TOTAL COMPENSATION

WHAT EVERY ‘BUDGETEER’

NEEDS TO KNOW

GFOAz Budget ForumOctober 21, 2011 Page

1

Agenda2

HR Terms and ConceptsMargie Ward, Employee Benefits

Administrator City of Mesa

Personnel Budgeting Case StudyDawn Lang, Assistant Director for Finance

City of Chandler

Questions / Panel Discussion

Total Rewards3

Compensation + Rewards and Recognition + Benefits

Distribution of Limited Dollars

Compensation4

Base PayRange vs. grade

Variable PayOvertimeShift DifferentialCall-backStand-by

Incentive Pay Longevity Pay

Base Pay Plans5

Step Traditionally used in labor agreements

Merit Pay for performance environment Pay pool distributed based on measurable

goals Cost of Living

Annual increase Broadbanding

Consolidation of several traditional grades into each band

Budgeting for Compensation

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Historical spend By Employee Full Time Equivalents (FTE’s) Position Control

Each position has unique ID Tracks position, not employee Each position can have a budgeted cost Can assign multiple employees to a position Can assign one employee to multiple

positions

Rewards and Recognition

7

Public acknowledgement Training and development opportunities Cash bonus Gift cards Time off Special parking space

Benefits8

Group Insurance Leave Pension Deferred Compensation Retiree health insurance

Funding Bases for Benefits

Fully funded Least risk Least flexibility Least administration Least cost effective

Self funded Least risk Least flexibility Least administration Least cost effective

Self administered Least risk Least flexibility Least administration Least cost effective

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Outside Administration Internal Administration

Crafting WIN/WIN Benefits

10

Saving money for the City and enhancing benefits

The power of procurement Value added benefits

Legal and financial EAP services Incentivizing generic use 24/7 Nurse line Voluntary benefits Wellness programs Discount programs

Cost Containment11

Identify high cost areas Make plan design changes Maximize in-network use Audit providers Medical management Comply with reinsurance (stop-loss)

provisions

Case Study12

Personnel Budgeting

Maximize Benefits While Minimizing Costs

“Looking Past the Challenges to Find the Opportunities”

Personnel Budgeting13

Personnel Budget is Significant 70% of Total Ongoing General Fund

Operating Budget 47% of Personnel is Sworn Public Safety

How do we Maintain or Minimize Cost Increases in Personnel? Understand Each Type of Wage and Benefit Determine Types with Controllable Costs Collaborate with HR and Payroll to Effectively

Budget

Wage Considerations14

Increases to Ongoing Wages COLA / Merit or Step Increases Competition for Skilled Workforce Union Contracts Political Expectations Maintain Equity Between Job Groups

Benefit Considerations15

Increases to Ongoing Benefits Retirement (ASRS, PSPRS & EORP) Medical, Dental, Life Worker’s Compensation Short Term Disability Retirement Health Savings Deferred Compensation

Budget, HR, and Payroll Relationship

16

Meet & Confer Involvement Costing and System Impacts Transparency and Education

Understand MOU Agreements for Budget/Payroll

Budget and Forecast for Each Employee Group Interpret MOU Changes Detail Wage/Benefits by Employee Groups

Annually

Budget, HR, and Payroll Relationship

17

Details Wage Items for Each Job Group or UnionDetails Benefits for Each Job Group or UnionBudget Compiles, HR and Payroll Agree

Personnel Budgeting18

Analyze Actual Payroll per Employee Group Tighten up Budgets Where Appropriate

Vacancy Budgeting Benefit Budgeting

Determine Benefits Where Savings can be Achieved Health Care Benefit Became Focus

Cost/Share Arrangement Minimize Rising Health Care Costs Sustain Over Time

Rising Costs of Health Care Benefits

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Fully Funded Plan At Mercy of Insurance Company In Business to Make a Profit Claim Data Compared Nationally

Cost / Share Arrangement 90% Employer - 10% Employee Premium Split Chandler Employees Paid the Lowest Amount

for the HMO Plan as Compared to Other Valley Cities

How to Address Rising Costs

20

Take Position of Consumer by Shifting to Self-Funded Negotiate Specifically on City Data 2% State Tax no Longer Required

Reduce Employer Share of Health Benefit Costs

Create Plan to Meet Goals

Process to Implement Change

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Include the Right People in the Process Hired Medical Plan Experts and Actuary Created Health Care Task Force

Start Early, Time Intensive Education and Transparency RFP for Health Care Provider and Plan Type Recommendation to Council by Health Care

Task Force

Medical Cost Savings Achieved

22

Sustainable Cost Measures Self-Funded Medical Plan in January of 2011

Used Fund Balance to Fund Reserves and Subsidize Premium to Mitigate Impact to Employees

Transition to 80/20 by January of 2013 Health & Wellness Program Implemented

$3.5 Million in General Fund Ongoing Savings Equal to:

4% Across-the Board Wage Reduction 10 Furlough Days per Year for Each Employee 43 Positions

Questions?23

Open for Discussion