HomeMy WebLinkAbout2013-10-10Tentative
BOARD OF SUPERVISORS
T E N T A T I V E
OCTOBER 10, 2013
ROOM 241
COUNTY OFFICE BUILDING
1. Call to Order.
2. 2:30 p.m. - Departmental Budget Presentations:
a. Office of Housing.
b. Fire and Rescue.
Recess.
3. 4:00 p.m. - Joint Meeting with School Board
a. Total Compensation Report.
4. Matters not Listed on Agenda.
5. Adjourn.
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COUNTY OF ALBEMARLE
EXECUTIVE SUMMARY
AGENDA TITLE:
Total Compensation Report
SUBJECT/PROPOSAL/REQUEST:
Acceptance of market data for use in budget
development for FY14-15, subject to available revenues
and adoption of resolution to opt out of the Virginia Local
Disability Plan (VLDP)
STAFF CONTACT(S):
Foley, Letteri, Davis and Gerome
PRESENTER (S): Lorna Gerome
LEGAL REVIEW: Yes
AGENDA DATE:
October 10, 2013
ACTION: X INFORMATION:
CONSENT AGENDA:
ACTION: INFORMATION:
ATTACHMENTS: Yes
REVIEWED BY:
BACKGROUND:
In 2000, the School Board and Board of Supervisors jointly approved a Total Compensation Strategy to target employee
salaries at the median of an adopted market and employee benefits slightly above adopted market levels. This adopted
market is identified in Attachment 1. Since that time, both Boards have continued to recognize the importance of providing
competitive salaries and benefits to attract and retain a high performing workforce. To that end, the County’s total
compensation and rewards program has continually adapted to meet these objectives in an ever-changing labor market.
The Total Compensation Report outlines our findings and recommendations based upon our annual compensation
analysis. These recommendations are provided to achieve our adopted Total Compensation Strategy, as well as for the
Boards to consider as they guide the County Executive and Superintendent during the upcoming budget process for
FY2014-15. It is noted that all final funding for the recommendations is subject to, and based upon, available revenues
and Board direction.
STRATEGIC PLAN:
Goal 7. Promote a valued and responsive County workforce that ensures excellent customer service
DISCUSSION:
1) Compensation Strategies
The adopted Total Compensation Strategy is detailed in Attachment 2. Last year, projections based on the Joint
Board adopted process presented in October were to fund an average overall pay increase of 2.55%. A 2.0% base
increase was adopted, however, the merit pay for performance differentials were reinstituted for classified staff, and an
average increase of 2% was applied to the teacher scale. The attached information on the compensation strategy is
provided to both Boards to consider regarding development of the FY2014-15 budget.
As detailed in Attachment 2, for FY 2013-14, our salary increase basis was 2% and we started the year statistically at
market, although very slightly below by -0.05%. As the adopted market median increase was 2%, our classified
salaries are now generally at market and we are meeting the Total Compensation Strategy. Additionally, our teacher
scale steps are within the top quartile of adopted market teacher scales, so that target has also been met.
2) Benefits Strategies
The Joint Board’s benefits strategy is to maintain a benefit program that is slightly above adopted market levels.
Medical insurance and the VRS benefit are the largest components of the employee benefit package.
Medical and Dental
The Health Care Executive Committee (HCEC) is comprised of representative staff from several departments in the
School Division and Local Government, as well as members from other affiliated organizations who participate in our
health and dental plans. The HCEC develops recommendations for our medical and dental plans to present to the
Boards. Over the next several months, the HCEC will continue to gather employee feedback, evaluate claims usage
and market plan design information, as well as the impacts of the Affordable Care Act on our plan. Staff will also
carefully evaluate our Health Care Fund in the context of actual claims experience and required adjustments in
AGENDA TITLE: Total Compensation Report
October 10, 2013
Page 2
premiums to maintain a 25% reserve balance target. A comprehensive report on this information and
recommendations on plan design and premium rate adjustments will be presented to the Boards in the spring.
Preliminary budget premium increase amounts for FY 14/15 are provided as recommendations below.
Virginia Retirement System
Effective January 1, 2014, VRS will implement a mandated “hybrid plan” for all full-time new hires without active prior
VRS service (note: hazardous duty new hires may not be in the hybrid plan). This hybrid plan will be a combination of a
defined benefit plan (which VRS Plan 1 and Plan 2 members currently participate in) and a defined contribution plan.
Also unlike the current VRS Plan 1 and Plan 2, the hybrid plan will not offer a disability retirement benefit. The County
may choose to join the Virginia Local Disability Plan (VLDP), which is a combination of short and long term disability
programs, along with a long-term care component. Opting in or out of the State VLDP is an irrevocable election and
localities cannot elect at a later date to opt out or to join the VLDP. If the County does not pass a Resolution to opt
out of the VLDP we will be automatically enrolled in it. Employer resolutions in this regard are due by November 1,
2013.
Localities opting out of VLDP will be required to offer employer-paid short and long term disability benefits to their
hybrid VRS members and those benefits must be at least equivalent to the benefits under the VLDP, but there is no
requirement to provide a long term care program.
Staff recommends that the Board adopt the attached Resolution (Attachment 4) to opt out of the VLDP prior to
November 1, 2013 and that the County purchase equivalent coverage based on the following:
The State has mandated that this decision is irrevocable. If the County does not opt out by November 1,
2013, the County will not be able to leave the State VLDP in the future.
A substantial number of localities have opted out and it is anticipated that the larger employers in the state will
not join the VLDP, potentially resulting in unpredictably high program rates once the current rates expire in
June 2014.
Staff worked with our benefit consultant, KSPH, to solicit proposals for the purchase of equivalent coverage
and received five bids. We evaluated these proposals and selected two finalists. Both vendors offer rates
lower than the VLDP rates. In December, staff will present our analysis and recommended vendor for short
and long term disability coverage. Given this mandated change in benefits to new employees and the
inconsistencies and administrative burdens managing yet another State imposed change to our benefits
creates, staff will also explore options for potential changes to our current benefits for all employees for
consideration in December.
BUDGET IMPACT:
This information is presented to the Boards for consideration in providing direction for the FY 14-15 budget
preparation. It is noted that all final funding is subject to, and based upon, available revenues and Board direction.
RECOMMENDATIONS:
Staff recommends approval of the following:
1. Establish a budget target for providing a 2.90 % salary increase for classified staff, to include pay for
performance increases and a 2.85 % increase to fund teacher salary increases to maintain the top quartile
position. Final recommendations by the County Executive and Superintendent will be based on the availability
of adequate funding.
2. Adopt the attached Resolution (Attachment 4) to “opt out” of the State VLDP.
3. Plan for an 8% increase in medical insurance premium costs.
4. Plan for a 5% decrease in dental costs.
ATTACHMENTS:
1 - Adopted Market
2 - Compensation Strategies
3 - Benefits Strategies
4 - Resolution to Opt-out of State VLDP
5 - Market Teacher Scale
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Attachment 1
Albemarle County
Adopted Competitive Market
Buckingham County
Chesterfield County
City of Charlottesville
City of Chesapeake
City of Danville
City of Harrisonburg
City of Lynchburg
City of Roanoke
City of Staunton
City of Virginia Beach
City of Williamsburg
Fauquier County
Fluvanna County
Greene County
Hanover County
James City County
Loudoun County
Louisa County
Madison County
Montgomery County
Nelson County
Orange County
Prince William County
Roanoke County
Rockingham County
Spotsylvania County
Albemarle County Service Authority
Martha Jefferson Hospital
UVA Health Systems
Compensation Strategy
To maintain competitive compensation based on the adopted strategy, two separate, but related actions
are required:
Create competitive salary scales so that the County and School Division are able to attract and
recruit new employees.
Grant competitive salary increases to ensure current employees are rewarded for job performance
by maintaining internal equity in their pay range, as well as maintaining market competitiveness for
similar skills.
To adhere to the Boards' adopted strategy, we implement the following processes each year:
Annually survey the adopted market to determine the salary scale adjustment implemented in those
localities/schools for the current fiscal year.
Annually survey the adopted market to determine the average total salary increase and teacher
scale adjustment granted employees in those localities/schools for the current fiscal year.
This market data is analyzed to ascertain where the salary scales and increases (both classified
employee and teacher) for Albemarle County stand relative to the adopted market.
Obtain data on what other organizations are projecting for salary increases for the next fiscal year
through a compensation database (WorldatWork, Eastern Region). This data is used to project the
merit increase percentage and develop the teacher scale, including step increases.
Step 1: Review of FY13-14. Survey the market to determine if the scale adjustments
implemented for classified/administrator and teacher pay scales and the total salary increase
implemented for classified achieved the strategy.
Classified/Administrator Scale Adjustments - Target median of adopted market
A competitive scale is important in attracting new hires. For classified employees, the scale
adjustment impacts new hires and any employees with pay rates that might fall below the new
minimums. With this in mind, the Classified/Administrator Pay Scales were adjusted by 1% in FY13-
14.
Classified/Administrator Salary Increases - Target median of adopted market
We received an overall salary increase of 2% for Classified/Administrator positions effective July 1,
2013 (FY13-14). Additionally, eligible employees received merit pay for performance increase. The
median increase of our adopted market was 2%. As we started the year at 0.05% below market
(which is statistically insignificant) our Classified/Administrator salaries now meet our target.
Teacher Scale/Teacher Average Salary Adjustments - Target top quartile (75th percentile) of
adopted market
We applied a 2% average increase to the teacher scale, to include step increase. Market data
indicates that we met our target and are in the top quartile at all steps. This is shown in Attachment
5.
Step 2: Projections for FY14-15. Based on current market position and scale/salary
projections, determine the changes necessary to achieve the Joint Board approved strategy
using the WorldatWork, Eastern Region data.
Classified/Administrator Scale Adjustments
The scale adjustment impacts new hires and any employees with pay rates below the new
minimums. The FY14-15 scale adjustment will be developed based on the Board approved
salary increase percent, as the scale increase must be considered in light of the salary increase
to minimize compression.
Classified/Administrator Salary Increase
Adopted Market Median FY13-14 increase: 2%
Albemarle FY13-14 Salary Increase Relative to Market: -.05%
WorldatWork FY14-15 projection for Eastern Region (including Virginia): 2.85%
Projected FY14-15 salary increase: 2.90%
Teacher Scale and Teacher Average Salary Increase
Albemarle FY13-14 Teacher Scale Relative to Market: meets all targets for Teacher scale
Projected FY14-15 scale and step increase: 2.85% average increase, to include the step
increase.
WorldatWork Projections Compared to Adopted Market
The information below illustrates the WorldatWork projections compared to the actual increases by the
localities and school divisions in our adopted market:
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
WorldatWork Projection 3.65% 3.65% 4% 3.3% 2.25% 1.95% 3% 2.55
Adopted Market Median Increase 4% 4% 3.63% 0% 0% 1% 0.7% 2%
Classified Merit
Our pay for performance system was reinstituted for FY12-13, the first time since 2008. Performance
evaluation results were tied to salary increases for classified staff. The percentage increase that classified
employees received was based on their overall performance evaluation score, and whether their salary
was below or at/above midpoint on the pay scale of their current position. The mer it matrix is indicated
below:
Position in
Range
Fails To Meet
Exp. (1)
Meets Minimum
Exp. (2)
Successfully Meets
(High)
Exp. (3)
Meets and Often
Exceeds
Exp. (4)
Consistently Exceeds
Exp. (5)
Below
Midpoint
No
Increase
Market Increase
-1%
Market Increase
+1%
Market Increase
+1.5%
Market Increase
+2%
At/Above
Midpoint
No
Increase
Market Increase
-1%
Market Increase
Market Increase
+.5%
Market Increase
+1%
Teacher Longevity Stipends
The market does apply value to teachers that exceed the typical career teaching scale, usually provided in
the form of an annual stipend. Albemarle County Schools provides a stipend of $200 for each year beyond
the end of the teacher scale, with a maximum lump-sum payment of $1000. As in previous years, our
stipend is consistent with our market strategy and within market ranges.
Lump Sum Payments for Classified Employees at Pay Grade Maximum
With the resumption of merit pay for performance, there is a renewed focus on rewarding excellence in
performance for all employees. An important tool in accomplishing this is the ability to provide a merit
increase to include those who reach the maximum of their pay grade without jeopardizing the integrity of
our pay scales. To that end, and as with past practice, an individually calculated lump-sum bonus for these
affected employees will be provided.
Benefits Strategies
The Boards’ joint Benefits Strategy is to maintain a benefit program that is slightly above that of
our adopted market. Medical insurance and the Virginia Retirement System are the largest
components of our benefit package.
Medical Insurance
The Health Care Executive Committee (HCEC) is comprised of representative staff from several
departments in the School Division and Local Government, as well as members from other
affiliated organizations who participate in our health and dental plans. The HCEC develops
recommendations for our medical and dental plans based on the following objectives:
Offer affordable options that meet varying needs of employees and their families;
Maintain reserves at approximately 25% of claims;
Ensure plans are in compliance with Health Care Reform; and
Maintain our competitive position for benefits (slightly above market).
Plan Review Process
The HCEC works routinely with KSPH Employee Benefit Management to review our health care
plan. This includes:
Detailed reviews of claims utilization with Coventry’s medical director;
Analysis of market information on plan design and employee/employer premiums;
Plan design includes: inpatient/outpatient coinsurance, co-payments, annual
deductibles, out-of-pocket maximums, emergency room co-payments, prescription drug
co-payments;
Employee/employer premiums includes market data from KSPH and our adopted
market;
Employee Feedback--input from employees via focus groups and surveys; and
Review and projections of reserve balance.
FY13-14 Medical Plan
Two plans (Basic and Plus) plans are offered through Coventry with the same benefit coverage,
but differ in cost sharing (co-pays, co-insurance, out-of-pocket maximums, deductibles) and
employee premium requirements. Both the employee and Board contributions were increased
by 7% for this plan-year, starting October 1st. Because of the significant plan design changes
implemented in the past two years and in light of the premium increase, no plan design changes
were made for this plan-year.
FY 13-14 Dental Plan
Two plans (Basic and High) are offered through United Concordia. As our dental reserve
balance was favorably above the target, a dental premium holiday was given from March 2013
until September 2013 for all dental enrollees for this period. Currently our unaudited dental
reserve balance remains favorable. Staff recommends re-evaluating this component of
compensation and bringing forth a recommendation once the FY12 audit has been completed in
November.
FY14-15 Medical and Dental Plans
The HCEC will continue to gather employee feedback, evaluate claims usage, market plan
design information and assess impacts of the Affordable Care Act on our health benefits. Staff
will also carefully evaluate our Health Care Fund in the context of actual claims experience and
required adjustments in premiums to maintain our targeted 25% reserve balance. A
comprehensive report on this information and recommendations on plan design and premium
rates will be presented to the Boards in the spring. Based on claims data and reserve balance,
as well as trend information provided by our benefits consultant Tom Mackay with KSPH, our
projected medical cost increase for FY14/15 is 8%. Our dental insurance costs are projected to
decrease by 5%. As we have just started the new plan year, staff will continue to monitor claims
experience and develop recommendations for both plan design and premiums to present to
both Boards for approval as part of the County Executive's and Superintendent's budget
proposals. Throughout this year, staff will be assessing how to best track the work hours of
temporary employees to ensure compliance with the provisions of the Act regarding coverage
eligibility. Staff will also evaluate our current plan options to confirm that our plan is within the
parameters of affordability as defined by the Act, as well as review current eligibility standards
for inclusion in the plans.
Virginia Retirement System
On April 18, 2012, the General Assembly approved a variety of changes to reform the
retirement plan administered by the Virginia Retirement System (VRS). The General Assembly
passed bills establishing a new hybrid retirement plan for state and local employees who are
hired on or after January 1, 2014 (HB 1130 and SB 498), as well as a companion bill (SB 497)
which requires local governments’ and school divisions’ current employees to pay a 5%
contribution to VRS by no later than July 1, 2016 and for local governments and school divisions
to provide employees with a salary increase to offset the cost of the employees’ VRS
contribution (the “5 and 5 Requirement”). Both the School Board and the Board of Supervisors
approved the whole “5 and 5 Requirement” in FY13, and the majority of localities and schools in
our adopted market (69%) have now as well.
Effective January 1, 2014, VRS will implement a mandated “hybrid plan” for all full-time new
hires without active prior VRS service (note: hazardous duty members may not be in the hybrid
plan). This hybrid plan will be a combination of a defined benefit plan (which VRS Plan 1 and
Plan 2 members currently participate in) and a defined contribution plan. Also unlike the current
VRS Plan 1 and Plan 2, the hybrid plan will not offer a disability retirement benefit. The County
may choose to join the Virginia Local Disability Plan (VLDP), which is a combination of short
(STD) and long term (LTD) disability programs, along with a long-term care component.
Employers who do not opt out of the VLDP will be automatically enrolled in it. Those who opt out
will be required to offer employer-paid STD/LTD benefits to their hybrid members and those
benefits must be at least equivalent to the benefits under the VLDP, but there is no requirement
to provide a long term care program. Regardless of opt-in or opt-out, these choices will be
irrevocable.
Staff worked with our benefit consultant, KSPH, to solicit proposals for the purchase of
equivalent coverage and received the following five bids: Lincoln, Guardian, Standard, Hartford,
and Cigna. We have evaluated these proposals on functional requirements, implementation
and services/project management, experience and qualifications, and selected two finalists.
Both vendors offer rates lower than the VLDP rates. Staff will present our analysis and
recommended vendor for short and long term disability coverage in December.
Leave Policies
Because of the VRS mandates around the VLDP/equivalent coverage, we are faced with the
possibility of having two or more leave policies/procedures for different groups of employees
(e.g., Plan 1/Plan 2, hybrid members). The mandated STD coverage duplicates and overlaps
with our current Sick Leave Bank program. Our current voluntary LTD program will lose
participants as employees retire and no new employees are added, eventually requiring a rate
increase or termination of plan. Staff does not feel that maintaining multiple plans
simultaneously would be feasible, considering staffing and tracking/technological constraints.
Given the administrative issues associated with our current leave policies, particularly in regard
to the unlimited accrual of sick leave, we believe the Boards should consider the creation of a
new set of leave policies/procedures applicable to all benefits-eligible employees. These may
include modifications to our Sick Leave Bank program, potentially capping sick leave accruals,
and coordination of benefits with a new employer-paid STD/LTD plan, VRS disability (where
applicable), and Social Security Disability. Such changes would create a true “safety net” for all
benefits-eligible employees, regardless of the duration of their employment here. Staff will
continue to study these alternatives and will bring options for the Boards’ consideration in
December.
RESOLUTION
Irrevocable Election Not to Participate in
Virginia Local Disability Program
WHEREAS, by enacting Chapter 11.1 of Title 51.1 of the Code of Virginia, the Virginia
General Assembly has established the Virginia Local Disability Program (“VLDP”) for the
payment of short-term and long-term disability benefits for certain participants in the hybrid
retirement program described in Virginia Code § 51.1-169; and
WHEREAS, for purposes of VLDP administration, an employer with VLDP-eligible
employees may make an irrevocable election on or before November 1, 2013, requesting that its
eligible employees not participate in VLDP as of the VLDP effective date of January 1, 2014,
because it has or will establish, and continue to maintain, comparable employer-paid disability
coverage for such employees that meets or exceeds the coverage set out in Chapter 11.1 of Title
51.1 of the Code of Virginia, with the exception of long term care coverage, by January 1, 2014;
and
WHEREAS, it is the intent of Albemarle County, 55101, to make this irrevocable
election to request that its eligible employees not participate in VLDP;
NOW, THEREFORE, IT IS HEREBY RESOLVED that Albemarle County irrevocably
elects not to participate in VLDP because it has or will establish, and continue to maintain,
comparable employer-paid disability coverage for such employees; and it is further
RESOLVED that, as an integral part of making this irrevocable election, Albemarle
County certifies that it has or will establish, and continue to maintain, comparable employer-paid
disability coverage for such employees.
Adopted in Albemarle County, Virginia this 10th day of October, 2013.
_________________________________________
Chair, Albemarle County Board of Supervisors
I, Ella W. Jordan, do hereby certify that the foregoing writing is a true and correct copy
of a Resolution duly adopted by the Board of Supervisors of Albemarle County by a vote of
_____ to _____ at a meeting held on October 10, 2013.
______________________________________
Clerk, Albemarle County Board of Supervisors
Attachment 5
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
$75,000
$80,000
$85,000
$90,000
0 Years 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years Maximum Annual Salary Experience
Teacher Salary Market Comparison 2013-2014
Top Quartile Range Breadth Albemarle