Rob Douglas: PTO: How much is too much?
October 10, 2013
In the coming weeks, the Steamboat Springs City Council will continue to debate a subject it has wrestled with since the onset of the Great Recession. The subject is city employee compensation, and the debate concerns how to determine fair compensation. While the focus of the debate usually is wages and salaries, the category of compensation most in need of adjustment is the amount of paid time off employees receive.
The latest round in this struggle began at the city's budget retreat when the city management team presented the City Council with a recommendation for changes in employee staffing levels and pay. Under the proposal, 40 employees currently working 36 hours per week — because of a 10 percent reduction in hours and pay imposed on a majority of employees because of the recession — would return to full pay and 40-hour workweeks. Additionally, a range of employees would see pay increases based on "market" and "experience" adjustments while all employees would contribute slightly more for health insurance and medical expenses. Those changes would result in an additional $898,000 in employee salaries.
In context, the budget for employee wages and benefits (including other changes) would rise from $16,918,934 in 2013 to $18,017,995 in 2014. In a revenue stream dominated by sales tax, employee compensation for 258 full-time equivalent positions — including 216 benefited employees — would equal 96 percent of the $18,750,000 in projected sales tax revenue for 2014. While total city revenue is projected to be $45,000,000, some members of the council are concerned about the percentage of city revenue that would be directed to employee compensation.
The management team's argument for market increases is based on salary comparisons (adjusted for cost of living) with the Colorado cities of Breckenridge, Carbondale, Delta, Durango, Glenwood Springs, Golden, Grand Junction, Louisville, Vail and Wheat Ridge.
One question that will arise at Tuesday's council meeting is whether employee compensation should be based on market comparisons or employee turnover. At the meeting, the management team will present information on turnover and replacement costs.
In anticipation of that discussion, council candidate Scott Ford provided the council with information about public and private employee turnover rates for Routt County and the region. That data indicates the turnover rate for government workers is significantly lower than it is for the private workforce.
Of course, employee turnover is not merely a function of pay. Just like many low-crime, small communities, turnover in the police department may result from officers transferring to larger departments where there is more "action" and room for advancement. Similarly, in other city departments, employees seeking to further their career may seek opportunities outside of Steamboat.
And turnover is not inherently bad. A modest amount of turnover is healthy for any organization.
Whether the council decides to evaluate employee pay based on market comparison, turnover or both, the reality is salaries paid to city workers are not exorbitant. No one is getting rich working for the city and most aspects of the benefit package contribute to a level of compensation that is reasonable.
So just as proponents of higher pay shouldn't play salary leapfrog with other markets, those who think city workers are overcompensated shouldn't use comparisons to private sector wages and benefits that have been stagnant for more than 30 years.
What is out of line is the amount of paid time off city employees receive.
Starting in the first year, noncontinuous operations employees receive 174 hours per year of PTO plus 72 holiday hours. In years six, 11 and 16, PTO rises to 200, 224 and 240 hours per year, respectively.
Continuous operations employees (firefighters, police officers and bus drivers) do not receive holiday hours. However, they receive 260 hours of PTO per year starting the first year. In years six, 11 and 16, their PTO rises to 284, 308 and 324 hours per year, respectively.
Those hours translate to at least six weeks of paid time off for entry-level employees.
If the question before the council is how much is too much when it comes to city employee compensation, one thing is clear. When it comes to PTO, that much is too much.
To reach Rob Douglas, email rdouglas@SteamboatToday.com.