City Manager Rob Jensen: City proactive in controlling labor costs

Updated February 27, 2017

What does it take to deliver an excellent quality of life in a community? Good policies and great people.

Both have proven instrumental to Roseville’s ranking as one of the best places in the nation across a range of categories, including for safety, health, young families, entrepreneurs, and even being playful.

While our staff is passionate about delivering high-quality services that make Roseville the great community it is, the cost to provide services continues to escalate. As with any service provider, our highest cost is labor.  Given this reality, I’m particularly thankful that the City’s labor groups and employees have been an integral part of the solution to managing labor costs. The changes we’ve made together still allow the City of Roseville to attract and retain competent, dedicated people to serve our community.

Affording our commitments

With fiscal soundness one of the Council’s top goals, the City started working several years ago on ways to ensure we live within our means. It’s an important undertaking given that labor-related costs account for almost 75 percent of the City’s $141 million General Fund, which pays for a variety of services including fire, police, parks, recreation, library, and public works.

Controlling costs

Ensuring consistency among labor groups within our workforce and developing strategies to contain costs have been key focus areas. In partnership with our labor groups, we took proactive steps, which included:

  • Capping liability for retiree health benefits: A defined-contribution plan is offered to new employees instead of the defined-benefit plan that previously existed. This means that employees, along with the City, contribute to saving for their retiree-medical benefits; and that the City’s cost associated with the defined-benefit plan will eventually be zero.
  • Setting salary-level targets at median levels in labor-market comparison: Salary schedules for new employees have been reduced up to 21 percent in some cases to reflect median salaries in the labor market, instead of upper-end levels.
  • Reducing the rate of increases within each salary range: The previous pay scales allowed for 5 percent increases between each step in a salary range. Now, new employees are eligible for increases no greater than 2.5 percent between each step in the range. This extends the time it takes to reach the highest level in the pay range, which can now be up to 15 years; slowing the growth rate of this expense.

Long-term outlook

The good news from a fiscal standpoint is that with approximately 35 percent of the City’s workforce eligible to retire in the next five years, the benefit of many of these cost-saving measures will be realized sooner than later.

However, budget challenges remain:

The growth of sales tax and property tax—the two primary sources of revenue for the City’s General Fund—have significantly slowed, yet expenses including labor, materials, and supplies continue to rise. A downturn in the economy could create more challenges for us as we strive to live within our means.

Combined with that, the findings of several recent performance audits have shown that although our current staff is highly efficient, the continuation of existing staffing levels with the increased workloads the City faces is unfeasible and that additional staff would be needed to maintain our service levels.

Tough choices are in front of us as we balance controlling costs with providing services. At its recent Goals Workshop, the City Council directed staff to engage the community to determine what services the City should be providing and what levels of service should be provided.

From a financial perspective, we’ll also need to consider what we can afford.  We will embark on this effort this year to find the right balance that addresses problems, opportunities, and priorities.

As your city manager, I greatly appreciate our labor groups’ willingness to partner to address the fiscal challenges we continue to face as a city. Our employees are dedicated, hard-working, and truly care about our citizens.  As we work with the community to understand where to focus our efforts and our budget, we remain committed to delivering high-quality services in a cost-effective manner. It’s the core of what we do.

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