03-03-26 City Council Meeting Packet

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STAFF REPORT DATE: March 3, 2026 TO: Mayor and Councilmembers FROM: Jennifer Doyle, Administrative Services Director AGENDA ITEM: Class and Compensation Update CORE STRATEGIES: ☐ Vibrant, inclusive, connected community ☒ Responsive, transparent, adaptive governance ☐ Managed Growth ☒ Efficient, reliable, innovative services ☐ Balanced Finances now and future ☐ Resilient Infrastructure BACKGROUND: The City of Lake Elmo’s compensation plan’s main objectives are to provide its employees with equitable compensation and financial incentives, to the extent permitted by law, to promote the attainment of the highest levels of performance and organizational contribution. The plan is a key factor in the City’s ability to attract, retain, and motivate well-qualified individuals to participate in the achievement of its objectives. This plan states the City will evaluate the plan on a yearly basis. The last time the City of Lake Elmo had a complete classification and compensation study was in 2022 and was completed by Baker Tilly. ISSUE BEFORE COUNCIL: Should the City Council authorize a classification and compensation update for all positions within the organization? PROPOSAL DETAILS/ANALYSIS: The project would evaluate positions within the current SAFE structure set up by Baker Tilly as well as review position wages to ensure we align with market. Baker Tilly, the organization that conducted our last Class and Comp study in 2022, did not respond when we reached out to discuss a proposal to conduct a market study. Staff reached out to three entities to provide a proposal not to do a complete salary restructure but rather work with our current SAFE structure set up by Baker Tilly to do a compensation update. We requested a market study to evaluate our grade levels and positions within those grade levels to ensure positions are aligned within the appropriate grade level and are competitive with the current market so we can continue to meet the objectives of our Compensation Plan. Please note the SAFE structure set up by Baker Tilly will be used as the framework for this year’s project, but the City will most likely need to move to a new structure with a future project to be best supported. We met with all three entities to discuss the proposals and felt Flaherty & Hood best aligned with the scope we presented them. They were familiar with and willing to work with our current SAFE structure which allowed for a reasonable cost proposal. They also conduct Pay Equity tests to ensure compliance with the State’s mandatory reporting. We have worked with Flaherty & Hood most recently to review our Public Works Operators and Lead compensation structure in 2025.