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Mecklenburg County Employee Compensation

Mecklenburg County Employee Compensation. Budget/Public Policy Workshop March 28, 2006. Presentation Agenda. Market-Based Compensation Pay-for-Performance Competitive Benefits Insurance Reserves. Potential Impact on FY07 Budget*. Market-Based Compensation

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Mecklenburg County Employee Compensation

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  1. Mecklenburg County Employee Compensation Budget/Public Policy Workshop March 28, 2006

  2. Presentation Agenda • Market-Based Compensation • Pay-for-Performance • Competitive Benefits • Insurance Reserves

  3. Potential Impact on FY07 Budget* Market-Based Compensation Annualized FY06 market adjustments $4.8 million Pay-for-Performance Annualized FY06 Merit Increase $ .6 million FY07 Merit Increase (full annual cost) $5.8 million Benefits Estimated increase for Medical/Dental $2.7 million 401(k)/457 for full year of 5% match $1.2 million Insurance Reserve Funding $ .7 million Total $15.8 million *Represents Cost in county dollars

  4. Market-Based CompensationAddressing Red Lights • Fair Pay = Market Value • Improve Recruitment (Right Person for Right Job) • Increase Career Opportunities • Increase Employee Motivation and Satisfaction

  5. Strategy for Change • Comprehensive Job Classification and Compensation Study • Approved by the Board in December • Total annualized cost of $9.2 million • FY06 budget $4.4 million • FY07 budget request $4.8 million

  6. Success Factors • Sustained commitment to remain at market • Excellent market data needed • Good management skills in each department • Employee communication of system is critical • Focus is on performance

  7. Pay-For-Performance Rationale: Financial incentives provide specific direction and motivation for employees to achieve the goals of the organization; more productive employees who achieve more are paid more. Actual Distribution for FY06 Performance Level % of Employees Merit Increase Exemplary 44% 4% to 5% Successful 55% 2.5% to 3.5% Needs Improvement 1% 0 – 1%

  8. Pay-For-Performance Annualized Cost of FY06 Merit Increases $ 600,000 FY07 Merit Increase (full annual cost) $5,100,000* Increased fringe benefit cost $ 700,000 Total $ 6,400,000 *Represents a 3.5% increase to current payroll

  9. Integrating Market-Based Compensation and Pay-for-Performance Position: Project Manager (Illustrative only) • Current Market Rate: $44,000 • No market adjustments until FY08 • Employee’s Current Salary: $45,000 • 3% Merit Increase (Successful Performance): $1,320* • Employee’s New Salary: $46,320 • Increased benefit costs for family coverage: $862 *Pay increase is calculated on the market rate rather than employee’s current salary

  10. Competitive Benefits FY07 Budget projections: • 12% increase for medical 1/1/2007 • 15% increase for dental 7/1/2006 • Annualized cost of 5% match for 401k/457 plan approved in the FY06 budget • Estimated increase for Medical/Dental $2.7 million • Annualized cost for 401k/457 $1.2 million Total $3.9 million

  11. Medical Cost Trends in the Southeast vs. Mecklenburg County

  12. Medical Insurance Reserve Goals • Medical/Drug $2,500,000 • Dental $ 200,000 • Margin (10%) $ 250,000 • Administration $ 162,000 • Total Reserves $3,132,000

  13. Medical Reserve Projection

  14. Progress Towards Goal • Notes: • Medical Reserve does not include $300,000 expected for the County’sMedicaid Part D • Medical Reserve does not include any savings projected from switching toCigna Healthcare

  15. Potential Impact on FY07 Budget* Market-Based Compensation Annualized FY06 market adjustments $4.8 million Pay-for-Performance Annualized FY06 Merit Increase $ .6 million FY07 Merit Increase (full annual cost) $5.8 million Benefits Estimated increase for Medical/Dental $2.7 million 401(k)/457 for full year of 5% match $1.2 million Insurance Reserve Funding $ .7 million Total $15.8 million *Represents Cost in county dollars

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