Pay raises draw fire
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By DEENA WINTER / Lincoln Journal Star
City Councilwoman Patte Newman admits she and her colleagues on the council were distracted when they approved an ordinance that could fatten the paychecks of some of the city's highest-paid employees. So they voted last week to delay a decision on annual raises for that particular group of employees.
The council members failed to ask the right questions when they passed an ordinance in December that changed the pay ranges of 139 city managers and professionals, she said.
"At that point, no one had come out and said, Wait a second. What's this about?'" she said.
It was about combining seven management ranges into two and extending the upper limits of those ranges, enabling more of the so-called "M class" employees to get raises and earn higher salaries. Since the ordinance was passed nine months ago, discontent has been brewing among rank-and-file employees who question whether police captains, for example, should be able to earn up to $115,000 more than the Lincoln police chief or his assistant chiefs now earn.
Now, the Lincoln Police Union and Lincoln Independent Business Association are questioning the rationale behind the range changes and the amount of money these new salaries will cost the city down the road. And LIBA is challenging data the city personnel department used to justify the changes.
At the center of the debate are 139 management employees not department directors, but employees such as engineers, planners, police captains and assistant fire and police chiefs who aren't represented by a union.
It's an experienced pool of people; 74 of them are eligible to retire.
The city's personnel director, Don Taute, said the pay ranges needed to be condensed because about half of the employees had "topped out" or reached the maximum salary in their range and were no longer eligible for merit pay increases. The city was hiring management employees at 80 percent of the maximum salary in their range to attract qualified employees, he said.
Taute said a survey of seven cities last year showed Lincoln's managers were paid 5.7 percent below market. Four of the seven had broader ranges than Lincoln's, he said, with an average range of $53,505 to $118,756. The cities were Des Moines, Iowa; Cedar Rapids, Iowa; Overland Park, Kan.; Topeka, Kan.; Wichita, Kan.; Omaha; and Sioux Falls, S.D.
Bumping those salaries up immediately, to put them on par with the other cities, would have cost $620,000.
Instead, Taute proposed gradually increasing the salaries by broadening the pay ranges.
Before Dec. 30, the management class had seven pay ranges that began at $37,800 and went up to a maximum of $110,069. Now, the two new pay ranges go from about $40,000 to $115,000.
At the same time, the maximum merit pay increase employees could get was reduced from 6 percent to 4 percent. Taute estimates merit raises will average 2.86 percent, down from 4.25 percent. Raises since the change was implemented in January have averaged 2.7 percent.
But as news of the pay changes spread among the city's workers, questions began flying.
"Our (labor) contract is settled, but there's still a lot of talk about it," said Ed Sheridan, president of the Lincoln Police Union.
The city's 15 police captains benefitted greatly from the changes, he said, because 13 previously were maxed out. Their $50,985 to $81,576 pay range changed to $56,000 to $115,049, allowing captains to eventually earn 39 percent more than what the city's highest-paid captains now earn.
While Sheridan doesn't doubt the city has trouble recruiting lawyers and engineers, he doesn't think the same can be said for filling police and fire captain positions. They're almost always promoted from within.
"They're blowing smoke," he said. "Honestly, I think that's a crock."
Police Chief Tom Casady said most captains are senior sergeants who get promoted and start out making $75,000 to $80,000 close to the ceiling.
When Sheridan checked police statistics for the nation's 200 largest cities, he said, he could only find 26 cities that paid police captains $115,000 or more, and 23 were in California.
By 2011, he said, captains could possibly earn $128,000 more than assistant police chiefs now earn and more than the $100,574 Casady earns.
But Casady said that's unlikely.
Based on captains' current salaries and ages, their salaries by 2011 should be between $95,500 to $104,471, he said, and that's only if they continue working long after they're eligible to retire and get unusually big annual raises.
"I suppose it's technically possible for someone to hit $128,000 by 2011, but I think the chance extremely remote," Casady said. His most recently promoted captain would have to work until age 65 to reach the top of the range, based on past average raises, he said.
Concerns raised by the police union prompted council members to ask questions, albeit after the fact, about the ordinance they passed, particularly the long-term financial effect. In the short term, the change will cost the city $76,500 for the remainder of fiscal 2004-05, Taute says. He estimates the financial effects to the city's tax-funded budget at $196,220 in five years and $245,112 in 10 years.
Several council members indicated they're willing to revisit the decision they made in December. But it's not entirely clear how obligated the city is to increase the salaries of the management employees, now that a survey has shown they're lagging.
Ninety-one percent of the city's employees are represented by one of five labor unions, and they negotiate in accordance with a process dictated by state law. Nebraska public employees aren't allowed to strike, but they can go to the Commission of Industrial Relations, which was created in 1947 to resolve labor disputes.
State law requires public employees' salaries to be "comparable" to their counterparts in other cities, and the commission has developed ways to determine whether they are by comparing salaries to similar employees in cities one-half to twice the size of their city and within general proximity.
While the commission usually deals with unionized groups, CIR clerk administrator Annette Hord said Lincoln's "M class" employees could go to the commission over the issue, although the case could be rejected. On the other hand, if the city throws out the changes it made in December, "The city might reap the consequences," she said. And the management employees could always consider unionizing.
During the Aug. 8 public hearing on the proposed 2005-06 city budget, the Lincoln Independent Business Association challenged the data collected from other cities Taute used to justify the new pay structure.
LIBA Executive Director Coby Mach said Taute denied LIBA access to the salary survey, and when LIBA did its own checking with the other cities surveyed, Mach said, they found conflicting salary information. Taute said four of the seven cities they used for comparison had broader pay ranges, but Mach contends none of those four do.
Mach said Wichita, for example, has seven pay ranges (as Lincoln did until December) and only is studying broader pay ranges.
"I believe it (the data) is all suspect," Mach said. "This was a way to give an awful lot of managers an increase in salary."
But Taute said the differing information is due to changes since the city gathered its information last year and different interpretations of the information. He checked with Wichita after Mach made his allegations and was told the city still is headed in the direction of broader pay ranges, although the process has been delayed.
As for denying LIBA information, Taute said he didn't feel it was appropriate to share the information, just as he doesn't share comparability surveys with unions during negotiations.
Mach said the council should consider returning to the old pay schedules.
If it did, Taute said, 69 managers would have been eligible for merit raises, and if they continued to average 4.25 percent, that would cost the city about $229,000, not counting a market adjustment. "You're really talking a wash," Taute said.
Mayor Coleen Seng directed Taute to review the information he used in the salary survey, said Mark Bowen, Seng's chief of staff.
In light of these issues, the council voted Aug. 8 to delay action on annual market adjustment raises more commonly known as cost-of-living-adjustments for management employees for two weeks. Those raises are different from the merit pay increases at issue. Council members say they delayed the vote to try to sort out the conflicting information.
Councilman Ken Svoboda said he's working on a compromise that would result in between three and seven pay ranges. Councilman Jon Camp said he's bothered by the conflicting information from Taute and LIBA, but he doesn't want to do "something that concerns the employees" because they're good, key management-level employees.
"But I want to resolve any doubt and make sure the information is accurate," Camp said. "If it's not black and white, then I want to know what level of gray it is."
Reach Deena Winter at 473-2642 or dwinter@journalstar.com.
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