Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.
City of Laguna Beach, CA
Classification and
Compensation Study
Attachment 1
7 2
2 • Project Overview
• SAFE (internal equity)
• Market (external equity)
• Proposed Pay Plans
• Benefits Comparison Results
• Pay Policy Recommendations
• Implementation and Next Steps
Agenda
8 3
Project
Initiation
Position
Review
Market
Assessment
Pay Plan
Development
Project
Completion
• Project Initiation. Planning meeting with City’s project team to understand goals of the study, collect necessary documentation, and setup the project. Included collection of PAQs and onsite communication meetings. • Position Review. Review of each position to ensure appropriate titling as well as an evaluation using our SAFE process to establish a relative-worth hierarchy. • Market Assessment. Distribution of a custom survey to identified public sector peers to collect base pay data for comparison against the City’s base pay. • Pay Plan Development. Development of a new pay plan with consideration to internal and external results, verified through a regression analysis, to establish a fair, equitable, and defensible pay structure. Cost analysis calculation for the City to consider in its adoption of the proposed pay plan. • Any changes to the pay plan and grade assignments must be bargained with each impacted group, as necessary. • Project Completion. Executive summary outlining the project methodology, the results of the study, and our recommendations based on those results. Training with HR staff to maintain and administer the pay plan going forward.
Project Overview
ME TH O D O L O G Y
We are
Here
9 4
Project Overview - Detailed
ME TH O D O L O G Y
1. Project
Initiation Project Planning Data Collection Communication Meetings PAQs
2. Position
Review Title Review Job Evaluation Quality Control
Quality Control
3. Market
Assessment Peers Selected Benchmarks
Selected Market Survey
4. Pay Plan
Development
Pay Plans
Drafted
Grade
Assignments
Implementation
Calculations Quality Control
5. Project
Completion
Final
Presentations Final Report Training for HR Staff
6. Additional
Deliverables FLSA Review Benefits
Assessment
Pay Policy
Review Job Descriptions
Baker Tilly worked closely with HR and
Department Leadership who have been
involved in reviewing preliminary results
and providing feedback – including the
review and selection of peer
organizations for the market survey.
Outstanding Items: • Finalizing implementation calculations • Finalizing the final report
documentation
• Training for HR to use SAFE going
forward
• Reviewing full pay policies report with
the City
• Updated job descriptions for all
positions
10 5
Job Evaluation
P h a s e 2
COMPENSABLE FACTOR WEIGHT DESCRIPTIONS / MEASUREMENT
Education 16% Minimum formal education level required by the position Experience 12% Minimum years of experience required by the position Level of Work 14% Degree of difficulty of work performed by the position Human Relations 8% Type and level of human interactions Physical Demands 5% Physical exertion performed by the position Working Conditions 7% Environmental conditions experienced by the positions Independence to Act 12% Degree of independence to make decisions and act on them Impact of Actions 14% Severity of consequences as a result of decisions Supervision Exercised 14% Type and level of supervision exercised 100% TOTAL
Baker Tilly has a point-factor job evaluation system known as SAFE® (Systematic Analysis and Factor Evaluation), which was developed specifically for the evaluation of public sector positions. • PAQs were used to evaluate every position. • The end results is a total score for every job based on 9 compensable factors. • This is an evaluation of the position, not the person in the position. 11 6
Market Peers
P H AS E 3
• 14 public peers were identified to receive the custom market survey. • Additional peers were included for Marine Safety comparison only. • Data from published survey sources was additionally included representing “all industries”.
1. City of Anaheim
2. City of Brea
3. City of Costa Mesa
4. City of Huntington Beach
5. City of Irvine
6. Irvine Ranch Water District
7. City of Malibu
8. City of Manhattan Beach
9. City of Newport Beach
10. City of Orange
11. Orange County
12. Orange County Fire Authority
13. City of Santa Ana
14. City of Tustin
15. City of Long Beach
16. Los Angeles County
17. City of San Diego
18. Bureau of Labor Statistics
19. Comp Analyst
20. Economic Research Institute
12 7
Published Sources
P H AS E 3
Data Sources Survey Parameters Survey Information
Bureau of Labor Statistics (BLS). The Occupational Employment Statistics (OES) survey is a semiannual survey measuring wage rates by industry and is displayed nationally, by state, and/or metropolitan area. BLS data used in this survey was pulled at the 10th and 90th percentile to represent the minimum and maximum thresholds of a salary range.
California State Average;
2024 May, aged by 3%
(based on WorldatWork Salary
Budget Survey)
Bureau of Labor Statistics
Comp Analyst is a salary data resource from Salary.com that is comprised of HR-reported pay data comprised of 800 million market data points from more than 25,000 organizations resulting in data across 15,000 unique job title, 225 industry breakouts, 27,000+ compensable factors, in 42,000+ geographies.
California State Average;
All Industry
Comp Analyst
Economic Research Institute (ERI) is a salary data resource reporting market data for more than 11,000 jobs in more than 9,000 different locations across more than 1,100 industry sectors. ERI data is updated quarterly. ERI data used in this survey was pulled at the 10th and 90th percentile to represent the minimum and maximum thresholds of a salary range.
California State Average;
All Industry
Economic Research Institute
13 8
Market Review
P H AS E 3
Quality
• Baker Tilly requires a 75% overlap in duties and responsibilities to be considered a ‘good match.’
• Job descriptions/summaries were reviewed (neo gov) for each position to determine appropriate overlap of job duties.
Quantity
• Baker Tilly required a minimum of 3 matches per benchmark to calculate a market value.
• If a benchmark position had less than 3 matches, it will be noted as “insufficient data” in the report.
14 9
Market Results
P H AS E 3
• Data was compiled from all 14 (to 17) public sector peers with additional matches, as appropriate, from 3 published sources. • 137 positions were benchmarked
• All positions had sufficient data (more than 3 matches) • On average, benchmarks had ~9 matches
Min
102%
Mid
100% Max
104%
85% 90% 95% 100% 105% 110% 115%
Lag "At Market" Lead
Overall, the City’s pay is “at market”
on average across minimums,
midpoints, and maximums.
15 10
Market Results
P H AS E 3
36 positions
5% - 26% ahead
of market
64 positions
-5% to 5% ahead
of market
34 positions
-32.4% to -5.1%
of market
Benchmark positions were evenly distributed with 36 positions leading by more than 5% and 34 positions lagging by more than 5%. 85% 90% 95% 100% 105% 110% 115%
Lag "At Market" Lead
16 Proposed
Pay Plans
17 12
Current Pay Plan
P H AS E 4 Pay Grade Min Mid Max Spread Mid Diff
64 61,340 50,956 71,723 40.8%
66 62,526 51,951 73,101 40.7% 1.9%
71 63,586 52,765 74,406 41.0% 1.7%
71 66,186 54,922 77,449 41.0% 4.1%
77 68,135 56,584 79,685 40.8% 2.9%
77 70,920 58,901 82,939 40.8% 4.1%
83 73,401 60,977 85,825 40.7% 3.5%
84 75,186 62,462 87,909 40.7% 2.4%
83 76,403 63,473 89,333 40.7% 1.6%
88 77,564 64,447 90,680 40.7% 1.5%
88 80,730 67,077 94,383 40.7% 4.1%
95 84,134 69,975 98,292 40.5% 4.2%
96 87,577 72,841 102,312 40.5% 4.1%
96 88,577 73,677 103,476 40.4% 1.1%
98 90,786 75,434 106,137 40.7% 2.5%
2000 90,915 72,735 109,095 50.0% 0.1%
100 91,666 76,240 107,091 40.5% 0.8%
104 97,477 81,001 113,952 40.7% 6.3%
106 98,753 82,064 115,441 40.7% 1.3%
106 99,879 83,003 116,755 40.7% 1.1%
114 109,767 91,193 128,341 40.7% 9.9%
122 120,779 100,325 141,232 40.8% 10.0%
128 130,008 108,023 151,992 40.7% 7.6%
133 137,364 114,146 160,582 40.7% 5.7%
133 138,367 114,975 161,759 40.7% 0.7%
134 140,697 116,910 164,483 40.7% 1.7%
2010 128,884 143,202 157,520 22.2% 1.8%
2020 127,411 159,238 191,065 50.0% 11.2%
3000 160,008 128,027 191,988 50.0% 0.5%
140 163,426 135,786 191,065 40.7% 2.1%
2030 135,174 171,658 208,141 54.0% 5.0%
3030 174,162 137,151 211,172 54.0% 1.5%
3010 187,978 167,089 208,867 25.0% 7.9%
2040 157,017 198,990 240,963 53.5% 5.9%
3020 204,792 182,032 227,552 25.0% 2.9%
2050 177,658 221,188 264,717 49.0% 8.0%
2060 183,876 242,626 301,375 63.9% 9.7%
• Consolidating “grades” from PEA, MEA, MGMT, and
Police/Fire Mgmt shows extreme overlap. • Midpoint differential’s range from 0.1% to 11.2%. • Meaning, many “grades” are essentially the same • Range Spreads are close among PEA and MEA positions with
40.4% to 41% spreads, despite a consistent 8 steps. • Management ranges have more inconsistencies with 22% to
63.9%.
18 13
Current Pay Ranges
P H AS E 4
37 grades for ~148 positions
Current Grades Pay Range Amounts
19 14
Municipal Employee’s Association
P H AS E 4
Current Grades Pay Range Amounts
20 15
Proposed Pay Plans
P H AS E 4
• We have developed 5 new pay plans:
• Police - 8 Step Plan
• Fire - 8 Step Plan
• Marine Safety - 8 Step Plan
• General – 8 Step Plan
• Management – Open Range Plan
The purpose of this new framework
is to promote equity by ensuring fair
and transparent compensation
practices across all groups, reduce
unnecessary overlap between
ranges, and simplify administration.
Changes to union positions/ranges must be bargained
21 16
Police
P H AS E 4
Project Title Grade 1 2 3 4 5 6 7 8
Park Ranger I 50 64,294.00 67,508.70 70,884.14 74,428.34 78,149.76 82,057.25 86,160.11 90,468.11 Park Ranger II 51 74,428.34 78,149.76 82,057.24 86,160.11 90,468.11 94,991.52 99,741.09 104,728.15 Senior Park Ranger 52 86,160.11 90,468.12 94,991.52 99,741.10 104,728.15 109,964.56 115,462.79 121,235.93 Police Recruit 53 93,612.00 98,292.60 103,207.23 108,367.59 113,785.97 119,475.27 125,449.03 131,721.48 Police Officer 53 93,612.00 98,292.60 103,207.23 108,367.59 113,785.97 119,475.27 125,449.03 131,721.48 Police Corporal 54 110,024.00 115,525.20 121,301.46 127,366.53 133,734.86 140,421.60 147,442.68 154,814.82 Police Sergeant 55 122,720.50 128,856.53 135,299.35 142,064.32 149,167.53 156,625.91 164,457.21 172,680.07 Police Lieutenant 56 170,905.90 176,033.08 181,314.07 186,753.49 192,356.10 198,126.78 204,070.58 210,192.70 Police Captain 57 195,165.00 201,019.95 207,050.55 213,262.06 219,659.93 226,249.72 233,037.22 240,028.33 8 Step Plan for 9
positions coving ~63
employees
Each “grade” is for a
designated classification
and was tailored for that
position specifically.
Grades 50 – 55 have a
5% step differential for a
40.7% range spread.
Grades 56 – 57 have a
3% step differential for a
23% range spread.
Proposed Grades Pay Range Amounts
22 17
Fire
P H AS E 4
Project Title Grade 1 2 3 4 5 6 7 8
Firefighter Recruit 61 84,184.00 88,393.20 92,812.86 97,453.50 102,326.18 107,442.49 112,814.61 118,455.34 Firefighter 61 84,184.00 88,393.20 92,812.86 97,453.50 102,326.18 107,442.49 112,814.61 118,455.34 Fire Engineer 62 98,511.00 103,436.55 108,608.38 114,038.80 119,740.74 125,727.77 132,014.16 138,614.87 Fire Captain 63 119,214.00 125,174.70 131,433.44 138,005.11 144,905.36 152,150.63 159,758.16 167,746.07 Battalion Chief 64 152,712.00 160,347.60 168,364.98 176,783.23 185,622.39 194,903.51 204,648.69 214,881.12 8 Step Plan for 5
positions coving ~42
employees
Each “grade” is for a
designated classification
and was tailored for that
position specifically.
Grades 61 – 64 have a
5% step differential for a
40.7% range spread. Pay Range Amounts
Proposed Grades
23 18
Marine Safety
P H AS E 4
Market Minimum Maximum
Project Title Grade 1 2 3 4 5 6 7 8
Marine Safety Officer 70 85,700.00 89,985.00 94,484.25 99,208.46 104,168.89 109,377.33 114,846.20 120,588.51 Marine Safety Lieutenant 71 110,269.00 115,782.45 121,571.57 127,650.15 134,032.66 140,734.29 147,771.01 155,159.56 Midpoint 8 Step Plan for 2
positions coving ~14
employees
Each “grade” is for a
designated classification
and was tailored for that
position specifically.
Grades 70 – 71 have a
5% step differential for a
40.7% range spread. Pay Range Amounts
Proposed Grades
24 19
General
P H AS E 4
Grade 1 2 3 4 5 6 7 8
5 $45,115 $47,371 $49,739 $52,226 $54,838 $57,579 $60,458 $63,481 6 $47,822 $50,213 $52,724 $55,360 $58,128 $61,034 $64,086 $67,290 7 $50,692 $53,226 $55,888 $58,682 $61,616 $64,697 $67,932 $71,328 8 $53,734 $56,420 $59,241 $62,203 $65,313 $68,579 $72,008 $75,608 9 $56,957 $59,805 $62,795 $65,935 $69,232 $72,694 $76,328 $80,145 10 $60,373 $63,392 $66,562 $69,891 $73,386 $77,055 $80,908 $84,953 11 $63,995 $67,195 $70,555 $74,084 $77,789 $81,678 $85,762 $90,050 12 $67,835 $71,227 $74,789 $78,529 $82,456 $86,579 $90,908 $95,453 13 $71,907 $75,502 $79,277 $83,241 $87,403 $91,773 $96,362 $101,180 14 $76,220 $80,031 $84,033 $88,235 $92,647 $97,279 $102,143 $107,250 15 $80,793 $84,833 $89,075 $93,529 $98,206 $103,116 $108,272 $113,686 16 $85,642 $89,924 $94,420 $99,141 $104,098 $109,303 $114,768 $120,506 17 $90,778 $95,318 $100,084 $105,089 $110,344 $115,861 $121,654 $127,737 18 $96,223 $101,035 $106,088 $111,394 $116,965 $122,813 $128,954 $135,402 19 $101,998 $107,098 $112,454 $118,078 $123,983 $130,182 $136,691 $143,526 20 $108,118 $113,525 $119,202 $125,163 $131,422 $137,993 $144,893 $152,137 21 $114,607 $120,338 $126,355 $132,673 $139,307 $146,272 $153,586 $161,265 22 $121,483 $127,558 $133,936 $140,633 $147,665 $155,048 $162,801 $170,941 23 $128,772 $135,211 $141,972 $149,071 $156,525 $164,351 $172,569 $181,197 24 $136,496 $143,322 $150,489 $158,015 $165,917 $174,213 $182,923 $192,070 25 $144,686 $151,922 $159,519 $167,496 $175,872 $184,666 $193,899 $203,594 8 Step Plan for 115 positions
coving ~163 employees.
5% step differential for a 40.7%
range spread.
21 grades, numbered 5 – 25
with 6% between each grade.
Aligned “at market” at the
midpoint. The midpoint falls
between step 4 and 5,
mathematically.
25 20
General
P H AS E 4 Pay Range Amounts
Proposed Grades
26 21
General
P H AS E 4
Maximum
Midpoint
Minimum
Regression
Position
27 22
Management
P H AS E 4
Grade Minimum Midpoint Maximum
109 $75,324 $90,389 $105,454
110 $79,843 $95,812 $111,780
111 $84,634 $101,561 $118,488
112 $89,713 $107,655 $125,598
113 $95,095 $114,114 $133,133
114 $100,801 $120,961 $141,121
115 $106,849 $128,219 $149,589
116 $113,260 $135,912 $158,564
117 $120,056 $144,067 $168,078
118 $127,259 $152,711 $178,163
119 $134,895 $161,874 $188,853
120 $142,988 $171,586 $200,183
121 $151,568 $181,881 $212,195
122 $160,662 $192,794 $224,927
123 $170,302 $204,362 $238,423
124 $180,520 $216,624 $252,728
125 $191,351 $229,621 $267,891
126 $198,692 $243,398 $288,103
127 $215,002 $258,002 $301,003
• Open range plan for 32 positions coving ~25 employees. • 19 grades, numbered 109 to 127 with 6% between grades and 40% range spreads. • Aligned “at market” at the midpoint. • Continuation of general plan. 28 23
Grade Assignments
P H AS E 4
Positions were assigned based on the following: Internal equity (job evaluation scores) External equity (market midpoints) Existing equity (current midpoints and grade groupings) Career progressions Supervisor / Subordinate separation The following information is NOT considered: The person in the position Performance Length of service Existing employee salary 29 Benefits
Comparison
Results
30 25
Supplemental Pay
BE NE F I TS C O MPAR I S O N– NO N- P U BL I C S AF E TY • Laguna Beach offers $1,000 per year in tuition
reimbursement, the lowest among peers.
• Laguna Beach does not offer shift differential for
non-public safety employees, unlike 13 peers
who do.
• Laguna Beach does not offer education pay for
non-public safety employees, while 31% of
peers provide degree-based incentives.
• 12 peers offer bilingual pay, ranging from $50 -
$260 per month. Laguna Beach’s $75/month
sits below the market.
6 6
1 Peers Offering Shift Differential Pay to NonPublic Safety Roles Percentage of base pay
only
Flat hourly rate only
Both flat rate and
percentage
4 9
Peers Offering Educational Pay to NonPublic Safety Roles Provides educational pay
Does not provide
educational pay
31 26
Leave Benefits
BE NE F I TS C O MPAR I S O N– NO N- P U BL I C S AF E TY • Laguna Beach offers 11 paid holidays,
for MEA employees which is
comparable to the peer average of
12.59. • Management accruals start higher but
plateau sooner than those at peer
agencies.
• Core statutory leave benefits (sick,
vacation/PTO, jury duty, military duty)
are generally in line with market norms.
Least Most Average Laguna Beach
Number of
Responses
12 10 days 16 days 12.59 days 11 days
32 27
Health & Life Insurance
BE NE F I TS C O MPAR I S O N– NO N- P U BL I C S AF E TY • On average, employers cover 88% of the cost for
single coverage plans and 90.5% of the cost for
family plans.
• Laguna Beach covers 100% of the cost for single
coverage plans and 80-90% of the cost for family
plans depending on bargaining group.
• The City offers a medical cash-out option of $569.39/month, exceeding the peer median of $400 - $450/month. • Most peer provide a flat amount for term life insurance (ranging from $10k - $250k) or a salary-based multiple (ranging from 1x-3x). Laguna Beach provides $50k to all full-time employees. • Long-term disability is generally structured around replacing 60 –
66.67% of an employee's salary with monthly maximums ranging from $10k to 15k. Laguna Beach provides up to $5,000 to all full-time employees. • Only 5 peer reported to providing short term disability benefits, similarly, structured around 60% salary replacement with monthly limits. Laguna Beach provides STD, as a voluntary, employee-paid benefit.
Least Most Median Range Laguna Beach Number of
Responses
City Contribution - EE Only 9 $769.16 $2,440 ≈ $1,000
% paid by employer 4 75% 100% 88% 100%
City Contribution - EE + 1 8 $1,492.28 $2,149.79 ≈ $1,670-$1,900 % paid by employer 3 70% 100% 90.5% 80% for MEA and 90% for MGMT City Contribution - EE + Family 8 $1,785.68 $2,794.00 ≈ $2,050-$2,700 % paid by employer 3 70% 100% 90.5% 80% for MEA and 90% for MGMT Medical Cash-Out 8 $125/month $929.52/ month ≈ $400-$450/month $569.39/ month 33 28
Pay Practices
BE NE F I TS C O MPAR I S O N– NO N- P U BL I C S AF E TY • Laguna Beach and peer organizations follow
FLSA overtime rules; non-exempt employees
earn 1.5x pay after 40 hours worked.
• Most peers guarantee a minimum of 2 - 3 hours
pay for call-backs, typically at 1.5x pay.
• On-call situations are typically compensated
with a $350 - $550 weekly stipend or 2 – 4
hours of pay per day, with higher rates on
weekends/holidays.
Peer Organization Call Back Minimum
Laguna Beach
1.5x pay; 3 hour minimum Marine Safety
1.5x pay; 2.5 hour minimum Sewer
1.5x pay; 2 hour minimum all others
Anaheim 1.5x pay; 3 hour minimum
Brea 1.5x pay; 2 hour minimum
Costa Mesa 2 hour minimum
Huntington Beach 1.5x pay; 2 hour minimum
Irvine No Response
Irvine Ranch Water District 1.5x pay; 2 hour minimum
Long Beach Greater of 1.5x pay with 3 hour minimum
or actual hours.
Manhattan Beach 2 hour minimum
Newport Beach
2 hour minimum, 3 hour minimum, or
actual hours worked depending on
employee group or CBA.
Orange
Regular pay or 1.5x pay, 2 hour minimum
or 3 hour minimum depending on
employee group or CBA.
Orange County 1.5x pay; 4 hour minimum
Santa Ana
Greater of regular pay at 3 hour minimum
or 1.5-2x pay for actual time depending on
employee group or CBA.
Tustin 1.5x pay; 2 hour minimum
34 29
Supplemental Pay
BE NE F I TS C O MPAR I S O N– P U BL I C S AF E TY
• Laguna Beach provides a 2.5% shift
differential for police and 0% for
firefighters.
• Tuition reimbursement is $1,000/year,
below peer average.
• Education, certification, and bilingual pay
are offered but generally at lower rates
than peers.
• Acting pay is competitive.
Laguna Beach
Least Most Average
Number of
Responses
$250 per year for
equipment 12 $230 per year $1,519 per year ≈ $650 per year 35 30
Leave Benefits
BE NE F I TS C O MPAR I S O N– P U BL I C S AF E TY
• Vacation accrual for PEA employees
starts and stays below market; accrual
rates for PFMA employees starts
above market but plateaus early.
• Paid holidays are in line with peers.
• Core statutory leave (sick, vacation,
jury duty, military, bereavement) aligns
with market norms.
• No longevity pay, while most peers
offer it.
Least Most Average Laguna Beach
Number of
Responses
12 9 days 14.75 days 11.47 days 11 days
3%
4%
5%
7% 8%
0%
2%
4%
6%
8%
10%
5 10 15 20 25+
Average Percentage of Base Salary for Longevity, by Years of Service
134.2
168.9
195.7
213.5
231.1 238.9
50.0 100.0
150.0
200.0
250.0
300.0
350.0
400.0
1 5 10 15 20 25+ Hours per Year
Years of Service
PTO/Vacation Accrual (Hours per Year)
Market Average Market Min Market Max
Laguna Beach (PFMA-Fire) Laguna Beach (PFMA-Police) Laguna Beach (Fire) Laguna Beach (PEA)
36 31
Health Insurance
BE NE F I TS C O MPAR I S O N– P U BL I C S AF E TY
• Medical premium contributions among peers
are competitive for both employees and
families.
• The City’s medical cash-out option
($569.39/month) closely matches the peer
median of $594/month.
Least Most Median Range Laguna Beach Number of
Responses
City Contribution - EE Only 8 $800.00 $2,419 ≈ $1,405.06 100% City Contribution - EE + 1 6 $1,175 $1,900 ≈ $1,685.22 80/90% City Contribution - EE + Family 6 $1,550 $2,712.86 ≈ $2,085.29 80/90% Medical Cash-Out 8 $325/month $1,060/ month ≈ $594/month $569.39/ month 37 32
Pay Practices
BE NE F I TS C O MPAR I S O N– P U BL I C S AF E TY
• Laguna Beach pay overtime at 1.5x,
consistent with peers.
• Most peers guarantee at least 2 hours
OT pay for call-backs.
• Most peers allow comp time accrual at
1.5x, typically capped at 80–120 hours
with cash-out options.
Least Most Average Laguna Beach
Number of
Responses
100 (Police);
96 (Lifeguards) 11 40 hrs 240 hrs 80-120 hrs
38 Pay Policy
Recommendations
39 34
Pay Policy Review
AD MI N I S TR AT I O N AN D MAI N TE N AN C E
To help improve documentation and communication about the City’s pay program we recommend the following:
• Adopt a formal compensation philosophy.
• This is a statement about what the City believes about how work is valued, and employees are compensated. It would help articulate the City’s commitment to attracting and retaining necessary talent to provide uninterrupted and high-quality services to the community. • Revise language to align with current/proposed process. • For example, Rule 9.3 states management employees are evaluated for “salary step increase” which contradicts the open range plan currently in use and proposed for future use.
• Create unified salary placement policy.
• To address decisions about hiring, promotion, demotion, transfer, reinstatement, reclassification, etc. with consistency, fairness, and transparency. • For example, “shall receive a step at least 5% over the step in the lower range” may not be achievable in the new pay plans. This language may be too restrictive to be met. 40 35
Pay Policy Review
AD MI N I S TR AT I O N AN D MAI N TE N AN C E
• Strengthen pay progression policy.
• Current policy sounds like step increases may be discretionary as long as 1 year in previous step and approval by City Manager is achieved. If increases are tied to anniversary date, budget process, performance, etc. the policy should state this. • For the open range management plan, define parameters for % increases to advance through the range.
• Consider adjustments to supplemental pay policies. • Acting Pay – a better definition of eligibility (minimum qualification, duties to be performed, and minimum duration of ‘acting out of classification’). Recommend whichever pay is greater between a 10% increase to base of step 1 of the higher classification. • Exceptional Performance Pay – current policy outlines a process that sounds more like a discretionary bonus. Any pay tied to performance needs to be very clearly defined regarding how performance will be measured, when, and how results are applied (lump sump, rolled into base pay, once a year, etc.) • Y Rated Pay – its common organizations will provide a lump sum bonus payment (not to be rolled into base pay) to employees at the maximum of their pay range who are no longer eligible for merit/step increases. This can be equivalent to a typical step increase (5%) or a reduced amount. This policy may be a better alternative to EPP. • In practice, this is not very different than longevity pay, however, longevity pay does roll into base salary. 41 Implementation
42 37
Implementation Cost Analysis
P H AS E 4
• 3 scenarios have been prepared for the City to consider in its adoption of the new classification and compensation plan. • Figures represent base pay only and do not include OT or other differentials. • No employee will receive a reduction in pay.
308 employees were included in the implementation calculations.* 12 (3.9%) have a salary that falls BELOW their new minimum. 246 (79.9%) have a salary that falls WITHIN their new range. 50 (16.2%) have a salary that falls ABOVE their new maximum.
Employees above their new maximum are excluded from implementation calculations. We recommend those employee salaries are Y-rated or ‘frozen’ until the pay structure catches up and they fall back within their range. Therefore, employees retain their existing salary without reduction. * Cost calculations are
a work in progress
43 38
P H AS E 4
Implementation Options (Step Plans)
• Option 1 would place employees on the step nearest their existing salary without a decrease. • Option 2 would place employees on the step corresponding with the number of years in position, without a decrease.
For example, 3 years = Step 3. If the employee’s salary is already greater than Step 3, they would go to the step establishing in option 1 which corresponds with their existing salary. • Option 3 would place employees on the step they are on currently in their range, without a decrease. For example, Step 3 = Step 3. If for some reason the employee’s salary is already greater than the new Step 3, they would go to the step established in option 1 which corresponds with their existing salary.
Implementation Options (Management Only)
• Option 1 would move employees to the minimum of their new range if their current salary is below the minimum. • Option 2 would provide a 2% increase to eligible employees (those below the minimum or within the range). • Option 3 would provide a 3% increase for every year in position from the minimum of the new range. If the employee's existing salary is greater, they would retain that amount. 44 Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.
We urge the City of Laguna Beach to: Approve the use of Baker Tilly’s SAFE® methodology to maintain internal equity in compliance with the federal Equal Pay Act. This job evaluation tool can also be used to maintain the integrity of the new classification and compensation plan in the future. Approve the 5 new pay plans that will provide the City with internally equitable and externally competitive pay for all positions. Approve the position grade assignments that have been established with consideration of internal and external data results as well as input from the City’s project team and department leadership. Work with administration to select an implementation scenario that addresses the City’s compensation philosophy and business goals, and that is fiscally attainable and sustainable. Continue efforts to maintain the classification and compensation system: Routinely review positions, job descriptions, and market conditions with appropriate peer comparators. Adjust the pay structure and salaries, as needed, to keep pace with market conditions. Commit to advancing employees through their assigned pay ranges based on Laguna Beach’s policies.
Recommendations
45 40
Next Steps
Ba k e r Ti l l y + L a g u n a B ea c h
• LB to finalize employee allocations;
• BT to finalize costing calculations.
• Work together to prepare an
implementation plan.
• BT to review and finalize pay policy
report and final report with LB.
• BT to complete updates to job
descriptions.
• BT to provide training to LB HR
• Council to consider Baker Tilly Recommendations +
46