Where Does Rochester's Payroll Money Come From, and Where Does It Go?

October 16, 2018 11:37 PM

(ABC 6 News) -- With a population of more than 100,000 people, Rochester is the third largest city in Minnesota, and it's projected to keep growing.

Over the next 25 years, the population of southeastern Minnesota is projected to grow by more than 50,000.


"As we grow, one of the things that we really have to be cognizant of is how do we keep up with that pace of growth, the expectations of the community," said City Administrator Steve Rymer.

Being able to provide and expand services to residents means maintaining, and even adding, city employees.

"We typically cut payroll checks for about 1,100 employees a month," said Linda Hillenbrand, director of human resources.

So where does the money come from?

"The bulk of it comes through the tax levy," she said.

"When you look at our overall compensation and the total amount that we pay for our employee services, it's 30 percent of our overall budget, which is, most people I think would anticipate a government unit that's delivering services, to be 60, 70 percent," Rymer said.

Some of the money for the city's payroll comes from enterprise funds: services that get customer charges, from water and utilities to parks programs.

But the majority of the money, 75 percent, comes from property taxes.

"I think the initial inclination by people is, you know, there's people that work for the city and so that must be where all their expenses go; but really, because we have so many facilities, we have miles of roads to maintain; all those different areas play into this," said Rymer.

Most of the city's payroll is devoted to three departments.

"That would be our public safety departments, police and fire; and our public works department. They're the largest departments, and they take up the largest portion of the salary budget," Hillenbrand said.

From 2014 to 2017, more than $100 million has been spent on police and fire.

Public works has cost more than $37 million.

In the same four years, those three departments accounted for more than half of the city's payroll.

"It's largely because of the number of employees they have. They're the largest employee counted or departments within the city of Rochester," Hillenbrand said.

"Police and fire, both very high priorities for the city council; not only the one that's here now, but many, many before them, and so to make sure that we have the right number of teammates, the right equipment, the right facilities, all directly related to making sure we have appropriate response times when there is an incident and, as importantly, to make sure that we're preventing issues from occurring," said Rymer.

From 2014 to 2017, the highest paid employees in the city were the police and fire chiefs; public works director and managers; city attorneys; the city administrator; and the finance director.

Most of those salaries ranged from $160,000 to $175,000 annually.

From 2014 to 2016, only two women were among the top 25 highest paid, with the addition of a third woman in 2017.

Human Resources Director Linda Hillenbrand is one of them.

The number of women "is probably a little lower than what all of us would like to see," Hillenbrand said. "Right now, we hover around 25 percent women on our leadership team."

She said citywide, about a quarter of the workforce is also female.

"And primarily, a lot of that is due to the turnover rate in the city of Rochester is very low; it hovers between four and six percent. So when you don't have a lot of turnover, it's hard to bring new bodies into the organization," she said.

"We have many people that've been here, and predominantly we've had more male employees, and as they've remained in the organization, that's kind of carried through," Rymer said.

As more people retire, that may begin to shift.

"The transition as you move up in the organization is slower, so the opportunity to move into those positions is less, generally, other than the exception of last year, when we had about a 60 percent turnover at the department head level," Hillenbrand said.

"To give you an example, through three-quarters of this year, just under 700 years of experience have retired," Rymer said.

In order to keep providing services, like maintaining the city's 500 miles of streets, issuing thousands of building permits annually, taking care of 5,000 acres of parks, and running a library that served more than half a million people last year, the city may need to hire even more people.

"One of the things that we're working on is just trying to understand what the future looks like," Rymer said.


Alice Keefe

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