        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 

Last year, the initial projections based on the Joint Board adopted process presented in October were to increase the classified salary scale by 3%, classified merit increase of 4.35 % and fund teacher increases by 4%.  However, as our adopted market consists of other localities that were also facing revenue shortfalls, in December and January, staff collected revised salary projections on their increase amounts.  While many localities were unsure as to their salary increase projections, the data indicated that most localities were planning lower salary projection amounts than previously indicated.  Based on that information, the recommendations were revised and adopted as follows:

1)       2% increase in classified scale.

2)       3.35% merit increase for classified staff.

3)       Design teacher scale to meet market and distribute 4.0% along teacher scale.

 

The following information is provided to both Boards to consider regarding development of the FY09-10 budget.

 

Step 1:  FY08-09.  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 2% in FY08-09.  In reviewing the salary scale data for FY08-09, our adopted market’s median scale adjustment was 2.5 %. However, we started last year at -0.76 below market, therefore our current scale remains below market by -1.26 %. 

 

Step 2:  FY08-09.   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 FY08-09 merit was 3.35%. The median salary increase amount implemented by our adopted market in FY08-09 was 3.63%.   However, we started last year at  -0.35 below market, which results in our 08-09 salaries remaining below market by -0.63%.

 

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. This is shown in Attachment # 2.

 

Step 3:  Projections for FY09-10.   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: 2.5%

·         Albemarle Scale Relative to Market: -1.26%

·         WorldatWork projection for Eastern Region (including Virginia): 2.6

·         FY09-10 Recommended scale adjustment: 3%

 

Classified/Administrator Salary Increase (merit percentage)

·         Adopted Market Median increase: 3.63%

·         Albemarle Salary Increase Relative to Market: -0.63 %

·         WorldatWork projection for Eastern Region (including Virginia): 3.3% 

·         FY09-10 Recommended increase: 3.93%

 

Teacher Scale and Teacher Average Salary Increase

The teacher scale is based on the projected total increase obtained from WorldatWork. This survey projects a 3.3% 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.  

 

FY08-09 Plan Year

Medical - Our medical insurance costs (both the Board contribution and employee premiums) increased by 8% this year.  The annual Board contribution amount for full time employees is $6648.  There were no plan design changes for this plan year.

Dental - Our dental insurance costs (both Board contribution and employee premiums) increased by 6%.  The annual Board contribution amount for full time employees is $238.

 

FY09-10 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 cost increase for FY09-10 is 12%.  Our dental insurance cost increase is estimated at 5%.  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.

 

 

Budget ImpACT:

In light of the anticipated revenue shortfall, staff has provided several scenarios to be used in determining the degree to which the Total Compensation strategy can be achieved in the FY09-10 budget. Projections are inclusive of salary and benefits.

 

 

Classified Employees Merit  Increase

Local Government

School Division

To be provided after Sept payroll

3.93% increase (merit projections included)

$1.81 million

Still being calculated by School Division

2.93% increase (merit projections included)

$1.43 million

Still being calculated by School Division

2.00% increase (across the board, no merit projected)

$0.85 million

Still being calculated by School Division

 

 

Note: Local Government projections maintain frozen positions

 

Teacher Increase (Step and Scale)

To be provided after Sept payroll

3.93%

Still being calculated by School Division

2.93%

Still being calculated by School Division

2.0%

Still being calculated by School Division

 

 

RECOMMENDATIONS:

Please note:  Staff is not providing a recommendation at this time.  The projections below are based on the Joint Board process and adopted strategy. 

1)       3% increase in the classified salary scale.

2)       3.93% merit increase for classified staff.

3)       Fund teacher increases to reach and/or maintain top quartile (3.3%) 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 12% increase in medical plan costs.

6)       Anticipate a 5% increase in dental plan costs.

 

 

ATTACHMENTS:

1 – Competitive Market

2 – Teachers Scale Top Quartile

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