FY 2006 Pay and Benefits Proposal

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FY 2006Pay and Benefits Proposal

• August 2005

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Compensation Goals

• The Citys Most Important Asset Is Its Employees
• Provide Market Competitive Pay and Benefits
• Maintain a Valuable Health Benefit
• Manage Escalating Medical Costs and Long-Term
  Liability
• Increase Choice and Flexibility

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Market Competitive
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Market Competitiveness
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Total Compensation

• An annual review is conducted of City of
  Arlington compensation and benefits in relation
  to the market.
• Above Market
• Health Benefit
• Sick Leave Sellback
• Below Market
• Salary Compensation

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Escalating Medical Costs
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Increase Choice and Flexibility

• Employee Makes Choice Based on Personal Health
  Care Needs
• Higher premium, no deductible
• Lower premium, higher deductible
• Plan Year 2007, City Will Implement A Cafeteria
  Style Program for Maximum Flexibility

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2006 Proposal Three Plans
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2006 Proposal

• Third Plan Added
• Modified City Subsidy to All Plans (90 Employee,
  70 Dependent on Choice Plan 3)
• Plan 1 Same Structure As Current Year With
  Increased Cost
• Plan 2 New Plan With Deductibles and Out of
  Pocket Maximums
• Plan 3 Same Deductible, Lower Out of Pocket
  Maximum

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2006 Proposal

• City Health Plan Goes From Three Tier to Four
• City Proposing One-Time Contribution to FSA to
  Assist in Covering Deductible

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Retirees
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Previous Recommendation(Summer 2004)

• Change to an experience based rate structure
  separating active employees, retirees under age
  65 and retirees over age 65
• Reduce retiree subsidy percentage
• Eliminate retiree dependent subsidy percentage

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Council Direction

• Recognize the issue is equally one of fiscal
  impact and human impact
• Subsequent recommendations should further
  acknowledge the human side of the equation

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2006 Proposal (Retirees)

• City Subsidy Remains At Current Levels on Choice
  Plan 3
• City Subsidy for Dependents Drops from 70 to
  Half of Retiree Subsidy
• City Proposing One-Time Contribution to FSA to
  Assist in Covering Deductible

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2006 Proposal (Other Changes)

• Exiting Retirees Do Not Have to Enroll in the
  Health Plan
• New Employees Starting After 1/1/06 Have No City
  Subsidy at Retirement
• Emphasize a defined contribution philosophy in
  the future rather than defined benefit by
  leveraging tools like the Retirement Health
  Savings Plan and other Employee Savings Accounts.

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Other Post Employment Benefits (OPEB) Liability

• GASB will require the reporting of long term
  liability beginning FY 2008.

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Employee Input

• Eleven Employee Briefings Conducted on the
  Proposal
• Two Retiree Briefings
• Received Questions and Comments
• Generally Positive Reception
• One Employee Suggestion That Was Made to Benefit
  Proposal Sick Leave Sellback/Health Savings
  Account Enrollment

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Conclusion

• Achieves Pay Increase Without Increasing the Tax
  Rate or Decreasing Services
• Begins Multi-Year Plan to Achieve Market
  Competitive Salaries
• Accomplishes an Equitable Contribution Across
  Employees and Retirees
• Provides Flexibility and Choice for Employees and
  Retirees
• Maintains a Valuable Health Benefit In a
  Fast-Changing Market

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Communication Plan

• Newsletter to Employees and Retirees Will Follow
  This Meeting
• Information Will Be Posted on Portal and Web
• Open Enrollment Meetings
• Confirmation Statements Sent Out After Open
  Enrollment Decisions Have Been Made

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Legislative Changes

• SB 18 adopted by State Legislature in May 2005
  changed rules for City's adoption of tax rate 
• Prior rules
• If proposed tax rated exceed lower of rollback
  rate or 1.03 times effective rate
• City must hold one public hearing on tax rate and
  publish two notices

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Legislative Changes

• SB 18 changes 
• If proposed tax rate exceeds lower of rollback
  rate or effective rate
• City must hold two public hearings (at least
  three days apart) on tax rate and publish three
  notices
• Vote on tax rate must occur within 14 days of the
  second public hearing
• New language for motion adopting tax rate and web
  site posting after tax rate ordinance has passed
• City's proposed rate of 0.6480 would not have
  required a public hearing and notices under prior
  law, but it is required now 

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Budget Calendar

• August 22 Council Member Capeharts Town Hall
  Meeting, Tierra Verde at 7 PM
• August 24 Council Member Wilemons Town Hall
  Meeting, Fire Training at 630 PM
• August 25 Council Member Riveras Town Hall
  Meeting/Council Meeting - First Public Hearing on
  the Tax Rate, Bob Duncan Center at 630 PM

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Budget Calendar

• August 29 Council Member Wolffs Town Hall
  Meeting, City Hall at 630 PM
• August 30 Second Public Hearing on Tax Rate,
  City Hall at 630 PM
• August 31 Council Member Bruners Town Hall
  Meeting, Nichols Junior High at 630 PM
• Sept. 6 Council Work Session on the Budget
• Sept. 8 Public Hearing on the Budget/First
  Reading on Budget and Tax Rate, City Hall at 630
  PM
• Sept. 13 Second Reading on Budget and Tax Rate

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Questions