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City HR outlines compensation plan; commissioners debate COLA versus merit framework
Summary
HR presented a multi-phase compensation plan that includes a 3% cost-of-living adjustment, up to 3% merit, and a potential 2.5% midyear adjustment; commissioners discussed whether to emphasize COLA or merit-based increases and raised concerns about range compression and recruitment.
Michelle of the cityHR team presented the compensation plan proposed for FY26 and the related organizational-structure changes. The plan continues implementation of a multi-phase pay analysis. For FY26 HR recommended a 3% cost-of-living adjustment (COLA), a maximum 3% merit pool and a potential midyear adjustment of 2.5% effective April 1, and staff said phase 3 of the pay-analysis implementation could occur in FY27.
Michelle said the compensation adjustments are intended to align the citypay ranges with the market (the consultant recommended the 50th percentile), continue internal- and external-equity reviews, and explore recruitment and retention tools. HR reported an FTE reallocation through reorganization that reduces 3.53 FTE for FY26 by relocating divisions and reallocating functions.
Commissioners engaged in extended questioning about the structure. One commissioner said removing COLA and leaving only supervisor-directed merit would risk leaving some employees behind and reduce predictability. Another commissioner argued that agency supervisors should have more discretion and that a strictly merit-based system would better reward performance. Concerns were raised about range compression if ranges are not regularly adjusted; HR confirmed ranges are intended to be adjusted to reflect COLA and market movement.
The commission and HR discussed how to use the consultant study findings, the cost of the study cited in the discussion, and whether a midyear adjustment should remain a commitment. No formal vote was taken; commissioners asked staff to continue refining allocation mechanics and to provide analysis during the budget hearings.
