Benefits

Town Hall Meeting

September 15, 2010

2:00-3:30 p.m.

Music Recital Hall

Agenda

I. Budget Overview- Reductions since 2008

II. Multi-Year Projection: 2011 - 14

III. Projected Year End Balance

IV. Rising Health Care Costs

V. Benefits Subcommittee Recommendations

VI. Questions

Total permanent cuts since

2008

In $ MILLIONS

$ .75 in 08-09

$3.50 in 09-10

$1.31 in 10-11

2011-14 Budget

Planning2011-12 2012-13 2013-14

Preliminary Budget Projected Projected

Difference between ongoing Revenues & Expenses (Structural Deficit) ($1,886,000) ($3,586,000) ($5,606,000)

Increase in State Revenue Anticipated 0 0 0

Net Reduction in Revenue 0

Annual Anticipated Expenditure increases to date (1,700,000) (2,020,000) (1,925,000)

Budget Reductions ? ? ?

Ongoing Shortfall* (3,586,000) (5,606,000) (7,531,000)

One-time Bridge Funds 1,250,000

Net Deficit (2,336,000)

*Estimates will change as more information becomes available

Expenditure Increases are

Outpacing Revenues

$1.9 million grows

to $3.6 million

Are benefit changes enough to

cover the deficit?

• 2011-12 Budget Reduction Target: $2.4 million

• 2011-12 Projected benefit increase: $700,000.

• 2011-12 Projected Deficit assuming benefit plan

changes/cost sharing: $1.7 million

Year End Balance

vs.

Cash Balance

Health Care Costs Continue to Rise:

Projected $2.5 million since July 2008

Employee Only $8,774

Employee + 1 $16,971

Employee + 2 or more $23,363

The Cabrillo stipend funds medical, dental, income protection,

life insurance

Benefits Committee Goals

• Cost Containment

• Recommend “baseline medical plan”

• Develop a cost sharing model to allocate benefit cost increases between Cabrillo and employees using a formula

• Provide information to help employees maximize use of the medical plan with the least cost to the employee and Cabrillo

• Develop a survey instrument to help Cabrillo assess employee needs and determine employee preferences with regard to cost containment and allocation of cost increases.

Baseline Medical Plan

• Definition-an acceptable plan that would not be

significantly modified each year.

• Benefits committee recommends Alternative HMO

Plan Option as baseline plan for 2011-12

• Note: Employees may need to pay more of the cost

to maintain the baseline plan over time.

• Reminder: out of pocket premium costs can be paid

using pre-tax earnings.

The Environment

Traditional Cost Containment

Strategies

Areas to focus on:

Plan Design

Plan Choices

Employer

Contribution

Eligibility Audit

Educate Consumers

Cabrillo 2010-11 Plan Designs

2010-11 Cabrillo Funded Low HMO Plan

• $25 co-pay

• 15.19 % increase in 2010-11

Alternative HMO Plan Option

• $30 co-pay

• 5.14% increase in 2010-11

Why Recommend a

Plan Design Change?

Impact of Plan Design Change

• If employee groups agree to change plan

design in 2011-12, we expect the base line

plan cost to be less than the current plan

design cost increase.

• In 2012-13 (year 2 and beyond) the cost

increases may go back up to double-digit

increases.

Cost Sharing

Alternatives

What is a cost sharing model?

• A model that allocates benefit cost increases to

employees or employees and Cabrillo using a

formula:

• Review examples of cost sharing options

Other components of the

benefits package

• Consider changing life insurance maximums to $25,000 for all employees. Costs would be reduced from $68,000 annually to $32,211.

Current maximums are:

• $75,000 - Faculty/Classified/Confidentials

• $100,000 - Administrators• $250,000 - President

• Employees would have the option to purchase life insurance via a payroll deduction.

Retiree Benefits

• We still need to evaluate current plans and

costs associated with retiree benefits.

Communication Plan• Cabrillo will continue to utilize wellness

programs as a long term strategy for cost

reductions.

• However, no significant short term cost

savings associated with wellness programs.

Health Insurance

Online Resources

• Blue Shield of California: Learn about your medical benefits with quick access to

membership information, benefit overview, and physician services. Register at

www.blueshieldca.com

• Medco prescription drug program (PPO high and medium plans): A easy way to get

the most value from your prescription drug benefit. Quick access to medications, refills,

side effects and cost comparisons. Register at www.medco.com

• PrimeMail prescription drug program (HMO mail order): Provides information and tools

to help you use your mail-service benefit. PrimeMail is dedicated to providing

convenience, savings, and service. Register at www.myprimemail.com

• Delta Dental program: Provides information about dental benefits with quick access to

membership information, benefit overview and dentists. Register at

www.deltadentalca.com

Next Steps

• Contracts and agreements have re-openers on salaries and benefits

• Tentative timeline for negotiations - Fall 2010

for October, 2011 Plan Year

• Please complete the benefits survey

Special Thanks

to the

Benefits Subcommittee

• Deborah Bone

• Leah Hlavaty

• Sue Torres

• Kathie Welch

• Loree McCawley

• Graciano Mendoza

• Tatiana Bachuretz

Questions?