The Oak Bluffs personnel board has recommended against a cost of living adjustment (COLA) for town employees this year. The decision follows a similar move in Edgartown, where selectmen and the financial advisory committee voted against granting a cost of living adjustment last week.
Oak Bluffs personnel board chairman Mimi Davisson said it was not an easy decision. As with all appropriations, town meeting voters will have the final say. “The personnel board is not giving a COLA,” said Ms. Davisson. “If voters disagree, they can adjust it.” She said the town budget would be prepared without a cost of living increase.
Town administrator Michael Dutton said employees have taken the news well. “They understand the constraints we’re under,” said Mr. Dutton. Last week, town finance director Paul Manzi told selectmen the town will fall $336,000 short of its revenue projections by the end of the current fiscal year. Declining revenues will also present difficult challenges for next year’s budget.
The COLA decision does not affect step raises, which are typically associated with longevity and job performance. In Oak Bluffs, all town employees are under a new job classification and compensation plan, which outlines an eight-step scale of salary increases. The town did not grant COLAs last year, because in the first year of the classification and compensation plans, nearly all employees received an increase in pay. This year, nearly all non-union employees are due for another step raise. The town’s two collective bargaining units are due to receive a three percent raise, as part of their negotiated contracts. They do not receive separate COLAs.
Last week, Edgartown notified town employees that the board of selectmen and the finance advisory committee would not support the personnel board’s recommendation for a cost of living increase for fiscal 2010, which begins on July 1 of this year. In a letter to employees, town administrator Pam Dolby wrote that it was a very difficult decision for elected officials.
“Edgartown has always given the highest COLA on Martha’s Vineyard,” wrote Ms. Dolby. “This year is different. We are struggling to fund operating budgets, fixed costs, and articles needed by various town departments. We are trying to avoid cutting positions.” In the letter, a series of questions highlight the uncertainty of trying financial times, with cuts in state government virtually assured, and receipts from town revenue streams mirroring the struggling national economy.
“We have to try and prepare to have an amount cut and we have no idea what that amount will be or not be,” wrote Ms. Dolby. “How many people will lose their jobs over the winter? Will the economy on Martha’s Vineyard get worse, or how bad will it get? What about next year?”
She said town employees were mostly prepared for the decision. “The staff is incredibly supportive,” said Ms. Dolby. “They understand we’re doing the best we can. I’ve tried to forewarn people over the last several weeks that it might be coming.”
Edgartown sets its COLA after reviewing the consumer price index for urban workers (CPI-U), in several Massachusetts cities. The CPI-U is a measure of the cost of living compiled by the federal Bureau of Labor Statistics. “I take an average and add a little bit,” said Marilyn Wortman, human resources coordinator for Edgartown, citing the higher cost of living here on Martha’s Vineyard. She said the personnel board planned to recommend a four-percent COLA when they first considered the issue last fall, before financial turmoil struck world economic markets. They presented a recommendation of two percent to the financial advisory committee and selectmen, but those boards decided against any increase.
Those due for step raises under union contracts, or under the town’s job classification plan will receive those pay hikes as scheduled.
Employee salaries make up an enormous part of town operating budgets. Mr. Dutton estimates that this year, employee salaries, including town employees, Oak Bluffs School employees, and the town’s share of salaries at the Martha’s Vineyard Regional High School amount to approximately $10.5 million, or 47 percent of the town’s $22.5 million budget. Scheduled step raises of three percent are projected to add about $315,000 more to salaries next year. If a cost of living adjustment of three percent was added on top of step raises, then the total salary expenditure would increase by $639,450.
Cost of living adjustments can rapidly inflate salary costs. For example, in Edgartown, an employee who began work in 2003, at a salary of $60,000, would have received cost of living increases ranging from four percent to 4.5 percent over the next seven years (see accompanying chart). The employee’s salary would increase to $77,130 in 2009, an increase of $17,130 over seven years, before factoring in any step raises due.