GO Item 1
February 4,2016
Worksession
MEMORANDUM
February 2, 2016
TO:
FROM:
SUBJECT:
Government Operations and Fiscal Policy COmmiT\
Robert H. Drummer, Senior Legislative Attorney
Worksession:
Bill 51-15, Non-merit employees
(1)tJ
Salary Schedule - Established
Bill 51-15, Non-merit employees - Salary Schedule - Established, sponsored by Lead
Sponsor Councilmember Leventhal and Co-sponsors Councilmembers EIrich and Rice, was
introduced on December 8,2015. There were no speakers at the January 12 public hearing.
Bill 51-15 would establish a salary schedule for heads ofdepartments and principal offices,
and other non-merit employees. The Bill would require the Executive to propose a salary schedule
for heads of departments and principal offices, and other non-merit employees in the Executive
Branch for approval by the Council as part of the annual operating budget for the County
government. The Bill would also require the Council to establish a salary schedule for non-merit
employees in the Legislative Branch as part ofthe operating budget. Non-merit employees would
be paid a salary within the appropriate salary schedule. The Bill would permit the Executive to
exceed the salary schedule established for a position for an individual employee, subject to Council
approval, if the Executive finds that it is necessary to attract or retain a senior leader for a specific
position. The Lead Sponsor, Councilmember Leventhal explained the purpose of the Bill in a
memorandum to his colleagues at ©5 and added some additional information in a February 1
memorandum at ©9.
Background
The County needs a compensation system designed to attract and retain highly competent
senior leaders as heads of departments and principal offices, and other non-merit employees.
It
is
also important to ensure that the compensation system is in line with other competing
organizations.
The Council's Office of Legislative Oversight (OLO) recently issued
Memorandum Report 2016-1,
Comparative Data on High-Level Manager Salaries.
The Report
can be viewed at:
http://\\''\\w.montgomervcountymd.gov/O LO/ResourcesIFiles120 15 Reports/OLOMemorandum
Report2016-I.pdf. OLO found that salaries for County non-merit employees was the highest in
the Washington-Baltimore region and higher than most non-local jurisdictions surveyed. The
Chief Administrative Officer's comments and the response to the CAO's comments from OLO
can be viewed at:
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http://www.montgomerycountymd.gov/OLO/Resources/Files/2016%20Reports/CombinedRespo
llseandComments20 16-1.pdf .
In the fall of 2015, the Executive retained Public Financial Management (PFM) to do an
Executive Compensation Study for the County. The Chief Administrative Officer sent the final
report to the Council last week. A copy ofthe CAO transmittal memo and the Executive Summary
is at ©1O-15. The report looked at total compensation and concluded that the County's executive
cash compensation lagged behind the private sector, was in the top quartile of other local
government employers, but not out of line with comparable government employers. While this
study may be useful for determining future salary schedules, the Bill would not dictate what the
salary schedules for non-merit employees should be. The Bill would simply require the re­
establishment of salary schedules for non-merit senior leaders.
Issues
--
1. Do other government agencies have salary schedules for non-merit senior leaders?
OLO found that the Federal government has a salary schedule for non-merit positions that
are appointed by the President, typically with the advice and consent of the Senate. There are 5
levels of this Executive Schedule ranging from Cabinet Secretaries to appointed directors and
deputy directors across multiple federal agencies. See the excerpt from the OLO report at ©6.
OLO also found that the State of Maryland has a salary schedule for non-merit executives in State
government. See the Maryland Executive Pay Plan at ©7. Howard and Prince George's Counties
in Maryland and Arlington and Fairfax Counties and the City of Alexandria in Virginia also have
salary schedules for non-merit executives.
Prior to 1997, each County employee holding a non-merit position was paid within a salary
schedule approved by the Council in the operating budget. Each department director was assigned
a specific salary grade that coincided with a salary schedule. See the Appendix to
0
LO
Memorandum Report 2016-1 showing the former salary grades for County department directors
at ©8. Bill 51-15 would not mandate any specific salary schedule.
It
would require the Executive
and Council to re-establish a salary schedule for each non-merit position. The Bill would apply to
any employee who is hired or promoted to head of a department or principal office or other non­
merit position after the date when this Act becomes law.
2.
What is the fiscal and economic impact of the Bill?
OMB and Finance have not yet prepared a fiscal and economic impact statement for Bill
51-15. We expect to receive it later this week. However, Council staff would not expect the Bill
to have a significant fiscal impact to implement.
It
is difficult to predict, how, if at all, a salary
schedule will impact future non-merit salaries for County positions. Since the Bill would only
apply to individuals hired or promoted into a non-merit position after the Bill takes effect, there
should be little immediate fiscal impact. The establishment of salary schedules should not have a
significant fiscal impact since both the OLO Report and the PFM Report recently benchmarked
salaries for comparable positions in the region.
2
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3. When should the Bill take effect?
The Bill contains the following transition clause:
This Act must apply to any employee who is hired or promoted to head of a
department or principal office or other non-merit position after the date when this Act
becomes law.
As pointed out by Assistant CAO Bonnie Kirldand, the Bill would become law when the
Executive signs it, but before any salary schedules are approved by the Council. See Ms.
Kirkland's email at ©16. If the Bill is enacted in February or March, the first salary schedule
would not be approved until May. Therefore, it is possible that someone is hired or promoted into
a non-merit position after the Bill takes effect, but before a salary schedule exists. If the salary
approved for that person does not fit into the salary schedule approved later, does that require a
salary reduction? One reasonable solution, as suggested by Ms. Kirkland, would be to make the
Bill apply to an employee hired or promoted into a non-merit position after the approval of the
first salary schedule by the Council.
In addition, in order to ensure that the law takes effect soon enough to require the
establishment of salary schedules in the approved FYI7 budget, the Committee may want to amend
this Bill to be an expedited Bill. Therefore, it is likely to take effect before the Council approves
the FYI7 budget, and possibly before the Executive submits a recommended FYI7 budget on
March
15. Council staff recommendation:
amend the effective date to make the Bill expedited
and to make it applicable to an employee hired or promoted into a non-merit position after the
approval of the first salary schedule by the Council as follows:
Amend lines
45-47
as follows:
The Council declares that this legislation is necessary for the immediate protection of the
public interest. This Act takes effect on the date on which it becomes law.
This Act must apply to
any employee who is hired or promoted to head ofa department or principal office or other non-merit
position after the date the Council approves the first salary schedule required in Section I [[when this
Act becomes law]].
4. Should the Bill contain a provision authorizing the Council to exceed the salary schedule for
a position in the Legislative Branch?
The Bill contains the following authority for an exception in the Executive Branch:
The salary schedule may contain a provision permitting the Executive to exceed the
salary schedule established for a position for an individual employee, subject to
Council approval, if the Executive finds that it is necessary to attract or retain a senior
leader for a specific position.
3
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There is no corresponding exception pennitting the Council to exceed the salary schedule for an
individual position. However, the Executive Branch salary schedules must be approved by the
CounciL The Legislative Branch salary schedules do not need to be approved by the Executive.
1
If
the Council finds a Legislative Branch salary schedule unworkable, the Council can amend it.
Council staff recommendation:
no amendment is necessary.
5. Should the Bill be enacted?
An
executive salary schedule is common in Federal, State, and local governments. This Bill
would not break new ground; it would add Montgomery County to the majority rule in the area. While
one may debate whether the County's current non-merit salaries are reasonable or excessive, the Bill
would delegate that debate to the establishment ofthe salary schedules as part ofthe operating budget
process. The Council would have general control over the minimum and maximum non-merit salaries
just as it has control over merit salaries and the County budget. The Executive would retain control
over the amount of an individual non-merit Executive Branch salary within the broad guidelines of
the relevant salary schedule, and would have the authority to seek a waiver where appropriate.
Council staff recommendation:
approve the Bill with the amendments recommended above.
This packet contains:
Bill 51-15
Legislative Request Report
Leventhal Memorandum
Federal government Executive Schedule
Maryland Executive Pay Plan
Former Montgomery County Executive Salary Grades
Leventhal Second Memorandum
CAO Transmittal and PFM Executive Summary
Kirkland email
Circle
#
1
4
5
6
7
8
9
10
16
F:\LAW\BILLS\1551 Salaries For Non-Merit Employees\GO Memo.Docx
I
Although the Executive may veto part ofthe budget, the Council retains the authority to override a veto.
4
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Bill No.
51-15
Concerning: Non-merit emplovees -
Salarv Schedule - Established
Revised: December 1. 2015 Draft No.
L
Introduced:
December 8.2015
Expires:
June 8. 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: _--:-_ _
~----
Ch. _ _ Laws of Mont. Co. _ __
I
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Leventhal
Co-Sponsors: Councilmembers EIrich and Rice
AN
ACT to:
(1)
(2)
(3)
establish a salary schedule for heads of departments, principal offices, and other
non-merit employees;
require certain salaries
to
be
set under the salary schedule established for these
positions; and
generally amend the law governing compensation for non-merit employees.
By amending
Montgomery County Code
Chapter 1A, Structure of County Government
Section lA-104
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law
by
original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL NO. 51-15
1
2
Sec.
I.
Section
lA-I04
is
amended as follows:
lA-I04.
Heads of departments and principal offices; other positions designated
as non-merit.
(a)
Names.
The head of a department or principal office is called the
Director ofthe department or principal office, except that:
(1) the Director of Police is also called the Chief of Police;
(2) the Director of the Montgomery County Fire and Rescue Service
is also called the Fire Chief; and
(3) the Director of the Office of the County Attorney is called the
County Attorney.
(b)
Qualifications.
(1) Each head of a department or principal office should be
professionally qualified.
(2) A person holding any other position in the Executive Branch
designated by law as a non-merit position must be professionally
qualified for the position under a position description established
by regulation under method (1).
(c)
Status.
Heads of departments and principal offices, and holders of any
other position in the Executive Branch designated by law as a non-merit
position, are County employees but are not merit system employees.
(d)
'Special reinstatement rule.
A person who was a merit system employee
of the Police Department when appointed as an Assistant Chief of
Police may return to the merit system in the Department at the same
rank that the person last held in the merit system. The person must elect
to return to the merit system within 10 days after leaving the Assistant
Chief position, by notifying the Chief Administrative Officer in writing.
If the previous rank was abolished, the person must be assigned to the
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
o
f;\law\bills\1551 salaries for non-merit employees\bilI4.docx
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BILL No. 51-15
28
29
closest equivalent rank, and must receive the salary and benefits that
would apply if the person had remained in the merit system at the
previous rank and the rank still existed.
30
31
32
33
34
Utl
Salaries.
The Executive must design
~
compensation system to attract
and retain highly competent senior leaders as heads of departments and
principal offices, and other non-merit employees in the Executive
Branch. Each of these employees must be paid
~
salary within
~
salary
schedule proposed
12Y
the Executive and approved
Qy
the Council in the
Operating Budget of the Montgomery County Government. The salary
schedule may contain
~
provision permitting the Executive to exceed the
salary schedule established for
~
35
36
37
38
position for an individual employee,
39
40
41
subject to Council approval, if the Executive fmds that it is necessary to
attract or retain
~
senior leader for
~
specific position. The Council must
establish
~
salary schedule for non-merit positions in the Legislative
42
43
44
45
46
Branch as part of the Operating Budget of the Montgomery County
Government.
Sec. 2. Effective Date.
This Act must apply to any employee who is hired or promoted to head of a
department or principal office or other non-merit position after the date when this Act
becomes law.
Approved­
47
48
49
Nancy Floreen, President, County Council
Date
o
f:\law\bills\1551 salaries for non·merit employees\bill4.docx
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LEGISLATIVE REQUEST REPORT
Bil151-15
Non-merit employees
-
Salary Schedule
-
Established
DESCRIPTION:
The Bill would require the Executive to propose a salary schedule for
heads of departments and principal offices, and other non-merit
employees
in
the Executive Branch for approval by the Council as part
of the annual operating budget for the County government. The Bill
would also require the Council to establish a salary schedule for non­
merit employees in the Legislative Branch as part of the operating
budget.
Salaries for non-merit employees are not controlled by a salary
schedule established by the Executive and the Council.
To establish a salary schedule for all non-merit County employees
designed to attract and retain highly competent senior leaders as heads
of departments and principal offices, and other non-merit employees.
CAD, Office of Human Resources
To be requested.
To be requested.
To be requested.
To be researched.
Robert H. Drummer, Senior Legislative Attorney
Not applicable.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not applicable
F:\LAw\BILLS\1551 Salaries For Non-Merit Employees\LRR.Docx
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
GEORGE LEVENTHAL
COUNCILMEMBER
AT-LARGE
MEMORANDUM
December 1, 2015
TO:
·FROM: .
SUBJECT:
Councilmembers
George leventhal
Bill on Compensation for Senior Non-Merit Employees
On December 8, I plan to introduce a bill on compensation for senior non-merit county
employees. The bill would require the Executive to propose and the Council to approve a salary
schedule for non-merit employees in the Executive Branch. It would also require the Council to establish
a salary schedule for non-merit employees in the legislative Branch.
It is important, as the bill text states, for the county to have a
Ilcompensation
system to attract
and retain highly competent senior leaders as heads of departments and principal offices, and other
non-merit employees ...."
As
the recent OlO report made clear, compensation for our senior non-merit
employees is in fact highly competitive. My concern is that since 1997, when County Executive Duncan
abolished the salary schedule for these employees, there has been a steady upward drift in
compensation with no apparent framework. This has had an impact on the countys entire salary
structure.
The bill is prospective; it would apply only to employees hired for non-merit pOSitions after the
bill becomes law. Also, the bill authorizes the Executive to exceed the salary schedule, subject to
Council approval,
Ilifthe
Executive finds that it is necessary to attract or retain a senior leader for a
specific position."
The common-sense approach in this bill will enable us to attract and retain outstanding
employees while meeting our obligations to the taxpayers. This approach is especially important in our
current tight fiscal situation, including the possibility of a significant tax increase. I would welcome you
as .a co-sponsor of this bill.
STELLA B. WERNER OFFICE BUILDING
100 MARYLAND AVENUE, 6TH FLOOR, ROCKVILLE, MARYLAND 20850
240n77-7811
OR
240n77-7900,
TTY240n77-7914, FAX240n77·7989
WWW.MONTGOMERYCOUNTYMD.GOv/COUNCIL
'f!
PRINTED ON RECYCL.ED PA.PER
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Comparative Data on High-Level Manager Salaries
2. Federal Government
The
US
Office of Personnel Management (OPM) publishes average salary data for federal employees,2
and Table 8 summarizes average salary data and salary schedules as of March 2015 for:
• Executive Schedule -- positions that are appOinted by the President, typically with the advice
and consent of the Senate. Includes five levels ranging from Cabinet secretaries (Levell) to
appointed directors, deputy directors, etc. (Level V) across multiple federal agencies.
• Senior Executive Service (SES) - high-levelll)anagement and supervisory positions across
mUltiple federal agencies just below Presidential appointees.
• G5-13, G5-14, G5-15 -- career position grades on the federal general salary schedule. The
Montgomery County Office of Human Resources
Personnel Management Review
reports that
these grades are comparable to the MLS series in the County.3
For the SES and GS series positions, OLO included the average salary nationwide as well as the weighted
average for positions in DC, Maryland, and Virginia only. Additionally, the salary schedule shown for the
GS positions includes the DC region locality pay differential. The maximum salaries for federal Executive
Schedule and SES employees are lower than the average director salary in Montgomery County.
Table 8. Federal Government Manager Average Salary Data, 2015
Position
Executive Schedule
Levell (n=18)
Level II (n=43)
Leveillf (n=95)
Level IV (n=251)
Level V (n=18)
All Executive Schedule (n=426j
Actual
Average Salary
Salary Schedule
Maximum
Minimum
$198,450
$179,846
$166,509
$158,434
$149,494*
$163,720
-
-
-
-
-
$203,700
$183,300
$168,700
$158,700
$148,700
--
-
$121,956
--
$183,300
Senior Executive Service
United States (n=7,862)
DC, MD, and VA only (n=5,994)
General Salary Scale (GS) 15
United States (n=61,405)
DC, MD, and VA only (n=40,963)
General Salary Scale (GS) 14
United States (n=122,741)
DC,
MO,
and VA only (n=63,738)
$170,572
$171,351
$150,966
$151,715
$124,363
$126,530
-
$126,245
-
$158,700
-
$107,325
-
$139,523.
General Salary Scale (GS) 13
-I
United States (n=250,038)
$102,990
$90,82;
i
DC, MD, and VA only (n=79,256)
$104,291
$118,069 •
*The OPM database does not indicate why the actual average
IS
higher than the maximum.
OPM data covers most Executive Branch agencies except for several intelligence offices and agencies (CIA,
NSA, etc.), White House and Office ofthe Vice President
staff,
and the U.S. Postal Service.
http://www.fedscope.oom.gov/datadefn/aboutehrl sdm.asp
3
htto:/Iwww.montgomerycountymd.gov/councll/Resources/Files/agenda/cm/2015/150423/20150423 G02­
CountyGovernment.pdf, p.36
2
The
8
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STATE OF MARYLAND
Executive Pay Plan - Salary Schedule
Annual Rates Effective January
1.2015
Grade Profile
EPP 0001
EPP 0002
EPP 0003
EPP 0004
EPP 0005
EPP 0006
EPP 0007
EPP 0008
Scale
ES4
ES5
ES6
ES7
ES8
ES9
ES10
ES11
9904
9905
9906
9907
9908
9909
9910
9911
Minimum
$79,953
$85,902
$92,333
$99.275
$106,773
$114,874
$123,618
$133,069
Midpoint
$93,277
$100,252
$107,785
$115,923
$124,711
$134,203
$144,451
$155,522
Maximum
$106,604
$114,600
$123,236
$132,569
$142,646
$153,532
$165,281
$177,977
.
EPP 0009
EX91
9991
$153,027
$204,947
$256,866
CALCULATING BI-WEEKLY SALARY:
Annual Salary x .038143
=
Bi-Weekly Salary
Bi-Weekly Salary x 26.071428 - must equal at least
the annual salary, adding a penny until it does.
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'\
\
MONTGOMERY COUNTY GOVERNMENT
APPOINTED ClASSES
CLASS
.tQQL
7905
7910
7911
7915
7917
7920
ClASS
TITLE
\
GBAD.E
39
39
36
County Attorney
County Health Officer
Director, Addiction, Victim, and Mental
Health Services
DirectQr~
Department of Transportation
39
39
39
39
36
39
36
39
36
Director. Department of Police
Director, Office of Finance
Director, Office of Management
&
Budget
Director, Department of Environmental
Protection
Director, Department of Fire
&
Rescue
Services
Director. Department of Public Libraries
Director, Department of Liquor Control
Director, Department of Correction and
Rehabilitation
Director, Department of Facilities and
Services
Personnel Director
Director, Department of Family Resources
Director, Department of Recreation
Director, Department of Housing and
Community Development
Director, Office of Economic Development
Director, Office of Planning Policies
Director, Office of State Affairs
7921
7922
7927
7930
7935
7940
7945
7946
7947
7950
7952
7954
7958
7959
36
36
39
36
36
3S
35
3S
Page
47
8
ffi
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
GEORGE LEVENTHAL
COUNCILMEMBER
AT-LARGE
MEMORANDUM
February 1, 2016
TO:
FROM:
SUBJECT:
Councilmembers
George Leventhal
~
~
Bill on Compensation for Senior Non-Merit Employees: Additional Information
. On December 8,2015 the Council introduced Bill 51-15, Non-merit employees - Salary Schedule
- Established.Councilmembers EIrich and Rice joined me in sponsoring this bill, which would require
the Executive to propose and the Council to approve a salary schedule for non-merit employees in the
Executive Branch. It would also require the Council to establish a salary schedule for non-merit
employees in the Legislative Branch.
My December
I,
2015 memo to you noted that the bill is prospective; it would apply only to
employees hired for non-merit positions after the bill becomes law. Also, the bill authorizes the
Executive to exceed the salary schedule, subject to Council approval, "if the Executive finds that it is
necessary to attract or retain a senior leader for a specific position':'
Many other governments have adopted salary schedules for senior non-merit employees - for
example, the federal government's Executive Schedule, which ranges from Cabinet Secretaries to
appointed directors and deputy directors of multiple federal agencies, and the State of Maryland's
Executive Pay Plan. Howard and Prince George's counties in Maryland, as well as Arlington and Fairfax
counties and the City of Alexandria in Virginia, have such salary schedules as well.
Until 1997, Montgomery County also had a salary schedule for senior non-merit employees.
Restoring such a schedule now makes good sense. The approach in this bill will enable us to attract and
retain outstanding employees while meeting our obligations to the taxpayers. I welcome your support .
. STELLA B. WERNER OFFICE BUILDING
100 MARYLAND AVENUE, 6TH FLOOR, ROCKVILLE, MARYLAND 20850
240n77-7811
OR
240n77-7900,
TTY240n77-7914, FAX240n77-7989
WWW.MONTGOMERYCOUNTYMDGOV/COUNCIL
~
PRINTED ON RECYCLED PAPER
(j)
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-
..-
-
..
---------------------------------------~
OFFICES OF THE COUNTY EXECUfIVE
!siah Leggett
COMJlly BXI(M/i",
Timothy L. Firestine
Chi,f Adminislroli", Offiu,
MEMORANDUM
January 29, 2016
TO:
FROM:
SUBJECT:
Nancy Floreen, President County Council
~
_/11"'trf'Lj L.
.
,c,IU""i::;..
J
Timothy
L.
Firestine, Chief Administrative Officer
Ex~tiveCom~tionSWrly
Please find attached for your information an Executive Compensation Study
(Study) for Montgomery County.
In
the Fall of2015 Montgomery County engaged Public
Financial Management (PFM) to perform an evaluation of executive and senior management
compensation. The purpose of the study was to investigate ifour compensation for executives
and senior managers is competitive with similar employers around the region and the nation.
The Study entailed a rigorouS evaluation of 26 positions for benchmarking
purposes and comparisons with comparable positions in the DC Metro area (private, public, non­
profit), as well as a selection of large regional and national public sector employers. These
include Director-level, Question A appointments and Management Leadership Service (MLS)
positions. PPM conducted an evaluation of base wages as well as·additional allowances such as
take-home vehicles, vehicle stipends, and longevity pay. PFM also obtained data on benefit
levels and reporting relationships to create a full picture for comparison. PFM notes that
"Montgomery County represents one of the largest and most complex employers in each of the.
comparison groups, as well as one of the largest jurisdictions by population size" and
''ranks
above the comparison group
medians
in measures ofcommunity wealth and cost-of-livmg."
Among
the
key
findings:
Montgomery County executive pay generally lags the regional labor market median,
which is not atypical for a comparison with the private sector, but instructive
in
the
County's ability to compete foJ;'. top talent.
While Montgomery County cash compensation
ranks
in the top quartile among DC
area local government employers, it is not out ofline with comparison jurisdictions,
particularly in light of the fact that County directors oversee headcounts and budgets
above the median.
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-----
-_._----_
..
Nancy Floreen, President County Council
January 29, 2016
Page
2
are an important component oftotal compensation. The County's executive
benefits do not offer a strong advantage over most of the comparison jurisdictions.
Montgomery County currently enjoys comparatively strong retention rates, which is
commonly accepted as beneficial
to
organizations
in
that it minimizes recrqitment
. and replacement disruption and costs, and benefits organizational performance and
service delivery.
In light of the Government Operations Committee work session scheduled for
February 4, we have asked PFM to attend should Council members wish to discuss the Study
further.
TLF:bk
Attachment
cc: Fariba Kassiri, Assistant Chief Administrative Officer
Bonnie Kirkland,' Assistant Chief Administrative Officer
Shawn Stokes, Director, Office of Human Resources
Ben~fits
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Executive Compensation Study
Montgomery County, Maryland
January
28,2016
PFl.\1."
The
PPM Group
Filllllftl:ial .& IlIwstntellt AdvrS/nS
Corporate
Office
Arlington
Office
4350 North Fairfax Drive
Two Logan Square
Suite 580
Suite 1600
Philadelphia, PA 19103
Arlington, VA 22203
Phone 703-741-0175
Phone 215-567-6100
Fax 703-516-0283
Fax 215-567-4180
www.pfm.com
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Table of Contents
Executive Summary ................................................................................................................... 3
Methodology .............................................................................................................................. 5
Overview .................................................................................................................................... 8
General Labor Sector Comparisons .....................................................................:....................21
Federal Government Comparisons ...........................................................................................26
Benefit Comparisons .................................................................................................................29
Regional Public Sector Comparisons ........................................................................................32
National Public Sector Comparisons .........................................................................................74
Appendices ...............................................................................................................................85
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Executive Summary
Montgomery County, Maryland, engaged Public Financial Management (PFM) to perform an evaluation of
executive and senior management compensation. To conduct this review, PFM bench marked major
elements of county pay and benefits for a cross·section of selected positions against the general labor
market in the Washington, DC metro area, the federal government, and major regional and national public
employers.
Compensation studies allow employers to analyze their relative position in the market place, and help to
determine if compensation levels should be adjusted to better attract and retain high quality leadership.
Such studies also provide inSight into an employer's compensation structure and competitiveness. For
example, one jurisdiction may have relatively higher usalaries" when comparing base pay only. Yet, when
including other cash allowances not included in base pay to generate a more holistic view of combined
cash compensation, the differences in pay across jurisdictions may be lessened.
In evaluating cash compensation, PFM analyzed actual base pay earned, as well as other major cash
allowances received by executive managers. Even though not included in base pay, such pay elements
- vehicle allowances, longevity pay, and uniform allowance - are typically considered by job candidates
when weighing opportunities. When accounting for such other allowances in a combined cash
compensation perspective, the gap between Montgomery County executive pay levels and those of the
comparison jurisdictions surveyed narrows considerably. Looking more broadly, prospective employees
may also consider non-cash benefits (e.g., take·home vehicles, retirement, and health benefits) in
determining the attractiveness of a job opening. As a result, this report also presents findings on major
benefits across jurisdictions surveyed.
As further detailed in the full report to follow, key findings include:
Relative to other large employers with more than $1 billion in revenue in the Washington, DC
area general labor market, Montgomery County executive pay generally lagged the regional
median - typically by 15% - 40%. While such a differential is typical for public employers when
compared to the private sector, this reference point nonetheless informs an evaluation of the
County's pOSition to compete for top tier talent.
• Along with cash compensation, benefits are also an important component of total compensation.
With a defined contribution retirement benefit, Montgomery County executive benefits do not offer
a strong advantage over the 401 (k) plans typical for regional private employers. Further, most of
the public employers surveyed offer a traditional defined benefit pension (either as the primary
retirement program, or as an element of a "hybrid" plan in conjunction with a defined contribution
supplement), which can be an important factor for some employees when comparing total
compensation across employers. To successfully recruit executive managers who plan a long
tenure, higher salaries may be required in Montgomery County relative to competing employers
with a defined benefit pension plan.
• Among other large Washington, DC area local government employers, Montgomery County cash
compensation generally ranks above the median, typically within the top quarter or third. This
relative position correlates with Montgomery County's comparatively large scale and complexity,
as reflected in budget size and number of employees supervised.
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For every Director-level position benchmarked, Montgomery County directors oversee a
headcount and budget above the median and, in all cases, report to the chief executive, which is
not always the case across the other regional employers surveyed.
Relative to the federal government, the region's largest public employer, Montgomery County
Management Leadership Service (MLS) pay ranges are in line with comparable ranges on the
General Schedule and Senior Executive Service pay ranges for the Washington, DC metropolitan
area. At maximum, Montgomery County executive managers in the M-1, M-2, and M-3 pay
ranges closely parallel their federal counterparts.
As
an additional reference point, recognizing that some executive positions may be recruited
nationally, PFM also evaluated Montgomery County executive compensation relative to larger
local governments in regions with similar economic factors. Within this grouping, Montgomery
County pay remains competitive - again, with a rough correlation found between salary levels
and factors such as organizational size and complexity. In addition, regional economic factors
can also contribute to comparative pay levels, as the Washington DC area is generally a high
cost, high wage market.
Relative to broad private and public sector averages, Montgomery County's current
compensation approach achieves comparatively strong retention rates. Such continuity may also
contribute to comparatively higher salaries - as employees with longer tenure generally earn
higher wages - but this trade-off, on balance, is commonly accepted as beneficial to
organizations. In addition to minimizing recruitment and replacement disruption and costs, such
stability in leadership roles is can benefit organizational performance and service delivery to the
public.
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Drummer, Bob
From:
Kirkland, Bonnie
Wednesday, January 27, 2016 3:02 PM
Drummer, Bob
Firestine, Timothy; Kassiri, Fariba; Stokes, Shawn Y.
Bill 51-15 Salary Schedule
Sent:
To:
Cc:
Subject:
Hello Bob - This is to follow up on our earlier conversation about the bill, in particular Section 2 which provides that the
Act will apply to hires or promotions
"after
the date when the Act becomes law." This is a little confusing because the
Act will become law on the day the CE signs it (presumably around February 15, if enacted by the Council on Feb 9). But
the Bill will not actually take effect until 91 days after signature, setting up a period between Mid-February and Mid­
May, during which the Act applies but has not yet taken effect (and during which there is no approved salary schedule).
Making the Bill an expedited bill is unnecessary and does not address the issue I described above. If made an expedited
bill (meaning it would go into effect roughly Mid-February), there would still be no "approved" salary schedule until the
Council takes action on the Budget later in May. So the same situation would exist.
Because you indicated the intent that this Act be prospective, and to clarify the above, I would suggest an amendment
that substitutes the language in quotes above with
"after
the date when the Council approves the salary schedule
required by this Act."
It is my understanding that you agree with this clarification and will present it to the GO Committee at its work session.
Thank you for your time and assistance on this issue.
Bonnie
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