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OFFICE OF THE COUNTY MANAGER Mailing Address: P.O. Box 218, Minden, NV 89423 PATRICK CATES County Manager JENIFER DAVIDSON Assistant County Manager 1594 Esmeralda Avenue Minden, Nevada 89423 [PHONE REDACTED] STAFF REPORT To: Patrick Cates, County Manager From: Jenifer Davidson, Assistant County Manager Wendy Lang, Director of Human Resources Terri Willoughby, Chief Financial Officer Subject: Update Moss Adams Risk Assessment Trends in recruitment, retention, and compensation in Douglas County Date: March 15, 2022 PURPOSE: Douglas County values its employees and works to develop a workforce that serves and is valued by County citizens. To attract and retain high-quality public servants dedicated to providing exceptional service and building community confidence, it is important for the County to periodically assess the human capital needs of the organization and evaluate the County’s compensation philosophy to ensure it is aligned with the organization’s strategic objectives. These objectives include investing in County staff and building talent from within, reinforced through a performance evaluation and compensation system that is tied to strategic goals and is fiscally sustainable1. Pursuant to Douglas County Administrative Policy and Procedure 200.11 Compensation, the Human Resources Director is responsible for the continuous maintenance and administration of the Compensation/Classification Plan (the Plan) for the County. As part of this responsibility, the Director is required to review and analyze prevailing rates of pay for similar positions in comparable labor markets by conducting wage and salary surveys. On the basis of this information, the Director will recommend to the County Manager changes to keep the Plan current, uniform, and equitable. Such recommendations will be reviewed and approved or modified by the County Manager and submitted to the Board of County Commissioners for consideration. This report is provided in accordance with County Policy 200.11. It contains updated market data regarding rates of compensation in the region, a discussion regarding the status of human capital and resource related needs and risks for the organization first identified in a 2019 Risk Assessment, and an overview of trends in recruitment and retention. It includes recommendations to address key challenges this organization is currently facing in light of changing conditions in the economy and public and private sector employment. HISTORY OF COMPENSATION IN DOUGLAS COUNTY SINCE 2015 2015 County completed the Pontifex Classification and Compensation Study and began a phased-in implementation of a new pay plan over two years. Employees with a pay rate below the bottom of the updated pay ranges were moved to the bottom of the range. No other adjustments within the ranges were made. As part of the implementation, the County agreed to cover the full cost of the PERS increase. Merit increases that had been frozen in 2011 were partially returned (up to 4% rather than the contractual 1 Source: Douglas County Strategic Plan 89 ---PAGE BREAK--- 2 Towards the end of the fiscal year, it was determined sufficient budget existed for an additional 1% lump sum one-time payment to employees. July 2016- Employees received a 1.5% increase in pay on their anniversary. July 2017- County unfroze salaries and implemented a revised merit system of 0-3% tied to performance. In addition, the County approved a 0-2% cost of living adjustment (COLA) annually beginning in 2017. July 2019- Cost of PERS increase of 1.25% split resulting in .625% decrease in pay and pay range. July 2021- Cost of PERS increase of split resulting in .25% decrease in pay and pay range. Since its adoption in 2015, the Douglas County pay plan has increased 9.125%. This includes two PERS adjustments during this time, where the County split the cost of the PERS increase with the employees by adjusting the pay ranges downward by the equivalent negative percentage. Following the planned 2% COLA for fiscal year 2022-23, the County pay ranges will have increased by 11.125% since adoption. Table 1, Summary of Pay Plan Adjustments Since 2015 Fiscal Year Douglas Approved COLA Douglas PERS Adjustments Douglas County Pay Plan Adjustments Carson City Pay Plan Adjustments Lyon County Pay Plan Adjustments 22/23 2 0 2 2 4 21/22 2 -0.25 1.75 2.75 2 20/21 2 0 2 1.75 2 19/20 2 0 2 1.75 2 18/19 2 -0.625 1.375 1.75 1.5 17/18 2 0 2 1.75 1 16/17 0 0 0 1.75 0 15/16 0 0 0 0 0 Total 12 -0.875 11.125 13.5 12.5 Figure 1, Summary of Pay Plan Adjustments Since 2015 90 ---PAGE BREAK--- 3 For comparison, the Carson City pay plan, which was adopted through labor negotiations in 2015, increased the salary ranges each year by 1.75% through fiscal year 2020-21 for a total increase of 10.5%. Carson City then finalized the current labor contract with the general employees in December 2021, implemented a 1% COLA on January 1, 2022, and approved 2% COLA each July thereafter, beginning in July 2022 for the term of the agreement. Carson City covers PERS increases up to 1.5% and splits the increase equally for any amount beyond 1.5%. In total by July 2022, the Carson City pay ranges will have increased by 13.5% since their pay plan was adopted. After undergoing a compensation and classification study in late 2016, Lyon County implemented a revised pay plan in 2017 and approved a total of 8.5% increases total since implementation. The County covers the full cost of PERS increases. In addition, Lyon County recently approved a 4% COLA effective July 2022. In total by July 2022, the Lyon County pay ranges will have increased by 12.5% since their pay plan was adopted. NATIONAL & REGIONAL TRENDS IN COMPENSATION IN PRIVATE & PUBLIC SECTORS The “Employer Costs for Employee Compensation” survey is produced by the Bureau of Labor Statistics of the U.S. Department of Labor to show employer’s average hourly costs for compensation and its components. Tables 2a and 2b compare the average employer cost for employee compensation, not including benefits, by occupational group, between 2014 and 2021, for private sector employers and State and Local Government. Since 2014 the employer cost for compensation for all private employers increased an average of 36%, while the employer costs for state and local government employers increased an average of 54%. Table 2a, Employer Cost of Employee Compensation for the Private Sector Private Sector Employers Cost Compensation 2014 Cost Compensation 2021 % Increase All Private Employers $19.41 $26.36 36% - Professionals $32.16 $39.94 24% - Office & Administrative Support $15.65 $19.87 27% - Service Occupations $10.32 $14.44 40% Table 2b, Employer Cost of Employee Compensation for State and Local Government State & Local Government Employers Cost Compensation 2014 Cost Compensation 2021 % Increase All State & Local Government Employers $21.98 $33.76 54% - Professionals $33.96 $40.93 21% - Office & Administrative Support $16.54 $21.78 32% - Service Occupations $10.81 $23.10 114% December 16, 2021 91 ---PAGE BREAK--- 4 The most recent job classification and compensation study, completed in 2015, used salary data gathered at the tail end of the recession when wages were frozen, and positions were eliminated due to lost and declining revenue sources. Nearly seven years later, the economy and the employment market have experienced significant changes which have impacted the County’s ability to attract and retain quality employees. A State and Local Government Workforce Survey2 of human resource professionals from 288 state and local government organizations was conducted by the Mission Square Research Institute (formerly the Center for State and Local Government Excellence) in 2021. The survey “tracks key challenges facing state and local governments in the recruitment and retention of talented employees and the strategies being employed to manage and compensate those staff” (Mission Square Research Institute, 2021, p. According to the survey, respondents reported some positions are becoming increasingly more challenging to recruit and retain due to increased market demand and limited supply for particular skill sets. More than half of respondents indicated positions in health care, corrections, policing, skilled trades, and engineering are particularly difficult to recruit given current market conditions. Figure 2 is taken from this survey; it shows which positions were reported to be the most difficult to recruit for by respondents. Douglas County’s experience is similar to those reported in the survey. In particular, the County is experiencing challenges related to the recruitment of accounting, recreation, planning, engineering, policing, legal counsel, information technology, emergency communications, and public works positions. These findings are not surprising given current conditions in the labor market. In response to increased inflation, changing economic conditions, and changes in service delivery models due to COVID-19, private sector employers offered more flexible workplace policies and higher salaries to meet market demand. Public sector employers have taken similar steps to offer flexible workplace practices such as remote working, but may not be able to keep up with private sector wage increases in some industries due to existing pay structures and budgetary constraints. 82% of respondents rated offering a competitive compensation package as a high priority for their organization with 30% indicating they would complete a job classification and compensation study in the near future (Mission Square Research Institute, 2021). For the Northern Nevada region, in particular, private sector employers indicate the labor market is facing “tremendous wage pressure3” with more jobs available, then there are applicants to fill positions. A review of recruitments in July 2021 of the Reno-Sparks area revealed approximately 25,000 job openings with 9,000 people on unemployment. From January 2021 to July 2021, Reno has seen a “28% increase in unique competitive job postings in the Reno market, and an 8% increase in the median salary” (Northern Nevada Business Weekly, July 2021). As employers began to reopen vacant positions from the pandemic and ramp up services previously impacted or eliminated by shutdowns, they have had to streamline the hiring process to meet operational needs as quickly as possible. Staffing agencies in Reno and Sparks report some employers have even gone as far to eliminate background checks just to fill positions (Northern Nevada Business Weekly, July 2021). On average, it takes Douglas County 60-80 days to recruit a position and make a job offer once a 2Source: “State and Local Government Workforce Survey” Mission Square Research Institute. May 2021. Accessed Feb. 2022 3 Source: “Reno staffing agencies: ‘Market faces tremendous wage pressure'” Northern Nevada Business Weekly. Jul. 2021. Accessed Feb. 2022 tremendous-wag/ 92 ---PAGE BREAK--- 5 background check is completed compared to 24 days on average across all employment sectors4 as reported in 2017. It is the County’s experience that wages reported to be below the average for the market for many positions coupled with recruitments that average 12 weeks have contributed to declining interest in County positions since 2019. Figure 2, Difficult to Recruit and Fill Positions for Public Sector Employers (Mission Square Research Institute, 2021) 4 Source: “How Long Does It Take to Hire?” Glassdoor Economic Research Blog. Aug. 2017. Accessed Feb. 2019 . 93 ---PAGE BREAK--- 6 In addition, wage pressure is resulting in increases in compensation costs in the private sector at a rate not seen since 2001. In January 2022, the Bureau of Labor Statistics reported “the 12-month Employment Cost Index (ECI) in the fourth quarter (Q4) of 2021 rose to 4.0% (Figure the highest growth rate since Q4 2001, although it still lagged inflation, which reached 6.7% over the same period. Behind this high average trend lies an unusually high degree of variation among occupational groups. In particular, private sector service occupations (whose compensation tends to be very low) have received the highest percentage increases in compensation. By contrast, regional variation is within the normal range.”5 The report indicated public sector compensation cost increases were 2.6% for the same quarter and that “worker’s real earnings lost ground, particularly in the public sector” due to inflation. The Bureau indicated the compensation cost increases in both the public and private sector can be mostly attributed to increases in wages and salaries at rates also not seen since 2001. Figure 3, Employment Cost Index for Total Compensation (Chart 1, from Bureau of Labor Statistics) Finally, due to recent changes from the 2019 legislative cycle, in the State of Nevada, minimum wage in private employment will increase by 26%, to $12 per hour without benefits and $11 per hour with benefits, by July 1, 2024. The $0.75 annual incremental increases to the rate began July 1, 2021, and are currently $9.75 and $8.75 per hour, respectively. The County’s lowest pay grade (A1) starts at $9.30 per hour, with the next highest grade (A2, i.e. Recreation Leader) starting at $14.31. As many of these lower paid positions are part-time and not eligible for qualifying benefits, the County is competing with wages below or close to the mandatory minimums set for private sector employers. While pay grade A2 does 5 Source: “Commentary on the Employment Cost Index” Bureau of Labor Statistics. Jan 2022. Accessed Feb. 2022 quarter/i 94 ---PAGE BREAK--- 7 begin above the minimum wage, the qualifications and skills required for these positions are significantly higher than entry-level, minimum wage positions. UPDATED MARKET COMPENSATION DATA SPECIFIC TO NORTHERN NEVADA Salary ranges help employers control pay related expenses and, in part, ensure internal pay equity. To assist the County with establishing the pay ranges that exist in the current pay plan, the County underwent a classification and compensation study beginning in 2014 by an independent third party, Pontifex Consulting Group. As part of that process positions were classified into pay grades based on skill, level of responsibility, and span of control. Once established, Pontifex compared the hourly rates at the minimum, maximum, and midpoint of the salary ranges for Douglas to those set for similar positions in the region. Jobs were matched based on content, responsibilities, level, and qualifications and not on title alone. For this reason, the titles in the market will not necessarily be the same titles as at the County. Classification of positions, benefits, and supplemental compensation practices were not considered. Reviewing compensation data in this context helps organizations to evaluate their current pay practices to determine if rates of pay are competitive for the industry and region. For the 2015 study, Pontifex Consulting Group compared Douglas County to the following Northern Nevada Area Public Sector Employers: Northern Nevada Area Public Sector Employer Survey Participants Carson City Churchill County Lyon County – including Western Nevada Regional Youth Center City of Reno City of Sparks Washoe County In January 2022, staff completed a compensation survey of the same Northern Nevada Area Public Sector Employers. Table 3a shows the percent difference between Douglas County and the public-sector organizations surveyed overall for different rates of compensation. Table 3b shows the percent difference between Douglas County and the public-sector organizations surveyed by employee groups for the minimum, midpoint, and maximum salary ranges. A sampling of positions within varying pay grades across the organization is provided in Table 4 to demonstrate this data in real dollar values. Minimum, Maximum, and Midpoint of the Salary Ranges The minimum salary range rate represents the minimum rate of pay that an employer will pay for a job/skill set. This is usually understood to be where the organization would set the pay rate for an incumbent who has the minimal level of education and experience. Douglas County Policy 200.11 requires all employees to be hired at the minimum of the pay range, with minimal latitude provided to the appointing authority for consideration of skills and experience beyond entry-level. The midpoint of the salary range represents the midpoint of the range of pay that an employer will pay for a job/skill set. This is usually understood to be where the incumbent is expected to fall in the range after many years in the position. The maximum salary range rate represents the maximum rate of pay that an employer will pay for a job/skill set. This is usually understood to be where an experienced incumbent is expected to fall in the range after a significant number of years in the position. 95 ---PAGE BREAK--- 8 Table 3a, Overall Percentage Difference in Rates of Compensation for Douglas County vs. Northern Nevada Public Sector Employer Survey Participants County as a Percent of Northern Nevada Public Sector - Minimum County as a Percent of Northern Nevada Public Sector - Midpoint County as a Percent of Northern Nevada Public Sector - Maximum -15% Table 3b, Percentage Difference at the Minimum, Midpoint, and Maximum Salary Range Rate for Douglas County vs. Northern Nevada Public Sector Employer Survey Participants PAY GRADE HOURLY MIN HOURLY MID HOURLY MAX Administrative/Unskilled -20% -15% -12% Senior Leadership -18% -13% -10% Juvenile Justice -17% Legal 1% 3% Managers -25% -20% -17% Professionals -11% Public Safety -18% Supervisors -10% Technicians -13% Table 4, Hourly Rate Difference at the Minimum, Midpoint, and Maximum Salary Range Rate for Douglas County vs. Northern Nevada Public Sector Employers, Sample Pay Grades Douglas County Market Average County as % of Market PAY GRADE MIN MID MAX MIN MID MAX MIN MID MAX A2 i.e. Recreation Leader $14.31 $17.89 $21.47 $17.58 $20.95 $24.38 -23% -17% -14% A4 i.e. Emergency Communications $19.49 $24.36 $29.22 $21.13 $25.37 $29.70 PS2 i.e. Deputy Sheriff II $22.87 $28.58 $34.31 $26.85 $31.69 $36.90 -17% -11% T3 i.e. Utility Systems Technician Senior $24.47 $30.58 $36.70 $27.10 $31.61 $36.19 -11% 1% P2 i.e. Accountant Senior $27.37 $34.21 $41.07 $31.32 $36.73 $42.36 -14% M2 i.e. IT Manager, County Engineer $38.26 $47.83 $57.39 $41.16 $48.52 $56.10 2% D2 i.e. Chief Financial Officer $45.97 $57.47 $68.97 $56.39 $67.97 $79.80 -23% -18% -16% Compensation Compared to Lyon County and Carson City Only When compared to Lyon County and Carson City alone on average overall, the County’s rates of compensation more closely align. Table 5a shows the percent difference between Douglas County and Lyon County and Carson City overall for different rates of compensation. Table 5b shows the percent difference between Douglas County and the public-sector organizations surveyed by employee groups for the minimum, midpoint, and maximum salary ranges. A sampling of positions within varying pay grades across the organization is provided in Table 6 to demonstrate this data in real dollar values. 96 ---PAGE BREAK--- 9 Table 5a, Overall Percentage Difference in Rates of Compensation for Douglas County vs. Lyon County and Carson City County compared to Lyon County & Carson City - Minimum County compared to Lyon County & Carson City - Midpoint County compared to Lyon County & Carson City - Maximum Table 5b, Percentage Difference at the Minimum, Midpoint, and Maximum Salary Range Rate for Douglas County vs. Lyon County and Carson City PAY GRADE HOURLY MIN HOURLY MID HOURLY MAX Administrative/Unskilled -16% -19% -21% Senior Leadership 0% Juvenile Justice 11% 15% 16% Legal 9% 12% 14% Managers 0% 0% Professionals 1% 2% Public Safety 2% Supervisors 4% 5% 5% Technicians 1% 2% 3% Table 6, Hourly Rate Difference at the Minimum, Midpoint, and Maximum Salary Range Rate for Douglas County vs. Lyon County and Carson City, Sample Pay Grades Douglas County Carson/Lyon Average County as % of Market PAY GRADE MIN MID MAX MIN MID MAX MIN MID MAX A2 i.e. Recreation Leader $14.31 $17.89 $21.47 $16.07 $20.48 $24.89 -12% -14% -16% A4 i.e. Emergency Communications $19.49 $24.36 $29.22 $18.88 $23.79 $28.76 3% 2% 2% PS2 i.e. Deputy Sheriff II $22.87 $28.58 $34.31 $26.06 $30.20 $34.48 -14% 0% T3 i.e. Utility Systems Technician Senior $24.47 $30.58 $36.70 $23.83 $27.70 $31.56 3% 9% 14% P2 i.e. Accountant Senior $27.37 $34.21 $41.07 $29.01 $35.25 $41.67 M2 i.e. IT Manager, County Engineer $38.26 $47.83 $57.39 $36.01 $43.50 $50.99 6% 9% 11% D2 i.e. Chief Financial Officer $45.97 $57.47 $68.97 $47.89 $60.89 $74.04 Based on this information and the approved increases to the pay plans for Douglas County, Carson City, and Lyon County, staff estimate the County’s rates of compensation overall will average between 5-15% below the public sector market in the region for minimum rates of pay, 3-9% below for midpoint rates of pay, and 2-5% below maximum rates of pay by July 1, 2022. This analysis did not look at comparable positions in the private sector, such as finance, information technology, and human resource positions. In the 2015 report, Pontifex Consulting Group advised it did not recommend comparing private and public sector compensation because “the data will not be a direct 97 ---PAGE BREAK--- 10 comparison to public sector wages due to the vast variances in retirement compensation, nor does the data add significant value to the data reported here.” UPDATED RISK ASSESSMENT DATA ON RECRUITMENT AND RETENTION In February 2019, Moss Adams completed an Enterprise Risk Assessment (the Risk Assessment) for Douglas County. The assessment was intended to help the County identify and analyze risk by the level of inherent vulnerability, the level of preparedness to mitigate them, and the impact such negative events could have on Douglas County should they occur” (Moss Adams, 2019, p. The assessment rated the County’s level of risk from high to low in each of 18 categories including, Human Capital and Resources (high risk), Management (high risk), and Organization and Staffing (moderate-to-high risk). The 2019 Risk Assessment is attached to this report for reference. This section of the report is intended to update the information provided in 2019. Turnover in Positions After increasing in 2017 from 51 resignations to 115 the following year, the voluntary departure of employees remains constant between 83-124 voluntary resignations or 17-22% of the workforce annually, while the average number of job applications per recruitment dropped 28% in the same time period. Overall the hiring of new positions is not keeping pace with the rate of separations. The data in Table 7 shows the number of new hires by fiscal year compared to the total number of separations and applications received. Table 7, New Hires by Fiscal Year Compared to Separations and Applications Received FISCAL YEAR NEW HIRES INVOLUNTARY TERMINATIONS VOLUNTARY TERMINATIONS NET CHANGE APPLICATIONS RECEIVED 2021- 2022* 45 7 58 -20 1,048 2020-2021 76 13 86 -23 2,663 2019-2020 90 19 84 -13 2,548 2018-2019 104 26 95 -17 3,900 2017-2018 112 38 115 18+ 3,584 2016-2017 110 19 51 10+ 4,295 2015-2016 40 No Data No Data No Data 3,401 *2021-2022 only includes data through December 31, 2021. Table 8, Attrition Rate by Employee Group 2019-2021 Position Type 2017 2018 2019 2020 2021 Senior Leadership 11% 18% 11% 22% 19% Management 7% 15% 4% 8% 4% DCSPA 10% 5% 3% 6% 7% Staff – Full Time 14% 18% 12% 12% 22% Staff – Part Time 41% 58% 45% 53% 41% Total 17% 22% 15% 18% 19% Entry level staff positions, continue to experience high levels of separations annually, with 22% turnover in 2021. Turnover in Sr. Leadership positions is trending at higher percentages since 2019 with attrition 98 ---PAGE BREAK--- 11 rates increasing from 11% in 2019 to 22% in 2020, and 19% in 2021. Table 8 shows the attrition rate each year since 2017 by employee group. Turnover for hourly sworn officers of the Sheriff (DCSPA) is up from 3% in 2019 to 7% in 2021, and turnover in full-time staff positions has increased significantly since 2019 from 12% to 22%. Tenure and Retirements In 2019 Moss Adams reported “the public sector is experiencing significant challenges associated with respect to an aging workforce reaching retirement eligibility. In addition, there is a general recognition that traditional methods and motivations for attracting and retaining employees may no longer be effective, largely due to the evolving make-up of the workforce” (Risk Assessment, 2019, p. 13). As generations enter and exit the workforce, there is a significant amount of experience and institutional knowledge lost. Many public sector organizations are preparing for the retirement of an increasing number of long-term employees, with 52% of respondents to the 2021 State and Local Government Workforce Survey reporting that they anticipate the largest share of retirements will occur in the next few years in the public sector (Mission Square Research Institute, 2021). 38% of survey respondents indicated that employees who are retirement-eligible are accelerating their plans to retire after the impacts of the COVID-19 pandemic. With this in mind, the County will need to continue to take steps to ensure the continuity of operations during periods of transition. This becomes more challenging when rates of turnover in critical positions shift the focus from long term succession planning to training and day to day operations. In the 2020–21 fiscal year, the County lost approximately 161 years of accumulated experience, and in fiscal year 2021-22 through December, 2021, 106 years to date. Tables 9a and 9b show retirements by department and position for fiscal years 2020-21 and 2021-22. Table 9a, Retirements by Department and Position for FY 2020-21 Department Position Tenure (yrs.) Juvenile Probation Juvenile Probation Officer Sr. 24.75 Clerk Treasurer Assistant Treasurer 29.16 Sheriff Deputy Sheriff II 22.64 Community Development Building Official 19.39 Human Resources Human Resources Analyst 21.71 Assessor Appraiser Sr. 17.92 Public Works Engineering Manager 25.79 Total 161.36 Table 9b, Retirements by Department and Position for FY 2021-22 Department Position Tenure (yrs.) Public Works Accounting Specialist 22.94 Sheriff Deputy Sheriff II 26.57 Clerk-Treasurer Deputy Clerk/Treasurer 28.43 Sheriff Deputy Sheriff II 28.19 Total 106.13 Information contained in this table was collected through December 31, 2021 99 ---PAGE BREAK--- 12 Moss Adams reported in 2019, based on their analysis, that it appeared 26 employees were eligible to retire at that time. As of December 31, 2021, the number of employees currently eligible for retirement increased to 52 employees, and 134 employees will be eligible in five years. Figure 2 shows the updated age distribution of County employees (both full-time and part-time). Approximately 14% of employees are ages 62 and over, with 9% over the age of 65. In five years, 25% of the organization will be age 62 and over, with 18% over the age of 65. The average age of a County employee overall is 46.47 years and the average years of service (tenure) is 8.9 years. Figure 2, Age Distribution by Percentage of County Employees 86% 75% 5% 6% 9% 18% Currently In 5 Years Under 62 62-64 65 and Over In order to be fully vested in the Nevada Public Employee Retirement System (PERS), employees age 65 and older need to have five years of tenure to be eligible to retire; employees aged 62 – 64 need ten years; and any employee who reaches 30 years of tenure, regardless of age, is eligible. This depends upon the hire-date; members enrolled after July 1, 2015, need 30 years of service over the age of 55 and 33.3 years at any age. Tables 10a and 10b show the current number of employees by tenure and the number of employees by tenure five years from now. Table 10a, Employees by Tenure Current Employee Tenure Under 62 62 to 64 65 and Over 0 to 4 years 224 9 15 5 to 9 years 89 6 7 10 to 19 years 108 7 14 20 to 29 years 39 4 11 30+ years 6 1 2 Total Retirement Eligible 6 12 34 Total Employees 466 27 49 100 ---PAGE BREAK--- 13 Table 10b, Employees by Tenure In 5 Years Employee Tenure Under 62 62 to 64 65 and Over 5 to 9 years 208 8 32 10 to 19 years 126 9 34 20 to 29 years 66 11 25 30+ years 9 7 7 Total Retirement Eligible 9 27 98 Total Employees 409 35 98 Departments that report to the County Manager have experienced significant management/leadership turnover since 2017 with the departure of the Chief Financial Officer, the Director of Public Works, the Director of Community Development, and the Chief Technology Officer (Moss Adams, 2019). Table 11 below shows the management-level average years of employment tenure by department as of December 2021. Table 11, Management Level Tenure by Department Department Avg. Management Tenure 911 8.96 Alternative Sentencing 1.97 Assessor 6.13 China Spring Youth Camp 7.09 Clerk-Treasurer 0.63 Community Development 1.31 Community Services 7.58 Constable 39.02 County Managers Office 3.28 Courts 8.95 District Attorney 7.78 Finance 2.55 Human Resources 4.96 Juvenile Probation 5.56 Library 2.99 Public Guardian 5.98 Public Works 4.80 Recorder 8.41 Sheriff's Office 7.55 Technology Services 2.03 Town of Gardnerville 4.41 Town of Genoa 0.55 Town of Minden 6.47 101 ---PAGE BREAK--- 14 Turnover in leadership positions may be a contributing factor to turnover in staff positions. Management attrition puts the institutional knowledge base of the department and the organization at greater risk and impacts the ability of departments to plan for the future properly and to conduct business efficiently (Moss Adams Risk Assessment, 2019). Looking forward, four out of eight directors that report to the County Manager have indicated their intent to retire in the next five years. To attract qualified applicants for these positions, it is likely the County will need to offer salaries at or above the midpoint of the established ranges. Operational Challenges Hiring and retaining quality employees continues to be a challenge for the organization, with many departments facing impacts to levels of service including, Emergency Communications, Community Development, Public Works, and Community Services. This section of the report contains a brief description of these impacts, as well as information conveyed by Elected Officials of Douglas County who articulated the challenges they are facing. Community Services Department Staffing-related issues for the Community Services Department programs, including Kids Club, Community Center Operations, Adult Day Care, Senior Services, Parks, Public Health Clinic, and Weed Control are dramatically impacted. These impacts translate to lost revenue opportunities, reductions in service levels to critical community services, reduction in efficiencies, and deferred maintenance on infrastructure. Of the 83 positions currently vacant in Douglas County, 45 positions are from the Community Services Department. Additional details regarding impact to levels of service by program are provided below. • Kids Club and Adventure Camp - This program provides critical services to working parents in the community. Many parents require before and after school care for their children in order for them to work. As the community recovered from the COVID-19 pandemic, many parents asked that these critical before and after school programs be available. The Community Services Department responded with a request to the County Board of Commissioners to restore 22 furloughed positions and a portion of the 11 positions frozen through the budget process as a result of the pandemic. Due to the nature of these jobs and the low pay these positions offer (Recreation Aide $10 per hour, Recreation Leader $14.31 and Recreation Leader Senior $17.79), the vast majority of the individuals furloughed moved on to other employment. Since then, the department has not been able to fill these positions. As a result, the department has had to close the program at three sites (out of seven) and is only operating at four locations. Currently, one of the operating sites is in jeopardy of closing due to staff shortages. Students who participate in the program are being transported between schools, creating a greater burden on staffing resources and on parents. The lack of availability has, at one time, caused a waiting list. The waiting list has been on the decline because of parent frustration, a lack of available openings, and inability of the department to extend services to additional sites. These programs are necessary to support a growing economy and a workforce that has childcare needs. • Community Center Operations - Due to staff shortages, Douglas County’s Community Centers at the Lake and the Valley have operated under reduced hours and continue to be closed on Sundays. This has an effect on those who wish to utilize the facility. With reduced hours from what was once offered, it is difficult for the department to sell memberships to a fitness facility that may not fully accommodate the customer’s desired schedule. 102 ---PAGE BREAK--- 15 • Adult Day Care - This program continued to run throughout the pandemic; however, staff shortages have caused a reduction in hours. As the program currently stands, it does not support working families who need 7 AM to 5 PM care. Although this program has successfully reduced long-term care costs to Douglas County, it is not fully functioning to the extent of providing services to all who have a need. • Senior Services Congregate Meals - For almost two years, the kitchen has been operating short of two Food Service Workers (starting pay $14.31). This has led to inefficiencies and higher costs within the operation. Due to this staff shortage, paper products (paper plates and plastic silverware) have been utilized for almost two years as staff has been unable to handle the volume of dishes created by using reusable plates and silverware. Staff shortages have also caused a significant increase in overtime costs. • Parks - The Parks Division has struggled to recruit seasonal (Parks Maintenance Assistants, $14.31 per hour) positions. This has affected the ability to adequately and properly maintain Douglas County’s Park infrastructure. Maintenance like painting, tree trimming, and other park related projects get deferred in order to focus on the minimum turf maintenance, trash pickup, restroom facilities, and keeping the facilities safe for public use. • Weed Control - Like the Parks Division, Weed Control struggles to recruit seasonal Park Maintenance Assistants. These positions are critical to assist with spraying during the summer months when the demand is the highest. For example, out of the five seasonal positions authorized last summer only two positions were filled. Staff shortages have caused a long waiting list, limits the ability to treat as many noxious weeds as possible and impacts the revenue that would have been generated from those service. Emergency Communications Department Prior to fiscal year 2019-20 Emergency Communications typically operated with one vacant Emergency Communications Specialist (dispatcher) position due to turnover. Currently, the department has seven vacant positions, 40% of the total positions. The last seven recruitments yielded 216 applications, with 120 applicants in FY2018-19 for one position (two separate recruitments), 82 applicants in FY2020-21 for three positions, and 14 applicants in fiscal year 2021-22 for one position (continuous recruitment, no end date). As part of the recruitment process, applicants are required to pass a skills test with approximately 25%-50% of applicants passing the test on average and moving on to the interview process for additional consideration. Once a position is filled, the new hire undergoes extensive training for six months before they are able to staff calls without direct supervision. Currently the department is using supervisory team members to maintain operational levels of service. This means the administrative duties of the supervisory team related to quality assurance evaluations required to maintain accreditation are superseded by day-to-day operational responsibilities. In the long term, if the department is not able to fulfill the quality assurance requirements, the department will lose accreditation through the International Academy of Emergency Dispatch. This accreditation provides maximum points to the fire districts which in turn lowers home owners’ and commercial insurance costs for County citizens and business owners. Staff report other jurisdictions in the region are facing similar staffing challenges even with higher wages. Community Development Department Community Development continues to have difficulty recruiting for the Planner Senior (Grade P3, $32.23) and Principle Planner (Grade, P4 $36.50) positions and routinely operates with at least one vacant planning position. A recent recruitment for these positions yielded a handful of viable candidates. The recruitment was extended through March in an effort to attract additional qualified applicants. The department utilizes professional services where possible to maintain levels of service in building, 103 ---PAGE BREAK--- 16 permitting, engineering, and plan review. To do so the department follows a process where interested firms are asked to formally respond to a request for qualifications (RFQ), and once evaluated, qualified firms are utilized on an as-needed basis. The department currently contracts with seven firms total to assist each of these division. The department plans to expand professional services roles to also support the planning division in the future. Public Works Department • Road Maintenance Division - Staff for the road maintenance division are required to have and maintain a Commercial Class A driver’s license. The applicant pool that can meet this requirement in our area has been on the decline in the past few years. The road department has advertised three separate times starting in August 2021 for road maintenance operators and only had a handful (less than 10) applicants that met the minimum job requirements over all those recruitments. Of those qualified applicants three declined to interview once we explain the pay policy. The department has extended employment offers to four individuals and all have turned it down. The reasons these applicants have cited are: they got a higher paying job; they were offered more to stay at their current job, or they had more opportunities for incentive pay with another offer or at their current job. The current applicant pool is very limited with little or no experience. • Public Works Engineering - Staffing at the professional level for engineering talent for technicians up to Senior Civil Engineers has been a constant issue due to lack of applicants. The Public Works Department just completed the second recruitment for a Senior Civil Engineer and had one applicant apply. This applicant was qualified, but in order to extend an offer it will need to be above the position mid-point to be competitive in the market place. The department is experiencing a similar difficulty with recruiting on the other extreme of that division with an entry-level Engineering Technician position. For this recruitment, they have resorted to a continuous open recruitment so that they can be more agile in the review of applicants. What they were finding was that with the traditional application process, a qualified candidate was accepting another position during the time they were waiting for the recruitment to close. To date, the qualified candidates interviewed have declined offers due to the competitiveness of wages in that field. • Utilities - The utilities division invests a significant amount of time and management oversight over its operators to ensure they have the knowledge, training, and certifications necessary to operate in accordance with the standards set by the State. Both Douglas County Utilities and the Town of Minden have lost operators to other agencies with higher wages. Clerk/Treasurer Amy Burgans, Clerk/Treasurer, has conveyed challenges in both recruitment and retention in all of the functions she manages, including Clerk, Treasurer, and Elections. Ms. Burgans articulated anecdotal recruitment information she and her management team have observed. The pool of viable applicants has diminished due to a heavily saturated market, with considerable competition from external job postings that offer more lucrative options for applicants. Applicant volume has decreased from approximately 70- 100 applicants in any given recruitment to only 20-25 applicants. She has observed applicants seeking higher wages, anywhere from $2-$7 per hour over the offered rate of pay. From her perspective, Ms. Burgans finds that the rate of pay and lack of skills in the current job market makes it difficult to find the right candidate, as well as rate of pay being inconsistent with the demands of the position. Inadequate compensation for the work being performed is also the main factor in retention concerns, along with flexibility and growth potential which are readily offered in other organizations with plenty of attractive 104 ---PAGE BREAK--- 17 opportunities for existing staff. The cost to the County to hire and train staff is high, including the constant weight of training new staff on department procedures. Most positions are skilled jobs that take several months to a year of training before employees can perform at full capacity. Current retention issues lead to constant training needs within the department that is inefficient of management and staff time. Judicial Services It has consistently been the practice of the Judiciary to hire 10% above the minimum of the pay range to ensure their staff does not fall within the poverty levels when they begin their employment with the courts. Bobbie Williams, Court Administrator, articulated the competitive disadvantage our compensation ranges place Douglas County at, and as a result, the lack of qualified staff available to fill positions. For instance, individuals with lesser qualifications are qualified for positions with higher pay rates in nearby jurisdictions. This results in hiring inexperienced staff and investing in them with training, which is costly and requires years to achieve proficiency in the role. If the pay and benefits do not match the functional responsibilities, complexity of job duties, and are not competitively compensated, costly turnover is inevitable. As legislation, reporting mandates, and related job duties become more complex, becoming a “high performing court” will be hard to reach. And, without highly trained, experienced clerks, errors will be made and issues could arise which may place the County at risk. Employees need constant training, education, and salaries that support consist quality output. District Attorney Mark Jackson, District Attorney, spoke to the Board of County Commissioners on February 3, 2022, to request the transfer of an existing full-time Deputy District Attorney to a professional services contract in order to retain a qualified employee. During this meeting Mr. Jackson alerted the Board to severe retention and recruitment challenges facing District Attorney Offices across the state, both in criminal and civil divisions, noting Clark County has reported applicant flow has fallen by over 75% in the last two years. Mr. Jackson advised his initial effort to backfill the vacancy created by the departing employee was met with zero applicants for the position, an issue, he has noted, his peers in other rural counties are also experiencing. A currently posted vacancy in Mr. Jackson’s office has been published with the Nevada State Bar Association for three weeks and has not received a single applicant. While there is a shortage of labor to fill the vacancies in the region, our compensation levels place Douglas County at the greatest disadvantage because they are significantly less than those with which we compete. Competitors, including Washoe County, are considering increasing their salary ranges in order to attract qualified applicants. Most agencies are finding it necessary to offer salaries towards the top end of their pay ranges, which is problematic for existing, experienced, and dedicated staff. The Vacation Home Rental program is a priority for Douglas County, however the District Attorney’s Office cannot provide the legal services required based on the applicant volume and legal challenges associated with the program. In order to keep up with demands Deputy District Attorney’s, particularly criminal prosecutors, routinely work in excess of 50-60 hours per week. Losing even one Deputy District Attorney would be devastating to operations and require even more significant workload to manage, which would be unsustainable and cause burnout, errors, and often results in unionization of the workforce in order to obtain the right to negotiate for fair pay and working conditions. Sheriff Recruitment and retention challenges have impacted public safety in similar ways. Sheriff Coverley stated “We need to pay all County employees as well as we can in order to uncover benefits from retention, recruitment, and morale among the workforce.” Employees leave the organization for various reasons, some of which are addressed in this report and others which are specific to individual circumstances. However, filling the vacancies created is nearly impossible. Staffing shortages have yielded the need to pull Deputies from patrol to cover vacancies in the jail, resulting in fewer Deputies on the streets directly 105 ---PAGE BREAK--- 18 serving the needs of the citizens. Shift hours have had to be altered in order to accommodate lower staffing levels, and overtime has increased substantially. It is also difficult to cover additional grant- funded opportunities such as additional traffic enforcement because of burnout amongst staff already picking up additional workloads. Recruitment is limited generally to individuals who already live in this community because anyone living outside of the area is unlikely to relocate here for the available salary. Commuting to Douglas County is not attractive because employees can commute to, or work in their own communities, for greater compensation. RECOMMENDED ACTION Based on a review of the market compensation data for the Northern Nevada Region, it appears that despite approving annual COLA adjusts of 2% since 2017, the County’s rates of compensation established in 2015 are not keeping up with compensation in the region for the public sector. Information collected from the Bureau of Labor Statistics, shows the same is true of private sector compensation. In addition, a review of applications received shows interest in County positions is declining, and it is becoming increasingly more difficult to recruit and retain qualified employees for critical positions across multiple departments. These impacts have resulted in the loss of services to citizens. Given the rate of turnover in positions, the number of vacant positions, the risk of looming retirements over the next five years, and the difficulty of recruitments, this problem is likely to worsen before it gets better. It is recommended that the County take steps to address compensation and adjust the pay plan consistent with the actions taken by Lyon County and Carson City to date. In order to address a gap in the pay range of up to 15%, it is recommended the Board of County Commissioners adopt a minimum of a one-time 7% market adjustment of the pay and ranges for all employees in addition to the 2% COLA effective July 1, 2022, and authorize staff to commission an outside consultant to conduct an independent compensation study. To address the immediate recruiting needs of the County, it is also recommended the County consider moving up the timeline for the planned 2% COLA from July 2, 2022 to the current fiscal year, while planning for the recommended 7% adjustment to take place at the beginning of fiscal year 2022- 223. The County should bring in an independent consultant to conduct a compensation and classification study in fiscal year 2022-23 to review position classifications, pay grades, compensation philosophy, and evaluate the job market to verify whether any further adjustments to salaries are needed to remain competitive. Such an evaluation is projected to cost approximately $100,000 and will provide the opportunity to consider the overall market as it applies to individual classifications and pay grades, as well as differentiate the recommendations for the top and bottom of each pay grade. Alternatively, if no study is commenced the County should contemplate an additional 7% market adjustment in fiscal year 2023-24. While this report considers information and positions across the entire organization, as does the estimated fiscal impact, it is important to note that there are three distinct bargaining units which represent a portion of the positions in Douglas County. Labor negotiations with two of these bargaining units are imminent as the current labor agreements are set to expire at the end of the current fiscal year. Increases to compensation will need to be negotiated with those bargaining units, though addressing compensation in the remainder of the organization and understanding the County’s position in the job market are both essential to the negotiating process. While there are two years remaining on the contract of one bargaining unit (DCEA), it is also recommended to address compensation via a memorandum of understanding with this association at the same time. All of the relevant facts and information contemplated in this report are equally applicable to represented and non-represented positions. Based on the increase in demand for employees in both the public and private sectors, it is likely the County would experience recruitment and retention challenges in this labor market even if wages remained competitive with public sector employers for the region. Compensation is not the ultimate 106 ---PAGE BREAK--- 19 solution; however, if the County does not take steps to address compensation it will fall further behind and in some instances may need to make decisions regarding reducing or eliminating services. Currently the County has 83 vacant positions and the rate of turnover is exceeding the pace at which the County attracts and hires replacements. Inadequate staffing can create burnout leading to an increased risk of voluntary resignation amongst remaining team members if unaddressed. Adjusting compensation to more closely reflect the rates of pay for the market in the region is a critical step forward. ESTIMATED FISCAL IMPACT The estimated fiscal impact of the proposed one-time 7% market adjustment, based on budgeted salaries for fiscal year 2022-23, is approximately $3.6 million, across various funds, as shown in Table 12 below. Of this amount, the largest impact would be to the County’s General Fund, at approximately $2.3 million. Funding is available in fiscal year 2022-23 for the one-time adjustment through a combination of increased revenues (Property, State Consolidated, and Room Tax) as well as a reduction in General Fund transfers out to other funds that are no longer needed. Funding for personnel costs is an integral part of the budgeting process, and an analysis of the County’s compensation plan should be included in the annual budget process each year as a part of strategic planning and goal setting. It is imperative to proactively review compensation in order to prevent compensation from falling too far behind the region which can prove to be costlier for the organization and more difficult to address over time. “When salary reviews are done on a regular cadence, you gain useful insights into how current salary bands and overall compensation packages may impact employee engagement, retention, productivity and growth.”6 Additionally, the operational costs of attrition are substantially increased when recruitment and retention suffer as a result of compensation as compared to the market. The recommendation outlined in this report is fiscally feasible and necessary to maintain fiscal stability. Based upon current trends in population and revenue growth in Douglas County, sufficient funding is expected to be available to maintain an appropriate pay plan. Table 12, Personnel Cost Breakdown Douglas County-Estimated cost of 7% Salary Adjustment Estimated Salary Budget-FY 2022-23 $38,576,155 7% Salary Adjustment $2,700,331 PERS Cost-Regular 623,00 PERS Cost-Safety 265,432 Tax Cost-Medicare 39,155 Tax Cost-SUTA 13,502 Total Cost of 7% Adjustment $3,642,299 6 Source: “Is it Time for a Company Compensation Review?” LaborIQ TalentTech News Blog. Nov 2021. Accessed Feb. 2022 107 ---PAGE BREAK--- 108 ---PAGE BREAK--- 109 ---PAGE BREAK--- 110 ---PAGE BREAK--- 111 ---PAGE BREAK--- 112 ---PAGE BREAK--- 113 ---PAGE BREAK--- 114 ---PAGE BREAK--- 115 ---PAGE BREAK--- 116 ---PAGE BREAK--- 117 ---PAGE BREAK--- 118 ---PAGE BREAK--- 119 ---PAGE BREAK--- 120 ---PAGE BREAK--- 121 ---PAGE BREAK--- 122 ---PAGE BREAK--- 123 ---PAGE BREAK--- 124 ---PAGE BREAK--- 125 ---PAGE BREAK--- 126 ---PAGE BREAK--- 127