Austin’s two top police officers are bound for 4 percent raises as the first step by the Austin City Council to ensure city employees are being paid equitable wages for their duties and responsibilities.

The Austin City Council voted unanimously at Wednesday night’s annual retreat to raise Police Chief Brian Krueger and Capt. Dave McKichan’s salaries by 4 percent.

Krueger brought data to staff and the council showing how Austin’s wages were trailing comparable cities with Krueger making $105,010 to the average $111,484 in Albert Lea, Winona, Owatonna and Faribault, while McKichan was making $89,378 compared to the average $94,123 in those cities.

Council member Steve King said the City Council was unaware the wages were falling behind to that level, but it was something that required quick action.

“Now that it’s been brought to our attention and it’s that glaring, I think to do nothing is irresponsible,” King said.

But those two wages are just a part of a bigger issue the city is now looking to address. The council also voted unanimously Wednesday to move ahead with a compensation and classification study of all employee salaries, duties and roles, a process that could take eight months to a year.

The city also voted to direct Human Resources Director Tricia Wiechmann to immediately begin looking at the wages of eight non-union employees to address those more quickly. The effort is all part of a plan to ensure the Austin city employees are being paid equitably and, therefore, won’t leave for better pay in other communities.

The council actions at the retreat must receive final approval at the next regular council meeting at 5:30 p.m. Monday in the council chambers of City Hall.

Overdue?

Discussions surrounding a compensation and classification study are nothing new for the City Council; in fact, the cost of a study has been budgeted in the city’s capital improvement plan for a few years.

However, the council had previously opted not to move ahead on the study. Early in Wednesday’s discussions, Council member Jeff Austin said he was against the compensation study, which city staff estimate would cost $25,000 to $30,000 to complete and would then likely lead to hefty pay increases for employees with lagging salaries.

Early in discussions, he favored looking at the salaries of non-union employees while continuing to negotiate salaries with union employees. City unions negotiate salaries, and some units have two or three years remaining on their contracts, while others haven’t yet reached new deals.

“We can address a lot of those without having to do the study,” Austin said.

But the rest of the council favored completing the study, and the votes were eventually unanimous.

“I think it’s the responsible thing to do,” Council member Janet Anderson said of a study.

The city hasn’t done a large-scale compensation study since the early 1990s, though Wiechmann said the city has done some patchwork to look into some issues of the years as new positions were created or changed.

The issue is not as simple as just comparing the pay of one position to a comparable one in another community.

City Administrator Craig Clark argued the city needs to know where it stands before addressing employee wage issues. The compensation study doesn’t just address wages, it also looks at job duties, responsibilities and other factors — many of which vary drastically in different cities.

While Clark said the city will surely face market pressures with employees, he said it’s important to have the tools and knowledge to know how the positions, responsibilities and pay compare. Clark said once one employee’s wage is increased, others will likely come forward with similar concerns.

“That internal consistency is very important,” Clark said. “That has implications for morale because, lord knows in the public sector, everybody knows what everybody else is paid.”

Director of Administrative Services Tom Dankert traced some of the need for the study back to Clark’s hiring in 2014. Clark’s predecessor made about $109,000 a year in 2013, but the council — following a consultant’s recommendation — upped the position’s salary during the hiring search before paying Clark $124,000 to start and then upping his pay to $128,000.

Dankert noted the city administrator’s pay traditionally sets the bar as the top city salary, while other employees are still being paid based on the prior administrator’s pay.

A costly correction

Dankert called the need for a compensation study long overdue, but he cautioned it will require a significant new revenue, depending on how the city decides to right the wages of underpaid employees.

Mower County is in the midst of a compensation study and budgeted $325,000 to implement the study — meaning it would cost that to bring underpaid employee wages up to par.

If the city’s implementation costs a similar $300,000, staff pay increases make for a change of $600,000 or more in one year when coupled with cost of living increases negotiated into union contracts — if the the city implements the plan all at one time.

But Council member Judy Enright and others favored implementing the wage increases in steps over the course of at least two to three years.

But Dankert said the council could easily be looking at a far heftier price when coupled with cost of living increases — and that’s without factoring in any other increases for the years it’s implemented

“I just need to make sure council’s prepared; if you’re approving this, you’re also saying, ‘We’re willing to have increased revenue,’” Dankert said.

Unless the city sees significant increases to local government aid as the increases are implemented, the other main source of revenue is city taxes.

“This is going to be a huge increase,” Dankert said.

Cities aren’t legally required to implement the findings — or raise the pay of underpaid employees — of the study; however, Dankert and other city officials noted it’s almost unheard of to do a study and then not make changes.

“When you do a comp study, sorry, you’re going to have to implement it,” Dankert said.

Pay now or pay later

Despite hefty costs, the decision came down to a choice of paying now or paying later.

While council members acknowledged the hefty wage increases that will stem from a compensation study, they also noted they could face similar challenges from losing employees to better paying jobs.

Austin’s lead building official just left to be a building inspector in Olmsted County, where he’ll make more money with fewer responsibilities in a lower position.

While city leaders acknowledged Austin can’t compete with Olmsted County’s wages and size, the study should give them the tools to try and stay competitive and retain workers.

Krueger outlined how he was making more than $6,000 less than the average pay in Albert Lea, Winona and Faribault, while McKichan was making about $4,700 less than the average, according to public records.

“As you can see, in every single category, both myself and the captain are lagging quite a bit behind,” he said.

King argued it was the council’s responsibility to correct the shortfall.

“For some reason, we’re falling way behind the curve,” King said.

Wiechmann noted that several of the other cities Krueger and McKichan’s pay were compared to have already completed compensation studies.

“Then shame on us for not doing it,” King said.

King argued that Austin has held a hard line on taxes for many years, and is ranked low compared to other cities. However, he argued the city could soon be at risk of losing more employees to neighboring communities.

If the city were to lose someone like Krueger or McKichan to a neighboring community, he questioned what it would cost in resources, job training, relationship building and other intangibles.

Council member Laura Helle agreed, arguing the study will be costly, but the alternative is worse.

“It’s a hefty price tag, but this is an investment that we’re making so that 20 years from now were can continue to wring out every tax dollar as efficiently as possible,” she said. “If we don’t invest in our people and pay them what they’re worth, we’re not going to continue to do so. I think the city is very efficient. I think we’re very lean, but we won’t do that if we don’t start looking at pay equity.”

Dankert noted that a compensation study does little good for someone like Krueger, who is closer to retirement than other employees, since it would take up to a year to complete.

When asked, Dankert recommended the council correct their salaries now.

“In my opinion, you need to fix it,” he said. “You need to do the right thing.”

After increasing Krueger’s salary 4 percent to about $109,200 and McKichan’s salary to $92,900, the council opted to look at the other eight non-union employee’s salaries as a matter of fairness.

Enright argued the city should do more to consider performance and skill over simple seniority, and Dankert later noted that some people are working hard and going above and beyond but still get the same increases as everyone else.

Clark argued it’s important to have some recognition of merit in these equations as well.