Compensation Update

Office of Human Resources

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Board Presentation

August 10, 2015

PURPOSE

1. Provide an overview of the compensation study.

2. Provide the APS administration’s salary adjustment recommendations based upon the compensation study.

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SY 2015-16 Budget Amendment Administration’s Recommendation

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Align internal and external experience to steps/ranges on salary schedules for all employees.

Provide pay parity among all employee groups.

Ensure all employees are paid at market value.

Salary Adjustments($11 million)

Compensation Strategy

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We believe that a robust compensation strategy is essential to our success and a key component of moving our system forward.

Having “strong students, strong schools, strong staff and a strong system” requires that we continually develop, recognize and compensate staff by:

developing a classification and compensation program that is transparent and equitable;

implementing a compensation program that attracts, rewards and retains highly qualified employees;

ensuring that APS remains competitive in the market place; and

committing to fiscal responsibility and supporting the APS budgeting process.

Relevant Facts

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Objectives of Compensation Study

1. Conduct a full market salary analysis with comparable labor markets.

2. Evaluate the current salaries of all APS employees and make recommendations to establish proper salary placement, reduce compression issues and close the gap where inequities exist.

3. Provide strategies for implementation that include financial cost.

4. Analyze current jobs and update salary schedules to address internal equity and external competitiveness.

5. Recommend guidelines that govern classification and compensation for all APS employees.

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Compensation Study Consultant• The Management Advisory Group International, Inc. (MAG) was

selected through a procurement RFP process to conduct the compensation and classification study for a fee.

• MAG is a national, full service human resources consulting firm based in Woodbridge, Virginia with extensive experience in classification and compensation projects, job analysis and evaluation, personnel policy and human resource software.

• Principals of the firm have over 30 years of municipal consulting experience and have conducted over 500 similar studies in 24 states.

• MAG conducted similar compensation projects for:• Philadelphia School District• Fairfax County Public Schools• Memphis City Schools• Virginia Beach City Schools• Dallas Independent School District• Henry County Public School District – GA• DeKalb County Schools – GA

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Methodology of Compensation Study

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• Collected current District budget, personnel and organizational background information

• Developed, distributed, collected and analyzed Job Analysis Questionnaires

• Analyzed recommendations concerning the relative ranking of District positions to develop a classification plan that will ensure internal equity

• Gathered feedback from department supervisors

• Identified and selected comparable organizations for the market salary survey

• Identified classification benchmarks• Conducted and analyzed target market

salary/wage survey

Internal Equity

External Equity

• Proposed Salary Schedules

• Individual Salary Adjustment Calculations

• Organizational Cost Calculations

• Implementation Options/Costing

Outcomes

Market Analysis Methodology

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MAG developed a list of comparable organizations* to be surveyed. Upon District approval of the target list, the survey instrument and the benchmark classifications, MAG conducted the market survey and performed the technical analysis and evaluation.

Organizations typically included as targets in a salary survey are those that are:

competing with the district for employees, geographically situated in such a fashion as to almost

automatically be considered a competitor, structured similarly to the District or providing similar types of

services, attractive to highly valued District employees for one reason or

another, and within a reasonable commuting distance.* See Appendix A for list of identified comparable organizations.

Findings of Compensation Study

APS Market Competitiveness by Position Type:(% Above Market Value)

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4%10%

13%

Market Value Leadership Teachers* Non-Teaching

*See Appendices B and C for teacher market analysis details

Findings of Compensation Study

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1. The FY2015 percentage salary increases brought many teachers closer to the appropriate step, but also placed many teachers above the appropriate step.

2. Of the 3,185 teachers evaluated:• 148 are paid on the appropriate step,• 881 are paid above the appropriate step, and• 2,156 are below the appropriate step.

3. Of the 2,772 non-teaching employees* evaluated:• 1,792 are paid at or above market based on internal experience,• 267 are below minimum of the assigned pay grade, and• 713 are paid less than market based on internal experience.

*Non-Teaching employees include:401 Administrative/Leadership (14.4%)737 Non-Teaching Professionals (26.6%)1,634 Support Staff (59%)

Based on the current new-hire salary schedules:

Recommendations from Consultant

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“If dollars are available, the District should take steps to address the questions of internally equitable salary placement for every employee. The recommendations would accomplish the following:

• Bring about internal salary equity for employees;

• Greatly simplify the salary plan for internal administration;

• Provide a simple, easy to understand plan for employees;

• Freeze any salary that exceeds the range maximum;

• Simplify future adjustments to accommodate market changes.

These recommended changes provide a solid foundation for employee compensation that should serve the District and the employees well as they move into the future.”

-Management Advisory Group

Recommendations from Consultant

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Teachers

• Maintain current new hire salary schedule.

• Assign (increase) identified teachers to appropriate step.

• Freeze salaries that are above appropriate step.

Non-Teachers

• Adopt unified structure with open pay ranges (use minimum, midpoint, and maximum).

• Assign (increase) identified employees to minimum of pay range.

• Assign (increase) identified employees based on internal experience.

• Freeze salaries that exceed range maximum.

Compensation Governance

• Make annual adjustments in future years according to market changes.

• Adopt recommended best practices that govern classification and compensation.

• Utilize classification manager software as a tool to place employees properly on the salary schedule.

Local Administration Recommendations

Phase I - FY16

Revise compensation guidelines.

Adopt a teacher salary schedule.

Apply internal & external experience credit for teachers and assign to appropriate step on salary schedule. ($7.4M)

Adopt unified pay structure for non-teaching positions.*

Assign all non-teaching employees to minimum. ($851K)

Apply internal experience credit to non-teaching staff. ($2.5M)

*Non-Teachers include administrative/leadership, non-teaching professionals and support staff.

Phase II – FY17

Verify external experience for all school-based, non-teaching, and central office employees.*

Adjust salaries to reflect accurate external experience for identified employees. ($4M)

Implement 1% Cost of Living Adjustment (COLA) for all employees. ($4M)

*School-based employees include paraprofessionals, parent liaisons, school office support, counselors, principals, bus drivers, custodians, etc. *Central staff includes employees of CLL and other central office sites.

Phase III – FY18

Implement a Cost of Living Adjustment (COLA) and/or step increase for all employees.

Example:

3% COLA for all employees

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$11 million

Note: Cost estimates are based on May 2015 employee data and will vary over time.

$8 million $12 million

Timeline for Implementation

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August 6, 2015

Present budget amendment recommendation for salary adjustments to Budget Commission.

August 10, 2015

Present compensation update to Board of Education.

August 12, 2015

Communicate Board approved recommendations and timeline for implementation to all employees.

September 30, 2015

Determine and verify compensation impact for each employee.

October 9, 2015

HR will send all employees a FY16 compensation salary statement. Compensation will include salary adjustments resulting from the salary study, if applicable.

November 30, 2015

Employees with salary adjustments will begin receiving their new pay as well as retroactive pay to their FY16 start date.

Appendix A: Market Comparison Group

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1. Arlington Public Schools, VA2. Atlanta Public Schools3. Baltimore Public Schools, MD4. Charlotte–Mecklenburg Schools, NC5. City of Atlanta Government6. City of Birmingham Government, AL7. Clayton County Public Schools, GA8. Cobb County Schools, GA9. Columbus City Schools, OH10. DeKalb County Schools, GA11. Douglas County Schools, GA12. East Baton Rouge Parish Schools, LA13. Fulton County Government, GA

14. Fulton County Schools, GA15. Gwinnett County Schools, GA16. Henrico County Schools, VA17. Jefferson County Schools, KY18. Jefferson County Government, KY19. Knox County Schools, TN20. Lexington-Fayette Government, KY21. Nashville Public Schools, TN22. O*NET23. Orleans Parish Schools, LA24. Virginia Beach City Public Schools,

VA25. Wake County Government, NC

List of organizations identified by MAG consulting as the target market:

Appendix B: Target Market Analysis for Teachers

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Teacher Degree Level

Market Minimum

APS Minimum

Market Midpoint

APS Midpoint

Market Maximum

APS Maximum

Bachelors $39,113 $44,312 $49,978 $55,390 $60,844 $66,467

Masters $42,784 $48,743 $55,021 $60,929 $67,258 $73,114

Specialist $46,689 $53,617 $59,617 $67,022 $72,545 $80,426

Doctorate $50,358 $58,978 $64,170 $73,023 $77,981 $88,468

Average All Levels

$44,736 $51,413 $57,197 $64,266 $69,657 $77,119

Survey Avg. % Difference

12.9% Above

11% Above 9.7% Above

APS teacher salaries compared to target market:

Appendix C: Local District FY16 Salary Increases

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District FY16 Salary Increase Plan Cost

Fulton County Teachers (0-5 Years) = 4% IncreaseTeachers (6-20 Years) = 8% IncreaseTeachers (21-26 Years) = 4% IncreaseNon-Teachers = 3% Increase

$42.2 million

Gwinnett County All Employees = 2.5% IncreaseTeachers (steps 7-8) = Additional Increase

$30.4 million

Cobb County All employees = 4% Increase $28 million

Henry County All Employees = 5% Increase $11.4 million

DeKalb County Teachers (0-5 Years) = 3% IncreaseTeachers (6+) = 4% IncreaseNon-Teachers = 2% Increase

$28.2 million

Cherokee County All Employees Credited One Full Step $3.8 million

Appendix D: Non-Teaching Salary Adjustments Grouped by Division

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Division # Employees to Minimum

Cost to Minimum # Employees Internal experience

Cost for Internal Experience

Accountability & Info Systems 13 $92,161 22 $113,455

Audit, Internal 2 $6443 4 $13,662

Curriculum & Instruction 14 $58,836 49 $117,352

Deputy Superintendent 2 $8,082 6 $36,549

Finance 17 $86,388 34 $155,128

Human Resources 6 $21,124 13 $40,442

Legal Services 1 $1,454 2 $3,353

Operations 62 $92,089 152 $317,059

School, Alternative 2 $2,778 19 $30,417

Schools, Elementary 89 $252,027 254 $735,805

Schools, Middle 38 $67,980 61 $231,987

Schools, High School 19 $27,892 95 $387,412

Superintendent’s Office 2 $17,790 2 $4,609

Grand Total (with benefits) 267 $850,592 713 $2,531,053

Note: Estimates are based on May, 2015 employee data and will vary over time.

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74924%

65320%

71022%

48315%

59019%

Teachers by Years of Experience

0 - 5 Years 6 - 10 Years 11 - 15 Years

16 - 20 Years 21+ Years

81826%

1,45446%

70422%

2096%

Teachers by Degree Level

Bachelors Masters Specialist Doctorate

Appendix E: Teachers by Years of Experience and Degree Level