HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/12/2005 - COUNCIL COMPENSATION AND BENEFITS COMMITTEE RECOMM DATE: July 12, 2005 WORK SESSION ITEM
STAFF: Amy Sharkey FORT COLLINS CITY COUNCIL
SUBJECT FOR DISCUSSION
The purpose of this item is to present the recommendations from the Council Compensation and
Benefits Committee to City Council.
BACKGROUND
During the 2004-2005 budget process, Councilmembers expressed concern regarding certain areas
of the City's benefit plans and the benchmarking agencies that the City compares itself to for
benefits and pay plans. The Council adopted Resolution 2003-147 establishing the Council
Compensation and Benefits Committee ("The Committee"). This Committee consisted of two
Councilmembers and staff. After soliciting the services of a professional consulting firm, The
Committee has reviewed and made recommendations on 1) The adoption of HR Metrics as a
budgeting tool; 2)What to do regarding the City's benefit plans and any changes to plan design and
employee contributions; 3)the City's Pay Plan for 2005 and 2006. The Council Compensation and
Benefits Committee recommends to City Council granting a one-time lump sum adjustment to
employees,implementing a 2006 Pay Plan,and that the following changes to the City medical plans
be implemented beginning January 1, 2006:
Changes to the City's Medical Plans
Effective 1/1/2006
What Cost Impact
1. Implement Wellness Program Future savings to be determined
2. Continue to promote and expand disease Future savings to be determined
management initiatives
3. Increase Dependent Portion of the Employee Estimated $60,000 savings
Contribution — PPO1 Plan to 5% of market
premium
4. Implement Outpatient Surgery, diagnostic lab Estimated $225,000 savings
and x-ray at 10% coinsurance
5. Implement prescription drug structure the Estimated $49,000 savings
same as PPO1&2 with no deductible
6. Increase in-network deductible for PP02 from Estimated $49,000 savings
$200 to $400 and out of network deductible
from $500 to$1000.
Increase in-network out-of-pocket maximum Estimated $40,000 savings
7. for coinsurance from $1,450 to $2,000
8. Cover preventive services as under the POS Estimated $50,000 cost to plan
plans to reinforce Wellness concept.
9. Increase the dependent portion of the Estimated $595,000 savings
premium to 20% of market premium
July 12, 2005 Page 2
The Committee recommends that the City continue to track,but not to formally establish HR Metrics
as a budgeting tool. The Committee recommends that the Council make changes to the City's
medical plan consistent with options put forth by the Gallagher Benefits Consulting Group. The
Committee further recommends that a one-time lump sum increase be provided to employees in
2005 and that beginning in 2006 an updated Pay Plan consistent with the Council adopted
philosophy of setting pay range maximums and the market 70th percentile be implemented, along
with merit and skills-based pay increases.
Making the recommended changes for 2006 to the City's medical plans will lower the City's
anticipated future cost by approximately $1 million.
ATTACHMENTS
1. Presentation Slides
2. Summary of Resolution 2004437
3. Memorandum to Council from the Personnel Board re:Gallagher Report Recommendations
4. Summary of Benefits Consultant Report
Staff presentations for Work Session items have been video taped in advance of this meeting.The presentations will
be broadcast on City Cable Channel 27 at the following times:
Thursday,July 7 5:30 p.m. Sunday,July 10 10:00 a.m. & 8:30 p.m.
Friday,July 8 1:00 P.M. Monday,July 11 12:00 p.m.
Saturday,July 9 2:00 p.m. &8:30 p.m. Tuesday,July 12 4:00 p.m.
Videos of the presentations will also be available via a high-speed internet connection at www.fcgov.com by 5:00
p.m.,Friday,July 7.
ATTACHMENT
•
City of Fort Collins
City Council
Work Session
July 12, 2005
i
Agenda
■ Council Compensation & Benefits
Committee's Recommendation to City
Council
■ Changes to Medical Plans for 2006
■ HR Metrics
■ Compensation for 2005
■ Compensation for 2006
i
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i
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1
Healthcare Costs
■ Healthcare costs rising dramatically
■ City costs increased over $6 million
from 2000 to 2004
— 9% of our Personal Services Budget in
2000
— More than 14% in 2004
3
i
Medical/Dental Costs as a
Percent of Personal Services
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2
Gallagher Options
■ Gallagher Benefit Services, Inc. hired by
Council in 2004
■ Tasked with researching ways to:
— bring our plans more in line with our benchmark
organizations
— help reduce the medical plan costs
■ From that report, the Council Compensation
& Benefits Committee will recommend
changes to City Council for 2006
5
I
I
•
Council Compensation and Benefits Committee
1 Recommendations:
Changes for 2006 Medical Plans - PPO Plans
Dependent � No Cost Plan + + 5% of market tt'
e 11 I dt +Pldil j "..
43 (h a,!t �
p t $60 000
+ Portion premium
PP01 Plan
In-Network $200 $400 $49,000
Out-of-Network $500 $1,000
Deductible
PP02 Plan
In-Network $1,450 $2,000 $40,000
Out-of-Pocket
Maximum
PP02 Plan
Cover
Preventative Cover routine $50,000/cost to
Services Not covered physicals City
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•
3
Council Compensation and Benefits Committee
Recommendations:
Changes for 2006 Medical Plans - POS Plans
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Outpatient $100 10% $225,000
Surgery,
Diagnostic Lab, $15 10%
X-Ray
Same 3-tier 3-tier$or%, $49,000
Prescription flat$co-pay whichever is
Drug Structure greater co-pay
PPO Plans
7
Council Compensation and Benefits Committee
Recommendations:
Changes for 2006 Medical Plans - All Plans
g'gf HuftwIgg R'Nd'
Dependent 15% 20% $595,000
Portion of
Premium
Wellness Well Day To Be
Program Incentive Program Determined
Disease Incorporated into To Be
Management Wellness Program Determined
Total Savings with All Options
Approximately $1 Million
4
Council Compensation and Benefits
Committee Recommendations:
HR Metrics
■ Attempted to provide process for
establishing parameters for setting
personnel costs as a percent of net
operating budget
■ Recommend that the City continue to
track this measure, but not to formally
establish HR Metrics as a budgeting
tool
9
•
Council Compensation and Benefits
Committee Recommendations:
2005 Compensation
■ Recommend to City Council a One-Time
Lump-Sum Adjustment
+granted in second half of 2005
+not added to base pay
+amount of increase still to be
determined
+supported by the Council
Compensation & Benefits Committee
I
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I
5
Council Compensation and Benefits
Committee Recommendations:
2006 Compensation
■ Propose in 2006/2007 Budget
+bring pay range maximums back to market
70th percentile — 2006 Pay Plan
+does not mean moving employees back to
their proportionate location in the pay range
+grant merit and skill increases and cost-of-
living adjustment in some form
+supported by the Council Compensation &
Benefits Committee
6
ATTACHMENT
RESOLUTION 2004-137
COUNCIL COMPENSATION & BENEFITS
COMMITTEE RECOMMENDATIONS
According to Resolution 2004-137:
"...the Committee is hereby directed to re-convene, as often as it deems
necessary, to address the following issues regarding employee
compensation and benefits and to submit recommendations regarding the
same to the Council no later than March 31, 2005"
a. 'Whether and how to implement the various cost savings options
referenced in the Gallagher Report;"
Committee Recommendation
The Committee supports implementing several of the Gallagher
cost savings options as detailed in the 2004 Gallagher Report. The
recommended options are summarized in Appendix A, entitled
Summary of Benefits Consultant Report.
b. "To develop a unified strategy to address both the rising cost of
medical benefits and the competitiveness of the City's pay plan
• relative to the Council's 70th percentile pay philosophy;"
Committee Recommendation
The Committee recommends that several of the cost savings
options identified in the 2004 Gallagher Report be implemented
effective January 1, 2006. These changes represent approximately
$1 million of cost shifting to employees, but will bring our plan
design and pricing more in line with our identified markets. It is
further recommended, however, that these changes to the medical
plans be implemented with a corresponding implementation of the
following changes in relation to the City's pay plan:
1. Consistent with the Council-adopted philosophy of setting the
pay range maximums at the 70th percentile of the competitive
market, that a 2006 Pay Plan is implemented which establishes
the pay range maximums at the 70th percentile of the market;
and
2. Merit and skills-base pay increases, and some type of cost of
living adjustment are resumed in 2006.
G. 'Whether and how to develop an "HR Metrics" approach to
employee compensation and benefits, whereby the Council would
establish certain parameters based upon a desired ratio of
personnel costs to overall operating costs within which the City
Manager would fix the compensation and benefits of City
employees;"
Committee Recommendation
The analyses conducted as a part of the Council Compensation &
Benefits Committee's work resulted in some meaningful and
insightful discussions. The trends in the data provided important
insights into our "people costs" in relation to our Personal Services
budgets. As a result of this effort, the City Manager has requested
that all service areas develop performance metrics that would be
used to track service area performance, and would also be
available to provide meaningful operational information back to the
City Council.
These conversations are ongoing, and it is too early to determine
whether this data would facilitate operational decision making. As
such, it is not recommended that the HR Metrics approach be
implemented at this time.
d. "Any other issues relating to employee compensation and benefits
that the Committee and the Interim City Manager agree to submit to
the Committee for its consideration."
Committee Recommendation
The Committee recommends evaluating a one-time lump sum
adjustment (not added to employees' base pay) in 2005. Any such
increase would be contingent on funding availability, and would
most likely be implemented sometime in the second half of the
year.
!: Boards and Commissions
ATTACHMENT
JM631
City of Fort Collins
MEMORANDUM
DATE: March 21, 2005
TO: Mayor and City Council Members
FROM: Valerie Remington, Personnel Board Chair
James Lyall, Vice Chair
RE: Position on Gallagher Report Recommendations
One of the objectives included in the Personnel Board's 2005 Work Plan was:
"During the first quarter, the Personnel Board shall give emphasis to its advisory
role with special focus on employee benefits and recommendations, other than
• premium, to the City Manager. Assist the Human Resources Director and City
Manager in the study of current employee fringe benefits package to determine
how the cost to the city may be reduced to achieve budget savings."
At the March 15, 2005 Personnel Board meeting, we reviewed a draft of the Ad
Hoc Compensation & Benefits Committee recommendations as related to the
Gallagher Report. This draft was provided by Rick DeLaCastro Human
Resources Director who is a member of the Ad Hoc Compensation and Benefits
Committee.
Any increases in employees' share of medical costs should be considered jointly
with an analysis of the competitiveness of employees' pay. Many employees
have not seen any type of pay increase including cost of living for three or more
years, and this is an issue of great concern to the Board. As a Board we are in
support of compensation increases for City employees, and encourage City
Council to make this a priority for 2006.
c: Ad Hoc Compensation and Benefits Committee
Darin Atteberry, City Manager
Rick DeLaCastro Human Resources Director
•
300 LaPorte AvcnUe ^ P.O. Box ;80 - Fort Collins,CO 80522-0580 ^ (970)2.21-6500
Council Compensation & Benefits Committee's
Recommended Changes to the City's Medical Plans
Effective 1/1/2006
What Cost Impact
1. Implement Wellness Program Future savings to be determined
2. Continue to promote and expand disease Future savings to be determined
management initiatives
3. Increase Dependent Portion of the Employee Estimated $60,000 savings
Contribution—PPO1 Plan to 5% of market
premium
4. Implement Outpatient Surgery, diagnostic lab Estimated $225,000 savings
and x-ray at 10% coinsurance
5. Implement prescription drug structure the Estimated $49,000 savings
same as PPO1&2 with no deductible
6. Increase in-network deductible for PPO2 from Estimated $49,000 savings
$200 to $400 and out of network deductible
from $500 to$1000.
Increase in-network out-of-pocket maximum Estimated $40,000 savings
7. for coinsurance from $1,450 to $2,000
8. Cover preventive services as under the POS Estimated $50,000 cost to plan
plans to reinforce Wellness concept.
9. Increase the dependent portion of the Estimated $595,000 savings
premium to 20%of market premium
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