HomeMy WebLinkAboutOrdinance No. 2314-20084
= ' ~=; ~- Suggested by: Councilor Smalley
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KENA~ SKA
CITY OF KENAI
ORDINANCE NO. 2314-2008
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, ENACTING
KMC 23.55.080 PROVIDING FOR LONGEVITY PAY OF TWO PERCENT (2%] FOR
CERTAIN EMPLOYEES IN STEP CC IN THE CITY OF KENAI SALARY SCHEDULE.
WHEREAS, the City of Kenai Salary Schedule contains nine "Steps" from Step A to
Step CC; and,
WHEREAS, the time period to advance between Steps B to F is one year and to
advance between F to CC is two years; and,
WHEREAS, when an employee advances to a higher Step, he/she receives a two
percent (2%) pay increase; and,
WHEREAS, it takes ten and one-half years to advance from Step A to Step CC; and,
WHEREAS, when an employee reaches Step CC he/she is not able to advance to a
higher Step; but does receive a cost of living adjustment in his/her Step when the
entire payroll schedule is adjusted, and,
WHEREAS, under the current system employees with over ten years continuous
service with the City are frozen at Step CC; and,
WHEREAS, 'longevity pay would reward the employees for their long-term service with
the City and provide an incentive for them to remain in City service; and,
WHEREAS, it is in the best interest of the City of Kenai to give certain employees
frozen at Step CC a longevity pay bonus of two percent (2%).
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, that KMC 23.55.080 Longevity Pay is enacted as follows:
23.55.080 Longevity Pay
All regular employees who have been at Step CC for a period of at least two
years as of July 31 shall be paid a longevity bonus of two percent (2%) of
his/her base annual salary (i.e. excluding overtime). The longevity pay shall be
paid just once a year on the August payroll. Notwithstanding the above, any
employee who has received a Range increase or a non-cost of living pay increase
within their current pay Range in the 12 months prior to July 31 is not eligible
for a Longevity Pay bonus.
New Test Underlined; [ll£+;LETED TEXT BR.9CKETED]
Ordinance No. 2314-2008
Page 2 of 2
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 17th day of
September, 2008. \ ~---~ ~ /~
PAT PORTER, MAYOR
ATTEST:
" ,/-~
Carol L. Freas, City Clerk
Introduced: May 20, 2008
First Reading: June 4, 2008
Second Reading: August 6, 2008
Third Reading: September 3, 2008
Adopted: September 17, 2008
Effective: October 17, 2008
New Teat Underlined; [DELETED TEXT BRACKETED]
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KENAA~ SKA
~~l/i~~a~e rwit~i a Aas~; Gity wit~i a Fr~tr~re"
210 Fidalgo Avenue, Kenai, Alaska 99611-7794 a~~'Ia~~ry
Telephone: 907-283-7535 /FAX: 907-283-3014 `~ '~
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MEMO:
TO: City Council
FROM: Rick Koch
DATE: August 27, 2008
SUBJECT: Ordinance No. 2314-2008, Longevity Pay
The purpose of this correspondence is to discuss a number of options relating to the
enactment of longevity pay increases/bonuses for employees that have reached the end of
the salary scale.
I will be usnig the term "vesting schedule" in my discussion. I don't tlur>Ic vesting
schedule is probably the most accurate term, but it's the best I can come up with to
describe the length of time from when an employee starts at the "A" step, to when they
reach fne "CC" step. Presently, when an employee reaches the "CC" step, for purposes of
this discussion, he or she is "fully vested".
I have attached a spreadsheet comparing the vesting schedules for selected govermnental
units ni Alaska.
Option Number One-Do Nothing
Discussion
The City of Kenai's salary schedule is assumed to recogruze the competitive range ofpay
for each job classification. In other words, it reflects what the market has deternuned is a
fair rate ofpay for a particular job. The City of Kenai has a reasonably short vesting
schedule in that it takes most employees only 10 to 10-1/2 years to reach the "CC" step.
This is advantageous to orir employees as they move though the vesting schedule more
rapidly than the majority of other mru7icipalities in Alaska.
Two measures of whether an employer is paying less than the market at any point in a
salary schedule is if there is high employee turnover and/or it is difficult to recruit to fill
position vacancies. The Ciry of Kenai does not have high turnover, nor have we had
difficulty in attracting qualified candidates to fill vacancies. The exception was within the
Police Department and that issue has been addressed.
Pros
No financial impact
Cons
- Disappointment on the part of some employees
- Perception at being frozen at top step continues
Option Number Two- Provide atwo-percent (2%) bonus each year for employees
that have been at the "CC" step at least two years. Bonus is based on base annual
salary.
Discussion
This option is defined in ordinance number 2314-2008. It provides as a bonus, what is
another step following the "CC" step, malting in effect a 12.5 year vesting schedule,
where employees will find their rate of pay "frozen". Twelve employees would receive
the bonuses in FY09. This is the option contained in ordnlance number 2314-2008.
Pros
Provides additional compensation. to employees, recognizing long-term city
service
Cons
- Provides additional compensation to employees, possibly higher than the
competitive market salary range
- Coat of impleTilentation is approximately $ 15,000 in FY09
- There is disagreement whether the annual "bonus" would be considered salary as
it relates to PERS
- Imployees would feel they are "frozen" again after receiving the bonus after only
several years
Option Number Three-Create two additional longevity steps in the existing salary
schedule
Discussion
There are almost and endless number of permutations to address taus. Excepting the City
of Kenai, winch has a 10.5 year vesting schedule, the range was 13.5 years to 22 years for
the other 5 government units I researched. The average vesting schedule for these was 19
years. The City of Soldotna, after reaching the end of the schedule (17.5 years) offers
three-percent (3%) longevity increases every Three years.
Two additional longevity steps, "DD" and "EE" ,with "DD" being attained after five
years at the "CC" step, and "EE"being attained after five years at the "DD" step, would
result in a vesting schedule 20.5 years in length. The cost of implementation in FY09
would be approximately $ 17,500. This cost assumes no recognition of past longevity,
aald provides an increase in base pay of 2.5% for each of the additional steps. In FY09
three employees would move to the "DD" step and five employees would move to the
"E,E" step.
Pros
Cons
Addresses perception that employees are "frozen" in salary
No confusion regarding application to PERS. It will increase employees'
retn-ement
Fewer employees will reach the end of the salary schedule
Consistent with other government tuuts vesting schedules
Additional steps may not be justified by the market salary range
The cost on implementation for PY09 is approximately $ 17,500
It is still possible to be "~fi-ozen" at the end of the salary schedule
Administration Recommendation
The adnlinistrationbelleves the existing vesting schedule represents the market range for
specific job duties, and that the performance of certain jobs should be compensated for
witlvn that range.
Under option three the proposed increase in salary expenditure is minimal and would
address long-term employee concerns they are "frozen" in the vesting schedule, some for
marry years.
Administration recommends option number three.
If the Comicil agrees with the administration recommendation I suggest Council direct
the administration to bring bank a substitute ordinance at the next regularly scheduled
Council meeting.
IA
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