Gallagher study recommends new 18‑grade pay structure and market alignment plan for city employees

Representatives from Gallagher presented a final compensation study to council staff on July 22 and recommended a market‑based restructuring of city pay grades, vacancy review and phased adjustments to align pay with comparable jurisdictions. Gallagher said the city provided 381 unique job titles representing 918 employees; the consultant was able to benchmark 292 jobs covering 850 employees (about 91% of staff) and recommended assigning positions to a new 18‑grade structure based on market midpoints. The consultant explained the methodology: they used a custom peer survey (17 respondents), published salary databases, data aging to a single effective date and geographic differentials to adjust for local labor costs. The study found aggregated compensation at roughly 89% of market median (11% below market at the 50th percentile) and 21% below the 70th percentile. Gallagher recommended: (1) create an 18‑grade salary structure and assign positions by market midpoint while preserving internal departmental hierarchies; (2) bring employees who fall below a new range minimum up to that minimum; (3) implement a years‑of‑service allowance (1.5% of the range minimum per year) and strategic adjustments to move employees into a stronger compa‑ratio position within ranges; and (4) adopt an annual market review process. Gallagher presented two cost options: option 1 aligns to the 50th percentile (lower cost; recommended immediate step) and option 2 (future state) moves toward the 75th percentile with higher up‑front cost. Gallagher’s cost estimate for option 1 was an increase in payroll in the low single‑digits (presented as percent impacts) and the firm noted the calculation excludes benefits and payroll taxes and excluded police and fire, which have separate, recently‑implemented structures. Council members asked clarifying questions about midpoints, grade structure and the estimate for vacant roles; Gallagher clarified the $7 million figure would reflect filling currently vacant roles at new minimums and that recommended changes were presented as a multi‑year roadmap rather than immediate action on all fronts. Council members asked staff to include the Gallagher recommendation in upcoming budget discussions and consider funding timing and implementation options; staff said they would present cost scenarios during the budget retreat and in subsequent budget deliberations.