Nancy Scarlet Human Resources Director

Nancy ScarletHuman Resources Director

Timeline of Major Changes to Fringe Benefit Package

What’s in Your Bucket?

Active Employee

Healthcare

Position Management

& Salaries

Retirement Retiree

Healthcare

What Oakland County Did– 8 1997-Healthcare contributions required for new hires

– 10 2003-Healthcare contributions increased for all employees – 2-tier system

– 11 2003/04-Employees move to 3-tier prescription co-pay

– 13 2007-Raised co-pays & deductibles for employees. Prescription co-pay equal for all.

– 15 2007-Employee Wellness Program begins

– 18 2008/09-Raised healthcare contributions of long term employees to match new hires

– 20 2008-Switched vendor for prescription coverage and Medicare Parts A&B

– 22 2009-Prescription formulary changes

Active Employee Healthcare

OakFit Wellness Review 2009

Health Screening and HRA Participation

50.4% (1774 out of 3519)

48.8% (1725 out of 3667)

47.7% (1639 out of 3679)

1550 1600 1650 1700 1750 1800

2007

2008

2009

(Participants completed both Screening and HRA)

Number of Health Screening and Health Risk Assessment Participants

Participation increased each year with an overall increase of 9% from 2007 to 2009. (Percentages are based on the total number of employees who are eligible to participate.)

2009 Health Risk Status of Oakland County Employees

Medium Risk23.6%

High Risk9.7%

Low Risk 66.8%

Low Risk (0-2 risks)

Medium Risk (3-4 risks)

High Risk (5+ risks)


High Risk 10%

Low Risk 65%

Medium Risk 25%





Low Risk 39%

High Risk 16%

Medium Risk 45%




Health Risk Status 2006 - 2009

Results from 930 employees who completed both the Health Screening and Health Risk Assessment (HRA) all three years.

• Recent changes in health care benefits have proven effective for controlling cost.

• 2008 costs were reduced by 8% from prior year’s costs. In comparison, according to the National Coalition on Healthcare, employer-based premiums rose an average of 5% in 2008.

• Prior to the reduction in 2008, the average annual increase was 13% for the period 2004 through 2007.

What Oakland County Did– 1 1984-Discontinued longevity pay for new hires

– 17 2009-Hiring freeze begins again (prior freezes in 1994 and 2003)

– 24 2010-Wage reduction of 2.5%

Position Management & Salaries

Compensation ComparisonOakland County vs. National Increases and CPI-U

Ten Year Trend: Comparison of Oakland County General Increaseto National Pay Increases and Consumer Price Index-U

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Pay Increases (Source: Mercer Compensation Survey) Oakland County General Salary Increases CPI-U U.S. City Average

General Salary IncreasesOakland County ● Cities ● State

Yea

r

Oak

lan

d

Au

bu

rn H

ills

Bir

min

gh

am

Dea

rbo

rn

Det

roit

Lan

sin

g

Liv

ing

sto

n

Liv

on

ia

Po

nti

ac

Ro

ches

ter

So

uth

fiel

d

Tro

y

Gen

ese

e

Ing

ha

m

Ken

t

Mac

om

b

Mu

skeg

on

OC

RC

Was

hte

naw

Wat

erf

ord

Way

ne

W B

loo

mfi

eld

Sta

te o

f M

I

2002 4.0 3.0 3.0 2.8 3.0 3.0 4.5 3.5 3.0 4.8 3.3 2.6 3.0 4.0 3.0 3.0 2.0

2003 3.0 3.0 3.0 3.0 3.0 3.5 3.5 3.0 6.5 3.3 2.0 4.0 3.0 3.0 2.0

2004 2.0 3.0 3.0 2.0 3.0 3.0 2.5 3.5 5.0 3.0 3.0 3.0 3.0 2.3 2.0 0.0 3.0 2.0 3.0

2005 3.0 3.0 3.0 2.0 2.3 3.0 2.0 2.5 5.0 2.5 3.0 2.3 2.5 2.3 1.0 3.0 2.0 3.0 4.0

2006 2.0 3.0 2.3 3.0 2.5 2.0 3.0 2.5 2.3 2.5 3.0 1.0 2.0

2007 2.0 1.0 2.3 2.5 3.0 2.2 2.0 2.0 3.0 2.5 3.4 2.5 2.5 2.5 3.0 1.0 4.0

2008 1.0 2.1 2.5 3.0 2.8 1.0 2.5 2.5 3.0 3.1 0.0 2.8 3.0 1.0 4.0

2009 1.0 2.3 2.0 2.0 2.5 0.0 2.5 2.0 3.0 0.0 0.0 0.0 0.0

2010 -2.5 1.0 0.0 2.5 0.0 2.5 1.0 0.0 0.0 -10.0 1.0

General Salary IncreasesCounties and Cities

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

Pe

rce

nta

ge

In

cre

as

e

Oakland County

Auburn Hills

Birmingham

Dearborn

Detroit

Lansing

Livingston County

Livonia

Pontiac

Rochester

Southfield

Troy

Genesee County

Ingham County

Kent County

Macomb County

Muskegon County

OC Road Comm

Washtenaw County

Waterford Twp

Wayne County

West Bloomfield

General Salary IncreasesOakland County & Cities

Retirement

What Oakland County Did:– 4 1993-Early retirement incentive - DB

– 5 1994-Defined benefit pension plan closed to new hires. Defined Contribution plan

offered

– 9 2002/03-Early retirement incentive DB & DC

– 19 2008-Discontinue social security tax for PTNE employees.

Replace with tax deferred retirement account

– 21 2008-Retirement incentive offered to employees already eligible to retire

– 23 2010-Elimination of Deferred Compensation Match program ($300)

Retiree Healthcare

What Oakland County Did– 2 1985-Retiree healthcare vesting schedule lengthened for new hires

– 3 1987-Began prefunding retiree healthcare obligations

– 6 1994-Buy-out offered to deferred retirees to waive future healthcare coverage

– 7 1995-Retiree healthcare vesting schedule lengthened again for new hires

– 11 2003/04-Retirees move to 3-tier prescription co-pay

– 12 2006-Discontinue traditional retiree health benefits for new hires. Health Reimbursement Account (HRA ) offered.

– 13 2007-Raised co-pays & deductible for retirees. Prescription co-pay raised to active employees levels

– 14 2007-Buy-out offered to deferred retirees to waive future healthcare

– 16 2007-Trust Certificates issued

– 20 2008-Switched vendor for prescription coverage and Medicare supplemental health coverage

– 22 2009-Prescription formulary changes

• Costs have remained flat for the past three years.

• In comparison, the 9/30/07 actuary study includes the assumption that health care costs would rise 9.5%. Costs for FY 2008 were projected to be $25.3 million as compared to actual costs for that period of $20 million.

10. Start with a clear understanding of your financial picture….

both short term and long term.

Top 10 Keys to SuccessfulOakland County Implementation

9. Utilize experts. The ROI for an experienced Actuary, Benefit Consultant, Labor Attorney will more than pay for the cost of their services. Seek out best practices. Ask for help.


8. Provide financial facts to stakeholders (e.g., Elected Officials, Labor Groups, Employees, Board and Council members). Everyone needs to be on the same page.


7. Determine organizational priorities and assign budget reduction tasks based on those priorities. Be prepared to explain how your determination was reached (i.e., equal share of the pie based on current budget allocation). Be clear that cuts must be structural in nature.


6. Let Elected Officials decide how to reorganize, cut their budget and run their operation.


5. Assist Elected Officials by creating vacancies where possible (e.g., Hiring Freeze, Retirement Incentives, use of part time employees or temporary staff). Much easier to get cooperation when vacant positions are cut. Hold the line on position creep.


4. Benchmark your benefit plan, retirement plan and salaries with other public and private agencies. At a minimum, make changes to “new hire” package going forward.


3. Treat union and non-union employees similarly (i.e., reduces administrative costs, enhances internal equity, improves morale and sends the message we are all in this together)


2. Be credible and lead. Keep your word, continually communicate the facts to stakeholders (recognizing they are subject to change) and “go first.” If wages need to be cut, start with leadership.


1. DO SOMETHING….incremental but significant changes reap huge benefits over time. You may need to go deeper but begin somewhere (e.g., new hire package).


Nancy ScarletHuman Resources Director

[email protected]

Additional Resources

• Detailed chronological list entitled“Changes to Oakland County’s Benefit Package”

• Resource documentation used for each benefit package change including resolutions, memos, lists, etc.

(Note: Numbered list and documents correspond with numbers on timeline in slide #2)

Nancy Scarlet Human Resources Director

Documents

Transcript of Nancy Scarlet Human Resources Director