Durham staff recommend 2% structure raise, fund minimum livable wage and defer pay‑for‑performance

Human Resources recommended a set of pay and benefit changes for FY27 that aim to preserve competitiveness while matching the city’s fiscal constraints. HR Director Aaron Miley and Assistant Director Jim Ryan Gruber told council the proposed package includes implementing the Durham Minimum Livable Wage (DMLW) at $25.09 per hour, a 2% structure adjustment for full‑ and part‑time pay plans, and no funding for pay‑for‑performance in FY27 due to cost.

Gruber explained the city’s four pay plans (three step plans for general, sworn police and sworn fire personnel and an open‑range plan for executives) and showed that 64% of full‑time employees are at or above market midpoint. He cautioned about pay compression created by recent large structure adjustments and said the city has issued an RFP for a classification and compensation study to be conducted in FY27 to build a maintenance plan that avoids large, periodic corrections.

Key recommendations:
• 2% structure adjustment citywide (full‑time and part‑time), with slightly larger lifts to the lowest grades so that step progressions and the DMLW align; total estimated cost of the proposed adjustments is roughly $7.2 million across funds (about $5.3M general fund impact).
• Implement DMLW at $25.09 per hour; HR clarified the ordinance frames DMLW as an annual threshold converted to an hourly equivalent for communication, and that some part‑time positions that are functionally equivalent to full‑time roles are covered. The council requested the exact formula used to compute the hourly conversion and comparisons to peer cities/private‑sector benchmarks.
• Do not fund pay‑for‑performance this year: the city‑wide cost would be approximately $10.9 million (general‑fund impact), versus the more‑affordable structure adjustment option in the available budget.

Benefits and other items: staff will continue to offer an employee‑only $0 premium health plan option; the city projects an ~8% increase in health care costs and ~3% for dental. New offerings include an on‑site ultrasound cancer screening program for firefighters and a Roth option for the 457(b) plan. The city continues its 5% lump‑sum retirement contribution program for employees.

What’s next: HR will provide the classification/compensation study scope and timeline (RFP issued; responses due). Council members asked for an explicit DMLW methodology, comparisons with regional employers and the private sector, and a clear table showing the difference between structure adjustments and step/merit alternatives for employee communications.