STAFF REPORT
Meeting Date:
January 13, 2026
STUDY SESSION
1 SUBJECT: CITYWIDE CLASSIFICATION AND COMPENSATION STUDY RECOMMENDATION: It is recommended that the City Council:
1. Receive a presentation on the completed Citywide Classification and Compensation Study, prepared by Baker Tilly US, LLP.
SUMMARY OF THE MATTER
This Final Presentation PowerPoint (Attachment 1) summarizes the results of the Citywide Classification and Compensation Study prepared by Baker Tilly US, LLP. The study was initiated in September 2024 pursuant to City Council action, and is the first comprehensive update of the City’s classification and compensation system in over two decades.
The study reviewed 137 classifications across 10 departments and six employee groups. It evaluated internal equity, market competitiveness, FLSA compliance, and pay grade structure. The Presentation includes Baker Tilly’s observations and findings regarding revised job descriptions, salary range adjustments, job title changes, benefits comparisons, findings, and recommendations.
Attachment 2 includes an informational Frequently Asked Questions (FAQ) document intended to support employee understanding of the study’s purpose, process, and anticipated next steps. The FAQ was provided to help City employees understand the process and not implement or approve any classification or compensation changes.
There is no immediate fiscal impact from the receipt of the study, and no action is being proposed to be taken at this study session. Any implementation actions with budgetary implications will be addressed in a future agenda item, through the normal budget cycle and, where required, as part of meet-and-confer processes or negotiations with the City’s bargaining units.
DISCUSSION
Background
In September 2024, City Council authorized the City Manager to execute a consulting services agreement with Baker Tilly US, LLP (Baker Tilly) to conduct a comprehensive review and update of the City’s classification and compensation structure. This is the first update in over two decades.
The study was undertaken to:
• Modernize job classifications to reflect current duties and organizational needs; • Evaluate internal equity and market competitiveness;
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• Support workforce recruitment and retention; and
• Provide a consistent framework for future compensation decisions.
Baker Tilly conducted a comprehensive assessment of the City’s classification and compensation systems, including job documentation, internal equity, external market alignment, pay structure design, and benefits comparison. The Final Presentation highlights Baker Tilly’s methodology, key findings, and recommended updates to the City’s classification structure, compensation plan, job descriptions, and pay grade alignments.
Study Scope and Methodology
Baker Tilly followed a structured five-phase methodology that reflects best practices in classification and compensation evaluation and aligns with the scope approved by the City Council:
Phase 1 - Data Collection
Baker Tilly met with the City’s project team to confirm the study scope, timelines, and data needs.
Baker Tilly conducted kickoff meetings, issued data requests, held employee and leadership communication sessions, and collected Position Analysis Questionnaires (PAQs). Information gathered during this phase established the foundation for the classification and compensation analysis.
Phase 2 - Position Review
Baker Tilly reviewed job titles, duties, and organizational alignment based on PAQs, existing job descriptions, and department feedback. Using the SAFE® job evaluation system, Baker Tilly assessed internal equity and established position hierarchy. A Fair Labor Standards Act (FLSA) review was also conducted to confirm exempt or non-exempt status recommendations.
Phase 3 - Market Assessment
Baker Tilly collaborated with staff to identify comparable agencies and distributed a custom market survey to benchmark classifications. Market matching was conducted using public sector data and published sources. Baker Tilly evaluated the City’s competitive position, prepared market comparisons, and completed a benefits analysis to assess alignment with regional standards.
Phase 4- Pay Plan Design
Using internal equity and market findings, Baker Tilly developed a proposed salary structure, assigned classifications to pay grades, and validated results using regression analysis. Baker Tilly prepared three cost scenarios for potential implementation strategies and reviewed potential impacts on existing pay policies.
Phase 5 – Final Report and Deliverables
Baker Tilly is working to complete the Final Report summarizing methodology, findings, and recommendations highlighted in the presentation. Deliverables in that report will include updated draft job descriptions, the proposed pay structure, and implementation tools. Baker Tilly will provide training to Human Resources staff and conduct Final Presentations.
Key Components of the Classification Study
The Classification Study served as the foundation for defining and organizing job roles across the organization and included:
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1. Job Descriptions: Updated to accurately reflect current duties, responsibilities, minimum qualifications, and working conditions, while ensuring accurate classification and legal compliance.
2. Job Classifications: Reviewed and grouped positions based on functional similarities and levels of responsibilities and required qualifications, promoting fairness and consistency.
3. Job Levels: Defined career progression by identifying levels of responsibility within the organization, ranging from entry-level roles to senior management, to clarify career paths and promotional opportunities.
4. Pay Grade: Assessed to ensure salary ranges are appropriately aligned with classification levels and remain competitive with market benchmarks.
5. Compensation Structure: Evaluated to ensure overall alignment between the City's compensation approach (e.g., salary, benefits, incentives) and organizational goals.
6. FLSA: Reviewed exempt/non-exempt designations for each position based on guidelines within the Fair Labor Standards Act.
Key Components of the Compensation Study
The Compensation Study assessed both the City’s external market position and internal compensation relationships. Components included:
1. Market Analysis: Evaluated salary and benefits data from peer comparable agencies to ensure the City remains competitive.
2. Internal Equity: Assessed the internal alignment of compensation across different job roles. This ensures that pay differentials between roles are justified by responsibilities, skills, and experience.
3. Job Evaluation: Reviewed and updated job descriptions to accurately reflect the duties, responsibilities, and requirements of each role. This process ensured that job clarifications and pay grades are appropriately aligned with current job roles.
4. Pay Structure Design: Revised salary ranges and pay grades to support equitable and competitive compensation practices. This established guidelines for salary increases, promotions, and other compensation-related policies and decisions.
5. Benefits Assessment: Evaluated the City's benefits offerings to determine its market competitiveness and effectiveness. This assessment helped identify opportunities for enhancing employee benefits and improving overall compensation packages.
6. Pay Policy Review: Evaluated existing City policies using data collected from the benefits study and best practice and provided recommendations for revision to policies describing how pay is administered.
Employee Groups Represented in the Study
The study evaluated 137 classifications across 10 departments and the following six employee groups:
• Laguna Beach Police Employees’ Association
• Laguna Beach Municipal Employees’ Association
• Laguna Beach Fire Association, Local 3684
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• Laguna Beach Police & Fire Management - Police Unit
• Laguna Beach Police & Fire Management – Fire Unit
• Unrepresented Executive and Management Employees
Peer Agencies Used for Market Comparison
To evaluate compensation competitiveness, Baker Tilly surveyed the following peer agencies.
1. City of Anaheim
2. City of Brea
3. City of Costa Mesa
4. City of Huntington Beach
5. Irvine Ranch Water District
6. City of Irvine
7. City of Malibu
8. City of Manhattan Beach
9. City of Newport Beach
10. Orange County Fire Authority
11. County of Orange
12. City of Orange
13. City of Santa Ana
14. City of Tustin
Data was additionally sourced from the following peer agencies to ensure adequate matches for Marine Safety positions:
15. City of Long Beach
16. Los Angeles County
17. City of San Diego
To represent ‘the private sector,’ Baker Tilly included matches, as appropriate, from the following sources:
18. Bureau of Labor Statistics
19. Comp Analyst
20. Economic Research Institute
Summary of Findings and Proposed Modification
Baker Tilly’s findings provide a comprehensive analysis of the City’s classification and compensation systems. Their observations are based on internal equity principles, market competitiveness, legal compliance, and public sector best practices.
The table below summarizes the key findings from both the Classification and Compensation components of the study:
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Table: Summary of Baker Tilly Findings
Classification
Area of Focus Summary of Baker Tilly Observations
Job Titles Recommended updates to position titles to reflect current duties and align with industry standards.
Job Descriptions Updated based on employee PAQs and supervisor review to ensure legal compliance and role clarity.
Job Evaluation Scores Used the SAFE® system to establish and maintain internal equity across classifications.
FLSA Designation Reviewed exempt/non-exempt status for compliance with federal labor guidelines.
Market Definition Defined peer comparison agencies and benchmarked base pay and benefits across similar roles.
Benefits Comparison Assessed public safety and non-public safety benefits to evaluate overall market competitiveness.
Pay Plan Structure
Developed five new pay plans (Police, Fire, Marine Safety, General Employees, Management) and aligned classifications to appropriate pay grades based on internal equity and external market data.
Implementation
Scenarios
Developed three scenarios: (1) Nearest Step (no decrease), (2) Years-in-Position Step, (3) Same Step.
The recommendations in the Final Presentation support the City Council’s goals to improve organizational effectiveness, strengthen recruitment and retention, and ensure compensation policies are consistent, transparent, and sustainable.
What the City Council Is Being Asked to Do and Next Steps? At this time, staff is requesting that the City Council receive the Presentation of the Classification and Compensation Study prepared by Baker Tilly. No formal action regarding implementation is requested or proposed at this meeting.
Following this presentation, staff will be taking the following steps:
• Review the draft report to verify findings, clarify technical details with Baker Tilly, and ensure updated job descriptions reflect City roles accurately. • Collaborate with Baker Tilly to finalize the report, incorporating any City Council direction, refining recommendations as needed, and confirming cost implications for each implementation scenario.
• Return to the City Council with the finalized report and staff analysis to request formal direction on which recommendations to pursue.
• Begin the meet-and-confer process with employee associations based on Council direction and incorporate any approved changes into the City’s annual budget.
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FINANCIAL ANALYSIS
There is no fiscal impact associated with receiving and filing this report. The Baker Tilly contract was previously approved and funded. Any financial implications resulting from the study’s findings, such as adjustments to salary ranges, classifications, or benefits, will be addressed through upcoming labor negotiations, future staff reports, and the City’s annual budget process, as directed by the City Council.
ENVIRONMENTAL ANALYSIS
The recommended action is not a project subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378, as it involves the receipt of a Baker Tilly report and does not result in a direct or reasonably foreseeable physical change in the environment. Accordingly, no environmental review is required.
ATTACHMENTS
1. Classification and Compensation Study Final Presentation - Baker Tilly US, LLP (Pgs. 7-46)
2. Frequently Asked Questions provided to employees (Pgs. 47-52) Submitted By: Gavin Curran Approved: .
Gavin Curran, Assistant City
Manager
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Robina Arora, Senior Human Resources
Analyst
Brittany Fernandez, Human Resources Analyst
Baker Tilly US, LLP