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Nancy Scarlet Human Resources Director

Nancy Scarlet Human Resources Director. Timeline of Major Changes to Fringe Benefit Package. 3. 1. 2. 3. 4. 5. 9. 8. 7. 6. 5. 4. 2. 3. 1. 9. 8. 7. 6. 5. 4. 2. 1. 9. 8. 7. 6. 23. 23. 21. 22. 22. 21. 22. 21. 23. 10. 10. 10. 11. 11. 11. 12. 12. 12. 13.

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Nancy Scarlet Human Resources Director

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  1. Nancy ScarletHuman Resources Director

  2. Timeline of Major Changes to Fringe Benefit Package 3 1 2 3 4 5 9 8 7 6 5 4 2 3 1 9 8 7 6 5 4 2 1 9 8 7 6 23 23 21 22 22 21 22 21 23 10 10 10 11 11 11 12 12 12 13 13 13 14 14 14 15 15 15 16 16 16 17 17 17 18 18 18 19 19 19 20 20 20 2007 Trust Certificates Issued 2007 Trust Certificates Issued 2007 Trust Certificates Issued 2007 Hiring freeze begins 2007 Hiring freeze begins 2007 Hiring freeze begins 2008 Switched vendor for prescription coverage & Medicare Parts A&B 2008 Switched vendor for prescription coverage & Medicare Parts A&B 2008 Switched vendor for prescription coverage & Medicare Parts A&B 1994 Buy-out offered to deferred retirees to waive future healthcare 1994 Buy-out offered to deferred retirees to waive future healthcare 1994 Buy-out offered to deferred retirees to waive future healthcare 2003/2004 Active & retirees move to 3-tier prescription co-pay 2003/2004 Active & retirees move to 3-tier prescription co-pay 2003/2004 Active & retirees move to 3-tier prescription co-pay 2006 Discontinued traditional retiree health benefits for new hires. HSAs offered. 2006 Discontinued traditional retiree health benefits for new hires. HSAs offered. 2006 Discontinued traditional retiree health benefits for new hires. HSAs offered. 1994 Defined benefit pension plan closed to new hires. Defined contribution plan offered. 1994 Defined benefit pension plan closed to new hires. Defined contribution plan offered. 1994 Defined benefit pension plan closed to new hires. Defined contribution plan offered. 2008 Discontinue social security tax for PTNE. Replaced with tax deferred retirement accounts 2008 Discontinue social security tax for PTNE. Replaced with tax deferred retirement accounts 2008 Discontinue social security tax for PTNE. Replaced with tax deferred retirement accounts 1987 Begin prefunding retiree healthcare obligations 1987 Begin prefunding retiree healthcare obligations 1987 Begin prefunding retiree healthcare obligations 2010 Elimination of Deferred Compensation Match Program 2010 Elimination of Deferred Compensation Match Program 2010 Elimination of Deferred Compensation Match Program 2003 Healthcare contributions increased for new hires 2003 Healthcare contributions increased for new hires 2003 Healthcare contributions increased for new hires 1997 Healthcare contributions required for new hires 1997 Healthcare contributions required for new hires 1984 Discontinued longevity pay for new hires 1984 Discontinued longevity pay for new hires 1984 Discontinued longevity pay for new hires 1997 Healthcare contributions required for new hires 2007 Employee Wellness Program Begins 2007 Employee Wellness Program Begins 2007 Employee Wellness Program Begins 1985 1990 1995 2000 2005 2010 1985 1990 1995 2000 2005 2010 1985 1990 1995 2000 2005 2010 2008 Healthcare contributions imposed on previously “grandfathered” employees to match new employees; first half implemented in 2008 - second half in 2009 2008 Healthcare contributions imposed on previously “grandfathered” employees to match new employees; first half implemented in 2008 - second half in 2009 2008 Healthcare contributions imposed on previously “grandfathered” employees to match new employees; first half implemented in 2008 - second half in 2009 2009 Prescription formulary changes 2009 Prescription formulary changes 2009 Prescription formulary changes 1995 Retiree healthcare vesting schedule lengthened for new hires; graduated schedule implemented 1995 Retiree healthcare vesting schedule lengthened for new hires; graduated schedule implemented 1995 Retiree healthcare vesting schedule lengthened for new hires; graduated schedule implemented 1985 Retiree healthcare vesting schedule lengthened for new hires 1985 Retiree healthcare vesting schedule lengthened for new hires 1985 Retiree healthcare vesting schedule lengthened for new hires 2007 Buy-out offered to deferred retirees to waive future healthcare 2007 Buy-out offered to deferred retirees to waive future healthcare 2007 Buy-out offered to deferred retirees to waive future healthcare 2002/2003 Early Retirement Incentive DB & DC 2002/2003 Early Retirement Incentive DB & DC 2002/2003 Early Retirement Incentive DB & DC 1993 Early retirement incentive DB 1993 Early retirement incentive DB 1993 Early retirement incentive DB 2007 Raised co-pays & deductibles for actives & retirees. Raised retiree Rx drug co-pays = actives employees 2007 Raised co-pays & deductibles for actives & retirees. Raised retiree Rx drug co-pays = actives employees 2007 Raised co-pays & deductibles for actives & retirees. Raised retiree Rx drug co-pays = actives employees 2008 Retirement incentive offered to employees already eligible to retire 2008 Retirement incentive offered to employees already eligible to retire 2008 Retirement incentive offered to employees already eligible to retire

  3. What’s in Your Bucket?

  4. Active Employee 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

  5. (Participants completed both Screening and HRA) 2009 50.4% (1774 out of 3519) 2008 48.8% (1725 out of 3667) 2007 47.7% (1639 out of 3679) 1550 1600 1650 1700 1750 1800 OakFit Wellness Review 2009 Health Screening and HRA Participation 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.)

  6. Health Risk Status 2006 - 2009Results from 930 employees who completed both the Health Screening and Health Risk Assessment (HRA) all three years.

  7. 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.

  8. Position Management & Salaries 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%

  9. Compensation ComparisonOakland County vs. National Increases and CPI-U

  10. General Salary IncreasesOakland County ● Cities ● State

  11. General Salary IncreasesOakland County & Cities

  12. 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)

  13. 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

  14. 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.

  15. Top 10 Keys to SuccessfulOakland County Implementation 10. Start with a clear understanding of your financial picture…. both short term and long term.

  16. 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.

  17. Top 10 Keys to SuccessfulOakland County Implementation 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.

  18. Top 10 Keys to SuccessfulOakland County Implementation 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.

  19. Top 10 Keys to SuccessfulOakland County Implementation 6. Let Elected Officials decide how to reorganize, cut their budget and run their operation.

  20. Top 10 Keys to SuccessfulOakland County Implementation 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.

  21. Top 10 Keys to SuccessfulOakland County Implementation 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.

  22. Top 10 Keys to SuccessfulOakland County Implementation 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)

  23. Top 10 Keys to SuccessfulOakland County Implementation 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.

  24. Top 10 Keys to SuccessfulOakland County Implementation 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).

  25. Nancy ScarletHuman Resources Directorscarletn@oakgov.com

  26. 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)

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