By MIKE ANTHONY

Executive Editor

Crestwood City Administrator Petree Eastman is recommending the city’s full-time employees and permanent part-time employees receive one-time, lump-sum pay adjustments.

The Board of Aldermen was scheduled to discuss Eastman’s recommendation Tuesday night — after the Call went to press.

Eastman is recommending full-time employees receive a $1,500 one-time, lump-sum pay adjustment and permanent part-time employees receive a $1,000 one-time, lump-sum payment adjustment. The pay adjustments would be for city workers employed as of Dec. 6, but would exclude new hires and the city administrator, who began her duties in October.

As proposed, the pay adjustments would be funded by using savings from positions that were unfilled during 2011.

The Board of Aldermen was scheduled to consider final approval Tuesday night of the city’s 2012 budget, which does not include any increase in employee compensation for the third consecutive year.

In a Dec. 8 memorandum to Mayor Jeff Schlink and the Board of Aldermen, Eastman wrote, “One of the most significant findings I have made since my arrival as city administrator is the low morale of employees, despite their dedication and love for Crestwood. Part of the morale issue is from the failure of the city to have a funded pay plan and classification system.

“It is a fact that the salary levels of city employees are not keeping up with inflation. Salaries have been frozen since 2009.

“Yet, because of the increasing costs in the basic necessities of life — utilities, food, gasoline — city employees have actually realized pay reductions over time. The impact of the regular inflation is exacerbated by the double-digit increases in an employee’s share of the medical insurance costs.”

In reviewing city employees’ salaries since 2005, Eastman concluded that they have not kept pace with the Consumer Price Index nationwide or locally.

“In an inflationary time, failure to provide even modest cost-of-living increases is tantamount to pay cuts through an employee’s reduced purchasing power,” the city administrator wrote.

She also wrote, “Because low morale relating to pay can adversely affect our service to the citizens of Crestwood, I do believe that reasonable pay is essential to provide the highest quality services to our residents. This is not an ‘us-versus-them’ proposition. Human nature dictates that citizens are not as likely to get superior service from employees who are struggling financially or suffer from low morale. More importantly, it is in the city’s best interest to retain excellent employees. Failure to minimally keep up with inflation can and has cost the city.”

Eastman’s memorandum stated that the city recently “lost two valuable employees who cite better pay in peer jurisdictions as the rationale for them leaving Crestwood. As the economy recovers and more local government jobs become available, we are likely to see continued loss.

“While it is true that all employees should be grateful for employment, this should not be used as justification for taking advantage of them. Simply replacing employees who have low morale due to their continued pay cuts is too simplistic of a view. (Taking) that scenario out to its logical conclusion proves such an argument is invalid. The amount of time and expense incurred by the city to advertise, select, train and get a new employee fully functioning, as well as the loss of important institutional knowledge of the former employee is significant. Simply hiring a new and presumably more ‘grateful’ employee is not cost effective.”

Good management practices for both public and private entities dictate “that employers respect employees, set high expectations and to provide for their well-being, including reasonable pay, quality benefits and the encouragement of personal and professional growth,” she wrote.

“In my professional view, keeping salaries in line with inflation, at a minimum, is necessary to ensuring the retention of excellent employees and in turn the provision of excellent service,” the city administrator wrote.

In her memorandum. Eastman noted the city realized a “substantial savings” from various positions that were unfilled for part or all of 2011 — $161,982.95.

The cost of providing the one-time lump-sum pay adjustments to city employees would total roughly $156,324.94, including “attendant taxes.”

To proceed, aldermen would have to direct City Attorney Rob Golterman to prepare an ordinance for the board to consider.

In a separate matter Tuesday night, Eastman planned to ask the Board of Aldermen to approve the appointment of Gilmore & Bell as special and bond counsel for the proposed redevelopment of Crestwood Court.

To proceed, the board would have to direct Golterman to prepare and negotiate the terms of an engagement letter and to authorize and direct the mayor and city clerk to execute the final engagement letter on behalf of the city.

“Gilmore & Bell was one of two firms to respond to the city’s request for proposals. Gilmore & Bell comes highly recommended and has performed well on behalf of the city in the past,” Eastman stated in a memo.