Parowan unveils new pay structure and merit program; council to adopt in FY2026 budget

Parowan city management presented a new compensation framework May 29 that pairs a step-and-grade salary table with an annual merit-based incentive program, and the council signaled support to adopt the program for the FY2026 budget year beginning July 1.

City staff and the salary committee said an in-house study of comparable regional municipalities showed most Parowan positions lag regional pay levels, particularly management positions. To address recruitment and retention without a tax increase, staff proposed a hybrid system that provides predictable tenure-based step increases (shallow steps to limit automatic cost growth) plus a merit-based annual incentive called the RISE program (Review, Incentive, Step/Grade Evaluation).

Under the plan the city will: (1) assign each job to a grade with a published pay range; (2) provide step movement within a grade for tenure and base progression; and (3) distribute annual merit incentives tied to documented performance, training and innovation. The FY2026 budget incorporates a one-time operational cost increase of about $322,000 to implement the new pay matrix and fund incentives; staff said roughly 57% of that cost will impact the general fund, with the remainder distributed to enterprise funds based on affected positions.

Staff recommended and the council agreed to train supervisors in the RISE evaluation process, conduct employee evaluations in June and present awarded incentives after the FY2026 budget is adopted. For FY2026 the incentive pool is budgeted with a maximum individual award of $300; staff said that level reflects a conservative first-year funding choice while the program is evaluated. Council members emphasized the need for clear, transparent career paths and frequent communication with employees about total compensation and grade/step placement.

Staff will publish the grade-step matrix and incorporate the approved amounts into the FY2026 budget, then monitor turnover and performance outcomes to determine any adjustments for subsequent years.