Compensation at UC A Special Report for the Coalition of University Employees November 2004

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Compensation at UCA Special Report for
theCoalition of University Employees November
2004

• Kathleen J. Hurley Associates

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Resume
Kathleen Hurley 6114 La Salle 307 Oakland, CA
94611 Phone [phone] Current
K. J. Hurley and Associates, Personnel
Consultant 1992-2000 Manager of Employment and
Classification, City of Oakland Effectively
manage human resources functions including
classification and compensation,
recruitment/selection, appeal resolution,
workforce placements, contract hires, position
certification, applicant tracking and EEO
reporting, executive recruitment and performance
evaluation consultation and review. Member of
the Public Safety negotiation team and principal
administrator of two negotiated public safety
promotional contracts. Oversee 19 staff with a
budget of 1.4 million. Prior to 1996, served as
Supervisor, Public Safety Employment and
Classification Section. 1979-1992
Consent Decree Coordinator, San Francisco Police
Department As an appointee of the federal court,
responsible for implementation of the Citys
obligations under an affirmative action consent
decree including job analysis, validation and
administration of testing procedures and
recruitment for the San Francisco Police
Department. As a team member, helped negotiate
or defend several litigation matters in State and
federal Court. Successfully defended many
protests and appeals before the San Francisco
Civil Service Commission. Provided consultation
to representatives of a number of personnel and
police departments throughout this country and
abroad in the areas of testing, job analysis and
validation, selection, affirmative action.
Managed a staff of up to 25 civilian and sworn
personnel with a budget of 2.8 million. Prior
to 1987, served as Assistant Consent Decree
Coordinator and Examination Unit
Supervisor. 1977-1979 Program Monitor, San
Francisco Mayors Office of Employment and
Training Negotiated and monitored employment
contracts, e.g., salaries and fringe benefit
items, with private non-profit agencies and City
departments in San Francisco for the employment
of CETA Title VI project workers. Provided
guidance on establishing job descriptions and
setting up classifications and appropriate
compensation. Also served as Training Officer
to a staff of approximately 200 persons including
performing needs assessments. Developed
standardized records-keeping procedures,
instigated a unit-to-unit speakers exchange and
helped launch a City-wide Council of Training
Officers to maximize resources. 1977-1978 Specia
l Masters Degree Program, Labor Studies, San
Francisco State University -completed all course
work requirements for a degree in Labor
Studies 1975-1977 B.A. in Psychology, San
Francisco State University, Summa Cum Laude, 3.9
GPA 1973-1975 A.A. in Social Science, San
Francisco Community College, Editor of College
Newspaper, numerous awards. Memberships Long-st
anding member of Personnel Development Committee
for NorCal Chapter of the International Personnel
Management Association (IPMA). As an IPMA
trainer, provided training to hundreds of human
resource professionals in the areas of
recruitment and selection, including the staffs
of Los Angeles County and County of Alameda.
Twice Vice President and prior Board Member of
Personnel Testing Council (Northern California
Chapter) 1999 Stephen Bemis Award Nominee.
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About CUE
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Cue to UC Headcount
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CUE
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The Coalition of University Employees engaged
the services of K. J. Hurley and Associatesto
examine compensation reports and information
provided by UC as well as other public documents
and resources comparing UC compensation to that
of other employers.
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Executive Summary

• Expert opinion is hereby rendered as to how CUE
  employees in the UC system fare in compensation
  matters compared to employees in comparable
  institutions. UC clerical wages are examined in
  light of a number of neutral and professional
  market compensation measures.
• A review of UC-provided wage studies and other
  materials leads to the following findings
• UC clerical salaries lag market comparators,
  often by significant amounts
• Large wage lags exist for
• __ Assistants (all) ranging from 13.29 up to
  24.79
• Library Assistants (all) approximately 33.4
• Irvine Dispatcher positions averaging 24.67

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Executive Summary

• Compared to market comparators, UC wage bands are
  narrow, constricting top salaries and merit pay.
• UC benefits lag the market in some respects, but
  overall are generally consistent with expected
  market levels.
• By fair market comparison, UC benefit values do
  not offset clerical salary lags when added for
  total compensation.
• Career clerical workers evidence higher rates of
  turnover at UC compared to UC staff overall
  non-career employees evidence even higher
  turnover.
• The majority of clerical workers leave UC with
  less than five years service.

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Executive Summary continued

• UCs defined benefit pension and post-retirement
  medical plans offer no value for those who leave
  without meeting minimum vesting requirements.
• Across the board Increases in health care and
  parking disproportionately impact lower earning
  clerical workers.
• UC administrators and spokespersons have
  repeatedly and publicly acknowledged significant
  market disparities in wages and merit pay for UC
  clerical staff.

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Total CompensationOverview
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Components of Total Compensation

• Wages
• Base Compensation Pay
• Ancillary Pay
• Bonuses, one-time awards, stock options
• Shift differentials, overtime, on-call pay, etc.
• Benefits
• Health, Pension, Insurance, Time off, Parking,
• Tuition Reimbursements, Childcare, etc.

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Comparing Compensation Data Practical Matters

• Whats the market?
• Ideally, compare to similar
• How to measure?
• Use matched benchmarks for efficiency
• Capture data in way simple to compare, e.g. low
  to high wages
• Average, median or actual
• Perceived value, cost utilization, hybrid
  measures
• Whats the purpose?
• Organizations often set as goal the aim to pay
  their employees at or within a certain of market

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UC Compensation Policy

• UCs stated goal is to recruit and retain
  quality staff by paying prevailing total
  compensation for employees performing comparable
  work in private and public employment.
• (1) That subject to the availability of
  appropriate funding, staff and management
  employee salaries and benefits be based upon
  prevailing total compensation for employees
  performing comparable work in private and public
  employment.
• (2) That the President be instructed to
  determine prevailing total compensation
  appropriate to University jobs and the salary and
  benefit adjustments required to bring University
  staff and management total compensation into
  alignment with prevailing total compensation.
• (policy approved November 17, 1978)

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UC Public Statement

• The Universitys goal is to maintain
  market-based competitive salaries for its
  employees. This means providing sufficient
  funds, through a combination of merits and COLAs,
  to maintain UC faculty salaries at the average of
  the salaries provided at the eight comparison
  institutions, and to provide salary increases for
  other employees that, on average, at least keep
  pace with inflation and the marketplace.
• -UCOP Budget Request for 2004-05, Program
  Maintenance Fixed Costs and Economic Factors

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The UC Benchmark Study for clerical
compensationWatson Wyatt Worldwide created a
497-page report, plus attachments, for UC in
October of 2000.
What does UC say about Clerical
Compensation? The Watson Wyatt Report
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WW 2000 three volumes by topic plus attachments,
lengthy discussion of methods and findings,
includes wages, benefits, best practices, merit
pay, range widths, recommended optionsWW 2001
condensed single volume update in June, aging
market data from the 2000 report less
explanation, similar benefits analysis ?The
timing of 2001 update coincides with a
financial high point for CUE employees who were
awarded several pay increases that year
Watson Wyatt
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Other UC Reports/Data Sources

• UC 2002 several individual pages of data
  provided , inconsistent w/ previous WW
  reportsUC 2003 updates on Library Assistants
  and Dispatcher-several pagesTask Force Reports
  UC Berkeley 2001 and UCSD 2000

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Select excerpts and documents from the WW and UC
reports are highlighted.Attention directed at
strengths and limitations as well as key results
and summary findings.Exact quotes expressed in
italic print with volume and page noted. Charts
to complement WW and UCOP data added to
illustrate findings.
Watson Wyatt Report
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In Search of a Defensible Position

• Project goals, as charged by UC to Watson Wyatt

An ultimate goal of this endeavor will also be to
use the model and methodology going forward for
other employee groups. This model would gain UC
and its employees three outcomes

• To provide UC a defensible position for market
  based total compensation
• To provide a definition and determine
  appropriateness of a total compensation package
  and
• To assist UC in communicating its programs and
  philosophies to its employees, thereby increasing
  employees awareness and understanding. ES2

The aim of achieving a defensible position
becomes transparent later when applied to
valuations for constructing a total compensation
model.
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What Other Concerns Led UC to Commission the
Report?
An underlying premise in commissioning a
compensation report in year 2000 had to do with
turnover and wage lags. Watson Wyatt states
UC has been experiencing some recruitment and
retention problems in its Clerical unit and
believes it lags the market for some, but not
all, salaries in both the Clerical (CX) and
Service (SX) units. (ES1)
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Details of recruitment and retention problems are
not elaborated in the report, nor are detailed
turnover figures provided nonetheless, these two
UC-identified problems (market lags and turnover)
are typically accepted and expected consequences
of low wages.
What Other Concerns Led UC to Commission the
Report?
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Turnover
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Turnover/Longevity

• An organizational measure of
• Experience
• Stability
• Employee Satisfaction

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Turnover Rates

• UC provided-data suggest an annual clerical
  employee turnover rate of at least 16.
• The true turnover rate is arguably much higher,
  especially for newer employees.

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Chart Turnover
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(No Transcript)
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Longevity
Longevity by hire date, all campuses from Aug
2004 data Snapshot of Current CX Unit
Based upon Aug 2004 snapshot, as a representative
sample, it is fair to deduce at any given time
only about 42 of the CX Unit will vest. Based
upon this snapshot, 57.6 leave before vesting
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Turnover Impacts Employee Compensation

• For the many workers who leave the institution
  prior to the five-year vesting period, there is a
  loss of what is touted to be one of the finest
  benefits UC provides, its retirement program.
• Even an excellent benefit ultimately has no value
  for the recipient if it cant be claimed.
• Based upon a necessary time for eligibility,
  early terminating workers often are not able to
  realize much, if any, in the way of merit pay
  awards.

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Wages
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Wage Surveys Multiple Sources

• UC Consultants
• WW 2000 Report and updates
• UCOP Studies
• Task Force Findings (UCSD and UCB)
• KJH Research

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Varying methodologies and time frames

• Studies from 2000 to 2004
• Scope, location, methods varied
• Comparators varied
• UC Watson Wyatt 2000 wage data most voluminous,
  though almost entirely off the shelf for __
  Assistants
• Weaker data for Dispatcher Library Assistants-
  but OK
• Best practices/strategies information useful in
  regard to analyzing range and merit pay issues

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Big Picture
All studies from 2000-2004 show low clerical wages

• In general, CUE wages lag the market by
  significant amounts
• It is not so much a question of judging whether
  or not CUE identified positions are lagging the
  market in wages, but more a measure of by how much

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WW and UC considered two basic approaches to
collect market data
Methodology for Watson Wyatt Wage Survey 2000
Developing a custom survey to research salary and
benefits vs. Using information already
available.
34
Working under time and cost constraintsUC WW
decided to primarily capture and work from
publicly available information. The alternative
custom survey approach was noted to be very
expensive and lengthy.WW committed to
supplement any significant gaps with as much
customized data as possible (ES5).
Methodology for Watson Wyatt Wage Survey 2000
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The WW report warns of limitations associated
with relying upon published and available survey
dataLocal data is not always readily available
from published sources Published data is not
available for positions that are unusual or
specialized (e.g. public safety dispatcher)
Publicly available data tends to be bifurcated
for total compensation purposes (e.g.
compensation and salary data separate from
benefits information) ES2 Emphasis Added
Methodology for Watson Wyatt Wage Survey 2000
36
WW Positions Studied

• _ Assistant I, II, III
• Library Assistant II
• Public Safety Dispatchers
• Child Development Center Teacher
• Child Development Center Assistant

37
II. Cash Compensation V2 66 Team approach in
decisions with UC
Research each job for each location
UC team met w/WW Discussed in detail
inconsistencies in data collection
Add research if local data lacking
38
Appendix A WW includes public ed
Includes Universities, Colleges Public Sector
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Includes Public Sector
40
California Education
41
Mixed West Coast
42
SF Private Education
43
California Colleges Universities
44
Mixed Western Region
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Appendix C WW Custom
CA Government and Education
Plus PGE 24 Hour Fitness for Child Development
positions
46
II. Cash Compensation V2 71 WW adds geographic
differentials
Insufficient or not credible local data
To correct geographic differential applied e.g.,
Merced, Santa Barbara, Santa Cruz
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II. Cash Compensation V2 72 Differentials WW
Doubts Med Data
Geographic Differential Applied
Few credible sources for health care industry pay
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CX/SX Total Compensation Study Results _Assistant
IV2 78 Includes Med Centers
P50 Mid Point
Weighted average factors in of positions at
each location
___ Assistant Is lag 16.6
49
CX/SX Total Compensation Study Results _Assistant
II V2 79 Includes Med Centers
All Locations
___ Assistant IIs lag 16.6
Med Center Data Weaker
50
CX/SX Total Compensation Study Results_Assistant
III V2 80 Lags 11.3
No med center collected
51
CX/SX Total Compensation Study ResultsLibrary
Assistant II V2 81 Lags 16.5
Locations with sufficient data tended to come out
with higher lags vs. custom areas that had less
reliable data
Library Assistant II lags 16.5
Includes custom surveys
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CX/SX Total Compensation Study ResultsPublic
Safety Dispatcher V2 84 Lags 18.8
Since this finding, all but Irvine have received
pay increases of 8-30
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CX/SX Total Compensation Study ResultsNon-Medical
Center ES 10 WW 2000
Note Removes Questionable Medical Data
54
CX/SX Total Compensation Study Results_Assistant
I Berkeley V2 127 example of data
Range Width
Location
39.6 vs. 18.1
Title
Survey Sources
55
CX/SX Total Compensation Study Results_Assistant
II Berkeley V2 138 Example of data
37.2 vs. 19.1
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CX/SX Total Compensation Study Results_Assistant
II San Francisco V2 144 Example
37.3 vs. 19.6
57
CX/SX Total Compensation Study ResultsLibrary
Assistant II Berkeley V2 160 Example
35.6 vs. 18.2
Fewer sources for LA II
58
CX/SX Total Compensation Study ResultsPublic
Safety Dispatcher Irvine V2 189
Irvine Campus
20.2 vs. 21.5 limited data
Weighted Avg. -14.6 P50 -16.8
59
CX/SX Total Compensation Study Results_Assistant
II Irvine Medical Center V2 323
Medical Center
37.6 vs. 18.6
Limited Data
60
CX/SX Total Compensation Study Results_Assistant
II Los Angeles Medical Center V2 324
Medical Center
37.1 vs. 18.5
Limited Data
61
Chart 2000 Summary CX Study Results
62
Post-2000 Studies
63
UC 2001 vs. 2000 Study Results WW ages market
values and adjusts for multiple CUE increases.
Lags are temporarily reduced
64
Chart 2001 Salary Lags CX/SX update
65
Chart 2000/2001 _Assistants Average Market Lag
66
2002 UC Update_ Assistants Lag up to
14.8Library Assistants Lag up to 23.6Market
comparison data provided by UC for September 2002
indicate wage lags for all positions surveyed at
all locations across the UC system. However,
data looks to be in error, authorship unknown,
market data unexplained. Methodology unclear and
blends some data.
67
UC Provided Update _Assistant II
Based on inaccurate data
Data blends Med Center and Campus results so they
cant be separated, e.g. SF, Davis. LA and Irvine
Medical split. No summary provided.
68
UC Provided Update 2002 Library Assistant II
Based on inaccurate data
Mixed data, no summary
69
How does this fit with faculty salaries?
70
UCOP Budget and Planning Summer 2003
71
UCOP Budget and Planning Summer 2003
UC pays faculty above publics
72
UC overall turnover 9 including clerical
73
Ancillary Other Pay Practice Issues
74
2000 Comparison StudySalary Structure Movement
and Ancillary Pay V2 358
Section on pay practices budget and structure
adjustments, shift differentials, and range width
issues Definition of Structure v. Budget
WW compiled info on salary practices, merit
increases and structure adjustments
75
WW V2 359
WW Examines overall structure vs. budget
Salary Structures
Difference often relates to merit or bonus
pay The table below summarizes our findings for
classifications of jobs similar to those in the
UC study. Overall, salary budget and Structure
increases are projected to be higher next year
(2001) than this year. The consensus median
actual total salary increase Budget for 2000 was
4.0. Next year, the consensus median total base
salary increase is projected to be 4.5. In the
sources surveyed, there was no appreciable
difference in increases whether the organization
was a not-for-profit organization. Reported
data was from the West Coast, however, and
particularly from California, was higher than for
other parts of the U.S. by between 0.1 and 0.3.
76
Longevity Pay and Bonuses Practices V3_366

• Tenure/Longevity Pay
• Based upon Special Survey
• Average payment between 25-30 per month added
  to salary, adding to amount annually. After ten
  years of continuous employment the average
  monthly payment 250-300
• Bonus Pay, e.g., merit-based, variable pay, or
  spot awards (single cash payments)
• Lump award may be used to reward employees who
  are at the top of their salary range (or top
  step) without going beyond the bounds of salary
  structure. Almost all WW West Region clients
  have some form of bonus program.
• Lump sum base building or re-earned increase
• V3_366

77
Strategies and Options V3 496

• WW Findings/Suggested Strategies
• UC ranges not as wide adding steps good
  response
• UC top step values significantly below the
  market
• Recommend evolving to open step ranges or adding
  steps

78
Strategies and Options V3 497 (continued from
p496)
UC clerical employees top out after time in a
job. UCs midpoints lagged competitive market
mid-points and UC top-step values were
significantly below the markets range maximums.
UC employees at the top steps of their
classifications are by definition below the
competitive market. (p. 496-497) WW
recommends UC consider a move towards open ranges
to be more competitive. Shortly after this
report came out CUE bargained for an additional
step in the range. Now asking to increase range
width by an extra 5. This extra step would
still be less than the 50 range CSU affords its
clerical workers.
79
Benefits
80
Benefits Survey Issues to Consider

• How do UCs benefits compare to competing
  organizations?
• Define Competition
• Geographic area, type of organization, types of
  positions
• How to measure benefits
• Cost to Employer, Cost to Employee, Ratio of
  Costs
• Yes/No survey, formula survey, market trend data
• Other value systems
• Employee satisfaction HR feedback, cost/ benefit
• Impacts on recruitment, turnover, retention

81
WW Report Comparisons V2 66 Team approach in
decisions with UC
Using team approach

• Cost of program less important than valued
  received.
• Apply UC demographic
• Use WW comparators

82
WW/UC Define the Benefit CompetitionWW
compares UCs benefits package against the select
sample of 17 other employers throughout the
State.Some of the employers operated in other
states as well as California. Some are
relatively small compared to UC
83
2000 Comparison StudyComparison Group V3 380
84
2000 Comparison StudyComparison Group Employer
Information Summary V3 383
85
V3_375
Note The comparator group may not be typical of
groups normally chosen for UC comparison studies.
Allows comparison in context to select group
86
Analysis and ResultsApproximately 90 pages of
detail are provided on various aspects of
benefits, comparing UC to the select 17
organizations. Ultimately most of the benefits
were organized into four categories and then
rankings were assigned. An overall ranking was
assigned related to values based on four
categories of benefits Retirement Plans,
Health Plans, Paid Time Off Plans and Security
Plans (insurance and disability).
87
2000 Comparison StudyComponents of Benefit
Values V3 384
of total UC program vs. average of others UC 1
pension PRM
88
2000 Comparison StudyTotal BenefitsV3 386
UC 1 Stanford 2
89
2000 Comparison StudyRetirement PlansV3 387
WW says 15 of UC clericals have less than 1 year
service
UC rates well for DB but 7 of the 17 comparators
have no pension plan benefits
90
2000 Comparison StudyMethodologyV3 388
Relative values measured by benefits provided or
by cost. An analysis by cost gives the relative
weights among plans. Note contrast to what is
said on a previous page. WW uses proprietary
models as well.
91
2000 Comparison StudyV3 389
On page 387 noted 15 leave in one year - Two
pages later use assumption that goes in different
direction.
Checking Assumptions
5.5 salary increase assumption WW IDs typical
CUE worker age 41, 6 years service
7.5 turnover
92
2000 Comparison Study Demographics V3 378
93
2000 Comparison StudyRetirement PlanV3 392
Pension DC PRM PRL UC 1 Stanford 2
94
2000 Comparison StudyPension PlanV3 393
Defined Benefit UC 1 Stanford 6 7 offer no
plan
95
2000 Comparison StudyDefined Contribution
PlanV3 394
DC UC 17 tied for last Stanford 1
96
2000 Comparison StudyPost retirement Medical
PlanV3 395
Retirement Medical UC 1 Stanford 5 Most dont
offer
97
2000 Comparison StudyPost retirement Life
InsuranceV3 396
UC Stanford tied for last w/14 others WW says
tied for 5th
98
Health Benefit Results 2000 V3_422
UC 2 Stanford 7
99
Dental Plan Results 2000 V3_424
UC 4 Stanford 9 UC covers 50 orthodontics
Stanford doesnt
100
Paid Time Off Benefits Results V3_441
UC tied 4 Stanford 2
101
Vacation Plan Results V3_442
UC 8 Stanford 4
102
Holiday Plan Results V3_443
UC tied 1 Stanford 5 Ave 9.5 days/yr
103
Security Plan Results V3_452
Ins Disability UC 12 Stanford last
104
Short Term Disability Plan Results V3_454
UC 8 Stanford 11
105
Long Term Disability Plan Results V3_455
UC tied 13 Stanford 9
106
Life Insurance Plan Results V3_453
UC tied for 11 Stanford last
107
Comparison Study-Paid Off Time PlansAverage 6.7
yearsV3 439
UCs clerical workforce has low service average.
Some comparators offer no sick leave
108
Employee ContributionsV3 432
In year of study, UC did not charge employee
premiums
Stanford charged employees so ranked lower
109
Parking V3 467
And going up
Only one of 17 charges for parking (25)
110
Parking V3 468
Most employers provide no-cost parking
111
Parking V3 469
Most Employers say they own their own lots
112
WW 2001 Study Found Same Outcome Based on Same
Methods
2001
Note Benefit values for UC employees in 2001
study now are 24.7 vs. a market benefit of 13.4
of total compensation. Combined WW suggests
_Assts. Lead the market by 6.4
WW Update has same benefit analysis similar
outcome using same comparators
2001
113

• Design Flaw
• In the Watson Wyatt study, benefits compared
  well against the select group of private sector
  organizations, especially as several of the
  comparators did not offer a pension plan. A
  look at public sector benefits and ratios later
  in this report will put the UC benefit ratings in
  clearer perspective. Had the Watson Wyatt
  report been more balanced UC benefits would not
  have ranked so high, removing the argument that
  the strength of UC benefits offsets low wages.
  Holding UC to the light of public sector benefit
  programs, UCs standings diminish.
• The UC/WW methodology shifts from using very
  broad comparators with public, education and
  private to a narrow group of privates.

114
Poor Comparators Downplay of Turnover Defined
Benefits vs. Defined Contribution
Nearly all public sector agencies offer
retirement plans. Approximately 90 of state
and local government agencies offer defined
benefit plans, as an attractive benefit to retain
a diverse workforce. The final benefit
calculation for DB depends on age and years of
service.
115
Pension Benefits defined benefits vs. defined
contribution (continued)

• A national study (BLS 2003) found that 58 of
  full-time private sector workers participated in
  an employer-sponsored retirement plan, and only
  10 of private sector employers nationwide offer
  defined benefit programs.
• The private sector trend is growing toward
  defined contributions plans, where employees make
  their own contributions, usually matched by the
  employer to some level. The final DC benefit
  depends on level of contributions.

Pension Research Council Working Paper
Profitable Prudence The Case for Public
Employer Defined Benefit Plans.
http//www.prc.wharton.upenn.edu/prc/prc.html
Document PRC WP 2004-6
116
Pension Benefits defined benefits vs. defined
contribution (continued)

• Stanford provides a defined contribution plan
  with 5 non-matching contribution plus a matching
  contribution of up to 4 with immediate vesting.
• UC has no employer contribution to its defined
  contribution plan.
• Even thought UC pension benefits were rated
  superior by WW, employees that leave UC before
  five years (the majority) would fare better with
  Stanfords benefit plan.

117
Pension Research Council Working Paper Results
2004, Detailed Footnote
Defined benefit plans remain the predominant form
of retirement for employees of state and local
governments in the United States, which employs
more than 10 percent of the nations workforce.
This chapter describes the divergence between
pensions in private industry, where defined
benefit plans continue to dominate. One reason is
that public employers have the ongoing
responsibility of attracting and retaining a
large workforce whose diversity is unmatched in
private industry. We also offer an economic
analysis of public plans, focusing on the
value-added to state economies from investment
returns which are often superior to those
generated by defined contribution
plans. --Profitable Prudence The Case for Public
Employer Defined Benefits Plans. Gary W. Anderson
and Keith Brainard. PRC WP 2004-6.
Abstract. Public vs. Private Sector Plan
Differences. Since the passage of ERISA, the
percentage of private sector workers with a DB
plan as their primary retirement benefit has
fallen steadily, while coverage has risen by
defined contribution plans (primarily of the
401(k) variety). A recent Bureau of Labor
Statistics (BLS 2003) study found that only 58
percent of full-time private sector workers
participated in an employer-sponsored retirement
plan, and only 10 percent of private sector
employers nationwide provided a DB plan. By
contract, virtually all full-time public sector
employees participate in a retirement plan, and
the vast majority (90 percent) is in DB plan.
Here benefits are usually expressed as a
percentage of salary for a designated period just
before retirement, multiplied by years of service
credit (Findlay, 1997). --Profitable Prudence
The Case for Public Employer Defined Benefits
Plans. Gary W. Anderson and Keith Brainard. PRC
WP 2004-6.
118
Close Up On Health CostsA Footnote
119
UC Policy Open Enrollment 2000

• At time of Watson Wyatt Study
• Open Enrollment Policy 2000 (Effective January 1,
  2001)
• Employer contributions are set so that each
  major location can offer at least one HMO plan at
  no cost to employees.
• This is no longer the case.

120
Table of Co-payment Increases for 2002 open
enrollment
Previous Open Enrollment 2002 Increase 2002
Increase Preventive Inoculations
HN 5 10 5 100.00 Office Visit
ALL 5 10 5 100.00 Emergency Room
ALL 35 50 15 42.86 Urgent Care
(participating) ALL 5 10 5 100.00 Urgent
Care (outside) HN, PC 35 50 15 42.86 Hospi
tal Inpatient Services ALL 0 250 250 Matern
ity Inpatient Care ALL 0 250 250 Mental
Health/Substance Abuse ALL 0 250 250 Annual
Maximums (individual) HN, PC 800 1,000 200 2
5.00 Annual Maximums (family) HN,
PC 2,400 3,000 600 25.00 Prescription 30
day (generic) HN 5 10 5 100.00 Prescription
30 day (brand ) HN, PC 10 20 10 100.00 Pre
scription 100 day (brand ) KP 5 10 5 100.00
Prescription 100 day (brand ) KP 5 20 15 300.
00 Mail Order 90 day Prescriptions (generic) HN,
PC 10 20 10 100.00 Mail Order Co-Pay
KP 3 8 5 166.67 Mail Order 90 day
Prescription (brand) HN, PC 20 40 20 100.00
HNHealth Net, KPKaiser Permanente, PCPacificare
121
Co-Payment chart
122
Co-Payment chart
123
Co-Payment chart
124
Example of UC Health Care Cost Impacts
125
Example of UC Health Care Cost Impacts
126
Example of UC Health Care Cost Impacts
127
Example of UC Health Care Cost Impacts
128
(No Transcript)
129
(No Transcript)
130
Health Net
Kaiser
Pacific Care
A no-cost health plan was available to employees
prior to 1997 (Health Net)
By 2002, no-cost was not an option
After 1997, various no-cost health plans were
available to employees (Health Net, Pacific Care
Kaiser)
131
(No Transcript)
132
(No Transcript)
133
Total Compensation WW Conclusion
134
Because UCs benefits package compares favorably
to the market, the value of the benefits package
added to the base salary closes the gap in
total compensation for almost every job. (ES 8)
135
The WW Defensible PositionBroad-based Survey
data (proving low market wages) were added to
the narrow benefits survey data (showing high
benefits) for each position under study. Watson
Wyatt concludes that the value of UC benefits
compensates for low wages, making UCs overall
package very competitive to market. This
position has a fatal design flaw inappropriate
benefit comparators.
136
Total Compensation for Reference V3 472
WW Total Compensation sum of base salary
value of benefits
137
Total Compensation for Reference V3 473
Median Values, e.g. 5 days sick pay, 7 days
vacation 1st year, 9.5 holidays, 75 matched DC
up to 6
138
Total Compensation for Reference V3 474
Benefit values for UC employees are 19 higher
than the percentage of total compensation for the
market per WW
Also notes 36.1 proportion of total comp for UC
employees vs. 17.1 for the general market.
139
CX/SX Total Compensation Study Results Aggregate
Data V3 476
e.g._AII -19.3 46.4 1.5
140
_Assistant I Benefit Ratio V3_478
_LA I UC 28 vs. 15 Statewide
141
_Assistant II Benefit Ratio V3_479
_A II UC 27 vs. 14 Statewide
142
_Assistant III Benefit Ratio V3_480
_A III UC 26 vs. 14 Statewide
143
Library Assistant II Benefit Ratio V3_481
LA II UC 24 vs. 13 Statewide
144
Public Safety Dispatcher V3_484
Dispatcher UC 24 vs. 13 Statewide
145
WW 2001 Update same methodology shows lags offset
by benefit values
WW 2001
E.G. _A II -12.9 47.3 2.7
146
Better Measures
147
Looking past Watson Wyatt

• UC Consultants mixed apples and oranges to come
  up with positive finding
• Sorting out the oranges, helps us compare the
  apples better.
• Best comparators for UC
• California State University System
• Other major Universities, Colleges
• Public sector as well as Private

148
UC vs. CSU

• Excellent Match
• Organizational goals
• Nature and setting of work
• Geographic locations
• Many Comparable Positions
• Size
• Both rely on State funding

149
CSU
UC
In a fiscal budget crunch, State reductions
affect CSU more than UC.
150
CSU to UC Comparisons

• Salary and Retirement (examples)
• Health Benefits
• Range Width
• Rural Stipend
• Ratio of Benefits per dollar salary paid

151
Chart CSU vs UC by campus 2003
Library Assistant II Average Annual Salaries (Min
Max) CSU vs. UC Campuses
152
Chart UC lags CSU
153
UC Library Assistant II vs.CSU Library Assistant
II
Retirement and Wage Example
University of California Library Assistant II is
paid 805.00 less per month in wages, and will
receive 563.00 less per month in retirement
benefits at age 55 after 20 years of service.
UC 1.5 X (highest paid consecutive 36 months
divided by 3 final salary) X 20 years of
service Annual Benefit
CSU 2.0 X (highest paid consecutive 12 months
final salary) X 20 years of service Annual
Benefit
154
Comparison of Wages Retirement
155
(No Transcript)
156
UC _Assistant II vs.CSU Admin Support Coordinator
Retirement and Wage Example
University of California _Assistant II is paid
404.00 less per month in wages, and will receive
433.00 less per month in retirement benefits at
age 55 after 20 years of service.
UC 1.5 X (highest paid consecutive 36 months
divided by 3 final salary) X 20 years of
service Annual Benefit
CSU 2.0 X (highest paid consecutive 12 months
final salary) X 20 years of service Annual
Benefit
157
Comparison of Wages Retirement
158
Chart UC Regents retirement age
SOURCE http//www.universityofcalifornia.edu/regen
ts/regmeet/jan01/503att1.pdf
At age 55, PERS Plan pay 2 at 55 formula vs. UC
1.5 payout
At age
159
The Benefits of Working at the CSUA Summary
SOURCE http//www.calstate.edu/Benefits/Summaries
/CSEA.pdf
Health Care Benefits
Health Care Benefits You have medical, dental and
vision plans from which to choose coverage. You
may cover yourself and your eligible spouse or
domestic partner and children. You are eligible
to enroll in coverage if you are appointed at
least half-time and for more than six months. If
you enroll on a timely basis, coverage begins on
the first of the month after your date of hire.
You also may enroll during any annual open
enrollment period. Medical Benefits You have a
choice of several Health Maintenance
Organizations (HMOs), depending on location, or
Preferred Plan Provider (PPO) insurance plans
through the California Public Employees
Retirement System (CalPERS). You and the CSU
share the cost of coverage, with the CSU paying
the greater portion of the monthly premium. You
may pay your portion of the cost on a pre-tax
basis through the Tax Advantage Premium Plan
(TAPP).
160
The Benefits of Working at the CSU
Health Care Benefits
Dental Benefits You may choose between two dental
plans a traditional indemnity (fee-for-service)
plan allowing you to see almost any dental
provider, or a dental HMO plan offering a
network of dentists from which to choose.
Currently, the CSU pays the full dental premium
for you and your eligible dependents. Vision
Benefits Vision coverage includes eye exams and
glasses or contact lenses. Currently, the CSU
pays the full vision premium for you and your
eligible dependents. COBRA Benefits If you lose
your eligibility for medical, dental, and vision
benefits under specified circumstances (for
example, you leave employment with the CSU), the
Consolidated Omnibus Budget Reconciliation Act of
1986 (COBRA) and the Omnibus Budget
Reconciliation Act of 1989 (OBRA) allow you to
continue to receive health care coverage at your
expense. You and your dependents can receive
COBRA benefits for up to 18, 29 or 36 months,
depending on the circumstances.
161
CSU pays more than UC per employee for Health
Benefits in 2003
Source http//hrd.csusb.edu/rates2003.htm
Source UC provided documents, Monthly Cost of
Medical Plans 1/1/2003-12/31/2003 40K and under
CSU still provided two no-cost options to its
employees in 2003, but UC did not. For example,
Kaiser plan 2003 EE1 CSU contributed more per
month to its plans than UC and CSU still offered
employees no cost-options.
162
CSU pays more than UC per employee for Health
Benefits in 2004
Source http//hrd.csusb.edu/rates2004.htm
Source UC provided documents, Monthly Cost of
Medical Plans 1/1/2004-12/31/2004 Health abd
Welfare Policy and Program Design 2004 Rate
charts - april 16.xls/GrossNet-CA-40K and Under
CSU still provides no-cost options to its
employees, and UC does not. For example, Kaiser
plan 2004 Employee 1 CSU contributes 118.74
more per month than UC yet, CSU requires no
employee contribution.
163
The Benefits of Working at the CSU
Flexible Benefits Plans
Flexible Benefits Plans Flexible benefits plans
help you save money by allowing you to pay for
certain eligible expenses with pre-tax dollars.
The tax savings help offset the impact of these
expenses on your disposable income. If you enroll
on a timely basis, coverage begins on the first
of the month after your date of hire. You also
may enroll during any annual open enrollment
period. Tax Advantage Premium Plan (TAPP) TAPP
allows your monthly cost for medical coverage
through the CSU to be deducted from your paycheck
on a pre-tax basis. This means you are not taxed
on your portion of the premium, which reduces
your taxable income. FlexCash If you waive the
CSU medical and/or dental coverage because you
have other non-CSU coverage, you can receive
additional cash in your paycheck each month. You
will be taxed on this additional income.
Currently, you can receive 128 FlexCash per
month if you waive medical coverage and 12
FlexCash per month if you waive dental coverage.
164
The Benefits of Working at the CSU (note parking)
Flexible Benefits Plans
Health Care Reimbursement Account (HCRA) Plan
With a Health Care Reimbursement Account, you set
aside a portion of your pay on a pre-tax basis to
reimburse yourself for eligible health care
expenses. You may contribute up to 5,000 each
plan year through payroll deduction. Neither
contributions nor reimbursements are taxed. You
may participate in this plan even if you are not
eligible for health care benefits. Dependent
Care Reimbursement Account (DCRA) Plan With a
Dependent Care Reimbursement Account, you set
aside a portion of your pay on a pre-tax basis to
reimburse yourself for eligible dependent care
expenses. You may contribute up to 5,000 each
plan year (2,500 if married, filing a separate
tax return) through payroll deduction. Neither
contributions nor reimbursements are taxed. All
employees are eligible to participate in the DCRA
Plan, regardless of eligibility for other
plans. Pre-Tax Parking Deduction Plan You may
pay for parking in CSU-qualified parking
facilities with pre-tax dollars. Premiums are
automatically deducted from your paycheck unless
you choose to opt out of the plan. You may change
your election to participate at any time.
165
The Benefits of Working at the CSU
Income Protection Benefits
Income Protection Benefits The following benefits
provide you with a source of income should you
become disabled and unable to perform your normal
duties at work. To be eligible for NDI and IDL
coverage, you must be a CalPERS member. If you
are eligible, enrollment is automatic and
effective on your date of hire. Currently, the
CSU pays the full premium for all income
protection benefits. Non-Industrial Disability
Insurance (NDI) If you are unable to work for
longer than seven days because of a
non-work-related injury or illness, and meet
other eligibility criteria, Non-Industrial
Disability Insurance (NDI) provides you 250 per
week for up to 26 weeks. Industrial Disability
Leave (IDL) The CSU provides you with Industrial
Disability Leave (IDL), which replaces your
salary during the first 22 days you are unable to
work due to a work-related injury or illness. A
three-day waiting period may apply. If you remain
disabled, IDL replaces two-thirds of your salary
for the next 11 months of your disability. Worker
s Compensation (WC) If you suffer a work-related
injury or illness, you may select Workers
Compensation Temporary Disability payments in
lieu of IDL payments.
166
The Benefits of Working at the CSU
Survivor Protection Benefits
Survivor Protection Benefits If you should die
while employed by the CSU, your surviving
beneficiary(ies) will receive benefits from a
number of CSU sponsored plans and, if you enroll,
several voluntary plans. To be eligible for life
insurance, you must be eligible for health care
benefits. To be eligible for CalPERS death
benefits, you must be a CalPERS member. Life and
Accidental Death Dismemberment (ADD) Insurance
The CSU provides you with 10,000 of basic term
life insurance coverage and 10,000 of basic
accidental death and dismemberment (ADD)
insurance coverage. The CSU pays the full cost of
this coverage. Coverage is automatic and
effective on the first of the month after your
date of hire. Voluntary Life Insurance You can
purchase up to 1.5 million of additional life
insurance for yourself. You may also purchase
life insurance coverage of up to 750,000 for
your spouse/domestic partner and/or 5,000,
10,000 or 20,000 for your children. The CSU
offers coverage at reduced group rates. You pay
the full cost on an after-tax basis. If you are a
new employee and enroll on a timely basis, you
are not required to provide evidence of good
health. If you are a current employee, you may
enroll or increase coverage at any time but
youll have to provide evidence of good health.
Coverage begins on the first of the month after
your application is approved.
167
The Benefits of Working at the CSU
Survivor Protection Benefits
CalPERS Pre-Retirement Death Benefits If you
should die before you retire, CalPERS will pay
your beneficiary a 5,000 tax-free death benefit.
Depending on your length of service, your
beneficiary may receive additional benefits. In
addition, CalPERS will pay your beneficiary a
lump sum payment equivalent to six months of
salary. Survivor Education Benefits If you
should die because of a work-related accident or
injury, your spouse and eligible dependent
children can waive or reduce many of the
undergraduate and/or graduate enrollment fees at
a CSU campus.
168
The Benefits of Working at the CSU
Additional CSU Benefits
CalPERS Long-Term Care (LTC) Plan Through
CalPERS, you can purchase long-term care (LTC)
insurance for yourself, your spouse,
parents/in-laws/ step-parents, and/or siblings 18
years old or older. The plan provides benefits
for assisted living should you (or your covered
family members) become unable to care for
yourself. You may choose from several coverage
options. CSU Fee Waiver Program If you are a
full-time employee, you are eligible each term to
waive certain fees at a CSU campus for a maximum
of two courses or six units, whichever is
greater. You may transfer your fee waiver benefit
to your spouse, domestic partner, or child,
however, not all of your fees may be waived or
reduced for your dependents. Credit Union You
have a number of credit unions available to you
that provide payroll savings programs, as well as
standard credit union services. Homeowners and
Automobile Insurance You can purchase homeowners
and/or automobile insurance and have your
premiums deducted directly from your paycheck on
an after-tax basis. Housing Programs The CSU and
CalPERS offer special housing programs to assist
with home purchasing needs.
169
For 2004 50 range spread at CSU

• TECHNICAL LETTER
• HR/Salary 2004-16
• Detailed Information Regarding Salary Structure
  Changes
• Increase to Salary Range Maximums
• Effective October 1, 2004, any CSEA salary range
  with a range spread of less than 50 will be
  increased to a 50 range spread by increasing the
  salary range maximum. Salary range minimums will
  not be adjusted. Campuses are required to update
  the Anniversary Date for employees whose base pay
  is no longer at the salary range maximum, as
  outlined in the processing instructions.

170
For 2003/04 Rural Stipends
California State University Offers a 500.00
annual stipend to rural employees.
Detailed Information Regarding Salary Program
Changes 2003/04 500 Rural Health Care
Stipend To be eligible for the 2003/04 500
Rural Health Care Stipend, the employee must meet
the following criteria during the September 2004
pay period Must be enrolled in a CalPERS
sponsored non-HMO health plan. Must reside in a
zip code determined by CalPERS to be a rural area
in which there are no CalPERS board approved
Health Maintenance Organizations. The relevant
zip codes are provided in Attachment B
Californias Proposed Eligible Rural Subsidy Zip
Codes by County effective January 1, 2004. Must
be in an active or on-leave status.
TECHNICAL LETTER HR/Salary 2004-16 For complete
information and processing instructions for all
salary programs, refer to Human Resources
Administrations Salary Program Web site at
http//www.calstate.edu./HRAdm/SalaryProgram/index
.shtml. Questions regarding this technical letter
may be directed to Human Resources Administration
at [phone]. This document is available on
Human Resources Web site at http//www.calstate.
edu/HRAdm/memos.shtml.
171
Ratios- Ballpark Notation

• Calls to CSU were not successful in finding an
  authoritative source for benefit to salary ratios
  for the CSU system. However, a number of CSU HR
  staff at different campuses including Hayward and
  Los Angeles suggested a 27 benefit ratio as an
  in-house rule of thumb for allocating
  compensation costs.

172
State of California Sources Show UC Clericals Lag
CSU and Statewide comparators.
State of California DPA Annual Study
UC compared to CSU and Public sector salaries for
Clerk Typist Benchmarks 2003
173
Community College-Clerk Typist
UCB Clerk-Typist match (per State of California)
makes 11.26-13.62 compared to Community College
average 12.40-15.73.
174
Community College-Administrative Secretary
UC _Asst. II averages 15.68/hr. Community
College Admin Secretary average start is 16.63
average salary 18.88
175
Better MeasuresBureau of Labor Statistics
176
Bureau of Labor Statistics

• Employment Cost Index Measures
• Employer Costs for Employee Compensation by
  category
• BLS calculates by Industry, Occupational Group,
  Private vs. Public
• Allocates of each dollar spent
• Excellent basis to compare

177
United States Department of Labor
The Employment Cost Index (ECI) is a quarterly
measure of the change in the price of labor, free
from the influence of employment shifts among
occupations and industries. It includes measures
of change in total compensation (wages and
salaries plus the employer cost of employee
benefits), wages and salaries, and benefits. The
ECI wage and salary series is limited to changes
in wage and salary rates, defined as
straight-time average hourly earnings.
Straight-time earnings are total earnings before
payroll deductions, excluding premium pay for
overtime, work on weekends and holidays, and
shift differentials. Production bonuses incentive
earnings, commission payments and cost-of-living
adjustments are included in straight-time
earnings, whereas non-production bonuses (such as
Christmas or year-end bonuses) are excluded. Also
excluded are such items as payments-in-kind, free
room and board, and tips. The ECI sample is
rotated over approximately five years this makes
it more representative and reduces respondent
burden. The sample is replaced on a cross-area,
cross-industry basis. NOTE The regional coverage
for the West is Alaska, Arizona, California,
Colorado, Hawaii, Idaho, Montana, Nevada, New
Mexico, Oregon, Utah, Washington and Wyoming
http//www.bls.gov/ro9/ro9news.htm
178
United States Department of Labor ECEC chart
Wages and Salaries
179
United States Department of Labor ECEC chart
Total Benefits
180
United States Department of Labor ECEC chart -
Health
181
Federal Employment Cost Studies 2004

• ECI Data tell us about Salary/Benefit Ratios as
  well as how Employer dollars are apportioned
  overall
• Analyzed federal statistics based on neutral
  information are arrayed by occupation, industry
  and public vs. private sectors.
• Recall, WW showed UC benefit ratios of roughly
  24-28 of overall compensation based upon base
  wages.
• Private sector comparators showed ratios much
  lower in the WW study, as low as 13.

182
Federal Employment Cost Studies 2004

• ECI Data tell us about Salary/Benefit Ratios as
  well as how Employer dollars are apportioned
  overall
• Analyzed federal statistics based on neutral
  information are arrayed by occupation, industry
  and public vs. private sectors.
• Recall, WW showed UC benefit ratios of roughly
  24-28 of overall compensation based upon base
  wages.
• Private sector comparators showed ratios much
  lower in the WW study, as low as 13.

183
Salary/Benefits Ratio-Civil EmployeesOffice and
Administrative Support Occupations
184
Salary/Benefits Ratio-Civil EmployeesJunior
Colleges, Colleges and Universities
185
Salary/Benefits Ratio-Civil EmployeesService
providing industries (includes Educational
Services)
186

• Wage Data Aged by Market Factors

187
March 8, 2004 Robert C. Dynes Presentation
188
March 8, 2004 Robert C. Dynes Presentationcontinu
ed
189
UC Wage Data spreadsheet
190
UC Wage Data spreadsheet
Math Check _Assistant I 2000 26.0 2001
28.4 2002 (28400 X .02 568) 28400
(28968) or 29.0 2003 2002 wage 0 2004 2003
wage0 Note WW figures are not presented as
whole numbers. Using whole numbers, rounding
errors occur.
191
Western Region spreadsheets
192
Western Region spreadsheets
Math Check _Assistant I 2000 (26000 - 31000
5000) ? 26000 .19230 or 19.23 2001
(28400 - 32100 3700) ? 28400 .13028 or
13.03 2002 (29000 - 33630 4630) ?
29000 .15965 or 16.0 2003 (29000 - 34890
5890) ? 29000 .20310 or 20.0 2004
(29000 - 36150 7150) ? 29000 .24655 or
24.7 Note WW figures are not presented as whole
numbers. Using whole numbers, rounding errors
occur.
193
Western Region Data _Assistant I
194
Western Region Data _Assistant II
195
Western Region Data _Assistant III
196
Western Region Data Library Assistant II
197
Western Region Data Summary 2004
198
Western Region Data Summary 2004
199
Public Safety Dispatcher
200
UC Irvine Campus Dispatchers Still Underpaid
Compared to Regional Average and Median Salaries
201
Equity for Irvine Chart
202
Dispatcher chart
In 2002 UC Dispatchers lagged the market across
the State. Since then, equity adjustments were
implemented at several campuses.
203
Dispatchers underpaid chart
Irvine compared to 28 agencies, and 40 positions
December 2002
204
Western Region Data Public Safety Dispatcher
205
Irvine UCOP survey
206
Library Assistants
207
LA II compared to Western Region
208
Chart 2003 LA II N. California
209
Chart 2003 LA II S. California
210
Chart UC lags CSU
211
UC LA I to __ Assistant I difference is under 15
across all campuses by average and median
212
UC LA II to __ Assistant II difference is under
15 across all campuses by average and median
213
CSU Salary comparisons
214
Nutrition Workers
215
Nutrition Workers
216
Parking
217
Parking
218
Parking
219
Parking
220
Parking
221
Parking
222
CSU Parking Comparison

• Based on a phone survey to four individual CSU
  locations
• (Hayward, Los Angeles, Chico and Chancellors
  Office)
• parking costs ranged from 12-16

223
Special Study HighlightsReinforce Below Market
Findings
224
A special report of the Academic Business
Administrators on the UCSD campus is remarkably
similar in key conclusions to several findings in
the 2000 WW report and also to positions taken by
CUE Statewide.The task force was comprised of
Business Managers from various schools and
departments, including the School of Medicine,
the libraries and Extended Studies.
UCSD Special Task Force 2000
225
Excerpts from Academic Business Administrators
(ABA) Staff Morale Task Force, UCSDAugust 25,
2000
Clerical Salaries Are No Longer Competitive There
are numerous signs that staff compensation has
fallen behind the market behind the costs of
living, and behind the expectations of long-term
UCSD employees. P6
Our starting salaries are not only low, but the
corresponding ranges are very narrow. In
addition, the first merit increase one can offer
is 15-20 months away. This is because most
step-based positions have merit dates at least a
year after they are hired, but these are then
delayed for an additional six months due to
budget cuts several year ago. P6
Many Long Term Employees Are Topped Out This
means that many are not eligible for merit
adjustments but only for the amount of the
expansion of the range maximum, typically 2 in
the last few years. This is particularly
distressing when they are asked to do more
complex work than every before as a result of
decentralization of myriad processes and
responsibilities.
Faculty Parity Increases Have Widened the Gap
Between Faculty and Staff It also meant an
increasing disparity between faculty and staff
raises. In three of the last five years, faculty
salary increases for cost of living and parity
have been more than twice the staff range
adjustment.
226
ABA Recommendations August 2000