Compensation & Benefits

Presentation to School Board

February 11, 2013

Discussion Topics

Compensation & Benefits Philosophy

Recent Pay Actions

Proposed Salary Increases

Market Competitiveness – Teacher Salaries in the Region

Cost Increases in Benefit Programs

Healthcare Reform Overview and Impact

Impact of Benefit Changes on Employee Pay

2

ACPS Compensation & Benefits Philosophy

Salary and benefits are key factors in employee recruitment and

retention. The goals of ACPS compensation and benefit plans are:

– To attract and retain highly skilled employees,

– To remain competitive in the market, and

– To provide a balance of salary and benefits that meets the needs of

our employees and their families

3

ACPS Pay Actions

Step Increase Market Rate

Adjustment

FY 2009 Full Step No

FY 2010 Full Step, Mid-Year No

FY 2011 Full Step, Mid-Year No

FY 2012 Full Step No

FY 2013 No Yes

Proposed FY 2014 No Yes

4

Market Competitiveness

5

Market Rate Adjustment and Step Increase

FY2009 FY2010 FY 2011 FY 2012 FY 2013

School Division

Market Rate

Adjustment Step

Increase

Market Rate

Adjustment Step

Increase

Market Rate

Adjustment Step

Increase

Market Rate

Adjustment Step

Increase

Market Rate

Adjustment Step

Increase

Alexandria City No Full Step No Full-Step/1/2 yr No

Full- Step/1/2yr. No Full Step 2.2% + 5% VRS No

Arlington County 2.2% No No Full-Step /1/2 yr No No No Full Step 2.68% + 5% VRS No

Fairfax County 2% Full Step No No No No 1% Full Step 1.25 % + 2% VRS No

Falls Church City 3% Full Step No 1/2 Step Full yr No No No No No Yes

Loudoun County No No No No No No 3% No Yes* No

Manassas City No No No No No No 2.25%-2.36% No 2.5% + 1% VRS No

Montgomery County, MD N/A N/A No Full Step No No No No No Yes

Prince George's County, MD 3% No No No No No No No N/A N/A

Prince William County 3% 3% No No No No 2.35% No 1% VRS No

*Increased each step by a fixed dollar amount

Market Competitiveness – Teacher Compensation

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Division Beginning

Teacher,

Bachelors Degree,

Step 1

Arlington County $47,282

Alexandria City $46,773

Montgomery

County

$46,410

Loudoun County $45,167

Fairfax County $45,161

Prince George’s

County

$44,799

Manassas City $44,564

Falls Church City $44,290

Prince William

County

$44,048

Manassas Park

City

$42,799

Source: Washington Area Boards of Education (WABE) – FY 2013 Guide

Division Experienced

Teacher, Masters

Degree, Step 9

Arlington County $71,982

Alexandria City $70,808

Montgomery County $67,723

Prince George’s

County

$63,020

Falls Church City $62,388

Prince William County $58,895

Fairfax County $58,303

Manassas Park City $55,758

Manassas City $54,197

Loudoun County $54,040

Division Maximum

Salaries

Arlington County $109,078

Alexandria City $106,197

Montgomery

County

$103,634

Manassas Park

City

$102,775

Prince William

County

$100,427

Loudoun County $100,072

Falls Church City $99,443

Manassas City $98,021

Fairfax County $96,039

Prince George’s

County

$91,752

ACPS Salary Increases School Year 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Pay Action

No MRA

Full Step

No MRA

Full Step,

Mid Year

No MRA

Full Step,

Mid Year

No MRA

Full Step

7.2% MRA*

No Step

Proposed

2% MRA

No Step

Percent

Increase

2009-2014

192 Days 194 Days 192 days 194 Days 197 Days 197 Days

Bachelor's Salary Scales

Step 1 Step 2 Step 3 Step 4 Step 4 Step 4

Beginning Teacher $ 42,671 $ 44,624 $ 45,710 $ 49,078 $ 52,613 $ 53,665 26%

Step 10 Step 11 Step 12 Step 13 Step 13 Step 13

Mid Career $ 60,721 $ 62,887 $ 63,795 $ 66,864 $ 71,678 $ 73,112 20%

Maximum $ 73,640 $ 75,895 $ 75,112 $ 78,342 $ 83,983 $ 85,663 16%

Master's Salary Scales

Step 1 Step 2 Step 3 Step 4 Step 4 Step 4

Beginning Teacher $ 48,944 $ 50,937 $ 51,924 $ 55,617 $ 59,622 $ 60,814 24%

Step 10 Step 11 Step 12 Step 13 Step 13 Step 13

Mid Career $ 67,180 $ 70,256 $ 71,965 $ 76,163 $ 81,647 $ 83,280 24%

Maximum $ 90,278 $ 93,043 $ 92,084 $ 96,043 $ 102,958 $ 105,017 16%

* Included 5%

contributions for

VRS

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Summary of Cost Increases in

Compensation and Benefit Programs

8

FY 2014 Cost Increase

2% Market Rate Adjustment (MRA)

- Salary

- Benefits

$2.8 Million

$0.9 Million

Health Insurance Plans

- Medical, Dental

$0.3 Million

Healthcare Trends

ACPS Premium Rate Increases

FY 2010 FY 2011 FY 2012 FY 2013

Proposed

FY 2014

United Healthcare Medical Plan 12% 13% 20% 9.8% 0%

Kaiser Medical Plan 0% 5% 14% 0.2% 5%

Dental Plan 7% 0% 3%

8% 8%

Vision Plan N/A New Plan

Effective

7/1/2010

0%

0% 0%

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Employee Benefits Summary

FY 2013 Proposed FY 2014

ACPS Contributions Employee

Contributions

ACPS Contributions Employee

Contributions

FICA Taxes

- Social Security

- Medicare

6.20%

1.45%

4.20%*

1.45%

6.20%

1.45%

6.20%*

1.45%

Virginia Retirement Plan (VRS)

- Professional

- Non-Professional

11.66%

5.43%

5%

5%

11.66%

5.43%

5%

5%

Retiree Health Credit (VRS) 1.11% 0% 1.11% 0%

Supplemental Retirement Plan 0% 2.25%** 0% 1.5%**

Basic Life Insurance 0.48% 0.71% 0.48% 0.71%

Long Term Disability 1.55% 0% 1.55% 0%

Medical Insurance***

- Family Coverage

- Individual Coverage

$ 18,006

$ 6,748

$ 6,002

$ 2,249

$ 18,486

$ 6,928

$ 5,522

$ 2,069

Dental Insurance

- Family Coverage

- Individual Coverage

$ 601

$ 229

$ 324

$ 123

$ 649

$ 247

$ 350

$ 133

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• 4.2% for CY 2012 ; 6.2% effective January 1, 2013

** 2.25% first half of FY 2013, 1.5% effective January 2013

*** UHC HMO medical plan for teacher group

Healthcare Premium Trends

-5%

0%

5%

10%

15%

20%

25%

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Proj. FY 2014

National Trend Survey ACPS Trend - Kaiser ACPS Trend - UHC

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Healthcare Participation

Approximately 1,700 employees or 75% of all eligible employees

participate in a medical plan, either with Kaiser or United Healthcare

• Highest participation with United Healthcare

• 77% participate in HMO plans; 23% in POS plans

• Approximately 60% of participants elect individual coverage

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Health Insurance Participation

Active Employees

0

100

200

300

400

500

600

700

800

900

FY 2011 FY 2012 FY 2013

Kaiser HMO Kaiser POS UHC HMO UHC POS

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58% 19%

23%

Coverage Type

Employee Only Employee + 1 Family

Healthcare Cost Sharing Structure

Proposed Employee Contributions – HMO Plans

14

FY 2013 FY 2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Administrator/SupportAbove Grade 25

Professional (Teachers) Support Below Grade 25

85% 75%

90%

15% 25%

10%

ACPS Employee

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Administrator/SupportAbove Grade 25

Professional (Teachers) Support Below Grade 25

85% 77%

90%

15% 23%

10%

Healthcare Cost Sharing Structure

Proposed Employee Contributions – POS Plans

15

FY 2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Administrator/SupportAbove Grade 25

Professional (Teachers) Support Below Grade 25

70% 68% 70%

30% 32% 30%

ACPS Employee

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Administrator/SupportAbove Grade 25

Professional (Teachers) Support Below Grade 25

70% 70% 70%

30% 30% 30%

FY 2013

Retiree Health Insurance

ACPS offers medical and prescription drug coverage to

its retirees – ACPS subsidy maximum $265 per retiree per month

– Monthly retiree health credits of $4 per year of service (must have 15

years of service with Virginia Retirement System)

– Participation has increased over time • 445 retirees and their dependents enrolled in an ACPS medical plan

Retirees may also continue to enroll in dental and vision

plans

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Healthcare Participation

Retirees

0

50

100

150

200

FY 2011 FY 2012 FY 2013

Kaiser HMO Kaiser POS Kaiser Medicare Plus

UHC HMO UHC POS UHC Medicare Advantage

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Healthcare Reform Impact

Patient Protection and Affordable Care Act (PPACA) was signed into law on

March 23, 2010, with major changes that will take effect in 2014 and beyond.

Following is a summary of the changes that ACPS has implemented in

response to Healthcare Reform requirements:

– Dependent coverage to age 26, effective July 1, 2010

– Preventive care covered at 100% (wellness and immunizations), effective

July 1, 2011

– Over the counter drugs are not eligible for reimbursement under health

care flexible spending account, effective July 1, 2011

– 2012 Forms W-2 reporting includes the cost of health coverage, provided

to employees in January 2013

– Health care flexible spending account capped at $2,500 effective July 1,

2012

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Healthcare Reform Impact

Other Healthcare Reform requirements include

• The development and communication of Summary of Benefits and

Coverage with the required contents and format, effective July 1, 2013

• Notice of Healthcare Exchange availability must be provided on or after

March 1, 2013 (This notice has been delayed by the Federal Gov’t)

• Auto enrollment into employer plan – employers are not required to

comply until guidance is issued

• In 2018, excise tax on high cost plans with value of coverage exceeding

$10,200 for single coverage and $27,500 for family coverage

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Impact of Changes on Employee Net Pay

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Assume Health Insurance to include UHC HMO, Dental and Vision, Individual Coverage

Bus Driver Food Service Teacher Assistant Principal

Fiscal Year

2013

2014

2013

2014

2013

2014

2013

2014

Gross Salary $24,895 $25,393 $15,940 $16,259 $70,808 $72,224 $ 91,227 $ 93,051

VRS Retirement $ 1,245 $ 1,270 $ 797 $ 813 $ 3,540 $ 3,611 $ 4,561 $ 4,653

Supplemental

Retirement

$ 467 $ 381 $ 299 $ 244 $ 1,328 $ 1,083 $ 1,710 $ 1,396

Life Insurance $ 177 $ 180 $ 113 $ 115 $ 503 $ 513 $ 648 $ 661

Health Insurance $ 1,108 $ 1,130 $ 1,108 $ 1,130 $ 2,457 $ 2,299 $ 1,558 $ 1,579

Net Pay $21,898 $22,432 $13,623 $13,957 $62,980 $64,718 $82,750 $84,762

Change $ 534

$ 334 $ 1,738 $ 2,012

For illustrative purposes, employees’ salaries are Step 9 of their respective salary scale;

health insurance includes UHC HMO, Dental, Vision, Individual Coverage

Glossary of Terms

FICA Taxes

Federal Insurance Contributions Act (FICA) is a Federal payroll tax - Employees and employers

must pay FICA to fund Social Security and Medicare programs, currently 7.65%

Full Step, Mid Year Full step is given at the middle of the school year or January 1

Healthcare Reform

Also known as the Patient Protection and Affordable Care Act (PPACA), signed into law in 2010.

The law includes health-related provisions to take effect over the next four years, including

expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for

businesses to provide health care, prohibiting denial of coverage and claims due to pre-existing

conditions, and establishing health insurance exchanges.

HMO

Health Maintenance Organization - An organized healthcare delivery sytem that requires care to

be rendered by in-network providers, except in case of emergency.

Kaiser

Kaiser Permanente is a well known health maintenance organization with facilities located

throughout Northern Virginia, Maryland, and District of Columbia.

Medicare Advantage

Medicare Advantage Plan is a type of Medicare health plan offered by a private insurance

carrier that contracts with Medicare to provide benefits.

MRA Market rate adjustment or cost of living increase

POS

Point of service plan is a managed care plan that coordinates medical plan. Out of network

benefits are available, subject to higher out-of-pocket expenses.

Retiree Health Insurance Credits

The health insurance credit provides retirees with a reimbursement to assist with the cost of

your health insurance premiums. The credit is added to monthly retirement benefit.

Supplemental Retirement Plan

A defined benefit plan offered by Alexandria City Public Schools that provides retirement

benefits in addition to the Virginia Retirement System.

UHC United Healthcare is a major health insurance carrier with national network of providers.

VRS

Virginia Retirement System is a mandatory retirement plan for full time ACPS employees. VRS

is the main retirement plan for many school districts in Virginia, as well the Virginia State

employees.

VRS Basic Life Mandatory life insurance coverage of 2 times employee's annual salary

WABE

Washington Area Boards of Education (WABE) - Annual statistical survey is completed by

regional districts.

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