Memo Market Rate AdjustmentTY 0
ot CI e F 0
MINNESOTA g
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, City Administrator
DATE: November 20, 2013
SUBJECT: 2014 Market Rate Adjustment
At the November 12 budget work session, we began discussion on the 2014 pay plan market
rate adjustment. The Council requested additional comparative and historical data before
making a decision. That information is included in or attached to this memo.
At the work session a survey completed by Administrative Services Director Dan Jordet was
reviewed. The survey included the 2014 pay plan adjustments for 70 cities. The survey data
indicated that, with a couple of exceptions, all of the cities in the survey are providing a two
percent increase in their pay plan with a rare zero or three percent in a few of cities, However,
the survey did not indicate if step increases would also be given to eligible employees not at the
final step in their pay range. A second request was sent to the cities that responded soliciting
that information. So far 22 cities have responded to the follow-up request:
All 22 have indicated that they use classification grade systems with progressive steps.
All 22 have indicated that steps will be given for 2014.
All 22 have indicated that step increases are independent of any market rate
adjustments or COLA increases.
3 have indicated that steps depend on positive/successful performance evaluation
Number of steps ranges from a low of 3 to a high of 16 with an average of 7
In 2009, the City identified a group of cities that would be used as a market comparison of like
cities to ensure that tsego's pay remained competitive and it stayed within the Council's pay
philosophy. Due to differing development rates and the unique nature of the cities, some of
the cities are no longer as similar to Otsego as they used to be, The main factors used in
selecting new comparable cities include proximity to Otsego, population, location, stage of
development, and growth rate. Within those cities, specific positions were compared. The
positions selected for comparison were those that are most consistent among cities. For
instance, the majority of a city clerk's duties are the same from city to city even though there
may be minor tasks that are very different. The availability of data through the League of
Minnesota Cities' salary survey was also considered. The positions selected for comparison this
year are the same ones used in the past to give the Council a historical perspective of tsego's
standing among other cities. As you can see on the attached chart, as of 2013 Otsego"s pay has
fallen slightly further below the average pay for the comparable cities than it was in 2011.
In addition to market data from comparable cities, the Council requested private sector salary►
survey data. Because Otsego is not a member of an organization that provides access to private
sector data, free online data from the Minnesotajobs.com website was used. A survey with
that data is attached. The positions listed are those that have some appearance of similarity to
city positions.
Other information requested by the Council is historical pay data for Otsego. Because the
economic circumstances differed substantially over this time period, the data is of limited value
without a comparison to the the annual economic conditions data for the same period.
Additionally, the City revised its pay plan during this period likely because of the addition of
new positions due to growth of the City and the need to bring pay rates to market levels. The
data is as follows: The pre 2009 data that is available indicates mainly no increases in pay in
2007 and 2008 with a few exceptions that were possibly due to changes in positions. In 2009
the Council adopted Salary Administration Guidelines including a step pay plan and
performance review system effective January 2010. In 2011 the pay plan did not increase. In
2012 pay plan increased 1.5% on January 1. In 2013 the pay plan increased 1% on April 15.
At the last work session, we also briefly discussed the typical indices used in determining the
cost of living such as the consumer price index (CPI) and Implicit Price Deflator (IPD). Attached
is the current CPI and IP[ data compiled by Dan Jordet.
Although the comparative and historical data has value, the City Council must do what it feels is
reasonable for employees while also considering the budget and tax levy. Perhaps one of the
most important factors for the Council to consider when deliberating is the comparable city
comparison. As you are aware, the draft budget includes funds for an increase within the
Council Contingency allocation. Each percent increase is represents approximately $10,000 of
additional cost when applied to all employees.
2
Survey of Comparable Cities
Data Source: 2013 League of Minnesota Cities Salary Survey
Admin.
Se rvices
Finance Street
ityr Pop. City Clerk City Admin. Director Maint,
Rogers 111500 1.071848 93,017 41,864
Monticello
11,5011
',
105,819
94,26
50,481
East Bethel
12,0901
117,998
90,875
581880
Hugo
131140
72171.9
131,042
103,539
571457
RLIffalo
1411931
111,987
47,694
5t. Michael
1.5,277
65,1.87
12.1,.597
53,601.
Forest Labe
1.7,496;
r
1.38,101.
1.1.3,617
67,387
Farmington
18,9591
137,910
107,679
62,774
Lina Lakes
20,305
70,104
1291252
1.081960
51.,688
Rosemount
21,521
68,160
124,825
105,230
54,953
Hastings
221491.1
128,766
107,827
50 398
Ramsey
23,272
68,889
1290854
1041728
49,774
Prior Labe**
23,335'
70,483 1
121,186
107,208
52,062
Elk River
23,633
74,942
126,913
106,158
54,828
Average
Otsego
14,161
69,936
671902
123,793
115,382
1.01,829
97,220
52,839
521789
2013 Percent of Average 97.09% 93.21% 96.47% 99.91%
2011 Percent of Average* 96.93% 96.06% 97.49% 100.1.2°
Position combined with Assistant City Administrator or Administrative Assistant Position
City has no comparable position
* 2011 Percent of Average based on 2909 Compensation Study comparison cities.
* 2012 pair reported for Prior Lake
11/zz/Zo13
Private Sector Pay Comparison
Data Source: Minn esotajobs.com Website
Data is for the MSA which is defined on the website as the Twin Cities and
surrounding counties.
Pay is the Median pay which is defined on the website as the typical wage.
All rates are hourly.
Median
Position Pay
Maintenance
Highway Maintenance
$ 23.23
Machinery Maintenance
22.21
Maintenance and Repair Workers General
20.23
Truck and Diesel Mechanic
22.41
Heavy Equipment Mechanic
25.60
Construction Laborer
22.76
Construction Manager
41.49
Finance
Payroll Clerk 20.99
Finance Clerk 18-88
Accountants and Auditors 30.09
Financial Specialist 29.08
Human Resources
Human Resources Assistant 19.66
Human Resources Specialist 26.15
Human Resource Management 50.80
Administrative
Executive Secretary/Executive Assistant 23.11
Secretary and Administrative Assistant (exempt) 19.07
Office and Administrative Support 17.23
First Line Supervisors
First Line Supervisor of Construction Trades 33.10
First Line Supervisor of Office and Adminsitration 24.87
First Line Supervisor of Mechanics 30.87
Manaeement
Chief Executive >80.00
Administrataive Services Manager 38.62
Finance Manager 54.26
Social and Community Service Managers 30.81
Managers - Other 50.67
TY 0
ot C1 e F 0
MINNESOTA g
DATE 22 November 2013
MEMORANDUM
TO: Lori Johnson, City Administrator
FROM: Dan Jordet, Administrative Services Dirl
RE: Inflation
( /
Inflation is commonly measured by the Consumer Price- Index established by the U.S. Bureau of Labor
Statistics (BLS). From the first half of 2012 to the first half of 2013, the CPI -LI for the Minneapolis -Saint
Paul area was 2.1%. Several other measures are included in the attached news release from the BLS.
Information from the Bureau of Economic Analysis through the League of Minnesota Cities (Table 3.9.4
attached) indicates that the Implicit Price Deflator (IPD), a number used by the State of Minnesota in
cal cul ati ng previous levy limits for cities, is 1 .87% from the first quarter of 2012 to the first q uarter of
2013. This is the quarterly number formerly used by the Department of Revenue in calculating levy
limit constraints. The chart also shows that the IPD from third quarter 2012 to third quarter 2013 is
1.28%
Other inflation indicators from the BLS website include:
CPI -U October 2012 to October 2013 — National 1.0%
CPI -U October 2012 to October 2013 — Midwest Non -Metro 0.8%
If there are additional questions or additional research needed, please let me know.
J00ke
BLS
BI_ It 1:1 A LJ 01' 1, A 11 () I t STIV I'l STI CS
U.S. DF-TARTMENT 01: LABOR
MIDWEST INF ORMATION OFFICE
Chicago, III.
Nr
NEWS RELEASE
For release: 7:30 a.m. CT, Thursday, August 15,2013
13 -1637 -CHI
Tectmical information: (312) 353-1880 a BLSInfoChicago g(bls.gov * w--vv�v.bls.gov/ro5
Media contact: (312) 353-1138
CONSUME, R PRICE INDEX, MINNEAPOLIS -ST. PAUL, MINN.-Wis., MSA
FIRST HALF` 2013
The Consumer Price Index for All Urban Consumers (CPI -U hi the Minneapolis -St. Paul area rose 2.1
percent from the first half of 20t2 to the first half of 2013, the U.S. Btireau of Labor Statistics reported
today. Regional Commissioner Charlene Peiffer stated that the energy index was 4.6 percent higher
compared to its first half 2012 level, primarily due to price it for electricity and utility (piped)
gas service. Food prices were Lip 1.3 percent. The index for all items less food and energy increased 1.9
percent over the same period. Among the categories within the all items less food and energy index,
prices for shelter, education and communicatioti, -,rmd medical care were higher over the year.
Food
Food prices rose 1.3 percent over the year after increasing 3.6 permit from the first lialf of 2011 to the
first half of 2012. Prices for both food at home and food away from home were 1.4 percent higher over
the year.
Energy
The energy index increased 4.6 percent from the first half' of 2012 to the first half of 2013. Within the
energy category, the hidex for utility (piped) gas service rose 16.6 percent, The in lex for electricity was
10.6 percent higher and the gasoline index rose 0.4 percent.
All items less food and energy
Over the year, the index for all items less food and energy increased 1.9 percent. Aniong the index's
components, higher costs were recorded for shelter (2.4 percent), education and comintmication (5.1
percent), and medical care (3.4 percent).
The second half 2013 Consumer Price Index for Minneapolis -St. Paul is scheduled to be released
in Febi-timy 20146
Technical Note
The Consumer Price Index (CPI) is a measure of the average change in prices over time in a fixed
market basket of goods and services. The Bureau of Labor Statistics publishes CPIs for two population
groups: (1) a CPI for All Urban C011SLIniers (CPI -U which covers approximately 88 percent of the total
population and (2) a CPI for Urban Wage Earners and Clerical Workers (CPI -W which covers 29
percent of the total population. The CPI -U includes, in addition to wage earners and clerical workers,
groups such as professional, managerial, and technical workers, the self-employed, short-term workers,
the unemployed, and retirees and others not in the labor force.
The CPI is based on prices of food, clothing, shelter, and fuels, transportation fares, charges for doctors'
and dentists' services, drugs, and the other goods and services that people buy for day-to-day living.
Each month, prices are collected in 87 urban areas across the country from about 4,000 housing units
and approximately 26,000 retail establlsliiiients--del)artiiieiit stores, supermarkets, hospitals, filling
stations, and other types of stores and service establistiments. All taxes directly associated with the
purchase and use of items are included in the index.
The index ineasures price changes frown a designated reference (late (1982-84) that equals 100.0. An
increase of 16.5 percent, for example, is shown as 116.5. This change can also be expressed in dollars as
follows: the price of a base period "inarket basket" of goods and services in the CPI has risen from $10
in 1982-84 to $11.65. For further details see the CPI home page on the Internet at wx.vw.bIs.gov/cpi and
the BLS Handbook of Methods, Chapter 17 The Consumer Price Index, available on the Internet at
www.bIs.gov/optib/lioiii/lioine.iiI7—a.litiii.
In caICLIlating the index, price changes for the various items in each location are averaged together with
weights that represent their importance in the spending of the appropriate I)OINIlation group. Local data
are there coinbined to obtain a U.S. city average. BCCaLISC the sample size of a local area is smaller, the
local area index is subject to substantially more sampling and other measurement error than the national
index. In addition, local indexes are not adjusted for seasonal influences. As a result, local area indexes
show greater volatility than the national index, although their long-terin trends are quite similar. NOTE:
Area indexes do not ineasui-e def fei-enoes in the level of prices between cities; they only ineasure
the average change in pi -ices fox- each ai-ea since the base period.
The Minneapolis -St. Paul, Minn.-Wis. metropolitan area covered in t1iis release is comprised of Anoka,
Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright
Counties and Pierce and St. Croix Counties in Wisconsin.
Information in this release will be made available to sensory impaired individuals upon request. Voice
phone: (202) 691-5200; Federal Relay Service: (800) 877-8339.
- 2 *4
Consumer Price Index for All Urban Consumers (CPI -U} , Indexes for semilannual averages and percent
changes for selected periods
M i n nea po I is -St. Pa Ll 1, MN- i (1982-84= 100 unless otherwise noted)
I This index series was calculated using a Laspeyras estimator. All other item stratum Index series were calculated u s [n g a
geometric means. estimator.
2 Index is on a December 1982=100 base.
3 Special Index based on a substantially smaller sample.
4 Indexes on a December 1993=100 base.
6 Indexes on a December 1997z:100 base,
Data not available.
Semiannual average indexes
Percent change to
1st half 2013 from-
1st half
2nd half
Ist half
Itern and Group
2012
2012
2013
1st half
2nd half
2012
2012
Expenditure category
All items ... ............ ....... ............. ......................................
223.880
225.038
228,473
2.1
1,5
All items (1967=100) ..... I ...................................... ....... ........
703.549
707.187
717.983
Food and beverages•#+. . ........ .....................
265.105
265.488
267.843
1.0
.9
Food ......... .............................................................................
253.258
254.336
256.643
13
.9
Food at home ......... ........ ....................................................
248.286
248.641
251.769
1.4
1.3
Food away from home ..........................................................
260.097
263,211
263,717
1,4
.2
Alcoholic beverages ...............................................................
376.458
368.252
370.893
-1.5
.7
Housing....................................................................................
194,805
197.086
200.390
2.9
1.7
Shelter ................................................. ......... ...........
222.998
225.156
228.269
2.4
1.4
Rent of primary residence I .................................................
222,692
225,098
227.272
2.1
1,10
Owners' equivalent rent of residences 1 2 ...........................
233,231
235.376
238.981
2.5
1,5
Cwners' equivalent rent of pdniary residence 1 2 ..............
233,231
235.376
238.981
2.5
1.5
Fuels and utilities .....................................
177.763
184.291
195.838
10.2
6.3
Household energy ............. ............................
163,700
170.089
183.355
12.0
7.8
Energy services ............... .................... ........
164.640
171.859
185.760
12.8
8.1
Electricity 1 .......................... __ .............
218.728
226.082
242.009
10.6
7.0
Utility (piped) gas service I .............................................
118.044
125,299
137.629
16.6
9.8
Household furnishings and operations
125,756
125,471
124,458
-1.0
-.8
Apparel . .................................................................... .............
140.637
138.667
140,555
.0
1.4
Transportation ..........................................................................
215,671
214.506
217.883
1.0
1.6
Private transportation .................................................. ..........
201.009
199.731
199.123
_,9
-.3
Motorfuel .,, ...... ..................................................................
286.986
286.427
288.135
.4
.6
Gasoline (all types) ......................................... ...................
288,786
287.976
289,963
.4
.7
Gasoline, unleaded regular 3 ...........................................
294.593
293.744
295.391
.3
.6
Gasoline, unleaded midgraded h * I I I I I b I a 1 4 & 4 4 1 d 0 * k d
287.715
286.818
289.782
.7
1.0
Gasoline, unleaded premium 3
328,804
328.174
331.737
.9
1.1
Medical care #........+11+++.1..+++++41.1.#1111+....+++4+....9+
445,013
449,053
460.009
3.4
2.4
Recreation 5
123.302
122.017
121.010
-1.9
-.8
Education and communication 6 .......................................
135.407
137,995
142,335
51.1
3.1
Otter goods and services........................................................
321.354
322,540
327,550
1.9
1.6
Commodity and service group
All items ......... ............................................................................
223,880
225.038
228.473
2.1
1.5
Commodities ................................................... ........................
194.104
193,465
194.360
J
.5
Commoditias less food and beverages ..................................
160,016
158,978
159.257
_.5
.2
Nondurables less food and beverages .................................
211.832
210.020
212,358
.2
1.1
Durables - .................................................................. .........
113,782
113.469
111.732
-1.8
-1.5
Services ..................................................................................
250.194
252,886
258.502
3.3
2.2
Special aggregate Indexes
All items less medical care .........................................................
213,904
214.939
218.052
1.9
1A
All items less shelter .... ..............................................................
225.500
226.147
229.781
1.9
11,13
Commodities less food ......................... ............. ....... ..............
168.199
166,932
167,285
_,5
.2
Nondurables ...............................................................................
238.477
237.658
240,026
15
1.0
Nondurables less food .......... o ..............................................
223.786
221.573
223,952
1J
Services less rent of shelter 2 ...................................................
294.558
297,833
307.120
4,3
3.1
Services less medical care services ...........................................
233.653
236.196
241.343
3.3
2,2
Energy .................................... ..................... ............
228.927
231.891
239,503
4.6
3.3
All Items less energy ............. I.., ... .............................................
226.971
228,003
231,111
1.8
1.4
All iteris less food and energy .., ..............................................
223.081
224.107
227.353
1.9
1.4
I This index series was calculated using a Laspeyras estimator. All other item stratum Index series were calculated u s [n g a
geometric means. estimator.
2 Index is on a December 1982=100 base.
3 Special Index based on a substantially smaller sample.
4 Indexes on a December 1993=100 base.
6 Indexes on a December 1997z:100 base,
Data not available.
Table 3.9.4. Price indexes for Government on umption ExpenditUres and Groan Investment
(index numbers, 2009=100] Seasonally adjusted
Bureau of Econom'eAnalysls
Last Revised on: November 07, 2013 - Next release Date December 05, 2013
� r r
1 Government consumptlon expenditures an
104,579
105.634
106.078
105.948
1003.697
106.771
106.85
107.209
107.454
107.485
107.898
Consumption expenditures 1
105.188
166.336
106.709
106.423
107.217
107.175
107.215
107.649
107.849
107.799
108.227
3 Gross investment 2
102.27
102,969
103,685
104.164
104.736
105.27.5
105.514
105.569
106
103.363
106.12
4 Structures
101.829
102.99
104.273
105.594
106.454
107.371
107,94
108.394
109.012
109.633
110.24
5 Equ'.pment
100-993
10 1.0 12
101.374
101,028
101.689
101,703
101:655
1011.21
101.12
101.393
101.242
6 Inte''ectual property products
104.031
1.04.551
104.631
104..508
104.693
104,967
104.957
104.833
105.409
105.482
105,887
7 Sofrivare
100.022
140.147
100.193
100.113
100.142
100.019
99.675
99.492
99.916
100.184
100.143
8 Research and deve'opment
105.033
105.616
145.743
105.569
105.8
108.176
103.255
106.155
106.767
106.784
107.314
9 Federal
104.499
105.483
105.835
105.56
105.959
103.162
105.224
106.37
147.047
107.229
107.55
10 onsumpt-on expenditures
104.887
100.054
106.42
106.134
100.551
105.761
106,814
107.07
107.771
107.93
108.332
11 Gross Investment
103.221
103.594
103.902
103.663
104.002
104.265
104.27
104.43
104.446
104.715
104.929
12 structures
100.668
101.637
102.573
103.545
104.168
104,922
105.623
146.132
103,822
107.645
108.288
13 Equ'pment
102.055
102.049
102.491
101.9
102.472
102.634
102.532
101.994
102.051
102.502
102 248
14 Inte:'ectual property products
104,555
105.061
105.141
104.832
105.066
105.324
105.307
105.171
105.785
105.874
106.366
15 Software
100.141
100.292
100.353
100.315
100.321
100,233
99.934
99.771
100.303
100.559
100.559
16 Research and development
105.836
105.911
106.995
105.752
105,9111
106.233
106.275
106.145
100.775
106,828
107.422
17 Hatlonal defense
104.346
105.416
105,718
105.283
105,914
106.229
106.322
106.542
107.283
107.612
107.816
18 Consumption expend.turas
104126
105,976
106.254
105.815
106,464
106,754
106,857
107.221
108.061
108.243
108.564
19 Cross investment
103.002
103.401
103.795
103.375
103.933
104.343
104,396
104,068
104.433
104.839
105.007
20 Structures
100.649
101.656
102.552
103.375
108.907
104,746
105.612
106.114
106.694
107,55
108.106
21 Equ'pment
102.536
102.355
102.82
102.176
102.856
102,984
102.882
102.328
102,391
102,94
102.668
22 1nte'lectuaI property products
104.1118
105.081
145.287
104,942
105.846
106.056
106.219
106,083
106.79
108,°81
107,637
23 Software
99.797
99,876
99.894
99.841
99.814
99.692
99.354
99158
99.61
99.885
99,815
24 Research and deve'opment
104,606
105.877
105.907
105,526
105,984
106.6
107.027
106,9
107.64
107.82
108.571
25 Nondefense
104.779
105,608
103.049
106,061
106,051
108.112
106,065
1 06,08 1
106.549
1066.76
107.108
28 Consumpr--on expenditures
105.191
106.197
103,731
106.74
108.716
106.777
146,734
106,795
107,257
107,511
107.883
27 Gross lnvestnient
103,58
103.912
104.094
104.112
104.143
104.203
104.141
104.023
104,507
104.589
104.867
8 Structures
104,69
101.52
102,566
103.642
104.283
105.02
105.629
106.142
108.098
107.702
108.317
29 Equ'pment
99.81
100.607
100.946
100-6
100.686
100.99
100-886
100_413
iO _499
100.49
100.227
30 lntel'ectual property products
104,943
105.083
105,036
104.939
104.85
104.736
104.575
104.44
104.978
104.°84
105.345
311 Softy, -are
100.297
100.482
100.563
100.531
100,552
100,48
100.198
100.05
1 M617
100.88
100.895
32 Research and development
106.053
106,16
106,107
105.994
105.875
105,749
105.619
105.488
10667
105,953
106,407
33 State and local
104.833
105,74
i0B.248
106.22
107 214
107,183
107.288
107.798
107.716
107.676
108.152
34 Consumption expenditures
105.384
106,5180
108,893
108.611
1107.656
107.446
107.477
108,029
107.907
107.693
108,168
35 Gross Investment
101.481
102.462
103.535
104.638
105 412
106.189
106.631
M3.945
107.388
107,684
108.314
38 Structures
101,958
103.148
104.468
105.822
103,704
107.835
108,192
108.6142
109.254
109.83
110.469
37 Equ'pment
98.327
98.417
98.588
98.859
99.211
99.387
99.462
99.247
°8,776
98.643
98.744
38 Intellectual property products
101.482
101.891
102.154
142.278
102.742
103.074
103,099
103,061
103.426
103.42
143.415
39 Solt,are
99.797
99,873
99.892
99.735
99,804
99.614
99,187
98,987
'99,195
99,466
99.371
40 research and dave'opment
102,709
103.362
103_.808
104,144
104.911
105.651
106.035
106.145
146.624
106,388
1103.451
I, GovernmonI conslimpLlion expend.'tures are sery es (such
as education
and naUonaI dofense) produced
by governmant thaI are
valued a the;rccsf ofproduccon.
&cludes
g0vernmant sales to other sectors and governajant o ,-n-account
in vestmenI (cc n S tructio
n, solWara,
and research and deva'epmentj.
2. Gross governmenI invas Iment consists ofgenaral govarnmant
andgoverwenI enlerpris9
expend ores rot fired assets,• inve aforyinvesfman( is included in govefnm nI oansumpu0n
expend Tures.
0.52 ;j
0.2355
1.81 fo