Salary Analysis

OFFICE OF THE MAYOR C1T’i~L CITY AND COUNTY OF HONOLULU C ~ C C~-r;~:jj~ 530SOUTHKINGSTREETR00M300*HONOLULUHAWAII 96813 PHONE: (808) 768-4141 * FAX: (808) 768-4242 * INTERNET: www.honolulu.gov 2~12J~!~N3j/1~19:t~9 PETER B. CARLISLE DOUGLAS S. CHIN MAYOR MANAGING DIRECTOR CHRYSTN K. A. EADS DEPUTY MANAGING DIRECTOR January 17, 2012 Mr. David Akina, Chair and Members of the Salary Commission City and County of Honolulu ~ -o 530 S. King Street Honolulu, Hawaii 96813 t’Tl D Dear Chair Akina and Members: We are transmitting the attached report containing the administration’s comments regarding the disparity in pay between the department heads and their respective subordinates, whose salaries are set by collective bargaining and are higher than the head of their departments, per the 2011 Salary Commission’s recommendations. In addition, this report reiterates the commission’s responsibilities as stated in charter, the chronological history leading up to the establishment of the commission, a summation of past commission findings and recommendations, and last year’s (2011) salary discussions that led to the recommendation of this report. Should you wish, we will be happy to further elaborate and explain the information and recommendations provided herein. Thank you for your service. Very truly yours, Douglas S. Chin Managing Director Attachments MAYOR’S MESSAGE 11 Report to the 2012 Salary Commission January 2012 The Revised Charter ofthe City and County ofHonolulu 1973 (2000 Edition), Section 3- 122, provides for an independent salary commission empowered to establish the salaries of all elected officials, including the mayor, council members, and prosecuting attorney, and the following appointed officials: the managing director, deputy managing director, department heads, deputy department heads, and the band director. The commission shall also establish schedules for salaries of deputies ofthe corporation counsel and prosecuting attorney. In setting the salaries, the Salary Commission is responsible for ensuring accordance with the principles of adequate compensation for work performed, and preservation of a sensible relationship with the salaries of other city employees. Background 1977 Salaries of appointed officials and administration automatically increased in connection with increases that were negotiated pursuant to the collective bargaining process. Ordinance 77-90 stated that the salary ofall heads ofdepartments shall be 10% above the highest amount payable to an employee at SR-3 1 in the salary schedule applicable to City and County civil service employees. Similarly, the managing director was paid 10% above the highest paid department head, and the mayor was paid 10% above the managing director. This model insured that department heads always received higher wages than the highest civil service employee. 1982 City officials’ salaries began pulling ahead of state officials, so the state legislature approved salary increases for state officials and also enacted Act 129-82 (HRS Section 46-21.5) which: 1) Froze county salaries until the state salary levels could catch up 2) Prohibited any salary increases of certain public officers whose salary was directly or indirectly dependent upon the public sector’s collective bargaining process, and 3) Required counties to return to the state any salary increases made from grants-in-aid from the state if the previous two conditions were deemed invalid for any reason by a court. The affected counties filed a complaint for declaratory judgment (Civil No. 72604) in circuit court challenging the legislature’s decision. The circuit court ruled that it was an abrogation of home rule and that the decision of how to handle salaries of appointed officials should be the responsibility of the counties. Report to the 2012 Salary Commission January 17, 2012 Page 2 of 6 1983 Mayor Eileen Anderson submitted an executive salary ordinance proposal (Communication D-863) to establish an independent salary commission to review and establish the salaries of certain elective and appointive officials in the executive and legislative branch (not including council members) to eliminate the tie between executive salaries and collective bargaining increases. During the city council’s deliberations, the proposal for establishing the salaries of council members emerged in the form of Resolution 84-197; initiating a charter amendment to establish an independent salary commission to review and establish the salaries of the mayor, council members, the prosecuting attorney, and all appointed executive and legislative officials, including appointed officials in the board of water supply. The administration stated that issues surrounding the salaries of legislators and that of government officials and workers are inherently different and should be dealt with separately and that a charter amendment was not necessary. In the end, Resolution 84-197 was amended to remove all appointed executive and legislative officials from the scope ofthe resolution. 1984 The Hawai’i Supreme Court reversed the circuit court ruling and found the provisions of Act 129 to be constitutionally valid, as the state legislature claimed that salaries of public officials was a matter of statewide concern. In November of 1984, a charter amendment was approved by the majority ofelectors and amended by adding a new Section 3-123 to Chapter 1 of Article III which states in pertinent part: The salaries ofall elected officials including the mayor, councilmembers, and the prosecuting attorney, shall be established by an independent salary commission which shall consist of seven members. The mayor shall appoint three members; the council shall appoint three members; and the seventh member shall be appointed by the mayor and confirmed by the council. As the passage ofthe charter amendment only authorized the proposed commission to fix the salaries of all elected officials, the city council continued to set the salaries of all appointed city officials by ordinance. 1985 Ordinance No. 85-8 was enacted in response to Act 129 and to the growing sentiment that executive pay increases linked to civil service collective bargaining increases was no longer acceptable. Ordinance No. 85-8 required that executive pay be maintained at the levels ofsalaries in effect on April 1, 1984. Subsequently, the state legislature repealed HRS Section 46-21.5, thereby lifting the freeze on county executive salaries. Report to the 2012 Salary Commission January 17, 2012 Page 3 of6 1988 Ordinance 88-12 was passed. Instead of establishing the pay of appointed officials in relation to rates paid to civil service employees via collective bargaining, the new formula established the salaries of appointed officials in relation to the mayor. Accordingly, department heads were set at a ratio not to exceed 90% of the managing director (which was 95% ofMayor’s). 1989 The city council approved salary increases for appointed officials ranging from 8.2 percent and 8.5 percent; however, was restricted by Ordinance because the mayor’s salary compressed the ceilings forthe cabinet. 1992 With budgets tightening in the early 1990s, public testimony reflected opposition to salary increases. Because of this, the Charter Commission recognized the difficult position of the city council in having to address salaries due to the economic situation; so in 1992, the charter was amended to give the jurisdiction of setting salaries of the appointed officials (i.e. managing director, deputy managing director, department heads and their deputies, and certain other appointed officials) to the Salary Commission (Revised Charter of the City and County of Honolulu 1973 [1993 Edition] Section 3- 122). The Salary Commission as it currently exists was created. Since the first Salary Commission convened in 1985, the debate over the commission’s responsibility for the “preservation of a sensible relationship with the salaries of other city employees” arose. While it appears that many commission members and even city administrators believed that the pay of elected and appointed officials had to be raised in order to stay ahead ofthe collective bargaining civil service employees (which was the rationale for many of the salary increases granted by the Salary Commission), a few argued otherwise. Some felt that collective bargaining salaries were too high in relationship to their appointed department heads and elected officials (however, realized that public employees collective bargaining was established by state legislative action, and thus, only state legislative action could rectify the situation); others believed that it should be a privilege to serve the people and that most administrators who work for the city do not come for the salary. Mayor Jeremy Harris, who served as both a managing director and mayor, even expressed arguments for both sides. Despite often wanting to grant salary increases to keep up with the increases received by collective bargaining employees, the Salary Commission was often asked by the administration not to do so, due to fiscal constraints. Having to make such a difficult decision each year, the Salary Commission began looking for resolutions. At one point, commissioners proposed tying salaries of elected and appointed officials to collective bargaining negotiations; however, were Report to the 2012 Salary Commission January 17, 2012 Page 4 of6 reminded that that Salary Commission was established to function independently to avoid any aspects ofa conflict of interest. Later, it was proposed

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