August 16, 1996

The attached ordinance would implement the recommendations of the classification and pay study, including

· changes in the salary grade assignment and the salary ranges of Town positions based on the classification and market study.

Based on Council consensus in work sessions, employee pay increases resulting from the implementation of these recommendations would be implemented on October 20 , 2000, the next bi-weekly pay period after October 1^st.

Effective October 20, 2000, we recommend the following changes in the classification and pay structure, as discussed in Council work sessions with the pay consultant and the Personnel Department staff, in Budget Working Papers and in budget work sessions:

· The proposed October 20, 2000, salary schedule in the attached Ordinance would be similar to the schedule currently used but would reflect simplifications to the existing structure. Current schedule components such as hiring rates, probationary steps, intermediate pay steps, and the Job Rate would be maintained, but the schedule would be revised so that salary compression in the lowest grades would be lessened. The structure of the new schedule would be the same from the lowest grade to the highest grade, instead of compressed in the lower 5 grades as in the current schedule.

Following Council discussions and consensus in work sessions, all of the rates in the recommended schedule are .25% (.0025) less than originally proposed.

· In accordance with the Town Council’s policy on market competitiveness, recommended salary grades and ranges for positions are competitive at the 75^th percentile of the local labor market. The goal of paying salaries at the 75th percentile rather than the median or average rate was adopted to allow the Town to be more successful in recruiting and retaining employees in the competitive Research Triangle Area labor market. It is also a reflection of the Council’s and employees’ concerns about high living costs in Chapel Hill and the recognition that the Town depends in large part on a commuter workforce.

· The attached Ordinance details the new titles and salary grades that are recommended for positions. For example, the title of Clerk positions at grade 12 would be changed to Office Assistant in a new grade 27. **

The Ordinance reflects two changes in grade assignments following the Town Manager’s consideration of employee appeals.

- 2 Landscape Supervisor I positions changed from grade 32 to grade 33, based on comparisons to other supervisory and crew leader positions in Public Works

- 3 Library Assistant II positions changed to Library Assistant III, based on the percentage of time spent in higher level reference and program tasks

Although the above grades for the changed and appealed classifications were not initially recommended by the consultant, he has said these are not inconsistent with the remainder of the classification and pay plan. These changes would result in approximately $3400 additional costs, which can be paid by reallocating funds in the two departments’ budgets.

· The attached Ordinance reflects changes in grade assignments of four department head classifications, based on review of market data and assessment of responsibilities:

There is less than $200 cost associated with the change in classifications of these positions.

· Employee pay increases for Fiscal Year 2000-2001 will vary based on the employee’s place in the recommended new salary range:

- For approximately 495 (85%) of employees below the new Job Rate: With acceptable performance, employees with salaries below the new Job Rate would be put onto a step in the new and more competitive salary range (hiring rate, probationary step, or steps 1,2,3, or Job Rate). If they have completed probation, employees would receive an additional step in the new range so that salaries would continue to be distributed through the new range and, with a few exceptions, would not be compressed with the salaries of new employees.

- For 85 (15%) of employees with salaries at or above the new Job Rate: If performance is acceptable, an average increase of 4.25% is proposed for employees with salaries above the Job Rate of their recommended new range. Following Council discussions and consensus in work sessions, the amount of the average merit increase is 4.25% instead of 4.5% as originally proposed in the Manager’s Recommended Budget.

Applying the policies adopted in the 1999 review of the Town’s pay system, the amount of the merit increase will vary based on the employee’s performance, and performance will be evaluated at one of five performance levels. A mathematical formula would be used to divide the available merit increase dollars based on a compilation of all of the performance ratings granted by departments, with increases granted averaging 4.25%

We believe that adoption of the recommended Classification and Pay Plan changes, adoption of the new and simplified salary schedule and providing employee pay increases which implement the Pay Plan are all important for several reasons:

· Recruitment: establishing hiring rates and salary ranges that are up to date and are more competitive in the Research Triangle area labor market

· Retention: providing our employees with career advancement and salary increases that are competitive with those being granted by other employers

· Commitment: continuing the implementation of the simplified and restructured pay system and completing the pay system review process that was begun in 1998.

Recommendation: That the Council approve the attached ordinance, which would be effective October 20, 2000.

** Grade 11 is the current lowest grade; 25 is the lowest recommended grade in the new structure. Because the recommended new salary schedule was so different in its structure from the current schedule, the consultant recommended that the current schedule be renumbered. The result is that all employees’ positions would be assigned to a new grade. Grade 25 was selected as the number that would designate the lowest salary in the new salary structure.