Alderman questions upper management salaries

By Scott Aust, Journal staff | Thursday, September 04, 2008

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Rapid City's finance officer, growth development director and civic center general manager will make more than South Dakota Gov. Mike Rounds next year, thanks to a budgeted 7.5 percent salary increase, the latest in a series of annual increases given to top city officials.

The increases began in 2002, and were designed to make the city's entire wage scale more competitive with other communities across the country. Seventy-two employees in the top six pay grades are scheduled to receive 7.5 percent raises in the 2009 budget.

Both Finance Officer Jim Preston and Growth Management Director Marcia Elkins are scheduled to make $128,731 in 2009, and Rushmore Plaza Civic Center General Manager Brian Maliske is slated to earn $119,537, all three higher than Rounds' pay of $115,331.

"Our finance officer and planning director are the sixth and seventh highest paid officials in the state," said city councilor Sam Kooiker. "And there are a number of other city officials that are higher than the state supreme court and other state officials, including the governor."

If the scheduled 2009 raises are approved by city council, the salaries for many city department heads will have increased by over 40% since 2005, namely the airport director (56%), city attorney (52%), parks and recreation director (52%), and library director (45%). (Airport director Mason Short left his position earlier this month and so the budgeted salary of $103,084 for that position may change).

Kooiker said the city could be headed for trouble if it doesn't take a closer look at the salaries it offers.

"I believe if you looked around the country, you would not find virtually any entity, public or private, with the exception perhaps of oil companies, that are able to afford 7.5 percent pay increases," Kooiker said.

The city's pay matrix includes 27 grades. Each grade is essentially a range of pay that includes 18, 2.5 percent steps in each grade. Rapid City has budgeted 7.5 percent pay increases next year for 72 employees at grades 22 and above, generally people in managerial roles or those with specialized professional backgrounds such as attorneys or engineers.

The increases are the fourth and final year of raises for those pay grades called for by a Condrey and Associates salary study authorized by the city council in 2001 for all pay grades within the city.

Employees at grades 21 and below received the full amount of the Condrey study increases over the first four years of implementing the plan.

Condrey compared Rapid City's pay scale to other governmental entities and some private sector businesses across the country. At the time, Rapid City was having trouble attracting and retaining employees, particularly police officers and people with technical and management skills. 

The council in 2002 decided it would be too expensive - roughly $1.6 million -- to implement the entire plan at once. Instead, the city gave employees at grades 21 and under the entire increase spread over four years and delayed implementing increases for grades 22 and above until 2006, again spread over four years for full implementation.

Kooiker isn't proposing canceling the upcoming final year of raises, but he does think the city should postpone 5 percent of the increase until 2010, a move that would save roughly $233,700 next year.

"Clearly, at a time of a slowing economy, it is hard to defend the concept of 7.5 percent pay increases," he said. "We've already done several large pay increases for grades 22 and above."

Kooiker said other units of government in the state are not increasing salaries as much as Rapid City, so he felt it was important to show people that Rapid City has some of the highest paid officials in the state.

Mayor Alan Hanks said either freezing salaries or delaying implementation of the last year of Condrey are bad ideas, both because of the impact on employee morale and the impact on union negotiations next year. The city council made a commitment to its employees in 2002 that the salary study would be fully implemented. To cut it one year short would show the council is not willing to fulfill its commitment, according to Hanks.

Though none of the employees at grade 22 and above are union employees, Hanks worries that the city's five unions would find it difficult to trust the city's word if it backs out on its previous promises to employees.

"In essence what you're doing is short changing. If you want to spread it out, it still means you're not following through," Hanks said. "We've had eight years to implement the plan. When we go back into negotiations, how tough is it going to be from the city side to negotiate with the unions and even retain good employees if we're not willing to follow through?"

Alderman Bill Okrepkie said the council should not rule out postponing the last year of the study because 7.5 percent is a significant increase.

"We should look at it and see if it's a fiscally responsible thing to do," he said.

But Alderman Malcom Chapman is not interested in changing the pay matrix. He said the city should manage tax dollars in a responsible manner, but it also needs to offer a fair wage to employees.

"It's hard enough to bring in quality, professional people to some of these jobs where we need technical expertise. All we need to do is cut salaries for those people we're trying to attract to Rapid City to decide not to come," Chapman said.

Hanks said after 2009, the city's entire pay scale will finally be "caught up" when compared to other communities, and will be at the "mid-point" level somewhere in the middle of all scales. Hanks said Kooiker's analysis was focused on the city's 11 department directors, but there are 63 non-director employees who would also be affected.

"I don't quite understand the rationale. Other than trying to make a political statement, I don't understand why you would do it," Hanks said. "Yes, they are making a good salary, but the reason some of them may look high is some have 20 years of experience."

Elkins, who has more than 27 years of experience as a planner, declined to comment on her salary, but Maliske, who was appointed civic center general manager in 2001, said he believes his salary is competitive with managers of similarly sized venues.

"I am paid comparatively with my peers, based on my level of experience," he said. "I'm happy with my salary. I feel I'm paid fairly and I appreciate working for the city. It's been a good job and I enjoy it."

Maliske notes it's difficult to find fair comparisons when talking about his job noting that Sioux Falls only has an arena, for example, but when the new multi-purpose arena is completed, Maliske will oversee operation of two arenas, a convention center and theatre.

Hanks indicated government salaries are an easy target, but they pale in comparison to similar positions in the private sector. He also wanted to make it clear that the mayor has no flexibility when it comes to salaries. Wages are determined by salary negotiations and established by council resolution.

Hanks himself does not get an automatic increase; it is set annually by the council. Hanks said he followed the direction the council set in place in 2002 when he included the salary increases in the proposed budget.

"I don't have the ability to tweak salaries up or down," Hanks said.

Kooiker bristled at the suggestion of a political motivation designed to score points benefiting any future ambitions. He called it an unfair question and said politics did not factor into bringing up the raises.

"I don't want to end up in the same boat as the school district. No one should be offended by me or anyone else asking whether it's appropriate to give 7.5 percent increases when we have such a tight budget," he said. "I don't know how much support there is on the council to make a change, but I think it's important, when we're talking about raising property taxes, for people to know we're giving out 7.5 percent pay increases."

The council is still discussing the 2009 budget, and has until Oct. 1 to give final approval. But during an Aug. 21 work session, the council rejected Kooiker's proposal to delay pay raises until 2010.

Check below for the salary schedule for various Rapid City officials from 2000 through 2009.

Contact Scott Aust at 394-8415, or scott.aust@rapidcityjournal.com