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The Oregonian: Public employees base salary only half of total compensation, PSU study shows
Author: Ted Sinkinger, The Oregonian
Posted: September 21, 2012

Read the original story in The Oregonian here. 

Base salary only makes up half the total cost of compensation for public employees in Oregon. Indeed, the value of overtime, paid time off, medical and post-retirement benefits, plus a host of other additions, often exceeds base wages, according to a study released this week by Portland State University's Center for Public Service. 

In Redmond, for example, the cost of non-salary compensation -- what the study calls a burden rate -- for an experienced police officer is 136 percent of base pay. 

The study, commissioned by the state, examined compensation for 11 different job titles in 21 different city and county jurisdictions in Oregon and southwest Washington. It captured the cost of base pay, overtime, insurance, costs to fund post-employment pension and medical benefits, as well as paid time off and social security and Medicare taxes. 

The aim, said Phil Keisling, director of the Center for Public Service, is to provide elected officials and top managers with a framework to evaluate and manage their compensation costs. He said the study was one of, if not the, most extensive of its kind. 

The data gathered represents only the past year, and doesn't capture growth to illustrate, for example, the ballooning costs of pension and medical benefits. The study's authors also purposefully avoided comparisons with similar jobs in the private sector. 

"We're not in an advocacy position," Keisling said. "We're doing research..It's important to have data like this so you can create a system that is smart, sustainable and responsive to circumstances that are very different than they were 25 years ago." 

Nevertheless, in an era of stagnating public budgets, compensation is one of the most important policy issues, as it represents such a large percentage of the money that goes to fund public services such as education, public safety and corrections. Certainly, the total cost of non-salary compensation, and its component parts, was eye-opening for some districts who participated. 

"In the professional ranks, we keep in mind a rate of 30 or maybe 40 percent burden (for benefits)," said Scott Lazenby, city manager of Sandy, one of the 21 entities that provided data for the study. "But the real number was closer to 100 percent. It shows that what we think is the hourly cost of an employee is not really the hourly cost." 

On average, the cost of non-salary compensation for employees with the state of Oregon and the cities and counties surveyed was between 92 and 103 percent of base pay. The cost components vary by longevity, with health insurance the biggest adder for entry level employees -- 35 percent -- and the cost of pension contributions and social security the biggest (27 to 34 percent ) for experienced employees who have reached the top pay step. 

The composition of pay and the cost of benefits offered also varies considerably by geography. For experienced police officers, one of the most comparable jobs across jurisdictions, base annual pay ranged from $44,000 in Jefferson County to $75,000 in Vancouver. Average per employee health insurance costs ranged from $9,000 per year in Sandy to $22,000 in Linn County. Average police overtime pay ranged from $3,400 per year in Jefferson County to more than $11,000 in Clackamas County. Police vacation time ranged from 160 hours in Grants Pass to 288 in Pendleton and 330 in Vancouver. 

Many of those components have ripple effects in other areas. Overtime and banked sick and vacation time fold into retirement formulas, and increase those costs. 

Mike McCauley, executive director with the League of Oregon Cities, said the study provided a good start on looking at total compensation costs, and baseline data that is more useful than the anecdotal information that is often rolled out in budget discussions, locally or in Salem. 

"This gives you sense of the magnitude across the state...a range of plus or minus of what's happening," he said.