Problems brew over pay raises

Published: Wednesday, January 21, 2004 at 6:01 a.m.
Last Modified: Wednesday, January 21, 2004 at 12:47 a.m.

For most Gainesville city employees, modest pay raises are arriving just in time to help pay their Christmas credit card bills.

But like an interest payment that grows over time, those raises - the first in a plan to update the salaries of city staff members - could come back to haunt Gainesville in a few years, according to the city's auditor.

The adjustments could cost the city an extra $3 million in the next three to five years, according to City Auditor Alan Ash.

A new salary restructuring plan for the city's non-unionized managers, administrators and professional staff is causing a rift between some top city officials. The plan increases the minimum and maximum salary most workers can earn.

Ash says the plan was rushed before the City Commission in November, without giving him time to review it. Now he says there are serious problems with the salary adjustments, which could strain the city's finances in the future.

Among the problems Ash has cited:

  • The study that set the new salary ranges for the managerial, administrative and professional employees may have been done incorrectly.

  • Among the managerial, administrative and professional employees, high-ranking staff will, for the most part, be eligible for larger raises than other workers.

  • The increased salaries could put the city in a financial pinch in a few years, especially as more employees retire and draw pensions from the city.

    Two other charter officers, however, are defending the pay study. City Manager Wayne Bowers and Gainesville Regional Utilities General Manager Mike Kurtz have said the salary changes will be implemented only on a year-by-year basis as the city's budget allows, and won't hurt the city's bottom line.

    Bowers said complaints are expected whenever salary adjustments are made.

    "Pay studies are always difficult for an organization. You're dealing with people's salaries," Bowers said. "I think that's probably one of the reasons it's been 16 years (since the last pay study). It can be traumatic to an organization."

    Most Gainesville employees are paid based on their ranking on a merit scale, which sets a minimum and a maximum pay for each position.

    The pay ranges for those positions were adjusted based on the recommendations of a six-member team of high-ranking city and Gainesville Regional Utilities employees. An independent auditor was hired by the city to oversee their work.

    On average, city workers will get a 4.75 percent raise this year, according to a memo to GRU employees from Ed Regan, GRU's director of strategic planning.

    But under the new salary plan, the average pay range for the city's professional employees generally will increase more than for blue collar workers, Ash said.

    "We became concerned with the distinct and obvious disparities between the different categories of city employees" after reviewing the new salary plan, Ash wrote in a report issued earlier this month.

    Ash told the commission last month - several weeks after the salary adjustments were approved - that the pay study may have inflated the salary range increases for some positions.

    In particular, Ash said the study didn't take into account Gainesville's size, location and the fact that professional workers in government jobs typically make less than workers holding similar positions in the private sector.

    One of Ash's findings particularly alarmed some commissioners: The city increased the midpoint of its pay ranges for its 354 managers, administrators and professional workers by nearly 20 percent, on average.

    The pay range for GRU managerial positions increased by an average of 30 percent, compared to an average 20 percent increase for general government managerial positions, Ash's report said.

    Meanwhile, the commission approved increasing the midpoint of its pay ranges for the city's 979 unionized employees - a category that includes positions like utility lineworkers and maintenance workers - by just over 6 percent on average, Ash said.

    The raises could put the city in a financial crunch because an unusually large percentage of employees are nearing retirement age, Ash said.

    Within the next five years, one-third of the city's professional employees, 60 percent of GRU managers and nearly half of the city's general government managers will be eligible for retirement. Their pensions will be awarded based on how much they earned during their last three years working for the city.

    In the report issued earlier this month, Ash questioned the credibility of the salary study, because the city employees who wrote it are "directly affected by the outcome of the study which lends itself to questions of independence and objectivity."

    The report also said that pay increases will lead to a tighter budget in coming years, making layoffs, increased fees and taxes more likely.

    Working out kinks

    Bowers and Kurtz declined to comment on the specifics in Ash's report, saying they needed more time to review it. But a Thursdaymemo from Bowers and Kurtz to city commissioners says they "remain confident that we can address the issues" raised in Ash's report.

    Given that it's been 16 years since pay scales were adjusted, Kurtz said it's reasonable that the salary ranges for some employees would jump considerably.

    Kurtz said the team that conducted the study "went to considerable lengths to look at comparable jobs in comparable markets."

    "All I know is we have staff who worked literally thousands of hours trying to do a credible job," he said.

    While Kurtz was complimentary of the city auditor's office, he said it doesn't specialize in doing compensation studies.

    "This is really not their area of expertise," he said.

    The commission could discuss the matter - including responses from Kurtz and Bowers - next month. But when Ash brought the matter up at a December meeting, some commissioners suggested revoking the raises while he reviewed the salary changes.

    That's not a good idea, Bowers said at the December meeting.

    "I think you have raised certain expectations among the employees. I think it would send a bad message to change it," he said.

    Commissioner Warren Nielsen said at that meeting that he was worried about employee morale, but was also concerned about the disparities in the pay increases, which he called "fundamentally wrong."

    Commissioner Chuck Chestnut said in December that he didn't want to be forced to lay off city employees when the effects of retirement kick in.

    "My best advice: we have voted for it. Give it a year and then come back and tweak it," he said.

    Ashley Rowland can be reached at (352) 374-5095 or

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