Town Council Special Meeting Minutes Morehead City, North Carolina  Tuesday, March 12, 2024  The Honorable Council ofthe' Town ofMorehead City held a Special meeting on Tuesday, March 12, 2024, in the Council Chambers of City Hall located at 1100 Bridges Street, Morehead City, North Carolina. The purpose of this meeting was to discuss and consider findings of the  Classification and Compensation Study conducted by Baker Tilly.  COUNCIL PRESENT: STAFF PRESENT:  Mayor GeraldA.. Jones, Jr.; Councilmembers Richard. Abell, George Ballou, Lee Stiles, Bill Taylor, and Harvey Walker. City Manager Chris Turner, Finance Director/Assistant City Manager Jewel Lasater, Assistant Finance Director Leeann Vinson, Public Services Director/Assistant City Manager Daniel Williams, Public Information Officer Anna Smith, Planning Director Sandi Watkins, Human Resources Director Leesa Jensen, Human Resources Specialist Kristen Flexer, Parks and Recreation Director Jessica Mayo, Fire-EMS ChiefCourtney Wade, Police Chief Bryan Dixon, Deputy Police Chief September Tuttle, Police Sergeant Zach Maceo Donald of the Carteret County News-Times, Sarah Towne of Baker Tilly, and Julie Anderson, Town Manager of Pine Knoll  Leach, and City Clerk Cathy Campbell.  OTHERS PRESENT:  Shores.  Mayor Jones called the Special Meeting oft the Morehead City Town Council to order at  3:00 p.m. with a quorum present. Classification and Compensation Study  City Manager Chris' Turneri introduced Sarah' Towne of Baker' Tilly whol has workedc closely with staff over the last year to conduct the Classification and Compensation study and to prepare  the: recommendation.  Ms. Towne began with a review of the project timeline that included five (5) phases: market assessment, position review, development ofa a pay plan, implementation calculations, and update job descriptions. The study began with a data collection process which included position analysis questionnaires (PAQs) that gathered input from all city personnel. This information was used to clarify positions that formed the basis for the entire study. The Position Review followed that utilized Baker Tilly's"SAFE". point factor tool. SAFE stands for Systematic Analysis Factor Evaluation. This tool analyzed nine (9) compensable factors to establish the value and hierarchy ofp positions: education, experience, level ofwork, human interaction, physical demands, working conditions, independence of actions, impact on the organization, and supervision exercised.  Morehead City Town Council Special Meeting March 12,2 2024  1    City staff and Baker Tilly worked together to identify comparable and competitive peer organizations to use for the market assessment. These peer organizations look and work like Morehead City in regard to size (revenue, population served, or number of employees), service offerings, geography, and growth. Adjustments were: made to account for the differences in hours worked weekly (401 hrs., 53hrs. or 56 hrs. per week), fiscal year, and geographical differences. A geographical differential is applied to each that adjusts for differences in the labor rate, cost of living, and unemployment. For towns that did: not] have a Bureau ofLabor Statistics geographical marker listed, the marker for thei next closest town on thel list is used. In this case, Morehead City's marker was used for Atlantic Beach, Beaufort, and Carteret County. Ten (10) public peer  organizations and three (3) published surveys were selected:  Apex, NC Boone, NC Emerald Isle, NC Comp Analyst  Atlantic Beach, NC Carteret County, NC Greenville, NC  Beaufort, NC Craven County, NC New Bern, NC  Economic Research Institute Bureau ofLabor Statistics  Ms. Towne explained that they have ai rigorous quality control process fort their peer review that requires a match of at least three (3) data points and a 75% overlap in job duties. The comparison of peer organizations is based on the Cost ofLabor driven by supply and demand. A total of 90 positions were included in the market survey to serve as benchmark positions. Of those, three (3) had less than three (3) matches across the comparative data rendering them insufficient for peer comparison. Ms. Town stated, ini response to a question, that there are other comparable factors that can be used to classify the positions that lacked sufficient data.  A comparison was conducted oft the current midpoint salaries for the benchmark positions to that oft the midpoint salaries ofthe peer organizations. The study focused on the midpoint value because iti is commonly viewed ast the market rate. This showed that the City is 7.9%1 below: market at the minimum, 8.6% below market at the midpoint, and 9.5% below market at the maximum.  The City's salaries fell below the market across all salary points.  The number of salary grades was reduced to eliminate salary overlaps and each position was then assigned a salary grade based on existing equity (current grade), internal equity (job evaluation, and external results (market midpoints). Positions were adjusted with respect to career progressions, supervisor-subordimnate separation, and the City's future growth. Finally, the grade assignments were used to prepare implementation calculations across four (4) different scenarios  to assist in adopting ai new classification and compensation system.  The City currently utilizes three (3) pay structures: General, Fire-EMS, and Police Sworn. Ms. Towne: recommended the continuation ofthese three (3)pay structures. Currently, the General pay plan has 28 grade levels with a 56% range spread between the minimum and maximum pay levels and a 5% midpoint differential or distance between each grade level. It is recommended that the plan be amended to only 18 grade levels with a 40-50%1 range spread and a 6-10%1 midpoint differential that is tailored to each position within the grade. This ensures that the midpoint and  maximum salaries are as competitive as the minimum salaries.  Morehead City" Town Council Special Meeting March 12,2 2024  2    The current Fire-EMS pay structure includes 15 grade levels with a consistent 56% range spread and varying midpoint differentials, which may be an attempt to distinguish between the position weights within the grade. Iti is recommended that the Fire-EMS plan be reduced to 11 grade levels with a 40-50% range spread and continuation ofthe varyingr midpoint differentials. It is also recommended that the minimum wage for Firefighter-EMT be increased from $16.18 per  hour to $20.53 per hour.  The current Police Sworn pay structure has eight (8) grade levels with a consistent 56% range spread and varying midpoint differentials. Once a new. hire is qualified as al Police Officer, they are offered a 10-13% increase in rank. Itis proposed that the City continue the Police Sworn pay structure with eight (8) grade levels, a 40-50% range spread, and varying midpoint differentials. The starting minimum wage for a Police Officer would increase to $25.23 per hour,  up: from $21.48 per hour.  Four (4) implementation scenarios were presented:  Option #1 Employees below the minimum would move to the minimum. Employees with current Option #2 Employees below the minimum would move to the minimum or receive a 2%  salaries within the proposed range would retain their existing salary.  adjustment (whichever is greater), capped at the maximum of their pay range. Employees with current salaries higher than the calculation would retain their existing  salary.  Option #3 Employees below the minimum would move to the minimum or receive a 2%  adjustment (whichever: is greater), plus all employees would receive a 0.5% adjustment multiplied by their years in the position, capped at 15 years. Employees with current salaries higher than the calculation would retain their existing salary.  Option #4 Employees below the minimum would move to the minimum or receive a 2%  adjustment (whicheveri is greater), plus all employees would receivea 1.0% adjustment for each year in their position, capped at 15 years. Employees with current salaries Ms. Town completed her report, stating that the Project Completion phase would include training to ensure the Classification and Compensation System will be maintained over time and updated job descriptions. It was noted that a small number of positions should be reviewed annually but another full review should not be needed for another five (5) to seven (7) years.  higher than the calculation would retain their existing salary.  Annual merit increases help advance employees through the system.  At this time, Mr. Turner distributed a chart showing the cost of each option for the remainder of the current fiscal year. Ifimplemented, no Cost ofLiving Adjustment (COLA) or  salary increases will be included in the FY2024-2025 budget.  Morehead City Town Council Special Meeting March 12, 2024  3    Councilmember Ballou questioned why it was recommended to implement the plan now in advance of the upcoming budget. Mr. Turner stated that increases are needed now to combat the difficulty experienced in recruiting and retaining premier employees. It will define Morehead  City as employer of choice.  Mr. Turner: recommended adoption of Option #3 at the cost of $425,403 for FY2023-2024 and $1.5M for FY2024-2025. He then distributed budget amendments for each option reflecting the funding sources. Option #3 would be funded for the remainder of FY2023-2024, utilizing invested earnings. No budget amendment was provided: for Option #4, which: included: a 1% value for each year of service, because Mr. Turner did not think it was sustainable. A COLA could be discussed again during years three (3), four (4), and five (5) of the study. He stated that the only reason for a COLA increase is to adjust salaries to the market, and this is accomplished by the  Study.  Councilmember Ballou was concerned with implementing the study mid-year before seeing the full budget for the upcoming year. Ms. Towne reminded the Town Council that the  plan is just bringing staff up to the minimum salary for their position.  Councilmember Taylor pointed out that the plan will cost the same amount next year, and implementing it now softens the impact. Finance Director/Assistant City Manager Jewel Lasater advised that she can cover the salaries for the upcoming budget year without imposing a tax increase to cover this expense. Councimember Abell pointed out that the County and all towns are experiencing the same problem, and qualified applicants are going to go to the agency paying  the highest starting salary.  Councilmember Taylor made ai motion to approve the recommended Classification and Compensation Study Option # 3 and to amend the Morehead City Pay Plan as presented. Councilmember Walker seconded the: motion and the motion was carried unanimously. (5-0) Councilmember Ballou asked for an explanation of the budget amendment. Ms. Lasater explained that interest earnings are higher than projected due to increased interest rates and the budget amendment transfers these increased earnings from the General Fund ($170,000), the Capital Project Fund ($180,170), the Water & Sewer Fund ($73,929), and the Solid Waste Fund  ($1,304) to fund the salary increases.  Councilmember Taylor made a motion to adopt Budget Ordinance Amendment 2024- 07 and Governmental Capital 2024-08 in support of the Classification and Compensation Study as presented. Councilmember Walker seconded the motion, and the motion was carried  unanimously. (5-0)  In closing, Mr. Turner thanked Ms. Towne for her assistance, and Pine Knoll Shores Town  Manager Julie Anderson for attending the meeting.  ADJOURNMENT  Morehead City Town Council Special Meeting March 12, 2024  4    There being no other business to discuss,  meeting at 4:06 p.m.  Attest:  CIT  FE  CeCapoat  Cathy Campbell, Elty Clerk  1858  Morehead City" Town Council Special Meeting March 12, 2024  5