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Anaheim, CA 92805
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CITY COUNCIL AGENDA REPORT
City of Anaheim
HUMAN RESOURCES DEPARTMENT
DATE: MARCH 24, 2026
FROM: HUMAN RESOURCES DEPARTMENT
SUBJECT: CLASSIFICATION AND COMPENSATION IMPLEMENTATION, PHASE 1, RESOLUTIONS TO APPROVE COMPENSATION OF
STUDY AND MINIMUM WAGE COMPLIANCE, AND
PERSONNEL RULE REVISIONS
ATTACHMENT (Y/N): YES ITEM # 22
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the City Council, take the following actions:
1. By Motion, implement the Segal Company, Western States, Inc. (Segal) Citywide classification and compensation study, Phase I, by realigning base salary ranges for specified classifications within the Anaheim Municipal Employees Association Part-Time and Executive Management groups to support the City’s recruitment and retention strategy, while addressing internal equity and compensation compaction; and
2. By Resolution, modify the City of Anaheim Personnel Rules to adjust pay policies for classifications designated as Non-Represented Full-Time and Part-Time to comply with the mandated 2026 California minimum wage increase and to realign base salary ranges in congruence of the implementation of the Citywide classification and compensation study, Phase I; and
3. By three (3) Resolutions, modify Appendix B in three separate Memoranda of Understanding establishing the base rates of pay for classifications in the i) General Employees, ii) Clerical Employees, and iii) Part-Time Unit represented by the Anaheim Municipal Employees Association to comply with the mandated 2026 California minimum wage increase and to realign base salary ranges in congruence of the implementation of the Citywide classification and compensation study, Phase I; and
4. By two (2) Resolutions, modify Appendix B in two separate Memoranda of Understanding establishing the base rates of pay for classifications in the i) General Management Unit and ii) Professional/Technical Management Unit represented by the represented by the American Federation of State, County, and Municipal Employees, Local 2002, to comply with the mandated 2026 California minimum wage increase and to realign base salary ranges in congruence of the implementation of the Citywide classification and compensation study, Phase I.
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
March 24, 2026
DISCUSSION:
Background:
In compliance with the provisions of the Municipal Code, the City of Anaheim maintains a personnel system comprised in part by a position classification plan and a plan of compensation.
On August 15, 2023, the City Council approved a Professional Services Agreement with The Segal Company, Western States, Inc. (Segal) to conduct a citywide classification and compensation study. The purpose of the study was to evaluate the City’s current classification and compensation practices across all bargaining units and recommend strategies that ensure the City consistently maintains (1) the ability to successfully recruit and retain a talented and highly qualified workforce, (2) review compensation practices that achieve internal equity and external competitiveness, and (3) provide a safe, productive work environment with high employee engagement.
Immediately following approval of the contract, Segal and Human Resources engaged all bargaining units and departments to identify and select comparable agencies and benchmark classifications.
On October 29, 2024, the City Council approved a second agreement with Segal to set the City’s competitiveness to be set at the 75th percentile in the labor market as well as implementation strategies based on anticipated economic forecasts.
This effort represents the first comprehensive citywide review of the City’s classification and compensation structures. The last study, conducted over a decade ago, included only those certain classifications in management.
The Classification Plan establishes positions based on departmental operational needs and an analysis of assigned duties and responsibilities. Due to the City’s one-of-a-kind placement in the competitive labor market that is similarly situated with agencies providing usual public services, including utilities, police, fire services, and the largest exhibition facility on the West Coast, the City maintains a complex classification system. Human Resources currently manages approximately 1,000 classifications, supporting about 2,000 full-time and 1,200 part-time employees.
The City’s Compensation Plan aligns with the Classification Plan and must be approved by City Council in compliance with Title 2 of the California Code of Regulations (“CCR”), Section 570.5.
Typically, salary ranges are established after consideration of multiple factors, including scope of responsibility, level of complexity, degree of risk, labor market conditions, and internal equity.
Together, the classification and compensation structures ensure organizational consistency, competitiveness, and fiscal responsibility. These salary ranges, along with other forms of compensation, make up the City’s plan of compensation, which includes 388 unique salary ranges.
Study Scope and Methodology:
To ensure the City remains competitive in the labor market and maintains internal equitable compensation practices, Segal conducted the study using a multi-phase approach that included stakeholder interviews, review of classification specifications, and a comprehensive market compensation analysis. Key components of the study included:
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
March 24, 2026
I) Project Initiation to set clear goals and objectives, gather and analyze critical information, and facilitate interviews with key stakeholders, including management and union representatives.
II) Compensation Philosophy to provide recommendations regarding compensation strategy, governance, and communication.
III) Classification Analysis for existing classification specifications to identify and confirm relevancy, accuracy, and adequacy of distinguishing characteristics, essential functions, working conditions, minimum qualifications, and Fair Labor Standards Act (FLSA) designations. Employees, supervisors, and directors also provided input through Job Description Questionnaire (JDQ). Based on the completed JDQs, Segal developed recommendations for updates to classification specifications and the overall classification structure.
Benchmark Classifications and Market Survey:
Segal conducted a benchmark position analysis using the City’s workforce census to facilitate the selection of a broad range of jobs representing different functions, departments, existing pay grades, labor contracts, FLSA statuses, etc. These would include “anchor” jobs, or those that define pay relationships within the City’s existing Memoranda of Understanding (MOU). Human Resources, department directions, and all bargaining units collaboratively selected the 117 benchmark classifications and 16 peer organizations included in the compensation survey.
Human Resources collaborated with department directors and all labor groups to finalize a list of 117 benchmark classifications and 16 peer organizations to be included in the compensation survey (See Attachment A).
Segal used the City’s existing classification specifications to develop job summaries for the market survey. Given that exact job matches are uncommon due to differences in organizational size, structure and services, the survey focused on positions with substantially similar duties and qualifications. that exact job matches are uncommon due to differences in size, structure and services. Nationally recognized published compensation data sources were also used to represent private sector pay data.
Market Analysis Results:
Comparisons were conducted relative to the 75th percentile. Segal adjusted data for geographic labor cost differences in labor between the peer agencies and Anaheim as well as cost-of-labor differentials reported by the Economic Research Institute (ERI).
Segal’s Approach to Defining Market Competitiveness
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
March 24, 2026
Segal uses the concept of a “competitive range”, defined as any value between 95% to 105% of the desired competitive position (in this case, the market 75th percentile):City of Anaheim as a % of Overall Market 75th Percentile1
Base Pay Range
Minimum Midpoint Maximum
Peer Agencies Survey 93% 97% 99%
Published Data Sources 111% 96% 103%
Overall Market 75th Percentile 94% 97% 100%
In summary, Segal found that the City pays at or near top-market levels, with only a minimal gap at the minimum salary range. Across all benchmark jobs, Segal found that the City is market competitive as base pay ranges align closely with the market’s 75th percentile (97%-100% of the market 75th percentile). At the minimum pay range, Anaheim has a minimal gap of 1% when compared to the 75th percentile.
Classification Plan Review:
As part of the classification review process, classifications were reviewed to identify obsolete or inactive classifications. This review resulted in 103 inactive or obsolete classifications being deleted on January 14, 2025, with the concurrence of bargaining units. This allowed the study to focus on classifications that reflect current operational needs.
With the completion of the analysis and study phase, Human Resources is prepared to move forward with other areas of the study and its findings.
Phase I Implementation:
Consistent with Council direction, Phase I implementation will prioritize realigning classifications identified as below the 75th percentile of the labor market, including necessary adjustments to address compaction and/or compression. Phase I key components include:
Continue review of classification specifications with departments labor groups. Salary adjustments to address market competitiveness, compaction and internal equity. Structural range adjustments to the Executive and Master Salary Schedules consistent with the approved framework.
The study identified approximately 176 incumbents in classifications with base pay more than five percent (5%) below the 75th percentile market minimum. These classifications include benchmark positions, as well as classifications tied to existing MOUs, and have been evaluated for internal equity concerns.
1 Segal uses the concept of a “competitive range”, defined as any value between 95% to 105% of the desired competitive position (in this case, the market 75th percentile):
● Values shown in red text are less than 95% of the market and are considered “below market” ● Values shown in black text are between 95% and 105% of the market and are considered “at market”, “market competitive”, and/or “in the competitive range” ● Values shown in blue text in are greater than 105% of the market and are considered “above market”
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
March 24, 2026
Staff recommends salary adjustments to several AMEA classifications. Most affected incumbents will receive base salary increases within their existing pay ranges. However, certain classifications require adjustments to the current salary ranges to achieve market alignment or to address salary compaction and internal equity. To name a few, classifications include AMEA Part-Time, specifically Park Ranger, Senior Park Ranger, Program Specialist, Senior Program Specialist. For example, the study determined that the Park Ranger classification is positioned more than five percent (5%) below the 75th percentile of the labor market. As a result, the adjusted hourly rate will increase to the minimum competitive threshold of $27.35. To maintain salary relationships based on the MOU, the minimum hourly rate must be changed for classifications tied to the Park Ranger as follows: Senior Park Ranger $32.56; Program Specialist $26.25; and Senior Program Specialist $33.21, pursuant to Article 15 – Salary Relationships of the AMEA, Part-Time MOU (Appendix B).
All bargaining units were provided with the study findings and staff met and conferred with those labor groups who had incumbents below the 75th percentile of the market minimum (AMEA and AFSCME). While both groups initially expressed a preference to implement the full study at once, acknowledging the scope and effort involved, continued discussions led to AMEA’s understanding to proceed with a Phase I approach, with the shared understanding the City would continue advancing future implementation.
The current compensation structure for the Executive Management team consists of four broad salary ranges (XER 10, 20, 30, and 40), with each classification assigned to one of the four levels.
Results of the market study indicate that the minimum base salary for the Executive Director of Convention, Sports & Entertainment, Finance Director, and Fire Chief classifications are more than 15 percent below the 75th percentile of the market. Reassignment to the next salary range will align these positions while maintaining the existing framework. Further, to acknowledge the current combined classification of the Finance Director and City Treasurer, authorized under section 701 of the City Charter, it is recommended a new classification of Finance Director/Treasurer be created and realigned. Accordingly, the Executive Director of Convention, Sports & Entertainment and the new classification, Finance Director/Treasurer classifications will be (re)assigned to XER 30, the Fire Chief to XER40, the Police Chief to XER50 consistent with compensation approved on December 28, 2025, and the City Manager to a newly created XER 60 salary range, which will correct salary compression, maintain internal equity, and remain competitive in attracting top executive talent (Appendix A).
Adjustment to salary ranges will not require a salary increase as affected incumbents’ current salaries are above the minimum of the 75th percentile. This realignment is to remain competitive with the market.
Next Steps, Implementation:
City Council’s approval of the foregoing will complete Phase I of the Implementation Plan, which is compensation alignment of the classifications that fall below the minimum of the 75th percentile.
This step is a significant investment and must be followed by sound compensation administration policy, or compaction issues will grow over time.
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
March 24, 2026
Staff recommends and intends to implement Phase II and Phase III, which will complete the implementation of the City’s study as follows:
Phase II, Classification Structure Modification - retitle, collapse, and/or expand up to 200 classifications pursuant to Segal’s recommendations.
Phase III, Compensation Structure Reconstruction – establish compensation ranges for master salary structure and align classifications internally based on grade, as well as externally to the labor market. This step is critical to ensure City classifications are based on job requirements and the actual market.
Each phase is anticipated to require approximately one (1) year due to the level of coordination required with departments and all labor groups. Full implementation will take approximately two (2) years.
Revisions to Personnel Rules
Concurrent to the above recommendations, staff further recommends approval of revisions to the Personnel Rules and Policies Covering Non-Represented Full-Time and Part-Time Employees (“Personnel Rules”) to update terms and conditions of employment, related salary schedules, temporary upgrade assignments, promotional increases, and the City’s Health Reimbursement Arrangement plan.
Section 1.2(c)(4), Scope – At-Will Appointments: clarified language for the term of employment to include all time combined regardless of part-time or full-time status Section 6.8, Temporary Upgrade – Management Employees: added language regarding upgrade pay for management positions deployed to wildfires Section 7.5, Promotions – General: updated language allowing for promotional increases to go beyond the Control Point but within the salary range of the classification; updated language regarding compensation for classifications with field responsibilities to provide consistency and clarity
Section 24.6, Health Reimbursement Arrangement Plan: updated references to Retirement Health Savings to the appropriately named Health Reimbursement Arrangement Plan; added language regarding the exclusion of the Chief of Police from HRA employer contributions
Appendix B, Non-Represented Non-Sworn Management: updated tables to include increases provided by the minimum wage increase
Minimum Wage Adjustments
On January 1, 2026, under California Labor Code §1182.12(c), California’s minimum wage increased from $16.50 to $16.90, thereby requiring exempt employees to earn at least twice the state minim wage, establishing the annual salary to $70,304.
To ensure compliance, Council approval will adjust pay steps and salary below the mandated wages, effective December 19, 2025 (the pay period that includes January 1, 2026). The affected classifications are outlined in each respective salary schedule reference within the attached exhibits.
IMPACT ON BUDGET:
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
March 24, 2026
The General Fund impact to implement Phase 1 of the Citywide Classification and Compensation Study is approximately $3,048,764, which includes FY 25/26 approximate cost of $588,378. The approximate General Fund impact to comply with the State minimum wage is $150,093, which includes $75,046 in FY 25/26.
Respectfully submitted,
Linda N. Andal
Human Resources Director
Attachments:
1. Resolution for Non-Represented Part-Time Classifications and Executive Management
2. Resolution – AMEA General Unit
3. Resolution – AMEA Clerical Unit
4. Resolution – AMEA Part-Time Unit
5. Resolution – AFSCME General Unit
6. Resolution – AFSCME Professional/Technical Unit
7. Personnel Rules – Redlined
8. Personnel Rules – Final