Elyria Finance Director warns of high cost of salary study recommendations

ELYRIA — As the Elyria City Council discussed the city's recently completed salary study, Elyria Finance Director Ted Pileski expressed concerns about the costs of some recommended changes. Council's Finance Committee took no action on the topic at its meeting Tuesday, instead tabling the discussion for two weeks, but Council members debated whether the city could afford the cost of recommended salary adjustments. The study was recently completed by Gallagher Benefit Services Inc. and recommended a significant overhaul of the city's pay structure for non-union positions, referred to as Chapter 165 employees. Gallagher's main finding was that the city should pare down and simplify its pay scales, going from 37 separate grades to just 16, and increase the pay of several positions to meet area market standards. Other government entities being studied were nearby, including Lakewood, North Ridgeville, Parma and Erie County. Human Resources Director Jean Yousefi told the committee on Tuesday that most of the Chapter 165 positions were relatively in line with the market, but Gallagher recommended the pay of a number of employees be increased to bring them more in line with those rates. These adjustments would be made by bumping employees up on their new 13-step pay scales, which run from step zero to step 12 with three percent increases at each step. The average pay increase from these adjustments would be about 6.6 percent for Chapter 165 employees, with nearly all of the increases falling between zero percent and 18.3 percent. One outlier Yousefi pointed out was the position of Fire Chief, which Gallagher found to be well below market rate and suggested a pay increase of 31.9 percent. All of these increases would cost the city about $490,000 more per year in total, but that number factors in only the salaries themselves, not pensions and other additional costs. The city currently spends about $7.6 million annually on Chapter 165 salaries. Pileski offered his "normal warning," cautioning Council against approving significant new expenses at a time in which the city is already spending more than it brings in. "There's the ideal world and the real world," Pileski said. "In the ideal world, everyone makes market salaries and moves up. The real world is that today the general fund cash balance is down $1,980,000 from the beginning of the year. To put that in other words, expenditures have exceeded revenues by $1.98 million in the general fund. So we are spending our stuff. If we continue on this path, eventually, the cash balance plus the revenues is not going to be enough to cover all our expenditures." Yousefi and other city officials noted the expense, but both argued that if Elyria was not close to market rate pay for key administrative positions, the city could struggle to retain and hire qualified candidates. "We are not talking about what somebody would make in New Albany, Upper Arlington or Dayton," Law Director Amanda Deery told members of Council. "We are talking Parma, Ridgeville, Erie County, I mean some of our people live there, they are commuting from there… I know it is not popular, and I don't envy you – I don't have to vote on it – but I think it is something that we are going to need to face sooner or later." The Gallagher study also recommended not basing raises for Chapter 165 employees on the raises given to Elyria's union employees, as the city has done in recent years, much to the chagrin of Councilwoman Mary Siwierka, D-3rd Ward, who championed the need for a salary study. "In the past… those adjustments to those raises have been made based on what the (American Federation of State, County and Municipal Employees) negotiated increase was," Yousefi said. "Which was never really the right way to do it, because it needs to be based on the market." The Gallagher study recommended that employees be bumped up one level on the 13-step pay scale every year and also receive a market adjustment on their pay grades as needed. Councilwoman Donna Mitchell, D-6th Ward, said that in light of the numbers that Pileski provided, she didn't think that the city should be considering a large initial raise and significant annual increases beyond that. "I just don't think that's wise at this time," Mitchell said. "... I did not come from this world, I've never worked for a government entity. I worked in corporate America, where you got raises based on your performance. If you did not do the job, you did not get a raise. If you did a good job and the company had the money, you got a raise. Not everybody got a raise just because you get a raise." Siwerka said she understood Mitchell's point, but that the raises Council had given out for Chapter 165 had been arbitrarily tied to union raises, and market rate increases would be more defensible and reasonable. Councilman and Finance Chair Phil Tollett, D-At-Large, tabled a committee vote for two weeks, asking Council members to reread the study and ask more questions, and asking Pileski and department heads to come up with more firm numbers for the committee to consider. This would place a possible committee vote on Monday, Oct. 27, which means the committee could still vote to make a recommendation which could go before Council as a whole at its Nov. 3 meeting, a day before the general election. Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.