CR 2003-004 Approve Increase In Non-Union Wages
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March 4, 2003
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Council Report 2003-004
APPROVE INCREASE IN NON-UNION WAGES
Proposed Action
Staffrecommends that the Council approve the following motion: Move approval of a 1.5% increase in
the cuncnt non-union wage schedule effective January L 2003 and a 1.5% increase effective June 29,
2003.
Overview
The proposed salary adjustment calls for a 1.5% wage increase cffective January 1, 2003 and a 1.5%
wage increase effective June 29, 2003. There is no proposed increase for insurance due to the fact that
the cost of health insurance will go down in 2003. The City switched health care providers from Medica
to Health Pa11ners which resulted in better rates.
The proposed increase is $17,000 below the amount budgeted for 2003.
Primal-V Issues to Consider
. . How does this agreement fit in with the 2003 budget?
. How does this agreement compare to other contract settlements for 2003 in lenns of wage and
benefit increases?
. Should wage increases be given when the City is facing possible cuts in state aid?
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Steve Mielke
City Manager
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I financial Impact: $ $40,600
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! Related Documents (eIP, ERP, etc.):
Notes:
Budgeted: YIN
Yes
Source:
Genera! Fund
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Council Report 2003-004
Page 2
Analysis of the Issues
How docs this agreement fit in with the 2003 budget?
The City budgeted 3.0% for cost of living adjustments. There is a savings of approximately $17,000
by phasing in the increase.
How does this agreement compare to other contract settlements for 2003 in temlS of wage and benefit
increases?
Settlements for other cities have generally been in the range 0[3 to 3.5%.
Should wage increases be given when the City is facing possible cuts in state aid?
It appcars certain the State of Minnesota will cut the City's local govenunent aid. At this time,
however, the extent of the cut is unknown. Should the City attempt to impose a wage freeze in
anticipation of these cuts?
If the City were successful in imposing a wage freeze on all employees, there would be a savings of
approximately $185,000 in the 2003 budget. A wage freeze, however, is difficult to obtain and has
consequences on morale, as well as recmitment and retention of employees.
Three of the City's five bargaining units have the ability to request binding arbitration in the event
that a wage settlement cannot be arrived at. An arbitrator has the authority to grant any increase that
he or she thinks is appropriate. Arbitrators tend to look at the market as well as the ability of the city
to afford the settlement. The other two bargaining units have the ability to strike.
Even if the arbitrators were to grant no increase to the unions, and the City was therefore sLlccessful
in freezing the wages of most or all of the employees for 2003, the City could find itself at a
competitive disadvantage when trying to hire new employees and retain current employees.
Alternatives
1. Approve the wage adjustment.
2. Do not approve the wage adjustment.
Staff recommends Altemative #1.