Fargo city staff propose higher pay caps, restructuring employee compensation plan

FARGO — Amid struggles to hire and retain employees in a competitive job market, the city of Fargo is considering revamping its pay structure.

Fargo city commissioners gave mixed reactions to a presentation of the proposed changes during an informational meeting on Monday, June 17.

“Great plan,” Mayor Tim Mahoney said, “but if we can’t afford it, then it’s not going to work.”

The audience in the Fargo City Commission chambers on Monday was packed with Fargo firefighters following a

letter to the editor published in The Forum last November

where firefighters took their

concerns over pay and staff turnover to the public

.

“We have all the firemen here. They deserve a raise,” Mahoney said, “But we also want to be mindful of what we do to the taxpayers.”

The city’s Human Resources Director Jill Minette walked the commission through the proposed plan.

There are two options to consider, she said, Option A or Option B. Both include increases to employee pay across the pay step range, with Option B including higher pay caps.

For example, Minette said, an Equipment Operator III at the highest step makes about $73,000. Under the proposed changes, the pay cap on that position would rise to either $85,600 or $87,800.

There are 11 pay steps for city employees, she said. Under the proposed options, staff suggested increasing that to 17 steps and raising the pay cap.

If approved, the new plan would increase the pay amount at every step along the way and result in a higher pay cap for every position. Employees advance a step up the pay scale on an annual basis, in addition to COLA raises.

“This would have a substantial increase with the retention of the workforce,” Minette said.

In the existing pay structure, firefighters have 10 steps and police have nine. Under the proposals, they would both have 11 steps. Having fewer steps shortens the amount of time staff need to work for the city to reach those higher levels of pay and boost retention.

Fargo firefighter salaries are capped at about $84,800, Minette said. Their salaries would top out at nearly $90,000 under Option A and around $92,200 under Option B. Under the existing pay structure, police officers hit their cap at $89,700, while under Option A the cap would be $94,800 and under Option B it would be $97,100.

Around 30% of city employees are already at the maximum pay for their job, Minette said.

Those employees receive a cost-of-living adjustment each year.

The city of Fargo has seen turnover skyrocket since COVID-19, going from 4.37% in 2017 to 6.31% in 2020 before jumping to over 13% in 2021 and 2022 and going to 11.32% in 2023.

However, these higher turnover rates are still below the national average, Minette said.

“Not all resignations are due to pay,” she added. “There are a multitude of reasons that people leave.”

The cost for implementing the new pay structure options is varied, with Option A ringing up at $3 million and Option B at $5.5 million, Minette said, with roughly 80% of that cost coming from the city’s general fund.

These costs include what the city of Fargo will have to pay for all the step increases that are already heading their way in 2025, Assistant Director of Human Resources Beth Wiegman told The Forum via email. That incoming cost is $872,000, she said, meaning that, if approved, Plan A cost an additional $2.1 million and Plan B be an extra $4.69 million.

While he said he backs pay raises for staff, Commissioner Dave Piepkorn questioned how these plans would impact the city’s budget.

Staff recommended that the commission approve Option B — the more expensive of the options — before the start of 2025.

However, Commissioner Denise Kolpack said she did not have enough context to decide between Option A and Option B, noting both options seemed to be “putting the cart before the horse.”

The commission needs to discuss the big picture of city finances before deciding what to do, she said.

She asked the finance, administration and human resources staff committee to decide the city’s compensation philosophy and pass that recommendation to the full City Commission for review.

Mahoney said it’s important for the city to offer competitive salaries for staff because the city trains “excellent” people who then leave to work in the private sector.

“It is a complex salary structure. It always was. But we’re trying to be competitive,” Mahoney said.