The Graceville City Commission continued discussions on employee compensation during its second budget workshop Tuesday, September 15, ultimately reaching a consensus to move forward with a proposed 75-cent-per-hour raise for all city employees as officials prepare the budget for the upcoming public hearing.

The workshop continued a discussion that began at the previous budget meeting over whether employees should receive a 3% cost-of-living adjustment, a flat 75-cent-per-hour increase, or some combination of the two. City Manager Michelle Watkins presented commissioners with updated figures comparing the two options.

Watkins explained that the overall cost of the two proposals was nearly the same, with a difference of approximately $780 for the fiscal year. The major difference was not the overall impact on the budget, but how the money would be distributed among employees. Under the 75-cent proposal, lower-paid employees would generally receive a larger percentage increase, while several higher-paid, longer-tenured employees would receive less than they would under a 3% increase.

Mayor Terry Nichols opened the discussion by saying the city needed to finalize its direction so a proposed budget could be prepared. Nichols also discussed the total compensation provided to city employees, including health and dental insurance, retirement contributions, FICA and other benefits. He said those costs must be considered when looking at the city's overall financial obligations to employees.

Dr. Jerry Windsor, who had spoken during the previous workshop about employees earning approximately $15 per hour, returned to address the commission. Windsor said that after reviewing the budget and speaking at length with Nichols, he had a better understanding of the total compensation package offered by the city. He said his earlier concern had focused primarily on hourly wages without accounting for benefits provided by the city.

The discussion also turned to opportunities employees have to increase their pay after being hired. Watkins said employees who perform well can typically receive a 3% merit increase after six months. Employees in departments such as public works and wastewater can also earn additional increases by obtaining licenses and certifications, with the city paying for training, travel and testing. She said some employees could potentially increase their pay by approximately 18% to 21% during their first 12 to 18 months through merit, longevity and certification increases.

Commissioner Samantha Angerbrandt argued that the flat 75-cent increase would help make some of Graceville's lower-paid positions more competitive with surrounding municipalities, particularly in departments that have experienced employee turnover.

Angerbrandt specifically pointed to the police department and Parks and Recreation, saying the city has lost employees to surrounding communities offering higher wages. She said a 75-cent increase would bring the city's lower-paid positions closer to wages offered in neighboring communities and argued that retaining trained employees should be part of the city's consideration when determining compensation.

"We're not going to lose these six or seven individuals," Angerbrandt said of the higher-paid employees who would receive less under the 75-cent proposal than under a 3% increase. "But if we keep doing this, and we keep doing a three percent raise across the board, which really isn't fair, we are going to keep losing our streets and rec. We are going to keep losing our police department."

Commissioner Walter Olds said making Graceville more competitive with surrounding communities while still providing every employee with a raise appeared to be a positive outcome. He also noted that the commission could revisit how raises are structured during future budget years rather than treating this year's decision as a permanent formula.

Commissioner John McClendon raised concerns about ensuring long-term employees are also recognized for their years of service. McClendon shared his own experience of working for an employer for many years and seeing a newer employee receive higher pay, saying the city should make sure dependable, long-serving employees are valued.

Watkins explained that longevity and merit increases would remain in place regardless of which across-the-board raise was selected. She said the current discussion concerned the base hourly increase and would not eliminate the city's existing merit, certification or longevity provisions.

Nichols summarized three possibilities discussed during the workshop: a 75-cent increase for everyone, a 3% increase for everyone, or a hybrid approach that would provide 75 cents across the board while giving an additional adjustment to employees who would otherwise receive more under the 3% proposal.

As the discussion continued, commissioners increasingly favored the flat 75-cent option. Watkins eventually asked whether the consensus of the commission was for staff to prepare the proposed budget using a 75-cent-per-hour increase for every employee.

Commissioners indicated that was the direction they wanted staff to take. Watkins emphasized that the workshop was not a voting meeting and that no formal action was being taken. Instead, the consensus provided staff with direction for preparing the budget ahead of the public hearing.

Nichols said the change would essentially redistribute approximately the same amount of money differently, with some higher-paid employees receiving a smaller raise than they would have under the percentage-based proposal while lower-paid employees would receive more. "It's kind of the same money, it's just how it's distributed," Watkins said.

The discussion also highlighted a larger issue commissioners said they want to address after the budget process is completed: updating the city's employee classifications, salary ranges and personnel policies.

Angerbrandt said she hopes the recent budget workshops will lead to more workshops throughout the year, giving commissioners and residents additional opportunities to discuss city policies outside of regular monthly commission meetings. She specifically pointed to the city's personnel handbook, employee classifications and portions of the city's residential code as areas that should be reviewed and updated.

"I do hope that we start that process of doing classification, salary," Angerbrandt said, adding that establishing a clearer structure would give the city something consistent to follow in future budget years and help ensure employees feel they are receiving their fair share.

The workshop concluded with city staff receiving direction to prepare the proposed budget using the 75-cent-per-hour increase for all employees. The proposal remains part of the budget process and is subject to formal action by the City Commission during the required public hearing process.