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ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION — SEPTEMBER 9, 2024 9 Councilmember Holden asked for confirmation that the current union contract will expire in January. Public Works Director and City Engineer Swearingen confirmed. He said negotiations have begun. Councilmember Monson noted the City hasn't done an analysis like this in several years. She believes the impact on the levy may be too big. She would like to understand what the levy impact would be if we come to market and move to above market over the next three years. She recognizes we are digging ourselves out of a hole and trying to be above average for a pay philosophy. She thinks the cost is too high to take on at one time. She would like to see what the cost of being at market and the costs of exceeding the market at 5% vs. 8% as outlined in the current option. She wants to understand what the scale of a change like that would be. Would it mean $20,000 or $100,000 difference? Tessia Melvin said she doesn't want to guess what that number might be. She said the most important question that should be answered tonight is the implementation of this. Will employees be placed at the closest step, by dollar amount, to what they are currently making or will they remain at the same step and receive that increase. She anticipates going from 8% to market, the cost will go down by a couple percent. Tessia Melvin said Council is saying they want to fix the grid immediately for hiring and retention. The implementation can be slowed down. She noted there are other ways to slow it down. Council could choose to do the COLA and everyone stays where they are. The rest could be implemented in July. She said she can keep giving different options but that is going to cause confusion. Her recommendation is to stay the course with the grid because people have seen it. If the grid starts changing, then people stop trusting the process. There are different ways to implement the changes to get to a more comfortable cost. If Council is saying that $124,000 is okay but $155,000 is too much, the implementation can be pushed to April or July or October. She can work with Finance Director Yang to come up with a scenario that keeps the budget impact at a certain dollar amount or percentage of levy impact. She has seen instances where initial discussions said one thing and Council lowered it. Employee morale goes down in those situations. The trust in the process can be lost. Councilmember Monson asked if changing from 8% above market to being at market, would change how the grid moves. Tessia Melvin confirmed. She said the grid is calibrated for 8%. Councilmember Holden said they did this three years ago and she said we are very close with only four positions below market. Tessia Melvin said the pay equity is done every three years. This is market analysis. Councilmember Holden understands but stated that is how we have adjusted the grid and COLA in the past. Sometimes it was 5% sometimes it was 3%. She thinks this option is too much money. She thinks if implementation is delayed until July, all we're doing is moving a bunch of money