Proposed Cost of Living Increase for County Employees

24 Jul

Probably the single most significant budgetary decision made by any unit of government is about raises or cost of living adjustments for employees. Most government operating budgets are driven by personnel costs; personnel represent over 75% of the general fund budget of Monroe County Government, for example.

In principle, Monroe County Government’s compensation policy states that it will “consider” giving employees a cost of living increase each year, which has been traditionally defined by Monroe County Government as the December to December change in the Midwest Consumer Price Index (http://www.bls.gov/ro5/cpimid.htm). Unfortunately, revenue shortfalls have forced the county to fall short of this goal in most years. What this means in practice is that the wages of county employees erode each year against the forces of inflation.

The following table illustrates the cost of living adjustments and the actual CPI change for the past 5 budget years.

Year Cost of Living Raise CPI Change
2008 3% (*)

1.69%

2009 $1000 per FTE

3.80%

2010 None

-0.32%

2011 1.5%

3.02%

2012 None

1.78%

2013 Proposed: $1000 per FTE

2.82%

* In 2008, the County chose to start paying the employee’s own mandatory 3% contribution to their own Public Employees Retirement Fund (PERF) account, in lieu of a cost of living raise.

As part of another tradition (I have been unable to find this documented in any policy), the County has tried to alternate percentage-based cost of living adjustments with flat per-employee cost of living adjustments. The former has the effect of spreading out the distribution of salaries (i.e., highly compensated employees receive a larger pay increase than lower-compensated employees). A flat adjustment (say, $1000 per full-time employee) disproportionally benefits employees at the lower end of the pay scale. By alternating these two forms of compensation, the theory goes, the distribution of salaries remains relatively constant.

I am proposing for the FY2013 budget that County employees receive a flat $1000 raise, for full-time employees (part-time employees will receive a prorated increase). I will discuss the budgetary impact of this proposal in a future posting. However, the net effect is approximately equivalent to a 2.5% increase in overall salary. This is still less than the 2.82% increase in the actual cost of living (as measured by the CPI change from December-December) — but close. During these difficult economic times, this raise would boost the compensation of lower-paid employees by a higher percent. Any employee making less than $28,000 per year, for example, would receive a raise greater than the CPI change; employees making more than $28,000 per year would receive less.

Note that this is different from what the City of Bloomington is proposing for their 2013 budget. The City is proposing giving employees a one-time $1000 increase in their 2013 compensation — sort of a like a bonus — but not increasing their base pay for subsequent years. In comparison, I am proposing that the County give employees a true $1000 cost of living increase, that will adjust their base pay for subsequent years.

Advertisements

One Response to “Proposed Cost of Living Increase for County Employees”

Trackbacks/Pingbacks

  1. 2013 Income Tax Numbers Just In — Good News for Monroe County « in53 – MoCoGov - August 2, 2012

    […] This is obviously good news for local governments. Both the City of Bloomington and Monroe County Government are, at least on paper, running on a deficit budget and projecting budget deficits for 2013, spending down reserves to make up the difference (Monroe County will actually probably wind up in the black in 2012, or very close to it, though). This additional revenue should reduce these deficits, and make it less urgent to demand cuts from departments. In the county, I hope this makes it easier to give county employees a much-deserved cost of living increase for 2013. I have already written about my proposed 2013 cost of living increase here. […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: