092606 Compensation Budget DrivCity of Virginia Beach
Compensation as a Budget Driver
System Overview and Trends
September 26, 2006
Overall Costs
EXPENDITURES
FY 2007-08 Major Categories
FY07-08 MajorCategories
$863.5M
Reserves
8%
Debt Service
$72M*
* Includes $45.8M =
11%
rollover
compensation
$95M
Capital
1%
$6M
Personnel
45%
$392M
$299M
Operations
35%
PersonnelOperationsCapitalDebt ServiceReserves
2
Overall Costs
FY07-08 Personnel Costs
$391.6M**
Health Insurance
7.53%
Miscellaneous Fringe
Benefits
0.22%
Life Insurance
0.82%
** Does not include $45.8M rollover
Retirement
compensation in reserves (salary & health)
11.48%
F.I.C.A
5.54%
Other Personnel Costs
1.94%
Full-Time
66.97%
Overtime
2.26%
Part-Time
3.24%
Full-TimePart-TimeOvertime
Other Personnel CostsF.I.C.ARetirement 3
Life InsuranceHealth InsuranceMiscellaneous Fringe Benefits
Introduction
The City needs dedicated, energized, and creative
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employees to be truly successful
A competitive compensation system is critical to
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attracting and maintaining a quality workforce
It is essential to strike a balance of affordability,
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competitive compensation and a quality workforce
which results in high quality services delivered
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Compensation System
Pay Program (Salaries)
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Incentive Program
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Leave Program
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PAY
PROGRAM
Pay Program
Three Pay Plans for Employees
General Plan
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All non-exempt employees (eligible to earn overtime)
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Approximately 5000 employees
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Administrative Plan
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All exempt employees (not eligible to earn overtime)
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Approximately 1000 employees
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Part-time Hourly Schedule
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Approximately 1200 employees
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Pay Program: Growth in Salary Costs
$350,000,000
Salary Costs Including Overtime
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0
FYFYFYFYFYFYFY
01/0202/0303/0404/0505/0606/0707/08
Growth from 2001 to 2007 is 33%
?
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Pay Program: Growth in City Positions
7000
6800
6600
Total City Positions
6400
6200
6000
5800
5600
5400
FY 00/01FY 01/02FY 02/03FY 03/04FY 04/05FY 05/06FY 06/07
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Pay Program: Growth in Compensation:
Local Area Cities Comparison
Growth in Personnel Costs in Local Market Cities
8.0%
7.0%
Avg Increase 2001 - 2006
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
PortsmouthNewportHamptonVirginiaChesapeake
NewsBeach
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INCENTIVE
PROGRAM
Incentive Program: Merit Increases
Movement across the pay ranges based on performance
Prior to 1995: Behaviorally-anchored rating
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scale of 2.5%, 5%, 7.5%
1995: “Satisfactory Job Performance”
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approach
Merit Percentage Goal:
4.5%
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Incentive Program: Comparison of Salary
Increases in Local Market
Comparison of Combined General and Merit Increases in Local Market
7.00%
6.00%
5.00%
Percentage
4.00%
3.00%
2.00%
1.00%
0.00%
FY01-02FY 02-03FY 03-04FY 04-05FY 05-06FY 06-07
4.00%0.00%3.00%3.00%4.00%4.00%
Chesapeake
3.30%3.30%3.30%3.50%4.00%4.00%
Hampton
6.00%3.00%4.00%2.00%4.00%4.00%
Newport News
2.47%3.00%3.97%3.97%2.50%6.00%
Norfolk
0.00%4.00%2.00%3.00%3.00%2.50%
Portsmouth
4.50%3.50%4.05%3.00%4.50%4.50%
Virginia Beach
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Incentive Program: Bonus Increases
Performance Bonus
$400,000
$300,000
$200,000
$100,000
$0
FY 03/04FY 04/05FY 05/06
Lump sum monetary reward
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Recognizes outstanding performance
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Typically equivalent to 1% –5% of salary
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Incentive Program: Administrative
Increases
Administrative Increase
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
FY 03/04FY 04/05FY 05/06
Increase to base salary
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Primarily used to retain employees with specialized skill sets
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Typically equivalent to 1% -5% of salary
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Incentive Program: PEER
City employees/volunteers recognizing their
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peers
Award for promoting excellence in support of
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the City’s mission
Typically between $250 and $500
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LEAVE
PROGRAM
Leave Program
Annual (Vacation) Leave
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Graduated accrual
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8 hours per month: under 5 years of employment
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10 hours per month: 5 up to 10 years of employment
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12 hours per month: 10 years up to 15 years of
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employment
14 hours per month: 15 years up to 20 years of
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employment
16 hours per month: 20 years or more of employment
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Maximum carry over and/or payout: 400 hours
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Leave Program
Sick Leave
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Consistent accrual of 8 hours per month –no cap
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on accrual
Payout at retirement: $28/day for unused balance
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Leave Program: Trend Analysis
Leave Usage
25
20
per Employee each year
7.79
7.72
7.9
8.05
Average Days
15
Sick
Annual
10
13.68
13.22
13.01
11.52
5
0
2002200320042005
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Leave Program
Other Leaves
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Holidays: 11.5 days
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Miscellaneous leaves
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Court leave: Witness in non-personal litigation
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Funeral leave: Up to 5 days for immediate family
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members
Jury leave: Summoned to serve as jurors
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Summary Points
A quality workforce is necessary for delivering high quality
services to our community
We must strike a balance between:
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Affordability
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Competitive Compensation Package
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Quality delivery of service
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This will require a well planned strategy with
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appropriate tools that influence and guide us
to the proper balance.
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QUESTIONS?
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