Employee Compensation Review - lausd.k12.ca.us · Assignment Categories ... 3/19/2004 Employee Compensation Review 9 5-Year Headcount by School Year ... Employee benefits are substantial

Employee Compensation Review

Human Resources Committee

March 25, 2004

Tim Buresh Chief Operating Officer

3/19/2004 Employee Compensation Review 2

Why Do We Need An Employee Compensation Review?

Employees: the key enabler for the District to fulfill its missionCompensation: a key factor to attract, motivate, and retain employees as well as the primary budget driverBudget crisis: requires a permanent structural change; all practices by all parties need to be re-evaluated and improved


Background

Lack of Management Information on Employees and Cost StructureSeveral months finding, extracting data, and creating management information and toolsInitial Presentation to HR Committee of basic information and observations


What is Total Employee Compensation?

Gross payBase pay, salary, wages, net paySalary AddsFringes-3000 codes: OASDHI, PARS, PERS, Retiree, STRS, SUI, WC, Dental, Life, Medicare, Medical, VisionFringes-Paid Time Off (PTO): vacation, holiday, illness, miscellaneous*, filler*, overtime, personal necessity, workers comp, jury duty, bereavement (*adjustments required)Unfunded tails, liabilitiesOverheadsTruncated work year District cost vs. total employee compensation


System Complexity: Employee Characterization Hierarchy

Service Type• Certificated• Classified• Unclassified

Employment Status• Permanent• Regular• Probationary• Provisional• Substitute• Temporary• District Intern• University Intern

BU MembershipAssigned Time• Full-Time• Part-Time

Assignment Categories• Primary Assignment• Multiple Assignments

Benefits• Fully-Benefited• Partially-Benefited• Non-Benefited


System Complexity: Too Many Pay Codes, But Not Enough

100+ different codes for comp Time-related codes > 97% of gross pay• Paid work: RG, OT• Paid but not worked:

HO, FL, IL, IH, FL*, MS*, PN, VA, WC (* adjustments required)

• Intersecting issues: IL, IH, MS, PNNo code to track professional developmentIntegrity of time reporting system- hard to know if reporting is accurate


Summary

Compensation cost represents 80%+ of District operating costs• $5.3B, FY 02-03 • $3.2B, FY 03-04 (YTD: 8 pay periods)

Costs are escalating; revenue is flat; headcount and worked time are downStatus quo needs evaluation and changeSubstantial financial and non-financial opportunities are available


Summary: Total Cost of Workforce

$3.1 $3.4 $3

.9

$4.0

$4.1

$2.5

$2.5

$0.6 $0

.7 $0.8 $1

.0 $1.1

$0.6

$0.7

$-

$1

$2

$3

$4

$5

$6

1998-99 1999-00 2000-01 2001-02 2002-03 2002-03* 2003-04*

Bill

ions

School Year

Tota

l Cos

t

3000 BenefitsGross Pay

* YTD: 8 pay periods


5-Year Headcount by School Year

115,

337

121,

975

126,

068

122,

872

119,

787

111,

809

93,9

74

98,2

84

101,

497

103,

848

100,

691

96,9

55

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04*

School Year

Num

ber o

f Pai

d Em

ploy

ees

Unique # of Employees PaidAvg # of Employees Paid Per Period

* 2003-04 is YTD which includes 8 pay periods


5-Year Headcount by Pay Period

0

20,000

40,000

60,000

80,000

100,000

120,000

1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 7 8

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

School Year/Payroll Period

Num

ber o

f Em

ploy

ees

Total

Certificated

Classified

Unclassified


Headcount by Class TypeSchool Year 2002-03*

UNCLASSIFIED17%

(19,254)

CERTIFICATED48%

(54,275)CLASSIFIED

35%(39,893)

* This profile is based on the last date of the school year on 6/30/2003. Total headcount in this chart will differ from that of other charts which measure different time periods or over a length of period.


Demographics:Years Since Hired

* All active employees as of 1/2004** Approximately 7,000 employees not in this chart because their hired dates are not readily available

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000<1 1

2

3

4

5

6

7

8

9

1

0 1

1 1

2 1

3 1

4 1

5 1

6 1

7 1

8 1

9 2

0 2

1 2

2 2

3 2

4 2

5 2

6 2

7 2

8 2

9 3

0 3

1 3

2 3

3 3

4 3

5 3

6 3

7 3

8 3

9 4

0 >4

Years Since Hired

Num

ber o

f Em

ploy

ees

UNCLASSIFIED

CLASSIFIED

CERTIFICATED


Demographics:Employee Age Distribution

0

500

1,000

1,500

2,000

2,500

3,000

3,500

7 17 22 27 32 37 42 47 52 57 62 67 72 77 82 87 100

Age

Num

ber o

f Em

ploy

ees

UNCLASSIFIEDCLASSIFIEDCERTIFICATED

Employees

AGE

Class Type

* All active employees as of 1/2004


Total Cost of Workforce

$3.1 $3.4 $3

.9

$4.0

$4.1

$2.5

$2.5

$0.6 $0

.7 $0.8 $1

.0 $1.1

$0.6

$0.7

$-

$1

$2

$3

$4

$5

$6

1998-99 1999-00 2000-01 2001-02 2002-03 2002-03* 2003-04*

Bill

ions

School Year

Tota

l Cos

t

3000 BenefitsGross Pay

* YTD: 8 pay periods


Total Cost by Class TypeSchool Year 2002-03

CLASSIFIED27%

($1,393.6M)

CERTIFICATED67%

($3,567.5M)

UNCLASSIFIED6%

($292.0M)


Top Pay Codes by Gross Pay for School Year 2002-03

RG-REGULAR PAY73%

VA-VACATION PAY2%

MS-MISC TIME PAY1%

OT-OVERTIME PAY1%

Other Time-Related Pay Codes

1%

FL-FILLER PAY (OFF TRK10%

HO-HOLIDAY PAY6%

IL-ILLNESS FULL PAY3%

Other Pay Codes3%

Pay CodeGross Pay (millions) %

RG-REGULAR PAY $3,006.0 73%FL-FILLER PAY (OFF TRK $418.2 10%HO-HOLIDAY PAY $253.4 6%IL-ILLNESS FULL PAY $113.2 3%VA-VACATION PAY $69.4 2%MS-MISC TIME PAY $44.9 1%OT-OVERTIME PAY $44.7 1%Other Time-Related Pay Codes $40.4 1%Other Pay Codes $132.4 3%School Year 2002-03 Total $4,122.5 100%


Observations: Current Practices

Major functions need improvement• Salary and benefits management• Timely and accurate time reporting• Control systems• Attendance management• Prudent utilization of benefits• District and employee performance


Observations: Pay and Fringe Structure--Salary Plus Salary Adds

Complex structure• Need to improve management oversight• Consequences to District not always understood

Over 200 differentials• Most as adds and others as increase of base pay• Little visibility: adds, differentials, stipends, perks

Over 100 different pay codes


Observations: Pay and Fringe Structure--Fringes

Employee benefits are substantial• 30-95% on top of base salary for permanent,

“benefited” employees, and risingPayment for “Paid Time Off” and 3000 code benefits masked in payroll• Little oversight, accountability, ownership• Cost of $950M YTD

Budget structure understates true District costs of employees“Pay as you go” and other practices relating to benefits will materially add to unfunded liabilities


Observations: Pay and Benefit Growth

Last Four Years• Headcount: +9%• Worked man hours: +11%• Gross payroll plus benefits: +42%• 3000 Benefits: +88%

Last Two Years• Costs increasing more than 5% per year• Headcount down 3% per year• Worked man hours decreasing 2% per year

Last six months year-to-year comparison• Costs increased 6-7% [annualized]• Worked man hours decreased 2-3% [annualized]


Total Cost vs. Total Hours Worked

60

70

80

90

100

110

120

130

1998-99 1999-00 2000-01 2001-02 2002-03 2002-03* 2003-04*

Mill

ions

School Year

Tota

l Hou

rs W

orke

d

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Bill

ions

Tota

l Cos

t ($)

Hours WorkedTotal Cost

(All figures are in millions)School Year Worked Time Gross Pay 3000 Benefits Total Cost

Hours %chg Amount %chg Amount %chg Amount %chg 1998-99 104.5 3,136.6$ 600.7$ 3,737.4$ 1999-00 111.5 6.6% 3,447.9$ 9.9% 711.5$ 18.4% 4,159.4$ 11.3%2000-01 115.8 3.9% 3,865.4$ 12.1% 831.2$ 16.8% 4,696.6$ 12.9%2001-02 118.7 2.5% 4,035.9$ 4.4% 963.1$ 15.9% 4,999.0$ 6.4%2002-03 115.9 -2.4% 4,122.5$ 2.1% 1,130.6$ 17.4% 5,253.1$ 5.1%

*8 pay periods2002-03* 65.6 2,463.6$ 621.1$ 3,084.7$ 2003-04* 64.6 -1.5% 2,467.5$ 0.2% 733.1$ 18.0% 3,200.6$ 3.8%


Next Steps

Attendance reviewReview of current practicesDetailed pay and benefit growth reviewOther

Documents

Employee Compensation Review - lausd.k12.ca.us · Assignment Categories ... 3/19/2004 Employee Compensation Review 9 5-Year Headcount by School Year ... Employee benefits are substantial