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Resident questions cost of living raise formula

The city will receive the proposed budget, with few changes from the draft, on May 28, Ron Scott said last week during his city manager’s report to the commission. But a resident spoke just after Scott’s comments about how she would like to see one major change.

Wilma Brown said she appreciated the budget being made available to the public, but she has a concern with how cost of living adjustments (COLA) are assessed.

“A 2% cost of living adjustment has been recommended, and that’s on an individual salaries. We have our lowest paid person on the city, and this was surprising to me, a full-time person makes $24,000 a year. Which is an embarrassing salary …” Brown said, and that person will get a $480 raise.

She said the highest salary is the city manager, “in excess of $130,000,” and that Scott will get thousands as a raise. “Then the next raise is based again on those raises, so that exponentially, the disparity between the lowest-paid person on the city’s salary scale and the highest paid — the disparity continues to increase.”

She said a better way to assess the COLA raises would be to take all of the salaries added together, multiply that by 2% and divide it by the number of employees. “All the employees will get the same amount, and I don’t know what that would be …”

Brown said she feels this way because, “You’re paying the same increase. Every time you buy a gallon of milk, if your hot water heater goes out, it doesn’t matter what your salary is,” the rates are the same for each person.

“I just wanted to point out that your lowest paid person continues to be at the bottom of the scale. And that increase we all pay at the gas pump now? … It’s an irritation to all of us, but for some people, it’s an actual problem …” Brown said.

Scott said the suggestion made by Brown was something he considered early on in his tenure as city manager. He said raises had been assessed in the past using this approach, by one of his predecessors.

“The result of that approach was that it didn’t motivate city employees to perform, and was not liked by most city workers,” Scott said. He said employees felt it diminished the cost of living adjustment for those who have “devoted more years to providing service, and gave ‘more’ to the newest employees, at the cost of those who had served longer.”

Scott said he found early on that applying the same 2% COLA to each worker’s salary resulted in higher job satisfaction among all workers. “I think that is the process followed by most employers who provide a COLA.”

Scott added, “Also, for clarification, I would note that any salary or COLA adjustments recommended by the city manager apply to all city workers — except the city manager. All salary adjustments … made to the salary of the city manager are determined by the city commission, during the annual performance evaluation performed in December. “

The city commission last reviewed Scott’s performance and granted a 3% adjustment — 2% COLA and 1% performance raise, which went into effect this year.

“That amount (2% COLA and 1% performance) had been given to all other employees the previous July 1, 2018,” Scott said. “The current gross pay of the city manager is $134,359.84 per year, not the higher amount quoted (at Monday’s city commission meeting).”

Scott’s annual salary is $122,054.40, but he receives an additional deferred compensation, considered a retirement benefit. The city pays an additional 10% of his salary into an ICMA account — used by public sector participants for retirement plans and other services. That contribution totals $12,205.44, annually. 

He said, “Ideas are appreciated, as expressed by citizens, and result in ‘broader thinking’ about possible approaches to solving problems. So while I will not be recommending this approach to the city commission, I do appreciate the fact that the idea was expressed.”

“The people who would complain the most are the highest paid people, of course,” Brown said. “But COLA is based on the price of commodities and services that people purchase … It has nothing to do with how long you’ve worked somewhere.”

She sticks to her assertion the COLA formula should be an average, since everyone is paying the same higher cost of living prices, regardless of what their salary is, everyone should get the same amount.

Brown said she understands Scott’s salary is set by the commission, “but that doesn’t help how it looks. Listen, I have nothing in this, except to think that we’re spending so much money on consultants, for example, yet we can’t properly compensate our employees.”

She pointed out how the mayor and commissioners’ salaries were bumped up by 50 percent last year (effect January 2019) in order to get them “into the 75th percentile, yet police and fire still aren’t there.”

In May of 2018, first responders appeared before city commission and referenced the same survey — through Kentucky League of Cities — that was used as justification for the elected officials’ salary increases; it was put into effect so they would earn as much or more than 75% of comparable positions noted in the survey. After that, Scott recommended $1 raise given across the board to qualifying employees.

Brown was also curious about the wage study Scott has said in the past the city would enact. Scott said the survey was developed and sent out, but didn’t quite go as planned. He said city staff, with participation by department heads, created a wage/benefit questionnaire, “which was necessarily detailed and lengthy.”

While Scott says he would’ve preferred the document was completed earlier — it was sent out in December to all cities within a 50-mile radius, via email. The initial goal was to compile the results into a report by early February, Scott says, in order to consider results during budget preparation.

“Despite our efforts, the response to that survey effort was clearly insufficient — we only had two cities of the identified 24 complete the survey and respond — to generate a report with sufficient information and valid conclusions …” Scott said. He said what information the city did receive, including what was garnered from additional phone calls made to some cities, “was obtained after the preliminary budget work had been completed. So, for these reasons, I have not generated a report to the city commission on this issue.”

Scott said given limitations in the growth of revenue this past year, the increased cost of meeting pension obligations “and the on-going cost of continuing to provide current services, as well as funding the new initiatives in the budget … I recommend the 2% COLA for all employees in next year’s budget. Recall that in the current fiscal year, significant compensation adjustments were made for all employees.”

Scott said the goal is to update the city’s last independent compensation and job classification study from ‘15. He said for cost efficiency, he plans to use the same firm and have it possibly completed by October, in order to consider the results before ‘20-’21 budget time.

Michele Gosser, the city’s CFO, said just going off of an employee’s base amount doesn’t show the full picture — they also get a full benefit package, she said.

“Which includes retirement, which for next fiscal year is either 24.06% for non-hazardous and 39.58% for hazardous, health, dental and life insurance,” Gosser said. She said with the health coverage alone, the base is close to $20,000 for a family plan.

“So it is possible for a fairly new employee to get over double their pay in benefits,” Gosser said.

Brown said no one is pushing her to gripe about city salaries. “I’ve served on boards and organizations, and I’ve just always advocated for raises for employees — when there is money.”

She said the fact someone is a long-term, dedicated employee should be considered during merit raises, not COLAs. “I’ll say it again, all this does is further the disparity. I feel it discriminates against the lowest-paid employees, and keeps them there.”

SO YOU KNOW

In observance of Memorial Day, the next Danville City Commission meeting will be 5:30 p.m. Tuesday, May 28 at city hall.