Total Compensation: A Review of Employee Pay & Benefits

1. Total Compensation:A Review of Employee Pay & Benefits Presented by: Human Resources Department January 13/15, 2003

2. Presentation Overview • What is “Total Compensation”? • Why is “Total Compensation” important? • Importance of competing against other employers • What is required by law? • What does the City of Dallas offer? • Who is eligible? • Total cost of major pay & benefits elements • How does the City compare to other employers? • Sick leave policy and usage • Summary

3. What is “Total Compensation”? • Anything given to pay or reward an employee for work or services done • Composed of two basic elements: • Pay elements—salary, overtime, special pay, etc. • Benefits elements—health coverage, life insurance, paid leave, etc.

4. Why is “Total Compensation” Important? • To attract and retain qualified employees, pay and employer-sponsored benefits must be: • Perceived by prospective and current employees as valuable • Commensurate with the value of the work performed • Focused on “Total Compensation,” rather than individual elements • Compliant with various laws and mandates

5. Competing Against OtherEmployers • Total compensation must be able to be measured/compared • Benefits levels vary by type of organizations • Public vs. private • Different industries • Challenges • Spend tax dollars prudently • Be an employer of choice (recruitment) • Maintain quality workforce (retention)

6. What is Required? • Federal and State laws • Wages and special pay • Hours, overtime • Protected medical leave • Discrimination • Health care • Unemployment • Workers’ Compensation

7. What is Required? • City Charter • Chapter II, Section 1., (35) & (36) • Make provision for the care and sustenance of police, fire, and all officers and employees who: • Become disabled while in service of City [e.g. disability pension] • Become incapacitated due to age or infirmity [e.g. retirement, health care, sick leave] • Become incapacitated due to longevity of service alone [e.g. retirement] • Provide aid and relief of widows, minor children and dependents • Create funds for above purposes

8. What is Required? (cont’d) • City Charter (cont’d) • Chapter XVI, Section 14.— Adoption of Personnel System and establishment of rules and regulations, including • Description of employment positions • Methods of determining merit and fitness • Hours of work, attendance, provisions for sick leave and vacation leave • Equitable pay scales • City Personnel Rules • Health and life benefits • Paid and unpaid leave

9. What Does the City of Dallas Offer? • Pay & Benefits Matrix (Appendix A) • Categorized by: • Objective • Name and description of element • Legal requirements • Mandated by local, state, or federal law • Optional • Eligibility • History • Cost to City • Direct – cash output • Indirect – staffing, resources, etc.

10. Who is Eligible for Benefits? • Various employee groups are eligible for all or some benefits • Full time Employees • Part time employees—most benefits available on a pro-rata basis • Retirees & disabled former employees • Access to subsidized health benefits & some life insurance • Elected officials (Mayor & City Council) • Access to unsubsidized health benefits

11. Major Pay & Benefits Elements—FY 2002 2002 Cost of Major Pay & Benefits Elements: $894,594,877

12. Major Pay & Benefits Elements Average Civilian Employee— FY 2002 2002 Average Total Compensation for Civilian Employee: $53,252

13. Major Pay & Benefits Elements Average Sworn Employee— FY 2002 2002 Average Total Compensation for Sworn Employees: $84,591

14. How Does the City Compare to Other Employers? • Other cities—Metroplex, Texas and other major city surveys • Hay Group comparison of pay & benefits (including private sector) • Hay Group 2002 Total Remuneration Survey • Private & public sector employers • Methodology— • Hay Group assigns values to all pay and benefits elements to obtain value of total compensation offered • Salary survey comparison of attached jobs

15. Public Sector Comparisons (Excluding Sick Leave)

16. City of Dallas vs. Public & Private Sector • Hay Group’s General Industry Database includes over 1,000 organizations in the US of all sizes and types (public and private sector). Examples: • American Airlines Burlington Northern • Baylor College of Medicine Texas Utilities • Bell Helicopter Textron Neiman Marcus • Blockbuster Dallas Morning News • FedEx J.C. Penney • Tarrant County Kimberly-Clark • Ft. Worth Transportation SPRINT Authority

17. City of Dallas vs. Public & Private Sector • Civilian positions • Compared to both public & private sector employers • Approximately 50 “benchmark” positions at the City were used for this comparison • Grouped into one of four levels, based on salary: • Category 1-Entry to mid-level positions • Category 2-Professional/Supervisory • Category 3-Senior professional/Manager • Category 4-Department Director • Uniformed jobs • Compared to other municipalities nationwide • Compared by rank

18. Total Compensation & Hay Group Survey Data • Total compensation includes Base Pay, Total Pay (Base plus Annual Bonus), and Benefit Values • Market Data is analyzed and broken down into percentiles • 75th percentile means that 75% of organizations are below this point • 50th percentile means half of organizations are above, half are below this point – this is the goal of most organizations • 25th percentile means that 25% of organizations are below this point.

19. City-Civilian vs. Public & Private Sector for 2003 • The charts on pages 23-25 show the value of City civilian pay and benefits • Total Compensation results • In Category 1 (entry to mid-level positions), the City is at the 75th percentile. This means that our total compensation package value for these types of employees is equal to or better than 75% of all employers surveyed. • In Category 2 (professional/supervisory), the City is at the 25th percentile. This means that our total compensation package value for these types of employees is lower than 75% of all employers surveyed.

20. City-Civilian vs. Public & Private Sector for 2003 (cont’d) • Total Compensation results (cont’d) • In Category 3 (senior professional/manager), the City is below the 25th percentile. This means that our total compensation package for these types of employees is lower than 75%+ of all employers surveyed. • In Category 4 (department directors), the City is below the 25th percentile. This means that our total compensation package for these types of employees is lower than 75%+ of all employers surveyed.

21. City-Civilian vs. Public & Private Sector for 2003 (cont’d) • Base pay results • In Category 1 (entry to mid-level positions), the City is above the 75th percentile. This means that average base pay for these types of employees is better than 75% of all employers surveyed. • In Category 2 (professional/supervisory), the City is at the 50th percentile. This means that average base pay for these types of employees is equal to or better than 50% of all employers surveyed. • In Category 3 (senior professional/manager), the City is below the 50th percentile. This means that average base pay for these types of employees is lower than 50%+ of all employers surveyed.

22. City-Civilian vs. Public & Private Sector for 2003 (cont’d) • Base pay results (cont’d) • In Category 4 (department directors), the City is below the 25th percentile. This means that average base pay for these types of employees is lower than 75%+ of all employers surveyed. • Employer-paid benefits results • In all job categories the City is below the 25th percentile. This means that value of employer-paid benefits for all employees is lower than 75%+ of all employers surveyed.

26. City-Uniformed vs. Public Sector for 2003 • The charts on pages 30-35 show the value of City uniformed pay and benefits • Base Salary & Benefits Results • For Police Officer, the City is just above the 25th percentile. This means that our total base salary & benefits value for this rank is lower than 50%+ of all municipalities surveyed. • For Fire & Rescue Officer and Fire Captain, the City is just below the 50th percentile. This means that our total base salary & benefits value for this rank is approximately the same as 50% of all municipalities surveyed. • For Police Sergeant and Police Lieutenant, the City is at the 50th percentile. This means that our total base salary & benefits value for this rank is approximately the same as 50% of all municipalities surveyed. • For Fire Battalion Chief, the City is at the 25th percentile. This means that our total base salary & benefits value for this rank is lower than 75% of all municipalities surveyed. • For Assistant Police Chief, the City is above the 50th percentile. This means that our total base salary & benefits value for this rank is better than 50% of all municipalities surveyed.

27. City-Uniformed vs. Public Sector for 2003 (cont’d) • Base Salary & Benefits Results • For Assistant Fire Chief, the City is at the 75th percentile. This means that our total base salary & benefits value for this rank is better than 75% of all municipalities surveyed • Base Pay Results • For Police Officer and Fire & Rescue Officer, the City is at the 50th percentile. This means that average base pay for these ranks is approximately equal to 50% of all municipalities surveyed. • For Police Sergeant, the City is at the 75th percentile. This means that the average base pay for this rank is equal to or better than 75% of all municipalities surveyed.

28. City-Uniformed vs. Public Sector for 2003 (cont’d) • Base Pay Results (cont’d) • For Fire Captain, the City is at the 50th percentile. This means that average base pay for this rank is approximately equal to 50% of all municipalities surveyed. • For Police Lieutenant, the City is at the 75th percentile. This means that the average base pay for this rank is equal to or better than 75% of all municipalities surveyed. • For Fire Battalion Chief, the City is at the 50th percentile. This means that the average base pay for this rank is approximately equal to 50% of all municipalities surveyed.

29. City-Uniformed vs. Public Sector for 2003 (cont’d) • Base Pay Results (cont’d) • For Assistant Police Chief, the City is just below the 75th percentile. This means that average base pay for this rank is better than approximately 75% of all municipalities surveyed. • For Assistant Fire Chief, the City is above the 75th percentile. This means that the average base pay for this rank is equal to or better than 75% of all municipalities surveyed. • Employer-paid benefit results • For all Police and Fire ranks surveyed the City is lower than the 25th percentile. This means that our total base salary & benefits value for these ranks is lower than 75% of all municipalities surveyed.

36. Benefit Values vs. Public & Private Sector for 2003 • The bar charts on pages 40-42 show employer paid benefit values at three different salary levels— $30,000, $50,000, and $80,000 • Compares City (Civilian & Uniformed) with Market (includes both public and private sector employers) for major benefits elements (see legend)

37. Other Benefits Tuition reimbursement Parking Car allowance On site cafeteria Holiday/Vacation Retirement Social Security Health Care Disability Death Statutory Unemployment Workers’ Compensation Benefit Values vs. Public & Private Sector for 2003 Bar Chart Legend* *In order shown on bar chart, from the top down

38. Benefit Values vs. Public & Private Sector – Results • Other Benefits – City is below 25th percentile • Holiday/vacation leave – In line with other employers (at approximately 50th percentile) • Retirement and Social Security combined– At or below 25th percentile

39. Benefit Values vs. Public & Private Sector – Results • Health care – Below 25th percentile • Disability – At 50% percentile because sick leave and disability retirement are included in this category • Death – Below 25th percentile

43. Dallas Area Public Sector Top Executives—January 2003

44. Sick Leave Policy & Usage • City of Dallas Sick Leave policy • Eligibility & usage • Annual accrual • Maximum accumulation • Termination payout • Comparison with other employers— public and private sector • Sick leave as disability protection • Retiree sick leave usage

45. City’s Sick Leave Policy (Personnel Rules, Sec. 34-22) • Eligibility • All permanent employees eligible upon initial appointment • Part-time permanent employees accrue hours on a pro-rated basis • By state law, sworn employees may take 30 sick leave days each calendar year • Fire Rescue: 360 hours (30 12-hour days) • All other sworn employees: 240 hours (30 8-hour days) • Sick leave taken in excess of amount accumulated will be charged to other paid or unpaid leave

46. City’s Sick Leave Policy (Personnel Rules, Sec. 34-22) • Sick leave may only be granted/taken when: • An employee is incapacitated for the performance of duties due to an illness, surgical procedure, or off-job injury • A medical, dental, or optical examination or treatment is necessary • An employee is incapacitated by or recovering from pregnancy, miscarriage, abortion, or childbirth • It is necessary to care for an immediate family member who is ill or incapacitated • An employee has been exposed to a contagious disease • It is allowed under the city’s wage supplementation plan • It is allowed under the city’s administrative directives governing the administration of the Family & Medical Leave Act

47. City’s Sick Leave Policy (Personnel Rules, Sec. 34-22) • Notice of unexpected absence • Required within two hours before to within 30 minutes after starting time, depending on departmental procedures • In 24-hour operation, required at least one hour before reporting time on first day of absence • Supervisor can require notification on each succeeding day of absence • Failure to give notice can result in employee being declared absent without leave and subject to disciplinary action • Documentation • Upon request by a supervisor, a department director, or the director of human resources, an employee may be required to: • Furnish a statement from an attending physician demonstrating the existence of circumstances to substantiate usage • Submit to a physical or mental examination by a healthcare provider selected by the city

48. City’s Sick Leave Policy (Personnel Rules, Sec. 34-22) • Annual Accrual • Fire Rescue: 144 hours (12 12-hour days) • All other employees: 96 hours (12 8-hour days) • Maximum Accrual • Fire Rescue: 2,160 hours (180 12-hour days) • All other employees: 1,440 hours (180 8-hour days) • Termination payouts upon retirement or termination with 20-years service • Fire Rescue: 1,080 hours (90 12-hour days) • All other employees: 720 hours (90 8-hour days)

49. Sick Leave Policy – Public Sector Comparison

50. Survey of Paid Leave for Public Sector Employers* *Prepared for City of Dallas by Fox Lawson, April 2002 **28 Respondents-all major municipalities