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7 City of Mounds View Staff Report March 27, 1997 Page 2 0 Benefits offered to employees with no additional cost to the City include tax deferred compensation and flexible benefits programs. C. COMPENSATION PLAN AND STEP INCREASES In 1992 the City Council adopted the attached Compensation Policy. The Policy is divided in 3 sections addressing,the Five Step Compensation Plan,Annual Compen ation Adjustment; and Pay Equity. As outlined in Section I.A, Step 5 is equal to 100% of the mean of the DCA Stanton Group 5 cities and is adjusted annually. Although it is stated in the Compensation Policy as the City using Stanton 5 cities for salary figures and annual adjusting the Stanton mean, adjustments have not occurred since 1992, nor have Stanton 5 figures been used for salary reclassification information. (See attachment for 1996 Stanton Salary Comparison). Contingent upon satisfactory performance, step adjustments occur at six months after the employee's date of hire and on the employees anniversary date thereafter until the employee reaches Step 5. Position that have been reclassified follow the same step adjustment schedule. Step adjustments are approved by the Department Head, City Administrator and City Council. Please note this compensation policy is for non-union employees, therefore, step adjustments with unionized personnel are not presented to City Council. • D. PAY EQUITY/COMPARABLE WORTH Background Summary: In 1984, the State Legislature passed into law the Pay Equity Act. The law required that all units of local government establish equitable compensation relationships. A primary consideration in negotiating, establishing, recommending, and approving compensation is comparable work value in relationship to other employees positions within the political subdivisions." Compensation for positions bear"reasonable relationships"to one another if the compensation for positions which require comparable skills, effort,responsibility, working conditions, and other relevant work-related criteria is comparable. Every political subdivision shall use a job evaluation system in order to determine the comparable work value of the work performed by each class of its employees. The system must be maintained and updated to account for new employee classes and any changes in factors affecting the comparable work value of existing classes. Subsequent to the enactment of the law, Mounds View, together with approximately 105 other cities, entered into an agreement with Control Data to develop a system of determine equitable compensation relationship among position classes. The hierarch of the position values (or points) was a result of the 1985 study. Based on three things: positions values, compensation maximums and regression analysis, the first pay equity adjustments were made to Mounds View employees in 1987. • In 1989, Control Data sold the program software for the study to Personnel Decisions, Inc. (PDI). 1990 Pay Equity Amendment: The Pay Equity Act was amended by the Legislature in 1990.