To address widespread challenges recruiting and retaining city employees, the City and Borough of Juneau recently introduced a package of potential programs that aim to both attract more workers and retain them within the municipality for a longer period.
The package of proposals was introduced at the Wednesday evening Assembly Finance Committee meeting, and according to City Manager Rorie Watt, it’s a multifaceted approach to the widespread recruitment and retention issues the city is facing.
“We’re in a period where the state is doing less and at the municipal level we’re trying to figure out how to fill those gaps and do more,” Watt said. “We’re losing, we don’t have workers — it’s a real, real problem.”
The city considers implementing a bigger sign-on bonus
Information on a sign-on bonus was presented, and If OK’d, it would allow the city to offer up to a $40,000 sign-on bonus in exchange for a four-year commitment to CBJ.
The city already has a bonus program in place that offers up to a $10,000 bonus available to all prospective city employees along with a $25,000 sign-on bonus for paramedics hired with the Capital City Fire/Rescue for a five-year commitment. However, given the major gaps in vacant city positions, Watt said a more robust and flexible system is a growing necessity for the city and something he thinks will only become more intense if nothing is changed.
“I really think that now is the time to do something, I do not think this issue will improve over time,” Watt said. “At the end of the day, we don’t have any new candidates and we need to find a way to move that needle.”
The city anticipates the cost to implement the program and provide bonuses would be paid by lapsing personnel funds accrued due to current vacancies, according to a memo outlining the proposal.
Along with the four-year commitment bonus, the city is also considering a possible lesser bonus for employees in exchange for a two-year commitment. If an employee leaves their position before their time commitment, the city is considering a pay-back policy or looking at awarding the bonus once the commitment time is complete, though proposal details are still preliminary and up for change.
Assembly member Waahlaal Giidaak Barbara Blake expressed concern about the potential impact the program could have on already existing employees, and asked if there was a way to implement a retroactive system to address employees who committed to the city prior to this proposal being introduced.
Dallas Hargrave, CBJ Human Resources & Risk Management director, said though the idea of a retroactive program was considered by the city, he said it was decided against it in favor of a more “multifaceted approach” via the other benefits offered in the package.
“One thing we talked about in the leadership workgroup was retention bonuses, but in the end, some of the other things included, like retirement benefits, child care, are probably better things to be doing for funds to appeal to our current employees,” he said.
Assembly member Michelle Bonnet Hale said she commends the proposal and its creativity to address the retention issues she said are largely a problem due to the state’s 2006 legislation that made Alaska the second state to switch from its defined benefit plan, more commonly known as a pension plan, to a 401(k)-style defined contribution retirement plan for teachers and public employee.
The change allows employees in city positions to leave their positions and continue to maintain their defined contribution plan, instead of the previous plan which offered guaranteed retirement benefits for government employees with payouts that were considered an employee’s salary, age and length of service.
The switch — which was generally supported by Republican legislators and opposed by Democrats — was largely pushed by lawmakers who were concerned with the underfunding of the state’s previously defined benefit plan.
“It has felt like at the city level we have been in a trap from the former Legislatures’ making,” she said.
The Finance Committee gave the OK for the city to move forward with developing the bonus program, and according to Watt, it will likely be decided at an upcoming Assembly meeting, though a date is unclear.
Implementing a city match to its voluntary deferred compensation retirement plan
Watt said given the current retirement system for Tier IV employees, who according to a memo, are estimated to make up 80% of CBJ employees, the city introduced a potential plan to implement a deferred compensation retirement plan match specifically for Tier IV employees.
Unlike Tier I, II, or III employees, who have a retirement benefit that grows the longer an employee stays in the system, Tier IV employees’ retirement benefits are portable after five years, meaning after that time, they leave, taking their benefits with them.
According to Jeff Rogers, CBJ finance director, the concept of adding a city match to the already existing and voluntary 457 retirement savings account adds more of an incentive for Tier IV employees to participate in the system for at least five years to achieve the full benefits available to them.
“We are at the dawning of an epoch of gigging,” Rogers said, regarding the short span of time workers tend to stay with the city.
The match would be 50 cents to the dollar, and the percent matched would escalate starting at a 1% match to the employee’s voluntary 2% contribution during their first two years of employment, followed by an increase to a 2% match to the employee’s voluntary 4% contribution, and capping off at a 3% match to the employee’s voluntary 6% contribution.
“Tier IV is not enough to retire on,” Rogers said. “The concept of a match is there to encourage employees to participate. We want employees to retire comfortably.”
Roger’s said the escalating match is the city’s way to replicate the “hook” that Tier I, II, or III employees get for prolonged employment, and he said this program aims to keep workers for 5-10 years, a period many CBJ employees currently don’t make it to.
The cost to the city to implement the match program is estimated at around $500,000 per year — $400,00 of which pulled from general funds, $140,000 pulled from other funds such as user fees, cruise ship passenger fees and airport fees — based off an assumed 85% participation and 2.5% match by the city, according to the memo.
Assembly member Greg Smith expressed concern about the program not keeping people beyond the five years when they would meet their maximum match from the city. He also said he wonders if there is a way to offer a larger match to lower-earning employees who may be unable to afford to contribute to retirement plans even with the proposed city match.
The program was passed by the Finance Committee with no objection, and a more developed version of the program and its cost is expected to be built into the upcoming city budget, and if passed, will begin at the start of the fiscal year in July.
City considers annual $5000 contribution to voluntary employee Dependent Care Flexible Spending Account
The city is considering adding a contribution of up to $5,000 annually to each full-time CBJ employee that partakes in its Dependent Care Flexible Spending Account.
The FSA program — which is a pre-tax benefit account that can be used to pay for services such as child care or preschool — is already available for employees to partake in, however, it currently does not include an employer contribution and only a handful of employees participate, according to a city memo.
The added $5,000 contribution from the city would be a flat dollar amount regardless of the employee’s salary and is a “use it or lose it” contribution, meaning if not used the balance would be returned to the city.
If implemented, around 100 CBJ employees would qualify for the benefit, and if utilized by all who qualify, it would cost the city around $500,000 annually, pulled from general funds and other funds such as user fees, cruise ship passenger fees and airport fees.
The program was passed by the Finance Committee with no objection, and a more developed version of the program and its cost is expected to be built into the upcoming proposed budget, and if passed, will begin at the start of the fiscal year in July.
• Contact reporter Clarise Larson at firstname.lastname@example.org or (651)-528-1807. Follow her on Twitter at @clariselarson.