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Consultant: city pay grades about 9% below market, recommends $1.3 million implementation
Summary
BTA Consulting told the Shelbyville council its pay grades average about 9% below market and recommended an 8% shift to pay grades, a fire step structure and a 3% across-the-board COLA. The one-time implementation cost was estimated at just over $1.3 million; council asked staff for department-level budget impacts before deciding.
Beth Thompson of BTA Consulting presented a market-based pay study to the Shelbyville mayor and city council at the June 2 study session and recommended changes aimed at aligning city pay with market rates.
Thompson said the firm used a municipal salary survey of more than 100 participants narrowed to comparable peers, plus a national industry database (Economic Research Institute), to derive a market rate per job and project figures to July 1 for implementation. "We take the numbers from our municipal salary survey and from our general business and industry survey and we average those together to give what we call a market rate for every job," she said.
The firms findings: current pay grades are roughly 9% below market and employee salaries average about 9.1% below market. Thompson said 37% of city employees fall below 85% of the market rate, a level BTA flagged as concerning.
To address those gaps, BTA recommended moving pay grades up across the board by 8% (a change to grade midpoints and ranges), creating a step structure for the fire department similar to police progression, and granting a minimum 3% across-the-board increase (described as the years COLA). "The 3% across the board is just under $375,000," Thompson said. She estimated bringing all employees to the new minimum pay ranges would cost about $767,000 and adding payroll taxes and benefits would add roughly $197,000, producing a total implementation cost just over $1,300,000.
Council members asked several questions about funding, prior efforts and the studys assumptions. Thompson acknowledged a correction had increased costs slightly, explaining that an earlier draft had omitted a promotion step in the fire schedule that added about $37,000 to the employee-cost total. Council members pressed staff to supply department-by-department budget impacts and alternate budget scenarios showing the effect of the pay numbers. A council member asked staff to get the numbers to Kaye to prepare an updated budget for the upcoming budget meetings; Thompson said she would provide updated employee-level figures to help produce departmental projections.
City Manager Scott Collins said staff would work with finance to produce those breakdowns for the two upcoming budget meetings and that the studys implementation timeline can be phased. Several council members expressed concern about reserves and long-term affordability but also acknowledged the citys difficulty recruiting and retaining employees when neighboring employers pay more.
The consultant recommended regular market monitoring after the initial changes (every two to three years or sooner for problem jobs). Thompson said the proposed changes would move the citys average structure market index to about 101.5% (from about 91%) and reduce the share of employees below 85% from 37% to about 11%.
Next steps: staff will produce department-level cost projections and alternate budget scenarios for upcoming budget meetings so council members can weigh funding options before any formal vote or ordinance change is scheduled.
