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Home My WebLink About03302010 COMPENSATION BENEFITS PRESENTATIONTotal Compensation Update 0 DEPARTMENT OF HUMAN RESOURCES MARCH 3 0, 2 010 Quality Employees are Critical to Quality Ser~ce Delivery --------------------------------------- 2 -------------------------------------- Today's Goal: Information Sharing on - Salary - Benefits Comparison base: Area Cities (Norfolk, Portsmouth, Chesapeake, Hampton, Newport News) FYii - No salary or benefit changes recommended Salary: Base Pay Increases / \ r- Previously Established Goal:\ 4.5% Merit Increase Pay Increases FY o~/08: 1.5 % General Increase 2 % Merit Increase FY o8/09: 2.5 % General Increase (~% Public safety) o % Merit Increase FY o9/io: o% General and Merit Increase FY 10/11: O% Proposed Comparison of Total Sala Increases in Local Market 0 d a~ d L d a 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% FY 08-09 I FY 09-10 I FY 10-11 Chesapeake 4.50% 3.00% 0.00% 0.00% ®Hampton 4.00% 2.81 % 0.00% 0.00% ^ Newport News 4.00% 3.00% 0.00% 0.00% Norfolk 4.50% 3.50% 0.00% 0.00% Portsmouth 4.50% 3.00% 0.00% 0.00% ^Virginia Beach 3.50% 2.50% 0.00% 0.00% Chesapeake ®Hampton Newport News Norfolk Portsmouth ^Virginia Beach City of Virginia Beach: lowest salary increases for both FYo7/o8 and FYo8/o y FY 07-08 Salary: Market Salary Survey 0 Market Salarv Survey • Originally conducted Market Salary Survey annually; changed to every three years in 2004 • Last survey implementation: July 2004 • i,~oo employees received pay range upgrades Salary -Market Salary Survey r- Surveyconducted to assess market. Preliminary survey results: o Up to 2,328 employees impacted o Cost: $ ~.4 M if implemented - pay range increase if 2.5 % below highest market midpoint - employee receives pay increase with market adjustment Note X Market adjustment if 5% below highest market midpoint: Impacts 1,286 employees Cost: $4.~M X Market adjustment if position ranked 3rd or lower: Impacts i,o63 employees Cost: $3.4M Salary: Supervisory (Vertical) Salary Compression ----------------------------------------------------------------------------------------------(; 0 r---------------------------------------------------------------------------------------------- Vertical pay compression occurs when a supervisor makes less than a subordinate Supervisor's Pay Range 1 Min $3g~4g4 1 42250 Min $30063 Subordinate's Pay Range 1 Max 43000 $43591 1 Typical causes: Supervisor less senior than subordinate, promotions. Common occurrence in most pay plans. Max $50554 2001 thru 2008 Compression Adjustment Cost = $12.9M Salary: Supervisory Salary Compression -------------------------------------------------------------------------' s ~, City Council Resolution: Address supervisory pay compression within three years of identification 20~o Supervisory Compression Review Total Number of Employees Impacted: li9 Total Cost if Implemented: $6i1,92~ Note: Horizontal salary compression is building at the minimum of pay ranges due to lack of merit increases VRS Changes -Local Employees Comparison of Major Benefit Provisions HB 1189 Final and State Budget Eire I`~fi ` I' t~r~~~1;~; - ~ ~ l~ ~ i c ~ ~~ `~ ~'~ ~~ ~:~ I~ I~~I i~~r I,_l ~~ i"Ef'C;~: Ct:'~~ (fit-'~I r~'r'1£'ri'. F~~~Ii~~ ~._~'~'~` ~•.QrI'"~~I I~.E.'`~r t_ I°, FAlzt ~~~~~~ Ir'a'. ~t`:, ~~ l_,~~ l ~c<~ I Cr~tE:~Ic~~,~=~ t~ C. c; r~tr i~t~ ~ic~r~ o/~,~io -1 9 ~~_ ~J Y~~~~r~ ~ct`3C~ Y~~t~r°~ `~~:~r~~i~;~ ~~:~ YF~,-ire C~~~::~ `(efjr ~~~°r;~i~f~~ P~~:~ ~: f~i I`~;f' .~ '"I?-g f'e'y' ~r ~~irc .~ ~; c: F:~ r~ ~.~ ~ f:~ r =,, i c: F ~ = ~r~~r Note: State Budget (HB3o) does not impose employee contribution on current state employees; does require 5 % contribution for new State employees. Benefits Overview Virginia Retirement System (VRS) • 5% Employee Contribution Currently Paid by City • Prior to Jan. i, i9~8, employees paid 5% contribution • Since Jan. ~, ~9~8, City contributes employer and employee rates • VRS rate of 17.58% of Payroll (~-~-~o) amounts to $50.3 million in FY11. (Current rate = 16.48%) • City of Virginia Beach VRS Employer Plan has unfunded liability of $275.1 million • Actuarial Study projects rate to increase i.5% more in FYi3 to total of i9. i3 New Employees -Local Option Employee Cont~~bution o % - 5 ~~ Advantages X Reduces City annual costs over time -not large savings initially, but with future retirements, impacts could be substantial X Preserves Defined Benefit Plan for employees Disadvantages X Potential negative impact on employer competitiveness X Creates two-tier system of employee benefits (Note: New State Employees Must Contribute 5 % ) Existing Employees -Local Option Employee Contribution of o% to 5% / \ r- Advantages • Preserves Defined Benefit Plan for employees • Reduces City annual costs - 1% $2.$6M - 2% $5.72M - 3% $8.58M - 4% $11.44M - 5% $14.3M Disadvantages • Potential negative impact on employer competitiveness • Reduces employee pay if no salary increase Employee Contribution o%, -~5% ---------( is }-------- Recommendation: All Employees pay 5 % employee share over time once economy recovers and pay increases can be reinstituted. Benefits Overview ,, i4 No Changes Recommended for FY11 Annual Leave -Accrual Based on Years of Service Sick Leave -One Day/Month Major Holidays - 11.5/Year (Includes two flex days) Retirement /VRS Summary ,, 15 • We are still competitive in our market. However, X We must continue to show our employees, who deliver services to our citizens, that they are our most valuable resource X We must be mindful of market trends and changes in pay and benefits X Pay increases need to be competitive for both recruitment & retention X We need to move employees within their pay range to mitigate salary compression 16 Benefits Overview Number of Annual Leave/Paid Personal Leave Days Accrued Based on Service Chesapeake Hampton Newport News Norfolk Portsmouth Virginia Beach State of Virginia Avg Med from 1 year 12 12 13 12 14.1 12 12 12.62 12 to 5 from 5 years 15 15 16 15 15 15 15 15.20 15 to 10 from 10 18 18 18 18 17.1 18 18 17.82 18 years to 15 from 15 21 21 19 20 19.1 21 21 20.02 20 years to 20 from 20 24 24 20 23 21 24 24 22.40 23 years to 25 from 25 24 24 20 23 21 24 27 22.40 23 years and above 1'7 Benefits Overview Maximum Accrual for Annual Leave/Paid Personal Leave Days Based on Service Chesapeake Hampton Newport News Norfolk Portsmouth Virginia Beach State of Virginia Avg Med From 1 years 36 24 80 48 44 50 24 46.40 44 to 5 From 5 years 36 30 80 48 44 50 30 47.6 44 to 10 From 10 36 36 80 48 44 50 36 48.80 44 years to15 From 15 36 42 80 48 44 50 36 50.00 44 years to 20 From 20 36 48 80 48 44 50 42 51.20 48 years to25 From 25 36 48 80 48 44 50 42 51.20 48 years and above 1g Benefits Overview Holidays Observed Chesapeake Hampton Newport News Norfolk Portsmouth Virginia Beach State of Virginia Avg Med New Year's Day yes yes yes yes yes yes yes Day after New Year's yes no no no yes no yes M.L. King Day yes yes yes yes yes yes yes Lee-Jackson Day yes no no no yes no yes President's Day yes yes yes yes yes no yes Memorial Day yes yes yes yes yes yes yes Independence Day yes yes yes yes yes yes yes Labor Day yes yes yes yes yes yes yes Columbus Day yes no no no yes no yes Veteran's Day yes yes yes yes yes yes yes Thanksgiving Day yes yes yes yes yes yes yes Day after Thanksgiving yes yes (a) yes yes yes yes yes Christmas Eve (half day) yes no yes yes yes yes yes Christmas Day yes yes yes yes yes yes yes Other no yes (b) no yes (c) no yes: no 2 days (d) Total 13.5 10 10.5 11.5 13.5 11.5 13.5 19.8 11.5 (a) Given based on the results of the citizen satisfaction survey -not guaranteed (not included in total) (b) Represents 1 flexible holiday taken at anytime the employee chooses. (c) Represents an 8 hour Diversity Day taken at anytime the employee chooses. (d) Represents 2 flexible holidays taken at anytime the employee chooses. 19