Reform 4.1: Salary Freeze
Realize Savings from General Salary Freeze. Other Information:
As further explained in the long-term section of this Commitment, freezing payroll – particularly pensionable payroll – can
have a significant impact on the City’s annual pension payment. Recent experience has shown that the City can lower its annual
pension costs by holding the line on salary increases. However, as the Independent Budget Analyst (IBA) has noted, “For FY
2011, the pension system actuary…estimated the ARC reduction due to a one-year salary freeze to be approximately $8.6 million.
This is less than the FY 2010 estimation of $12.0 million. The reason for the differ ence is that the City is only freezing
general salary increases, and not the step increases that are received by classified personnel.” Recognizing the issue raised
by the IBA that is referenced above, we have also asked our actuary to estimate the impact of the pay freeze for the FY 2012
pension payment to account for the step increases that have occurred. Our General Fund estimate of the pay freeze impact is
a savings of $8.1 million from the baseline projection in the Five Year Outlook.
Indicator(s):
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