FY2018 Recommended Budget

adjustment will not increase existing employee salaries unless they fall below the adjusted beginning pay range, and will have a minimal budgetary impact.

Employee turnover continues to trend upward for a variety of reasons, but in part is driven by a more favorable economy and latitude to move to higher paying jobs within the same job market. A comprehensive review of pay ranges and actual market salary comparisons was conducted for all benchmark positions (i.e., those comparable to other municipalities) in the Town of Morrisville’s pay plan. Most positions were reviewed. General observations are that as the town’s population has grown to above 25,000, for some positions, particularly skilled and technical jobs, the town’s pay ranges remain reasonable, but actual salaries are comparably lower than in the peer group. This can occur when turnover results in newly hired employees commanding higher salaries than tenured employees who started at a lower salary and for which market salaries have increased faster than actual pay. For public safety positions, the comparative analysis is more detailed and complex due to levels, steps and incentives that are common in peer city compensation strategies that do not exist in the Town of Morrisville, and require additional in-depth study to formulate conclusions and recommendations. A more comprehensive report of this evaluation will be provided to Town Council independent of the annual operating budget. The proposed operating budget includes some funds to make essential adjustments, where necessary, to retain employees that are vulnerable to loss due to market conditions, as well as those whose actual salaries may be notably below market. This recommendation is not a vehicle for comprehensive salary adjustment for all employees, but a method to maintain the strength of our experienced and skilled workforce. Total funds requested to support the merit and market pay proposals and related payroll costs is approximately $429,900. Part-time pay plan rates were adjusted for Fiscal Year 2017 to assist with recruitment and retention of those employees, and no changes are necessary in Fiscal Year 2018. The part-time employee merit pay plan and related performance evaluation process was also reviewed during Fiscal Year 2017. The performance evaluation and merit pay plan were previously established to accomplish recruitment and retention goals, but have not resulted in substantial improvement in retention goals. Recommendations for changes include eliminating merit pay adjustments for seasonal employees, those working less than a specific number of hours, and those with limited tenure. These recommendations are not expected to have significant impact on the budget.

Other Employee Benefits

In January 2016, the Local Government Employees Retirement System (LGERS) Board made several decisions regarding the local retirement system. The LGERS Board adopted an Employer Contribution Rate Stabilization Policy . Following adoption of that policy, the Board set LGERS employer contribution rates for the next 5 years in accordance with the policy.

The Fiscal Year 2018 employee contribution is 7.5% for general employees and 8.25% for law enforcement officers (LEOs). These rates will both increase by 0.25% annually through FY2020-21. The death benefit contribution – which is 0.50% for general employees and 0.14% for law enforcement officers – will be in addition to these rates. Adoption of this policy and these contribution rates is expected to allow for predictability and stability in the contribution rates, while maintaining the North Carolina local retirement system’s position as one of the best-funded systems in the country.

Additionally, Morrisville continues to contribute annually 5.35% of gross wages for both General/Fire employees and LEO employees toward the liability created when Morrisville bought into the retirement system July 1, 2003. The Local Government Employees Retirement System (LGERS) liability pay-off is projected to be complete by June 30, 2018 and will not impact future year budgets.

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