Kodiak council members tell staff to pursue plan raising city pay to market average

Kodiak City Council members told staff at a work session Wednesday, without a vote, to move forward on a consultant's plan to reset city pay ranges to the market average. The consultant put the first-year cost at about $303,000, before benefits and scheduled step raises.

The plan comes from a classification and compensation study by McGrath Human Resources Group. As Alaska News reported Oct. 30, the study found starting pay for 79% of city job classifications lags the market. Consultant Malena Halverson-Mays told the council "the vast majority of your positions is under market" and recommended the city target the 50th percentile of comparable employers' pay now, moving toward the 60th percentile later.

Halverson-Mays described fast turnover: "49% of your employees have less than 2 years with the city. Okay, that means that you have had a tremendous turnover rate." Her firm did not survey employees on why they leave, and the report says compensation "is not the sole driver" of turnover.

The city now uses 15 steps, with raises that start at 2.5% and drop to 2%. Halverson-Mays said employees take too long to reach market pay and leave. Her plan uses 10 steps of 3.5% each, with market pay at the fourth step, which a new hire should reach within two years.

Option 1 would move each employee to the nearest step in a new pay grade, with no pay cuts. Raises would range from 0% to 35%, averaging 5.13%. Halverson-Mays recommended starting before the next budget cycle. Option 2 would add about $210,000 to move longer-tenured workers further up their ranges so they do not land beside new hires. She called the roughly $513,000 combined total "your base number" and warned, "It's gonna go bigger."

Council Member Djuna Davidson called the cost worth it: "These high levels of turnover and, and these long drawn-out hiring processes only harm us." She said the council must still decide how to absorb the cost, choosing Option 1, Option 2 or "something in between." Council Member Charles Davidson said the city has trained fire and police employees who then left.

Mayor Terry Haines said the city falls behind the market between every pay study. A 2013 classification and compensation study found city salaries 9% below the market's 50th percentile. Halverson-Mays said that without annual cost-of-living adjustments, pay ranges will fall behind again within two years. Her final report recommends a full market update about every three years.

Interim City Manager Tim Putney said employees first saw the presentation Wednesday morning. Halverson-Mays told the council to expect that employees will not be satisfied. Department directors meet next Thursday to collect employee feedback. Revised personnel rules, approved by ordinance, will return to the council.