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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
6
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
7
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%
9
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
10
• 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
11
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
12
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
13
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
16
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
17
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
18
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
19
Impact of Changes on Employee Net Pay
20
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.
21