Item 7AITEM 7A
M E M O R A N D U M
March 30, 2022
TO: Shana K. Yelverton, City Manager
FROM: Stacey Black, Director of Human Resources
Sharen Jackson, Chief Financial Officer
SUBJECT: Approve Ordinance 1245A, Revising the Budget Figures for Fiscal Year
2022, Beginning October 1, 2021 and Terminating September 30, 2022.
Action
Requested: City Council approval of Ordinance No. 1245A, revising the budget
figures for Fiscal Year 2022, beginning October 1, 2021 and terminating
September 30, 2022.
The purpose of this item is to request City Council's consideration of a
budget amendment to provide for mid-year employer of choice
employee compensation adjustments. In addition, the budget
amendment will update the sales tax revenue to reflect current collection
and trends.
Background
Information: The City of Southlake is a service-oriented organization, with
approximately 70% of the general fund allocated to personnel costs. In
order to deliver exceptional service, one of the City's guiding budget
principles is to be an Employer of Choice to attract and retain top talent.
We do this by having a strong organizational culture focused on
employee experience and employee engagement, by offering a
comprehensive benefits package, and by providing a competitive, fair,
and equitable compensation program.
At the 2022 Winter Workshop, staff briefed City Council on the
challenges the organization is facing with retaining and recruiting talent.
As a result, Council directed staff to study the issue further and to make
a recommendation to specifically address employee compensation.
As discussed at the Winter Workshop, four external forces have begun
to impact the City's ability to attract and retain talent; they are as follows:
• The Great Resignation. The Great Resignation is a phenomenon
that describes the record number of people leaving their jobs. This
has impacted many employers, and Southlake is not immune. We
have seen our turnover rate increase, especially for regrettable
turnover.
Shana K. Yelverton, City Manager ITEM
March 30, 2022
Page 2
The City's full-time voluntary turnover rate year-to-date is 5.1% and
is projected to be around 15% for FY 2022. The five-year trend is
below:
Voluntary Full-time Employee Turnover:
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
11.6% 10.8% 13.2% 12.1% 5.1%*
*As of 2/28/2022
According to the Surviving the Great Resignation Report from the
Society of Human Resource Management (SHRM), 53% of workers
are leaving for better compensation and 42% for better work/life
balance.
In Southlake, exit interview data revealed that 59% of full-time
employees indicated they would recommend Southlake as a great
place to work, while only 38% indicated they believe their pay and
incentives were fair in comparison to the job market for people doing
similar work. In addition, dissatisfaction with compensation has
become a common theme in exit interviews.
• Competitive Labor Market. The labor market has become
increasingly competitive in the DFW Metroplex. The City currently
has 28 vacant full-time positions, and the time-to-fill average for
vacant positions is 123 days. The other factor is the limited number
of applications the City receives for vacancies. In the last five years,
the average number of applications per opening has dropped from
106 to 28 This has significantly impacted our ability to fill open
positions.
Average Number of Applications per Civilian Opening:
2018 2018 2020 2021
106 75 87 28
• Competitive Wages. The competitive labor market has driven
wages in both the public and private sectors. A review of market
data reveals that the City has already fallen behind its desired
market position, despite recently making market adjustments. At the
Winter Workshop, City Council directed staff to strive to pay public
safety at the 85th percentile and civilian positions at the 70th
percentile, in an attempt to stay ahead of the market.
Shana K. Yelverton, City Manager ITEM
March 30, 2022
Page 3
Current Market Position:
Public Safety Non-Exempt Exempt
-7.7% -5.6% -5.9%
• Consumer Price Index. The CPI has continued to increase, and
the average Dallas-Fort Worth CPI (excluding food/energy) in
January 2022 was 5.9% and continues to increase each reporting
period.
All of these factors have made it increasingly difficult to retain talent and
recruit high-quality candidates. In an effort to mitigate these challenges
and maintain strong service delivery, staff recommends implementing
mid-year compensation adjustments to address increasing market
wages and cost-of-living changes. This includes a 3.4% cost-of-living
adjustment for all employees and market adjustments as appropriate.
The average market increase for eligible employees is 2.3%.
In addition, staff recommends making changes to the compensation
system to right size for talent density. This includes creating a pay plan
specific to information technology positions, modifying the wage floors
for part-time and full-time non-exempt positions, modernizing job titles,
and making a number of changes to address talent density among staff.
Finally, staff conservatively projected sales tax revenue; however, the
year-to-date collections are trending higher than original projections.
Staff recommends amending the sales tax revenue to include the
additional revenue collections.
Financial
Considerations: The estimated general fund costs for the employer of choice
compensation adjustments are indicated below. In addition, the
estimated impact on salary-driven benefits is approximately $85,062.
FY 2022
Impact
Ongoing
Annual Impact
COLA Pay Adjustments $380,348 $760,697
Market Pay Adjustments $210,491 $420,982
System Adjustments $13,370 $26,741
Talent Density Adjustments $94,954 $189,908
Total: $699,164 $1,398,328
The proposed amendment increases general fund personnel
expenditures by $784,226 and sales tax revenue by $1,750,000
resulting in estimated ending fund balance of $11,978,236 (26.87%).
Shana K. Yelverton, City Manager ITEM
March 30, 2022
Page 4
Strategic Link:
• Focus Area: Performance Management and Service Delivery
• Corporate Objective: L3 Attract, develop, and retain a skilled
workforce
Citizen Input/
Board Review: N/A
Legal Review: N/A
Alternatives: Changes as may be desired by the City Council.
Deny the proposed amendment.
Supporting
Documents: Ordinance No. 1245A
Staff
Recommendation: City Council approval of Ordinance No. 1245A, revising the budget
figures for Fiscal Year 2022, beginning October 1, 2021, and terminating
September 30, 2022, and making appropriations for each department,
project, and account; repealing conflicting ordinances; providing a
savings and severability clause; and declaring an effective date.
CITY OF SOUTHLAKE
ORDINANCE NO. 1245A
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS, REVISING THE BUDGET FIGURES FOR
FISCAL YEAR 2022; BEGINNING OCTOBER 1, 2021, AND
TERMINATING SEPTEMBER 30, 2022, AND MAKING
APPROPRIATIONS FOR EACH DEPARTMENT, PROJECT, AND
ACCOUNT; REPEALING CONFLICTING ORDINANCES;
PROVIDING A SAVINGS AND SEVERABILITY CLAUSE; AND
DECLARING AN EFFECTIVE DATE.
WHEREAS, the City Manager has prepared a revision of certain figures in
the 2022 budget which was approved by City Council with Ordinance No. 1245 on
September 21, 2021, and submitted same to the City Council; and,
WHEREAS, a copy said amendment is attached hereto as Exhibit “A” and
incorporated herein for all purposes; and
WHEREAS, the City Council has studied the Budget Amendment and has
determined that the Budget Amendment attached hereto is in the best interest of
the city.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF SOUTHLAKE, TEXAS:
Section 1. That all the above premises are found to be true and correct
and are incorporated into the body of this Ordinance as if copied in their entirety.
Section 2. That the revised figures, prepared and submitted by the City
Manager for the 2022 budget, be, and the same are hereby, in all things, approved
and appropriated, and any necessary transfers between accounts and
departments are hereby authorized, approved, and appropriated.
Section 3. That the Budget Amendment attached hereto as Exhibit “A”
and incorporated herein for all purposes is adopted for the Fiscal Year beginning
October 1, 2021, and ending September 30, 2022; and there is hereby
appropriated from the funds indicated such projects, operations, activities,
purchases and other expenditures as proposed in the Budget Amendment.
Section 4. That the City Manager has determined that there are
necessary revenue and expenditure adjustments to those estimated in 2022
approved budget.
Section 5. That all ordinances, resolutions, rules, regulations, policies, or
provisions in conflict with the provisions of this Ordinance are hereby repealed and
rescinded to the extent of conflict herewith.
Section 6. If any section, article, paragraph, sentence, clause, phrase or
word in this Ordinance, or application thereto any person or circumstances is held
invalid or unconstitutional by a Court of competent jurisdiction, such holding shall
not affect the validity of the remaining portions of this Ordinance; and the City
Council hereby declares it would have passed such remaining portions of this
Ordinance despite such invalidity, which remaining portions shall remain in full
force and effect.
Section 7. That the necessity of adopting and approving a budget for the
fiscal year as required by the laws of the State of Texas requires that this
Ordinance shall take effect immediately from and after its passage, and it is
accordingly so ordained.
PASSED AND APPROVED on first reading this _____ day of
_________________, 2022.
__________________________
John Huffman, Mayor
ATTEST:
__________________________
Amy Shelley
City Secretary
PASSED AND APPROVED ON second reading this _____ day of
_________________, 2022.
__________________________
John Huffman, Mayor
ATTEST:
__________________________
Amy Shelley
City Secretary
APPROVED AS TO FORM:
__________________________
City Attorney
Date: _____________________
Adopted: __________________
Effective: ________________