Staff recommends modest market and merit increases for nonunion employees

Jen, the staff compensation lead, presented the City’s nonunion compensation approach, which targets the 75th percentile of an 18-community market and separates a market/COLA adjustment from a merit pool. She said the methodology uses four data inputs: comparable communities, internal equity, union contract steps, and regional CPI/benchmarks.

Jen said the data-driven market result would be about 3.36%, but staff recommended a reduced market adjustment of 2.75% to balance budget constraints and compression concerns. For the merit pool, staff recommended budgeting 3% to reward performance. She flagged significant "compression" concerns in the IBEW bargaining unit and noted compression also appears among some sergeant ranks in police, which complicates promotion and retention decisions.

Council members asked about retention risks where direct reports earn as much or more than supervisors. Jen said the City has struggled to keep some supervisory positions filled, citing several recent vacancies in key utility leadership roles. Financial questions focused on the dollar impact: staff said a 0.25 percentage-point change in either market or merit equals about $36,000 overall because the nonunion payroll pool is roughly $12–13 million.

Staff said the recommended figures reflect a balancing exercise among compression mitigation, competitive pay, and broader budget pressures; council members asked staff to check whether benefit/pension compounding was included in the cost calculations, and staff said they would confirm whether ancillary pension and benefit costs are incorporated.

Next steps: staff will finalize the compensation line items in recommended budgets and provide any requested clarifications about long-term pension impacts.