council budget staff report · this year, the administration again proposes to front-load the...

CITY COUNCIL OF SALT LAKE CITY

451 SOUTH STATE STREET, ROOM 304

P.O. BOX 145476, SALT LAKE CITY, UTAH 84114-5476 COUNCIL.SLCGOV.COM

TEL 801-535-7600 FAX 801-535-7651

CHARLIE LUKE | DISTRICT 6 | COUNCIL CHAIR || LUKE GARROTT | DISTRICT 4 | COUNCIL VICE CHAIR || JAMES ROGERS | DISTRICT 1 ||

KYLE LAMALFA | DISTRICT 2 || STAN PENFOLD | DISTRICT 3 || ERIN MENDENHALL | DISTRICT 5 || LISA ADAMS | DISTRICT 7

COUNCIL BUDGET

STAFF REPORT

CITY COUNCIL of SALT LAKE CITY

www.slccouncil.com/city-budget

TO: City Council Members

FROM: Jennifer Bruno

Deputy Director

DATE: May 9, 2014 at 1:10 PM

RE: Fiscal Year 2014-15 Compensation Budget

VIEW MAYOR’S RECOMMENDED BUDGET

ISSUE AT-A-GLANCE

Personnel and Payroll costs make up 66% (approximately $151 million) of the City’s $229 million General Fund

budget. Included in this figure are salaries, health benefits, pension costs, and other benefits. The

Administration is proposing what amounts to a 3% salary increase for employees ($4.1 million), and the Utah

State Retirement System (URS) is requiring an increase for pension contributions of $1.5 million, for a total

increase of $5.6 million in salary and benefits over the FY 2014 budget.

The City has three bargaining units with which the Administration discusses compensation, and comes to agreements through multi-year Memorandum of Understanding (MOU) – Police, Fire, and the American Federation of State, County, and Municipal Employees (AFSCME). Agreements with City bargaining units are developed prior to and after the Mayor presents the recommended annual budget. The recommended budget includes total compensation adjustments for all City employees, both union represented and non-represented alike. However, depending on the outcome of negotiations, recommendations for union employees may be modified.

POLICY QUESTIONS

1. The compensation philosophy for municipal government is often different than the private sector, and involves many components. While the Citizens Compensation Advisory Committee (CCAC) annual report touches on these components with respect to how they compare to the market, the Council may wish to ask for a more in depth briefing from the Administration on the compensation system, and what

the City’s philosophy is.

ADDITIONAL & BACKGROUND INFORMATION

<staff note: some of these items were of such significance to the General Fund budget that they have also been

covered in the Budget Overview Staff report>

A. Employee Compensation – The Administration is proposing to increase employee compensation in a

few ways:

Project Timeline: Briefing: May 13, 2014 Budget Hearings: May 20, June 3 Potential Action: June 10 OR 17

http://www.slccouncil.com/city-budget/

http://www.slcdocs.com/budget/mayor2015.pdf

Page | 2

An overall 3% increase for non-represented employees.

$450,000 for previously-agreed-upon years of service increase for represented employees.

A pool equal to 3% for represented employees, final usage and amounts to be determined throughout

the course of negotiations.

B. Citizen’s Compensation Advisory Committee (CCAC) Recommendation - Each year the CCAC is

responsible for preparing and submitting a written report, with any recommendations, to the Mayor and

City Council for their consideration. One role of this Committee is to study and compare the City’s salary

groups or benchmarks against the salaries of comparable employers to see if City’s salaries are competitive.

Based on its findings, the Committee strongly recommended that resources be appropriated to grant market

salary adjustments for employees whose annual salary lags behind the market by 5 – 10 percent or more.

The Mayor’s Recommended Budget includes approximately $79,000 to fund these salary adjustments.

These increases are in addition to the proposed 3% overall salary increase. The following chart is the

recommended amount of adjustment, by department:

Department Adjustment Position(s)

Attorney’s Office $ 12,809 Senior City Attorney

Finance $ 18,912 Business License Processor, Financial Analyst

Human Resources $ 34,610 HR Consultants

Justice Court $ 9,036 Financial Analyst

Public Services $ 4,848 Financial Analyst

Note: The full CCAC report was briefed for the Council during the May 6, 2014 work session, and is

available here.

A. Affordable Care Act Changes – The Administration is proposing to convert 45 seasonal and 10 RPT

positions (that function more like full time positions), into full time positions with full benefits ($1.6

million). These changes allow the City to recognize the true functioning of each of these positions, and also

allow the City to be in compliance with the Affordable Care Act, which according to federal law, must be

implemented by July 2015. Most of these positions are in the Public Services department (General Fund,

Refuse, and Golf). It should be noted that there are two additional positions in the Council Office that are

Regular Part Time positions where the incumbents fall within this conversion approach. Those positions

can be converted without adjusting the recommended Council budget.

B. Retirement – The Utah State Retirement System (URS) indicates to the City each year, how much the City

must contribute towards employee’s retirement. The past few years this line item has increased

substantially, in order to make up for retirement system’s anticipated funds lost during the market

difficulties of 2008. For FY 2015 URS is requiring a $1.5 million increase. The Administration is hopeful,

based on conversations with URS, that this is the last major increase for a number of years.

C. Health Insurance – The Administration is proposing to continue the up-front contribution to health

saving accounts (HSAs) for employees on the Summit Star High Deductible Health Plan (HDHP). This is

$750 for a single employee and$1500 for double and family. Premiums are also proposed to decrease

slightly for this plan based on significant savings realized by the Plan. For employees on the Summit Care

plan, premiums will increase slightly. The City will continue to pay 95% of the Summit Star HDHP

Premium and 80% of the Summit Care Premium. Approximately 78% of the City’s employees have elected

to join the Summit Star HDHP. This is well in excess of initial estimates for participation in the plan.

D. Employee Compensation History – the following table illustrates the past few years of history relating to

employee compensation:

Employee

Group

FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14

Page | 3

Represented

Employees

1.5% salary and

wage reduction

Four days of

personal leave

(one per quarter)

1.5% salary and

wage restoration

One extra day of

personal leave

3.0% salary and

wage increase

Rationale -cover

employee costs for

health care

premiums.

AFSCME – non-

topped out 1.0%

general pay increase

AFSCME – topped

out – two additional

shifts off as personal

holiday

Police and Fire –

topped out - one

additional shift off as

personal holiday

AFSCME, Police, and

Fire - Mid-Year pay

adjustment (January 6,

2013) for eligible

employees – move to

new proficiency/time

based compensation

system. Also included

a 1% general pay

increase to topped-out

employees.

Non-topped out

represented employees

received previously-

agreed-upon years of

service increases;

Topped out

represented employees

received a zero

increase.

Non-

Represented

Employees

1.5% salary and

wage reduction

Four days of

personal leave

(one per quarter)

1.5% salary and

wage restoration

One extra day of

personal leave

3.0% salary and

wage increase to

offset health

insurance premium

increases

Rationale - cover

employee costs for

health care

premiums

1.0% general pay

increase

Department heads

given a pool equivalent

to an approximate 1.5%

increase, to divvy out

to employees as

determined based on

merit or other factors.

ATTACHMENTS

Attachment 1 – CCAC Annual Report

MAYOR’S RECOMMENDED BUDGET

MAYOR’S RECOMMENDED BUDGETFiscal Year 2014-15

B-14

As required by Utah Retirement Systems (URS), the City’s medical plan reserve should be maintained at a level to cover claims for a minimum of 55 days and a maximum of 100 days of premiums. Having been in deficit status as of June 30, 2011, the medical plan reserve bal-ance ended with a positive $9,434,546 as of June 30, 2013. In the last year the reserve building surcharge was discontinued due to the stability of the reserves. The medical reserve balance as of December 31, 2013 was a positive $12,172,675 and, effective December 2013, employees and the City were refunded the total reserve building surcharge they contributed, approximately $2.4 million. The reserve balance as of February 28, 2014 was $10,514,834 – exceeding the URS requirement for insurance risk pool reserves. Through the effective management of the re-serves, the City and employees enrolled in the STAR plan were able to receive premium holidays, as noted above. Finally, and significantly, a reduction in the number of catastrophic claims and a reduction in overall claims costs has contributed to the stability of the reserves. This year, the Administration again proposes to front-load the Health Savings Account (HSA) associated with the HDHP. As in prior years, the proposal will continue to fund one-half of the deductible for this plan - $750 for singles and $1500 for doubles and families into a health sav-ings account or medical flex account. The Administration also proposes to add an autism cover-age benefit and to increase the mental health coverage under both medical plans. As before, the City will continue to pay 95% of the total Summit Star medical premium and 80% of the Summit Care medical premium.

Compensation

The Mayor’s proposed budget includes a recommended compensation package for City employees which totals approximately $4.19 million. This proposal is comprised of the following: • For non-represented employees, the Administration is recommending a three percent (3%) general increase to the base hourly wage or salary of each employees. • For represented employees, the Administration recommends funding for proficiency pay increases based upon employee anniversary (compensation) dates and the number of calendar years completed by each employee in their respective job title. The projected cost for these pay increases is approximately $450 thousand. Additionally, although negotiations will be ongoing at the time the FY 2014-2015 budget is submitted to the City Council, the Administration has included in the budget an increase to compensation for represented employees equivalent to 3%. The final amount and distribution of such increases will be determined through the negotiation and ratification process found in the Collective Bargaining Resolution. • Finally, as recommended by the Citizens’ Compensation Advisory Committee, the Administration is proposing market adjustments for certain benchmarked employee groups in the City who lag significantly behind market pay rates by more than 10%. The projected costs

for market adjustments are approximately $79 thousand.

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DEBRA ALEXANDER ~·,~~1llr~~'Rl~f SCANNED TO: f:J.a:./CA---SCANNED BY:~~

OJ R E CTOR DEPARTMENT OF" HUMAN RESOURCE

DATE: RALPH BECKER

MAYO~

CITY COUNCIL TRANSMITTAL

Date Received: §Lf f 13 /~'-I Date sent to Council: 4 ; 1: {t t.-/

TO: Salt Lake City Council Charlie Luke, Chair

DATE: April15, 2014

FROM: Debra Alexander, Director ~ ~ ~ Human Resources Department

SUBJECT: 2014 Citizens' Compensation Advisory Committee (CCAC) Annual Report

STAFF CONTACT: Debra Alexander, HR Director (801) 535-6604

David Salazar, City Compensation Program Manager (801) 535-7906

COUNCIL SPONSOR: Exempt

DOCUMENT TYPE: Annual Report

RECOMMENDATION: This report is for informational purposes. Consideration should be given during the City's annual budget review process, as it relates to employee compensation. The City Council will receive a formal presentation of the annual report by the Committee's Chair, Ms. Connie Spyropoulos-Linardakis, during a Council work session; presentation date is yet to be determined.

BUDGET IMP ACT: n/a

BACKGROUND/DISCUSSION: This report includes information and recommendations pertaining to the total compensation for the city's elected officials and employees, as required by city ordinance (City Code, Title 2, Chapter 2.35- Citizen'_s Compensation Advisory Committee (CCAC)

451 SOUTH STATE STREET, ROOM 1 1 5, SAL.T LAKE CITY, UTAH 84114- 5464

MAIL.ING ADDRESS: P.O. BOX 145464, SAL.T LAKE CITY, UTAH 94114- 5464

TELEPHONE: 801·535·7900 FAX: SOl -535·6614 * 'ICCYC\CO ,.~~,.~·

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The fo llowing recommendations and information are highlighted in this year' s report-

• As funds permit, the Committee strongly recommends appropriations for market salary adjustments for employees in jobs identified as below market- including first priority for benchmarks specified as significantly below market; and, second priority for benchmarks specified as slightly below market;

• Consideration of an increase in total salary budget between 2.6% to 3 .0%, including merit pay and other increases that accelerate employees' pay through their respective salary ranges.

• The Committee strongly recommends limiting pay increases for those employees whose pay rates are equal to or above established City market rates and holding the maximum pay rates at a zero increase, including those classified in 20 benchmarks (and their related jobs) cited in the report as being paid significantly above market;

• A recommendation to consider other pay alternatives in lieu of cost-of-living adjustments, and instead reserve limited funding available to focus on providing actual pay and salary range adjustments necessary to allow the City to remain competitive with other employers;

• A report on pay for Elected Officials, Department Directors & other key city leaders;

• Commendation on the City's success containing health insurance premium and plan costs related to implementation and administration of a high-deductible health plan (HDHP) option, which now covers a reported 80% of City employees and their eligible dependents. To sustain success and interest in the plan, the Committee encourages the City to continue to provide front-loaded, employer contributions to employee health savings accounts.

• Analysis, results & findings from a third-party employee benefits market study conducted by the Hay Group.

PUBLIC PROCESS: nla

ANNUAL REPORT Citizens’ Compensation Advisory Committee

2014

SALT LAKE CITY CORPORATION

CCAC ANNUAL REPORT

2014

Page 1

Executive Summary The Citizens’ Compensation Advisory Committee (CCAC) was formed with the purpose of “…evaluating the total compensation levels of the city's elected officials, executives and employees and making recommendations to the human resources department, mayor and the city council…” (City Code Title 2, Chapter 2.35.060). Each year the Committee is responsible for preparing and submitting a written report to the Mayor and City Council containing, among other things, recommendations of the “appropriate competitive position for the city relative to the compensation practices of comparable employers”, “wages and benefits of the city’s elected officials, executives and employees” and “general recommendations regarding the mix of compensation for the city’s employees, e.g., base salary, benefits, incentives” (City Code Title 2, Chapter 2.35.060.A.6) Based upon a review of current economic trends, market data and other significant considerations, the Committee now recommends that the Mayor and City Council consider the following when deciding appropriate measures to be taken regarding the City’s overall compensation plan:

1. As a standard, the Committee feels confident that the best possible outcomes can be achieved if the City continuously strives to maintain an actual average pay position of no less than 95% compared to the pay levels of other employers with whom the City most directly competes.

2. Based upon current market comparisons of actual average pay, the Committee is confident with regard to the City’s overall pay position relative to market. For the majority of salary benchmarks surveyed Salt Lake City Corporation’s actual average base pay rates are appropriately compared to and generally match or exceed the local market. Among the 63 total salary benchmarks surveyed, actual average pay for 20 of these benchmarks significantly lead the market by more than 10% -- compared to only 17 benchmarks in this same category last year (see page 9). HOWEVER, current market data also indicates a total of eleven salary benchmarks which lag the market either slightly or significantly, including five benchmarks that lag significantly, which is more than ten percent below market; and, six benchmarks that lag slightly, which is between 5-10% less than market average (see page 10). As funds permit, the Committee strongly recommends that the Mayor and City Council appropriate financial resources necessary to grant special market salary adjustments for employees in benchmark jobs identified in this report as lagging behind market. First priority should be given to those lagging significantly; second priority should be given to those lagging slightly behind market. The Committee

CCAC ANNUAL REPORT

2014

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recommends implementing market pay adjustments incrementally for incumbents in job benchmark groups designated as lagging market significantly.

3. In consideration of the salary budget predictions available at the time of this report, we suggest a total salary budget totaling between 2.6% to 3.0% be allocated for pay adjustments and other increases. The Committee asserts that effective implementation of budgeted salary increases should be influenced by the following considerations: a) When granting individual wage & salary increases, the Committee

strongly recommends that the Administration consider the best practice of granting pay increases that accelerate employees pay through the first and second quartiles of their respective salary ranges, up to and including the City’s established control point or City market rate;

b) For those employees whose pay rates are equal to or above established

City market rates, pay increases, if any, should be limited to smaller increments (not to exceed range maximum); and,

c) For those employees whose pay is at (or above) maximum rates, the

Committee recommends a zero increase; instead, the Committee suggests consideration of lump sum awards such as a longevity bonus or other award in lieu of a base wage or salary increase.

d) Finally, except for the Police Officer and Firefighter benchmarks, potential

concerns arise when comparing the City’s actual average pay for the those benchmarks shown to significantly lead the market. Where market salary data indicate that the City’s actual average pay significantly leads the average pay offered by other employers, the Committee cautions and advises the City to reconsider its policies and any pay decisions which may worsen this issue. In these cases, the Committee strongly recommends holding the maximum pay rates of these benchmarks (and related) jobs at a zero increase until which time City market rates more closely align with other employers.

4. Again, the Committee strongly recommends that the City consider pay

alternatives to cost-of-living adjustments (COLA), and, instead, reserve limited funding available to focus on providing actual pay & salary range adjustments necessary to allow the City to remain competitive with other employers; especially in cases where current data indicates a significant lag in actual employee pay and/or established job salary ranges.

5. Across all industries pay for performance continues to be a recognized standard and criterion for setting employee pay. Although no citywide plan or program presently exists, the Committee acknowledges that a study by the City’s Human

CCAC ANNUAL REPORT

2014

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Resources Department is currently underway to identify and implement the best practices found among other public employers.

6. For the majority of City department directors and other key city leaders, a comparative analysis with similar U.S. cities indicates that current salaries are competitive. The Committee advises the Administration to consider action, if any, for Directors where data indicates that annual salaries lag by more than ten percent. Consideration of pay increases for all others should include the same general salary increase, if any, given to all other employees.

7. The Committee finds the present salaries for the Mayor and City Council members to be within the competitive range when compared to the salaries of elected officials in similar U.S. cities. Therefore, the only salary adjustment recommended for these officials would be the same general salary increase, if any, given to all other employees.

8. The Committee commends the City for its success containing health insurance premium and related plan costs by continuing to offer a high-deductible health plan (HDHP) option, which now covers a reported 80% of City employees and their eligible dependents. This total reflects an annual increase of 12% compared to the number enrolled last year. To sustain and promote employee interest in this type of plan, the Committee encourages City officials to continue to provide front-loaded employer contributions to qualified health savings accounts (HSA’s) for employees enrolled in the high-deductible plans.

9. Except for those noted as lagging market, the Committee finds the City’s overall mix of wages, salaries and employer-provided benefits (known as total rewards or total compensation) to be competitive to highly competitive when compared to other local employers. Furthermore, based upon the findings and results of the City benefits market analysis conducted by the Hay Group, the Committee recommends that leaders strive to maintain a full range of benefits that is at the market 75th percentile or more when compared in aggregate to the Utah market. Maintaining this position not only enhances total compensation for employees, but strengthens the City’s overall competitive advantage.

CCAC ANNUAL REPORT

2014

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We are hopeful that these recommendations and the detailed information contained within this report are both helpful and beneficial in the important decision-making process ahead. Respectfully,

Citizens’ Compensation Advisory Committee Connie Spyropoulos-Linardakis, Chair Paul Jones, Vice-Chair John Campbell Kerma Jones John Mathews Cori Petersen Dale Cox

CCAC ANNUAL REPORT

2014

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Introduction In conjunction with its role as a local government employer, Salt Lake City Corporation is responsible for maintaining a workforce capable of providing for the public safety and well-being of its residents, visitors and business community at large. Success in fulfilling this part of the City’s mission depends in large part upon elected officials’ and public administrators’ ability to make informed and fiscally-responsible decisions with regard to the total rewards offered in the form of compensation and benefits to City employees. This report is intended to aid City officials when determining appropriate compensation and benefit levels, including the pay practices necessary to effectively attract, motivate and retain the human resources required to carry out the City’s mission-critical goals and objectives. This Committee believes that the primary mix of indicators upon which the City should rely when making these key decisions include: current economic indicators, pay trends and comparative market data analysis, as conveyed and included in the recommendations of this report. Specific sections in this report include the following:

1) City compensation philosophy 2) 2014 economic outlook, including salary budget projections 3) Market wage & salary analysis 4) Report on salaries of Elected Officials’, Department Directors’ & Other Key City

Leaders 5) Employee Benefits Market Analysis 6) Appendices (including a detailed comparative market data analysis by salary

benchmark) City Compensation Philosophy Whether public or private, every employer must find ways to effectively attract, motivate and retain the human resources necessary to carry out its mission-critical goals and objectives. The degree to which an employer succeeds in this endeavor is tied directly to their decision to match, lead or lag the comparative pay levels offered by competing employers. Whether informal or deliberate, pay decisions, practices and policies formulate the basis of any organization’s compensation philosophy. Unlike private employers, City leaders are under pressure to make pay decisions that support the tenuous balance between the competitive pay fairness that employees seek and the fiscal responsibility demanded by taxpayers. To this end, this Committee is confident that the best possible outcomes can be achieved if the City strives to maintain an actual average pay position of no less than 95% compared to the actual average pay offered by other employers with whom the City most directly competes. Furthermore, when qualified resources are both abundant and readily available from within the local

CCAC ANNUAL REPORT

2014

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area, the Committee affirms that matching or comparing wages and benefits of other Utah employers is most often an adequate approach. Considering the City’s present success in attracting large applicant pools (drawn primarily from along the Wasatch Front), highly competitive wages and low turnover—measured during FY 2013 at 5.8%-- there is good evidence to support and demonstrate that the City’s existing compensation strategy is working. The Committee acknowledges that there may be specific situations or circumstances when the City’s needs, even as a public employer, call for higher than average wages in order to attract the right talent. Factors such as a larger magnitude, higher volumes, and unique challenges associated with delivering services to Utah’s capital city may call for Salt Lake City to promote itself as a pay leader, such as with Police, Fire and other jobs that are exclusive to the public sector. Other considerations include situations when jobs require highly-specialized or scarce skills, training, education and/or experience. 2014 Economic Outlook Despite some economic hiccups on the national level, such as the sequestration and federal government shutdown, the Committee reviewed reports that indicate that Utah’s economy and job market have continued to grow and remain strong. Local researchers and economists all tend to agree that the 2014 outlook for Utah is a good one.

As the economy rebounds, so does Utah’s job market. According to the state’s Department of Workforce Services most recent employment summary (February 2014), Utah continues to experience positive job growth at a current rate of 2.5%

compared to one year ago, which is higher than the national employment growth measured at 1.5% for the same period. (Source: Utah Department of Workforce Services, Employment Summary – February 2014, issued March 21, 2014). Utah Chief Economist Carrie Mayne states that after hurdles with the government shutdown and raising the debt ceiling, more businesses are now beginning to invest in their companies again, which means more jobs and, subsequently, greater competition for qualified human resources (Source: “Utah 2014 economy looks rosy with jobs, real estate growth,” SL Tribune news article published 1/6/2014). Another measure of Utah’s strong economy—consumer confidence—reached a record high of 96.1, as measured by Zions Bank Consumer Attitude Index (CAI) from November to December of last year.

CCAC ANNUAL REPORT

2014

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With the cost of living in Utah remaining relatively low compared to the rest of the nation, lower cost of doing business (including labor), and a forecast that inflation will stay in check over the next 12 months, all are indicators of Utah’s strong economy, according to Darin Mellott, senior research analyst for the commercial real estate services CBRE Group, and a member of the Utah Economic Council (Source: “Utah 2014 economy looks rosy with jobs, real estate growth,” SL Tribune news article published 1/6/2014). 2014 SALARY BUDGET PROJECTIONS – Historically, this Committee has relied on data obtained from the employer salary budget survey conducted by WorldatWork when formulating recommendations to City leaders about annual salary budget increases. WorldatWork is a nationally recognized not-for-profit organization focused on human resource issues, which conducts the most anticipated, most respected survey of its kind in the compensation industry. In addition to collecting data on actual salary budget increases allocated by the organizations surveyed, WorldatWork also obtains information about employers’ projected salary increases during the upcoming year (expressed as a total percent increase). In its 40th edition, WorldatWork released the findings from its 2013-14 Salary Budget Survey, which included more than 2,124 responses from a wide variety of employers from all industries in all 50 states. Nearly 60% of all the survey responses were received from organizations whose workforces total between 500 – 9,999 employees (Source: WorldatWork’s “2013-2014 Executive Report & Analysis,” pp. 8 & 10). The following charts provide a summary of the projected and actual increases reported by type of increase and employee category. Chart 1 – Salary Budget Increases, by Type of Increase

Projected 2013 Actual 2013 Projected 2014

General Increase/COLA 1.5 % 1.3 % 1.6 % Merit Increase 2.8 % 2.7 % 2.8 % Other Increase 0.7 % 0.7 % 0.8 % Total Increase 3.0 % 2.9 % 3.1 %

Note: “General Increase/COLA,” “Merit,” and “Other” do not add to the “Total Increase” because not every organization provides all three types of increase.

CCAC ANNUAL REPORT

2014

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Chart 2 – Salary Budget Increases, by Employee Category

Projected 2013 Actual 2013 Projected 2014

Nonexempt Hourly, Nonunion 2.9 % 2.9 % 3.0 % Exempt Salaried 3.0 % 2.9 % 3.1 % Officers/Executives 3.0 % 2.9 % 3.1 % All 3.0 % 2.9 % 3.1 %

It is also worth mentioning that the above charts indicate the projected and actual salary budget increases for all survey participants, nationally. However, when considering the specific projected totals indicated in the report by state (Utah) and by industry (public administration), the Committee notes the total salary budget projections are at slightly lower rates, which are 3.0% and 2.6%, respectively; these are the same rates upon which the Committee bases its salary budget recommendation to City leaders. Consistent with the findings by WorldatWork, the nationally-recognized Society for Human Resource Management (SHRM) cites a similar study conducted by Buck Consultants, which indicates that pay trends in 2014 will remain steady at three percent (3%) for a second year in a row in the U.S.—roughly one percent below pre-recession levels (Source: Society for Human Resource Management, “Pay Trends for 2014” article by Stephen Miller, published 10/8/2013). PAY FOR PERFORMANCE -- In addition to these projected salary budget increases, there is still good evidence of a differentiation of awards offered to employees through pay for performance. Year after year, regular studies conducted by WorldatWork show that rewards for top performers consistently average 150% compared to those given to average performers. Translated, using this year’s projected salary budget amounts, this results in a total 2.7% increase for average performers versus a 4.1% increase for top performers. The Committee recognizes that no such pay for performance program exists citywide, but is, however, utilized by a few City departments. We believe that such programs, if administered effectively, have the potential to enhance the City’s ability to not only motivate, but also retain top talent upon which the City relies. Market Wage & Salary Analysis The Committee also considered comparative data (wages & salaries only) from two Wasatch Front-based survey groups: 1) the 2013 Salt Lake Area Survey, conducted by the Western Management Group (WMG); and, 2) Wasatch Compensation Group’s (WCG) TechNet system. The Salt Lake Area Survey included 118 participants, the majority of whom are large private or public employers with operations along the Wasatch Front. Data gathered from the Wasatch Compensation Group (WCG) comes exclusively from other Utah public employers, including local municipalities, counties and special districts, who serve populations of 40,000 or more along the Wasatch Front.

CCAC ANNUAL REPORT

2014

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A complete list of all employers considered for salary comparative purposes is shown in Appendix B of this report. Where necessary, additional salary data was collected in special surveys conducted by the Human Resource Department for certain key positions where the City competes regionally and nationally, including City Planners. In addition, the Committee considered wage analysis comparing Police Officers and Firefighters to other similarly sized U.S. cities, which is the same sample utilized to consider the pay levels of Elected Officials, Department Heads & Other Key City Leaders. Among the City’s 834 individual job titles, the Committee reviewed wage & salary analysis conducted by the City’s Human Resources Department for 63 salary benchmarks. The Committee reviewed a comparison of actual average pay for all benchmark jobs and highlighted those for which data shows the City either leads or lags market significantly (by >10% or more) or lags slightly (between -4.9% to -9.9%).

Table A: Benchmarks SIGNIFICANTLY ABOVE MARKET ( > 10%)

BENCHMARK JOB SLC

Actual Average Salary

Market Actual Average Salary

SLC/ MKT

Senior Parks Groundskeeper $38,290 $31,645* 125.1% Real Property Agent $59,218 $47,330 125.1% Wastewater Plant Operator $44,463 $35,775 124.3% Legal Secretary III $47,258 $38,474* 123.3% Office Technician II $40,614 $33,613* 123.0% Firefighter I/II/III $50,015 $40,707 122.9% Public Safety Dispatcher II $43,870 $34,929* 119.9% Custodian II $29,182 $24,607* 118.8% Senior Secretary $37,785 $32,452* 117.7% Community Programs Manager $49,295 $42,222 116.8% Police Officer I/II/III $56,817 $49,108 116.7% Engineering Technician IV $51,198 $43,903 116.6% Licensed Architect $71,053 $61,068 116.4% Research Analyst/ Grant Program Mgr $65,702 $48,273 115.4% Airport Operations Specialist $50,499 $43,773 115.4% Asphalt Equipment Operator $44,034 $38,588* 114.4% Procurement Specialist II $56,524 $50,089* 112.9% HVAC Technician II $51,085 $45,540 112.2% Water Meter Technician $42,598 $38,188 111.5% Accountant III $58,894 $54,699* 111.1%

* Market salary is based on an average of actual salaries reported in both WMG & WCG surveys. All other market salary comparisons are from one survey group only.

CCAC ANNUAL REPORT

2014

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Concern arises when comparing the City’s actual average pay for these benchmark jobs, which are shown to be significantly above market. This concern is due primarily to the fact that many are jobs for which the City competes directly with other private sector employers. With the exceptions of the Firefighter and Police Officer jobs for which the City desires to be a pay leader, the Committee cautions and advises leaders to reconsider its policies and pay practices which, if not readjusted or corrected, may only result in exacerbating this pay issue. Compared to the number of benchmark jobs shown in this category in 2013, the total this year includes thirteen of the same benchmark jobs and an overall increase by three. In contrast, market data also reveal that the actual average pay levels of eleven benchmarks either lag competing employers slightly (between 5-10% less than market) or significantly (>10% less than market), as shown in Tables B & C. Table B: Benchmarks SIGNIFICANTLY BELOW MARKET (> -10%)

SLC SALARY BENCHMARK SLC Actual Average Salary

Market Actual Average Salary*

SLC/MKT

Senior Human Resources Consultant $61,861 $76,389 81.0% Principal Planner $57,773 $65,966 87.6% Business License Processor $35,901 $40,747 88.1% Appointed Senior City Attorney $109,304 $123,324 88.6% Financial Analyst III $65,710 $73,612 89.3%

Table C: Benchmarks SLIGHTLY BELOW MARKET (-4.9% to -9.9%)

SLC SALARY BENCHMARK SLC Actual Average Salary

Market Actual Average Salary*

SLC/MKT

Evidence Technician II $37,201 $40,995 90.7% Software Engineer $81,959 $90,068 91.0% Water Meter Reader II $31,652 $34,379 92.1% GIS Specialist $54,707 $59,316 92.2% Lab Chemist* $51,553 $55,560 92.9% Paralegal* $48,139 $52,669 93.2%

* Market salary is based on an average of actual salaries reported in both WMG & WCG surveys. All other market salary comparisons are from one survey group only. A complete summary of the 2013 SLC/Market survey results is shown in Appendix A of this report, including actual average salary information for all 63 job salary benchmarks.

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In presenting this compensation survey data, we repeat our usual cautions: Due to many uncontrollable variables, salary survey results should be seen only as indicators, not absolutes. To maintain a competitive compensation system, the Committee urges City leaders to also consider effective means for steadily advancing employees through their respective pay ranges, up to the City’s established market rate. Best compensation-related business practices rely on factors such as pay for performance, enhanced competency and market competitiveness when determining frequency and amounts of pay increases. Failure to implement a plan for advancing employee pay most often has negative impact and results in issues such as pay compression, loss in competitiveness and increased turnover due to employee dissatisfaction. POLICE & FIRE—Previously in this report, the Committee suggested that the City consider itself a pay leader when evaluating compensation levels for Police and Fire personnel. Although acting as a pay leader doesn’t necessarily equate to offering the highest pay, the Committee believes that operating

under this philosophy better enables the City to more effectively attract and retain the most highly desired talent available from the local workforce. With lower than average turnover rates and consistently high numbers of qualified job seekers placed on the City’s hiring registers, current pay levels for these specialized jobs (as an indicator) do not appear to be a hindrance to filling limited position vacancies.

Further support for the idea of Salt Lake City Corporation acting as a local area pay leader includes factors such as—the City’s large downtown area and weekday business population; broad infrastructure; high call volumes, and the complex logistics required while protecting and serving Utah’s capital city. All are traits that make Salt Lake City unique when compared to other local jurisdictions. As the following table indicates, Salt Lake City is in fact in the desired pay leader position for the local area market.

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SLC Police & Fire/ Market - Wasatch Front Comparison (base wages only)

SLC Avg # Local Market Avg # #

Respondents SLC/Mkt

Ratio

Firefighter I/II/III $50,015 35 $40,707 236 12 123% Police Officer I/II/III $56,817 340 $49,108 1,692 18 116%

Respondent data used in these comparisons includes other cities, counties, the State of Utah and special service districts such as Salt Lake County’s Unified Fire Authority and Unified Police Department. All are located along the Wasatch Front and serve populations 40,000 or more. The Committee also notes the City’s Police Officers and Firefighters (Basic EMT) as having the highest actual average wage compared to all other local respondents. In addition to local market data, this Committee also reviewed actual average wage data obtained from 10-12 similar U.S. cities. All are western region cities who serve population sizes between 100,000 – 600,000. SLC Police & Fire/ Market - Western U.S. City Comparison (base wages only)

SLC Avg # U.S. City Market Avg # #

Respondents SLC/Mkt

Ratio

Firefighter I/II/III $50,015 35 $58,019 1,604 10 86% Police Officer I/II/III $56,817 340 $66,555 4,561 12 85%

Although this data was not relied upon as a primary source for evaluating Police Officer & Firefighter pay, it is considered to be a relevant secondary source—one which provides city officials with an additional perspective and measure of how current pay rates for sworn personnel compare to their counterparts in other western region cities. To this end, the Committee encourages on-going efforts by the City’s administration to collect and analyze this type of pay information on a regular basis. Elected Officials, Department Directors & Other Key City Leaders During 2013, the City’s Human Resource Department also conducted a special survey designed to compare salaries of Elected Officials, Department Directors and other key city leaders with their counterparts from similar U.S. cities. Responses were received from a total of 31 cities*** whose population size is between 100,000 to 600,000 (based upon the 2010 U.S. Census). Salary comparisons for Salt Lake City’s Mayor only included other full-time mayors; salary data from all cities surveyed was used to compare City Council members pay considering the fact that most, if not all, other City Councils are part-time.

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Data indicates that the annual salaries for both the Mayor and City Council are well within the range of salaries paid to other elected officials in the cities surveyed, as shown in the following table. SLC U.S City Mkt Avg # Respondents SLC/ U.S. Mkt

Mayor $118,745 $125,861 12 94.3% City Council $23,749 $25,783 17 92.1%

*** 2013 Elected Officials, Department Heads & Other Key City Leaders salary survey participants included the following U.S. cities (population size): Albuquerque, NM (555,417); Anaheim, CA (346,161); Aurora, CO (339,030); Boise, ID (210,673); Burbank, CA (104,000); Chandler, AZ (242,564); Colorado Springs, CO (435,000); Denver, CO (600,000); Eugene, OR (159,964); Everett, WA (104,200); Henderson, NV (278,047); Lakewood, CO, (145,596); Las Vegas, NV (586,000); Lincoln, NE (258,379); Mesa, AZ (448,098); New Orleans, LA (369,250); Oklahoma City, OK (580,000); Omaha, NE (421,570); Orlando, FL (227,050); Peoria, AZ (160,000); Portland, OR (593,820); Reno, NV (220,000); Riverside, CA (311,955); Salem, OR (157,000); Scottsdale, AZ (217,385); Spokane, WA (210,000); Tacoma, WA (200,000); Thousand Oaks, CA (128,000); Tulsa, OK (395,442); Vancouver, WA (164,500); West Valley City, UT (133,000). It is interesting to note that regardless of the salary differences between Salt Lake City’s elected officials and their U.S. counterparts, City Council salaries are equal to a rate that is approximately 20% of the Mayor’s salary. For the majority of City department directors and other key city leaders surveyed, survey results indicate current salaries are competitive or at rates that are within ten percent of their U.S. city counterparts. The Committee advises the Administration to review and consider action where data indicates that annual salaries lag ten percent or more. (NOTE: The specific comparative data collected as part of the 2013 special survey for this group is available through the SLC Human Resources Department). Employee Benefits Market Analysis In addition to evaluating wage and salary information pertaining to the City’s employees and elected officials, the Committee also reviewed and considered the results of a benefits market analysis conducted by the Hay Group (completed during March 2014). This study enabled the Committee to do the following:

- Compare the value of the City’s benefits programs with the local market; - Understand the key drivers of cost for the City and the market; - Identify market trends with regard to benefits changes; and, - Make decisions regarding the City’s compensation program in the context of total

compensation. Hay Group used a comparator market comprised of approximately 100 Utah employers contained in their 2013 benefits database, including Utah organizations that participated

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in a previous custom survey sponsored by the State of Utah. It is important to note that this analysis compared the value of benefits for someone hired today by the City to a new hire in the local market—ensuring an “apples-to-apples” comparison based on current market conditions. The Committee now conveys the following highlights and conclusions regarding the City’s overall benefits value to employees—

- The City provides a full range of benefits programs to employees and elected officials that are at (or above) the market 75th percentile in aggregate. Benefits include: health care; retirement; employer-paid leave time & holidays; long- & short-term disability; life insurance; post-employment health plan, 501c(9); educational reimbursement; employee assistance program (EAP); and commuter subsidy.

- Market position of the City’s health care and retirement benefits, the two primary drivers of overall market competitiveness, weigh heavily in overall benefit program competitiveness and are above market median relative to the Utah market.

- Lower than average employee-paid health care contributions (equal to 5% of the total premium) and the City’s front-loaded health savings account (HSA) contributions boost the overall value of the program.

- The Tier 2 Hybrid retirement benefit for regular and Fire & Police (F&P) employees is above market (>P75), as only 18% of the Utah market provides a defined benefit plan.

- Disability and paid leave are also competitive relative to the market, while death benefits (life insurance) are less competitive relative to the market. These benefits, however, comprise a smaller portion of the total benefits program.

Hay Group’s analysis indicates that the City’s total benefits value is at (or above) the 75th percentile compared to the Utah market. This means that the City’s overall employee benefits offering is valued among the highest 25% of benefit programs provided by competing Utah employers. The total benefits value calculated for Fire & Police is higher than regular SLC employees due primarily to differences in the retirement benefits received. The graph shown on the following page illustrates the City’s total benefits value compared to other Utah employers; on this graph, “P50” represents the market median. Benefits values are shown in dollar equivalents compared to a range of annualized pay rates from $20,000 to $100,000. (Source: Hay Group, “SLC Corporation - Benefits Market Analysis Report, p. 14).

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A complete copy of the Hay Group’s benefits market analysis report, including a breakdown of individual benefits and key findings, is included in Appendix C.

THIS PAGE IS LEFT BLANK INTENTIONALLY

APPENDIX A

Appendix A - 2013 Salt Lake City/Market Comparison

Citizen's Compensation Advisory Committee

Job Title SLC Actual Avg# SLC

Incumbents WCG # Incumbents # Respondents SLC/WCG WMG # Incumbents # Respondents SLC/WMGACCOUNTANT III (001666) $59,894 6 $48,113 102 14 124.5% $61,284 112 25 97.7%AIRPORT OPERATIONS SPECIALIST (001514 & 001505) $50,499 33 $43,773 257 13 115.4%AIRPORT SIGN TECHNICIAN II (001353)APPOINTED SR CITY ATTORNEY (000185) $109,304 12 $123,324 58 13 88.6%ARBORIST (001541) $49,504 3ASPHALT EQUIPMENT OPERATOR (000909 & 000918) $44,034 26 $40,379 109 14 109.1% $36,798 110 7 119.7%AUDITOR (001684) $68,838 2 $69,385 32 8 99.2%BUILDING INSPECTOR III (000723) $58,128 8 $57,864 30 14 100.5%BUSINESS LICENSE PROCESSOR (001535) $35,901 4 $40,747 12 11 88.1%CARPENTER II (001349) $46,592 7 $46,057 102 10 101.2%COLLECTIONS OFFICER (001376) $41,169 5 $38,318 46 12 107.4%COMMUNITY PROGRAMS MANAGER (001655) $49,295 6 $42,222 90 12 116.8%CUSTODIAN II (006090) $29,182 2 $23,648 107 12 123.4% $25,565 202 17 114.1%DEPT PERSONNEL/PAYROLL ADMINISTRATOR (000410) $47,950 5 $45,125 11 11 106.3% $42,037 17 13 114.1%ENGINEER IV (000745) $68,895 10 $67,921 104 14 101.4%ENGINEERING TECHNICIAN IV (000829) $51,198 16 $43,903 18 6 116.6%ENVIRONMENTAL SPECIALIST II (000720)EVENTS MANAGER (001538) $50,003 1EVIDENCE TECHNICIAN II (001549) $37,201 4 $40,995 13 8 90.7%FINANCIAL ANALYST III (001670) $65,710 9 $73,612 126 19 89.3%FIREFIGHTER I/II/III (001461, 001460, 001480) $50,015 35 $40,707 236 12 122.9%FLEET MECHANIC I (000757) $46,559 34 $43,761 134 23 106.4% $44,545 28 6 104.5%GENERAL MAINTENANCE WORKER IV (006145) $44,086 4 $36,855 174 14 119.6% $45,874 162 19 96.1%GIS SPECIALIST (000781) $54,707 4 $59,316 15 10 92.2%GOLF PROFESSIONAL (000940) $71,270 5 $67,751 24 16 105.2%HEARING OFFICER REFEREE COORDINATOR II (000421) $40,227 2HUMAN RESOURCES CONSULTANT, SENIOR (001120) $61,861 5 $76,389 68 22 81.0%HVAC TECH. II-95 (006050) $51,085 9 $45,540 119 12 112.2%JUSTICE COURT CLERK (001495)* $38,504 19 $40,211 13 8 95.8%JUSTICE COURT JUDGE (001601) $109,574 4 $110,373 12 9 99.3%LAB CHEMIST (000427) $51,553 2 $57,307 10 6 90.0% $53,812 19 5 95.8%LEGAL SECRETARY III (003136) $47,258 1 $36,067 81 15 131.0% $40,880 11 5 115.6%LICENSED ARCHITECT (000752) $71,053 1 $61,068 25 7 116.4%MAINTENANCE ELECTRICIAN IV (000168) $52,413 31 $47,043 27 8 111.4% $53,867 91 13 97.3%METAL FABRICATION TECHNICIAN (006207) $48,027 4NETWORK SYSTEMS ENGINEER II (001394) $77,309 4 $69,927 19 17 110.6% $76,683 38 16 100.8%OFFICE TECHNICIAN II (001191) $40,614 15 $29,140 279 17 139.4% $38,086 22 6 106.6%PAINTER II (001347) $46,592 7 $42,954 60 10 108.5%PARALEGAL (000572) $48,139 7 $45,411 36 8 106.0% $59,927 19 10 80.3%PLANS EXAMINER (001546) $55,806 3 $57,953 15 8 96.3%PLUMBER II (000854) $49,504 5 $48,239 84 12 102.6%POLICE INFO SPECIALIST (001713) $33,278 26 $32,483 85 12 102.4%POLICE OFFICER I/II/III (001457, 001456, 001489) $56,817 340 $49,108 1,692 18 115.7%PRINCIPAL PLANNER (001733) $57,773 8 $65,966 56 8 87.6%PROCUREMENT SPECIALIST II (000534) $56,524 2 $49,091 30 11 115.1% $51,086 125 29 110.6%PUBLIC SAFETY DISPATCHER II (000161) $41,870 46 $35,414 227 9 118.2% $34,445 39 9 121.6%REAL PROPERTY AGENT (000370) $59,218 2 $47,330 57 8 125.1%RESEARCH ANALYST/ GRANT PROG MGR (001276) $55,702 1 $48,273 157 9 115.4%SAFETY PROGRAM COORDINATOR (001432 & 001435) $52,998 1SENIOR SECRETARY (003030) $37,785 5 $29,140 279 17 129.7% $35,765 440 26 105.6%SOFTWARE ENGINEER II (001726) $81,959 3 $90,068 55 12 91.0%SR PARKS GROUNDSKEEPER (005088) $38,290 17 $37,404 62 11 102.4% $25,886 65 6 147.9%SR UTILITIES REPRESENTATIVE - CUSTOMER SVC (000199) $36,937 5 $33,943 26 9 108.8% $35,746 240 19 103.3%TECHNICAL SYSTEMS ANALYST II (000584) $56,597 1 $59,468 14 7 95.2%TELECOMMUNICATIONS ANALYST II (004201)TRAINING & DEVELOPMENT COORDINATOR (000491) $54,985 2 $52,612 29 12 104.5%WAREHOUSE SUPPORT WORKER - FLEET & AIRPORT (000390 & 002022) $38,470 4 $37,002 17 5 104.0% $34,617 58 15 111.1%WASTEWATER PLANT OPERATOR (000968) $44,463 6 $35,775 20 7 124.3%WATER METER READER II (006326) $31,652 8 $34,379 27 6 92.1%WATER METER TECHNICIAN (000997) $42,598 3 $38,188 8 6 111.5%WATER PLANT OPERATOR I (001454) $42,598 4WATER SYSTEM MAINTENANCE OPERATOR II (000975) $45,219 14 $43,580 20 8 103.8%WEB PRODUCER III (001413) $73,590 2 $69,689 17 8 105.6%

INSUFFICIENT DATA

No incumbents INSUFFICIENT DATAINSUFFICIENT DATAINSUFFICIENT DATA

INSUFFICIENT DATA

INSUFFICIENT DATAINSUFFICIENT DATA

INSUFFICIENT DATA

No incumbentsINSUFFICIENT DATA INSUFFICIENT DATA

INSUFFICIENT DATANo incumbents INSUFFICIENT DATA INSUFFICIENT DATA

INSUFFICIENT DATAINSUFFICIENT DATAINSUFFICIENT DATA

INSUFFICIENT DATA INSUFFICIENT DATA

INSUFFICIENT DATA

INSUFFICIENT DATA

INSUFFICIENT DATA

INSUFFICIENT DATA

INSUFFICIENT DATA

INSUFFICIENT DATA

APPENDIX B

2013 Wasatch Compensation Group (WCG) Participant List All participants, except western states, are political subdivisions or special districts within the

state of Utah (population size > 40,000)

BOUNTIFUL SANDY

CEDAR CITY SMITHFIELD

CENTRAL DAVIS COUNTY SEWER SOUTH DAVIS METRO FIRE AGENCY

CENTRAL VALLEY WATER SOUTH DAVIS SEWER DISTRICT

CENTRAL WEBER SEWER SOUTH JORDAN

COTTONWOOD HEIGHTS SOUTH VALLEY WATER RECLAMATION

DAVIS BEHAVIOR HEALTH SPANISH FORK

DAVIS COUNTY SPRINGVILLE

DRAPER TAYLORSVILLE

HURRICANE TAYLORSVILLE-BENNION SPECIAL DISTRICT

JORDAN VALLEY WATER TIMPANOGOS SPECIAL DISTRICT

KEARNS IMPROVEMENT DISTRICT UINTAH COUNTY RECREATION DISTRICT

LAYTON UNIFIED FIRE AUTHORITY

LEHI UNIFIED POLICE DEPARTMENT

LOGAN UTAH COUNTY

METROPOLITAN WATER, SALT LAKE & SANDY UTAH COURTS

MT. OLYMPUS IMPROVEMENT DISTRICT UTAH TRANSIT AUTHORITY

MURRAY UTAH VALLEY DISPATCH SPECIAL SERVICE DISTRICT

NORTH DAVIS COUNTY SEWER VALLEY EMERGENCY

NORTH DAVIS FIRE DISTRICT VALLEY MENTAL HEALTH

NORTH SALT LAKE WASHINGTON CITY

OGDEN WEBER BASIN WATER

OREM WEBER COUNTY

PARK CITY WEBER FIRE DISTRICT

PARK CITY FIRE DEPT WEBER HUMAN SERVICES

PROVO WEST JORDAN

SALT LAKE COUNTY WEST VALLEY

WESTERN STATES

STATE OF ARIZONA

STATE OF COLORADO STATE OF IDAHO

STATE OF MONTANA STATE OF NEW MEXICO

STATE OF WASHINGTON STATE OF WYOMING

61 TOTAL PARTICIPANTS

2013 Western Management Group (WMG) Participant List Greater Salt Lake Area Compensation Survey

AECOM Technology Honeywell Technology Solutions Safety-Kleen Systems Aerojet GenCorp Hoyt Archery SAIC

Agreserves Huntsman Cancer Institute Salt Lake Community College Alliant Techsystems ICF International Salt Lake County Amer Sports US IM Flash Technologies Scientific Research ASE Intermountain Health Care Sears Holdings Associated Food Stores ITT Exelis- Electronic Systems Sierra Nevada Atria Senior Living ITT Exelis- Information Systems Sierra Nevada Corporate Bard Access Systems JR Simplot Silverado Senior Living

Battelle Jacobs Technology Sinclair Services

BD Medical Systems Johnson Controls SM&A

Big West Oil Jordan School District Sodexo Black Diamond Equipment KeyCorp Southwest Research Institute Boart Longyear KPMG Stampin Up

Boeing L-3 Communications/Communications Systems-West State Farm Insurance

Boise Cascade L-3 Communications/Stratis State of Utah Boise Inc Landesk Software TAB Bank Booz Allen Hamilton Lennox International TASC

Brigham Young University LJT & Associates TD Ameritrade

Browning Lockheed Martin U.S. Foods

CACI International Merit Medical Systems Unisys

Camber Mitre Unisys/Federal Systems

Church Of Jesus Christ Of Latter-Day Saints Moog Aircraft Salt Lake Ops University of Utah

COLSA Morinda Bio Actives URS Federal Services Division

Comcast Cable NCI Information Systems URS/Energy And Construction

Dow Chemical Northrop Grumman US Magnesium

Dynamic Research OfficeMax USANA Health Sciences

Easton Technical Products Otto Bock Health Care Utah State Courts

eBay Parker Hannifin/Control Systems Utah System of Higher Education

Edwards Lifesciences Parsons Utah Transit Authority

EG&G/JT3 Penske Truck Leasing Utah Valley University

Emertius Assisted Living Pitney Bowes Verizon Communications

Energy Solutions Pricewaterhouse Coopers Visa Engility GSES Progrexion Waste Management FBL Financial Group Questar Weber State University FJ Management R.R. Donnelley and Sons Wells Fargo

General Dynamics/AIS Raytheon Xerox General Dynamics/Information Technology Rio Tinto Services Zions Bank

Hexcel Rockwell Collins Holiday Retirement Ryder Systems

118 TOTAL PARTICIPANTS

APPENDIX C

Salt Lake City Corporation Benefits Market Analysis

MARCH 2014

2 © 2014 Hay Group. All rights reserved

Prepared by:

Ron Keimach Principal Hay Group Malinda Riley Benefits Consultant Hay Group


Contents

Background and Objectives

Results Summary

Detailed Benefits Analysis

Appendices A. Participant Lists B. Benefits Valuation Methodology

1

2

3

4

01 Background and Objectives


Background and Objectives

Salt Lake City (the “City”) requested a benefits market analysis This total benefits analysis will enable the City to do the following:

Compare the value of the City’s benefits programs with the market Understand the key drivers of cost for both the City and the market Identify market trends with regard to benefits changes Make decisions regarding the City’s compensation program in the context of total

compensation This analysis has been based on the benefits program information provided by the City

for its current FY benefits program Hay Group used a comparator market comprised of the following:

Utah organizations contained in Hay Group’s 2013 benefits database, including Utah organizations that have participated in previous custom surveys (including a 2013 survey sponsored by the State of Utah). A list of organizations comprising the comparator market is in Appendix A.

02 Results Summary


Results Summary

Below is the summary of the City’s benefits market competitiveness

Benefit Area City vs. Market Key Drivers

Total Benefits P75 Strong retirement and health care drive total value

Retirement > P75 Defined benefit plan provides more value than prevalent 401(k) type programs in the market

Health Care P75 Very low employee premium cost sharing Higher than median out of pocket costs (deductible, OOP max, etc.) in HDHP design

Disability P50 > P50 – F&P

Combination of sick leave and employer paid STD Less competitive LTD that is employee paid (except for Fire & Police)

Death Varies by salary $50,000 benefit is > P50 for employees earning < $50K Market position drops to <P25 for higher paid employees

Other P25 – P50 Post employment health contribution is not prevalent Educational reimbursement is aligned with market

03 Detailed Benefits Analysis


Benefits Analysis

The City provides a full range of benefits programs to its employees that is at the market 75th percentile in aggregate Health care and retirement, the two primary drivers of overall market competitiveness,

are above market median relative to the Utah market Disability and paid leave are also competitive relative to the market, while death benefits

are less competitive relative to the market. These benefits, however, comprise a smaller portion of the total benefit package

This analysis has been based on the benefits program information provided by the City for its current FY benefits program

Hay Group used a comparator market comprised of Utah organizations contained in Hay Group’s 2013 benefits database, including Utah organizations that have participated in previous custom surveys. (Refer to the appendix for a listing of the market organizations)

The following pages summarize the City’s competitive position relative to the market It is important to note that this analysis compares the value of benefits for someone

hired today by the City to a new hire in the market. This ensures an apples to apples comparison, that does not consider the impact of grandfathered or frozen benefits.


Market Competitiveness – Total Benefits

The following slides are graphical depictions of the City’s benefits values compared to the market’s values. The range of pay covers salaries from $20,000 to $100,000. Market results are calculated according to the measures below: P25 is the 25th Percentile

75% of the data is above this point, and 25% below P50 is the 50th Percentile

50% of the data is above this point, and 50% is below P75 is the 75th Percentile

25% of the data is above this point, and 75% is below


Benefit Area

Market Comparison

Key Findings

Total Benefits

P75 Market position of health care, retirement weigh heavily in overall benefit program competitiveness

Retirement > P75 The Tier 2 Hybrid retirement benefit for regular and Fire & Police (F&P) employees is above market (>P75), as only 18% of the UT market provides a defined benefit plan. The Tier 2 DC plan, while less valuable than the Hybrid plan, is also competitive against the UT market (P75) due to the City’s fixed contribution of 10% (12% for F&P).

Health Care P75 The competitive 5% premium contributions for the HDHP combined with the City’s HSA contribution offset the relatively higher deductibles and out of pocket maximums associated with the HDHP design. Employees are required to pay 100% of dental coverage, which is slightly below typical market practice.

Market Competitiveness – Total Benefits SALT LAKE CITY VS. HAY GROUP MARKET (UT)


Benefit Area

Market Comparison

Key Findings

Total Benefits

P75 Market position of health care, retirement weigh heavily in overall benefit program competitiveness

Disability (Personal Leave, STD & LTD)

P50 > P50 – F&P

Employee under Plan B receive 14 days of personal leave annually and employer paid short term disability coverage, which is competitive. Combined with the employee paid LTD (employer paid for F&P), the City provides a competitive disability program

Death Varies based on salary

The City’s flat dollar basic life and AD&D benefit of $50,000 is above market for lower paid employees and is below market (<P25) for those earning >$60,000. The City paid Line of Duty benefit of $50,000 enhances the value, but does not change the market position. Prevalent practice is to provide a salary based benefit (1 times pay).

Other & Executive

P50 Post Employment Health Plan contribution, educational reimbursement, EAP and commuter subsidy provide value in this category

Paid Leave At Market The number of paid holidays (13) is above typical market practice while the vacation schedule that provides 10 to 25 days of vacation based on service is aligned with typical market practice. Department Heads accrue vacation at the maximum rate, which is aligned with common executive vacation practice in the Utah market.

Market Competitiveness – Total Benefits SALT LAKE CITY VS. HAY GROUP MARKET (UT)


Market Competitiveness – Total Benefits TOTAL BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

$20 $30 $40 $50 $60 $70 $80 $90 $100

Ben

efit

Valu

e

Salary Levels (000s)

State of Minnesota Compared to Non-Public Sector Peer GroupEMPLOYER PAID TOTAL BENEFITS VALUES w/ ALLOWANCES

Salary Levels $60,000 - $160,000

P50

P75

SLC

P25


Market Competitiveness – Total Benefits (F&P) TOTAL BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

5,000

10,000

15,000

20,000

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30,000

35,000

40,000

45,000

50,000

$20 $30 $40 $50 $60 $70 $80 $90 $100

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efit

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State of Minnesota Compared to Non-Public Sector Peer GroupEMPLOYER PAID TOTAL BENEFITS VALUES w/ ALLOWANCES

Salary Levels $60,000 - $160,000

P50

P75

SLC

P25

SLC F&P


Market Competitiveness – Retirement RETIREMENT BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

$20 $30 $40 $50 $60 $70 $80 $90 $100

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efit

Valu

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Cient Compared to MarketEMPLOYER PAID TOTAL RETIREMENT BENEFITS VALUES

P50

P75

SLC

P25


Market Competitiveness – Retirement (F&P) RETIREMENT BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

2,000

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$20 $30 $40 $50 $60 $70 $80 $90 $100

Ben

efit

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e


Cient Compared to MarketEMPLOYER PAID TOTAL RETIREMENT BENEFITS VALUES

P50

P75

SLC

P25

SLC F&P


Market Competitiveness – Health Care HEALTH CARE BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

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15,000

20,000

25,000

$20 $30 $40 $50 $60 $70 $80 $90 $100

Ben

efit

Valu

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Client Compared to MarketEMPLOYER PAID HEALTHCARE BENEFITS VALUES

P50

P75SLC

P25


Market Competitiveness – Disability DISABILITY BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

500

1,000

1,500

2,000

2,500

3,000

3,500

$20 $30 $40 $50 $60 $70 $80 $90 $100

Ben

efit

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Client Compared to Market EMPLOYER PAID DISABILITY BENEFITS VALUES

P50

P75

SLC

P25


Market Competitiveness – Death DEATH BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

50

100

150

200

250

300

350

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450

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$20 $30 $40 $50 $60 $70 $80 $90 $100

Ben

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Client Compared to MarketEMPLOYER PAID DEATH BENEFITS VALUES

P50

P75

SLC

P25


Market Competitiveness – Other OTHER BENEFITS VALUES – Salary Levels $20,000 - $100,000 Utah Market

0

500

1,000

1,500

2,000

2,500

3,000

3,500

$20 $30 $40 $50 $60 $70 $80 $90 $100

Ben

efit

Valu

e


Client Compared to Market Other BENEFITS VALUES

P50

P75

SLC

P25


Market Competitiveness – Retirement

The Tier 2 Retirement benefit which provides employees a choice of a 1.5% cash balance hybrid plan or 10% defined contribution continues to be competitive when compared to the Utah market For purposes of this analysis only the hybrid programs were valued for public

employees and Fire & Police The F&P program has a slightly higher value than the public employee program due

to the shorter service requirement – 25 years vs. 35 years UT organizations typically provide a defined contribution plan with employer contribution

only (82%), with only 18% providing both a defined benefit plan Median contributions toward DC retirement programs are 4% of pay in the UT

market, which puts the Tier 2 DC plan (10%, or 12%) well above market median practice

When compared to DB plans in the UT market, the Tier 2 hybrid retirement program is at P75 of the market

When considered in total (DB and DC Plans), the City’s retirement program is above P75 of the market


Market Competitiveness – Health Care

The City’s most prevalent plan is the Summit Star HDHP. PPO plans are the most common plan type, with HDHP’s a subset of this group

The City requires employees to pay 5% of the premium for single and family coverage. This feature puts the City above market, where organizations typically require contributions of 20% to 25% Higher premium contributions are typical of plans that have lower deductibles and out

of pocket costs Premium contributions for HDHPs are typically lower for two reasons: they are a

lower cost option for both the employee and employer, employers provide an incentive for employees to enroll in this plan

The City’s HSA contribution of $750 individual and $1500 family serves to cut the deductibles in half for employees, which boosts the overall value of the program

The Summit Care Plan requires premium contributions of 20% and has a plan design aligned with the market median

The table on the following slide compares key plan design elements of the City’s Summit Star HDHP


Market Competitiveness – Health Care

In aggregate, the City’s health Care program is above market, as the low premium contributions and employer HSA contribution more than offset the higher out of pocket costs associated with the HDHP design

Plan Design Element Utah Market Salt Lake City (HDHP) In network deductible – Single $500 $1,500

In network deductible – Family $1,050 $3,000

Out of pocket maximum – Single $2,500 $4,000

Out of pocket maximum – Family $5,000 $8,000

Coinsurance 80% 90%


Market Competitiveness – Benefit Costs

With the exception of retirement, the City’s benefit costs appear to be within market norms

The City’s health care costs, which have declined over the past two years are currently 16.6% of payroll

In the general market, health care costs average 13% of payroll, but range from 8% at the 25th percentile to 19% at the 75th percentile*. The average is higher for public sector employers at 18%**, as health benefits are typically more generous and salaries are less competitive

As a result, the City is optimizing its health care spending, as the value of the City’s plans are at the market 75th percentile, while costs for the program are more aligned with the average of the market and well below the public sector average

* Kaiser Family Foundation, Snapshots: Employer Health Insurance Costs and Worker Compensation

** Bureau of Labor Statistics, Employer Costs for Employee Compensation, December 2013


Market Competitiveness – Benefit Costs

Retirement contributions to URS, as a percentage of payroll are as follows for the City’s various employee groups:

In the market, total retirement costs, as a percentage of payroll are typically 6% to 8% of pay at the median DB program costs have been higher over the past several years due to market

conditions, exceeding the typical market range Costs for DC programs are typically on the lower end of the range

Employee Group Total % Cost UAAL Portion Employer 401(k) Tier 1 Noncontributory 17.29% 5.49% 11.80%

Tier 2 Hybrid 15.58% 13.99% 1.59%

Tier 2 DC 15.58% 5.58% 10.00%

Public Safety 44.83% 22.25% 22.58%

Fire Tier 1 21.17%

Fire Tier 2 Hybrid 12.11% 11.02% 1.09%

Fire Tier 2 DC 12.11% 0.11% 12.00%

04 Appendices

A Market Comparator Group


Market Comparator Group

Abercrombie & Fitch ACUITY Advance Auto Parts Air Liquide America Air Products & Chemicals Akzo Nobel Alpine School District Andersons, The Anheuser-Busch InBev --

Anheuser-Busch Apple Aramark ASML Associated Materials AutoZone Bayer -- AG Belden Big-D Construction Carter's

Caterpillar -- Solar Turbines

CBRL Group -- Cracker Barrel Country Store

Centene Corporation Charlotte Russe Children's Place City of Bountiful, UT Clearlink Coach Colvin Engineering Comcast Cable

Communications Crown Imports De Lage Landen - USA Delta Dental Plan of

California Department of Veterans

Affairs

Dick's Sporting Goods Dow Chemical DSW Dyno Nobel EarthFax Engineering Eaton Express FBL Financial Group Fossil Gap Hallmark Cards HC Healthcare Health Net Hershey Foods Holcim Group Support Home Depot Humana Care Plan Iasis Healthcare Intermountain Healthcare


Market Comparator Group

J.Crew jcpenney Jordan Valley Water

Conservancy District Joy Global Kellogg Kimberly-Clark Knowledge Universe Kohl's Limited Stores Macy's Merit Medical Michelin North America Moog Nordstrom Office Depot Payless ShoeSource PETCO

Phillips-Van Heusen Ply Gem Siding Group Praxair Questar Ralph Lauren SABIC Innovative Plastics Safeway Salt Lake Community

College Sanofi-Aventis Sears Holdings Shopko Solvay America -- Solvay

North America Sonoco Products Staples State of Utah SUPERVALU

Talbots Target TJX Toys R Us Tumi University of Utah Utah Valley University Valley Mental Health Walgreens Walmart Stores Weber State University Wells Fargo Williams-Sonoma Workers Compensation

Fund Zale

B Benefits Valuation Methodology


Methodology: Hay Benefit Valuation Methodology

Hay Group utilizes a proprietary actuarial valuation methodology to evaluate benefit plans in terms of the cash equivalence of the benefits.

In establishing a program’s overall market competitiveness the Hay Benefit Valuation model uses “standard cost assumptions”, instead of a company’s specific costs, which eliminates the impact of such cost variables as demographics, geography, funding method, or purchasing power, etc.

The utilization of “standard or common cost assumptions” provides a uniform quantitative evaluation method which produces values based solely on the level of the benefit provided.

The valuation model places a relative value on each specific feature of a benefit program. The value for each plan is then compiled to produce an overall program value appropriate for market comparison. In general, the more generous a particular feature is the higher the relative value.


Methodology: Hay Benefit Valuation Methodology

The valuation method is applied to a full range of employee benefits including: Healthcare Insurance (medical, dental, RX, vision, physical exams);

Retirement Plans (defined benefit and defined contribution plans);

Death Benefits (employer paid and voluntary life insurance plans);

Disability and Sick Leave (sick leave, short-term, long-term disability plans); and

Other benefits such as Tuition Reimbursement, Flex Plans, Statutory Benefits, etc.

Benefit values are calculated on an “Employer-paid” basis. Employer- paid benefit values are discounted to reflect the relationship of any required employee contributions to the program’s total value. For fully employee-paid plans, the discount is 95% (some value remains due to such things as group purchasing power, etc.). For fully employer-paid plans, there is no discount, and for cost shared plans, a pro-ration is applied.


Methodology: Internal Equity

Internal equity is the inter-relationship between reward opportunities within an organization. Many benefit plans (death benefits, disability, retirement, etc.) have features or benefit levels that are related to salary. Internal equity is achieved in a benefit program when the relationships between the benefit level and the employee salary are consistent within each employee population (Note: While benefit program differences can often be found between employee classes, most organizations provide consistent policies within a class).

Organizations that wish to achieve internal equity within a benefit plan typically establish benefit levels that are based on uniform salary multiples (i.e. death benefits of one times salary or disability income replacement level of 60% of salary).

In order to observe the internal equity of an employee benefits program, benefit values are typically illustrated at several salary levels. For this review of benefits, values are shown for salaries from $20,000 to $100,000.

451 South State Street, Room 115 Salt Lake City, Utah 84114-5464

(801) 535-7900

Debra Alexander, HR Director David Salazar, Compensation Program Manager

Jodi Langford, Benefits Program Manager

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