Reform 5.7: Step Increases
Reform How Step Increases Are Provided. Other Information:
Under Personal Regulations of the civil service system at the City of San Diego, nearly 2,000 salary increases are granted
each year, as “merit,” or “step” increases. Some of these increases are triggered by service time rendered by a City employee
at a particular position. For example, Personnel Regulations outline that “[e]xcept as otherwise provided in current Management
policies or current ratified memoranda of understanding, full-time salaried employees are considered for normal one-step increases
upon completion of” various amounts of service time5. Summary statistics regarding these salary increases for the past two
fiscal years and through October 5th of FY 2011 are provided in the table below. As the table on the left shows, the longevity-based
“merit” or “step” increases have cost the City approximately $5.5 million annually (citywide) over the past two fiscal years8.
This is important to note because while the City has not provided general salary increases in its recent labor contracts,
payroll has still increased due to these merit increases. In upcoming labor negotiations, the City could propose to suspend
these step increases in an effort to obtain a true, or “hard” pay freeze. However, the City’s ability to impose a step increase
suspension in the event that its labor unions do not agree to such terms is more legally complex because of potential issues
and requirements of the City Charter. As a result, we do not score any savings from suspension of step increases into our
solutions. However, we do recommend that addressing these automatic pay raises be included as part of the City’s long-term
strategy for resolving its structural deficit. As a long-term goal, Charter Section 130 should be amended to ensure the City
can control its entire payroll, which is an important method the City has to control annual pension costs. Compensation Reductions
Common in Private Sector As part of our solution to the FY 2012 budget deficit and the solution to the long-term pension crisis,
the Roadmap to Recovery proposes to make some reductions in city employee compensation – ranging from a reduction of 5% for
some employees to as much as 8.5%. According the National Bureau of Economic Research, in December 2007 the United States
economy entered one of its largest and longest recessions in recent history. The affects of the recession permeated nearly
every industry and region in the country, including San Diego. Since 2007, San Diego County has experienced business closures,
rising unemployment, and falling wages. The following presents a snapshot of how this recent recession has impacted San Diego's
private economy. Reductions in Employment9 Between March 2007 and March 2010, private employment in the San Diego County shrank
from 1,095,301 to 1,004,005, a reduction of 91,296 jobs (8.34% of all private jobs in the County). A large portion of these
job losses came during the period corresponding to the City's FY 2009 (July 2008 – June 2009). During this period private
employment in San Diego County shrank by 77,764 jobs (7.04% of all private jobs). In January 2010, employment in San Diego
County totaled only 997,279, the lowest total during any month since January 2001, despite a 4.58%10 increase in the County's
population over this period. Average Private Sector Wages Decreased by 13.39%11 Total wages paid by the private sector decreased
by $1.83 million or 13.39% between the first quarter of 2007 and the first quarter of 2010. Wages paid in the first quarter
of 2010 were the lowest total wages of any corresponding period during the past decade.12 While total annual private wages
in 2009 were at their lowest since 2003. Average annual private wages per employee were $48,5805 in 2007. By 2009, annual
private wages per employee dropped $557 (1.15%) to $48,023.
Indicator(s):
|
