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Home My WebLink About11-05-18-SWSAGENDA ITEMS Compensation Study Discussion Gayle Bauman, Finance Director MEMO.PDF ATTACHMENT A.PDF ATTACHMENT B.PDF TCAAP/Rice Creek Commons Public Forum Discussion Dave Perrault, City Administrator MEMO.PDF COUNCIL/STAFF COMMENTS ADJOURN Mayor: David Grant Councilmembers: Brenda Holden Fran Holmes Dave McClung Steve Scott Special City Council Work Session Agenda November 5, 2018 5:30 p.m. City Hall Address: 1245 W Highway 96 Arden Hills MN 55112 Phone: 651 -792 -7800 Website : www.cityofardenhills.org City Vision Arden Hills is a strong community that values its unique environmental setting, strong residential neighborhoods, vital business community, well -maintained infrastructure, fiscal soundness, and our long -standing tradition as a desirable City in which to live, work, and play. CALL TO ORDER 1. 1.A. Documents: 1.B. Documents: 2. Page 1 of 4 AGENDA ITEM – 1A MEMORANDUM DATE: November 5, 2018 TO: Honorable Mayor and City Councilmembers Dave Perrault, City Administrator FROM: Gayle Bauman, Finance Director SUBJECT: Compensation Study Discussion Budgeted Amount: Actual Amount: Funding Source: N/A N/A N/A Council Should Consider The Council should review and provide feedback regarding results from the Compensation Study completed earlier this year and employee benefit renewals for 2019. Background Earlier this year, a compensation study was completed by George Gmach Compensation Consulting LLC. The Financial Planning and Analysis Committee (FPAC) was directed to take the lead on this project. The main areas that were reported on were Pay Plans; Paid Time Off; Life, Disability and Retirement; and Health and Dental. Discussion Pay Plans The City has a step system where there is a defined period of time to reach the maximum, which is considered the market rate. There are 24 grades, but the bottom 6 grades and the top 2 grades are not currently used. This is a normal structure design for a city the size of Arden Hills. Overall, Arden Hills is competitive in its market and no major changes are needed in the level of pay. Improvements could be made in the step structure by using a uniform step value that would divide the steps equally over the years. This approach would increase the dollar value of the current early steps and decrease the later steps, which is more aligned with the performance curve of employees. It also gets new hires to a more competitive rate earlier, when retention can be an issue. Another change that was suggested was to shorten the timeline by one or two years for the non-union pay scale. It currently takes 7 years from minimum to maximum for non-union employees and 3 years for union employees. Public Works maintenance wages have some room for wage growth but any adjustments considered should be accompanied by a harmonization with the City non-union step structure. No changes are being recommended at this time. Page 2 of 4 Paid Time Off The PTO program is competitive at middle market. No changes are being recommended at this time. Life, Disability and Retirement For life insurance, the City paid coverage is $20,000. This is a little on the low side but within the $10,000 to $50,000 range. The City does pay for short and long term disability for employees. Employees are taxed on these amounts so benefits received are non-taxable. The City does offer a deferred compensation plan but this is all employee funded, no City contribution is made. No changes are being recommended at this time. Health and Dental For all jurisdictions surveyed, the single healthcare insurance premium was paid entirely by the City. Larger jurisdictions have for many years used a flat dollar value for benefits. This approach treats all employees alike, whether or not they have dependents. Typically, the amount provided by the city is short of what is required for family coverage but a single employee could use the remainder towards other premiums or deferred comp. Cities with HSA’s usually contribute a monthly amount to an employee’s savings account in addition to picking up a share of family coverage. Single coverage is normally provided at no cost to the employee. Family coverage is where the limits or target come into play. Cities are more likely to set a premium cap based on the lowest cost healthcare plan offered paired with an HSA contribution to arrive at a total number. It appears that a number in the range of $1,075 to $1,205 is what cities pay in 2018. The FPAC committee met on both 10/25/18 and 10/29/18 to review information on 2019 employee insurance benefits. The main focus was on health care. NFP (the city’s benefit consultant) provided information for renewing our current plan as well as options to change to Blue Cross Blue Shield, Medica, Preferred One and PEIP. After going through the information, the committee narrowed down its choices to renewing the current plan and PEIP and decided to focus on providing an HSA plan. The cost of the PEIP HSA plan is much lower than the current Health Partners plan. Some of the reasons for this are the more limited/restrictive care options available, having to get referrals to see specialists, the higher deductibles and higher max out of pocket maximums. The current breakdown of employee and city costs for health and dental care is as follows: The City currently pay 80% of the family premium for Union and Non-Union and also contributes an amount to employees with an HSA account. The committee wants to move away from a 2018 BREAKDOWN $1,650/year Total EE Total Employee Employer City HSA City Health Dental Premium Portion Portion Contribution Contribution Max out of Pocket Average of all ee's Single 629.56 45.97 675.53 - 675.53 137.50 813.03 2,000 per person Average of 2 ee's Family 1,378.71 45.97 1,424.68 321.71 1,102.97 137.50 1,240.47 2,000 per person/4,000 per family Union 1,240.00 Incl.1,240.00 248.00 992.00 - 992.00 3,000 per person/7,000 per family Premiums Page 3 of 4 percentage based contribution and go with a flat dollar amount to help control city costs in the event of a significant premium increase. The breakdown proposed for going with the PEIP HSA plan is as follows: The recommendation is to cover the entire premium of a single plan and $900 of a family plan. In addition to this, $1,025 per month would be contributed to an employees’ HSA account, if applicable. There has been some discussions on whether or not the contribution to Union employees should be the premium amount ($900) or the premium plus HSA amount ($1,025). The PEIP program offers three different plans: Advantage, Value and HSA; and three different networks to choose from: HealthPartners, Blue Cross Blue Shield and Preferred One. An employee would need to choose the network carrier that best fits their needs. Within each network there are primary care clinics. Primary care clinics have been placed into one of four cost levels, depending on the care system in which the provider participates and that care system’s total cost/quality of delivering health care. Cost level 1 is much less expensive than cost level 4. A clinic can be at a different cost level depending on the network. Example: Allina is at a cost level 3 for Blue Cross Blue Shield but it is at a cost level 4 for Preferred One. The max out-of-pocket amounts listed in the table above relate to cost level 2 clinics. If an employee wanted to make Allina their primary care clinic, the max out-of-pocket would be higher. Our current plan has a deductible and max out-of-pocket of $2,000 per person and $4,000 per family. The PEIP HSA plan (Cost Level 2) has a deductible of $2,000 and max out-of-pocket of $3,000 for single coverage, a deductible of $3,200 and max out-of-pocket of $5,000 per family member, and a deductible of $4,000 and max out-of-pocket of $6,000 per family. So the max out- of-pocket is increasing by 50%, $1,000 for single and $2,000 for family with the PEIP HSA plan. This could potentially impact an employee with a single plan by $1,150 per year and an employee with a family plan by $2,150 per year because the max out-of-pocket is increasing and the HSA contribution is decreasing. 2019 PEIP HSA plan $1,500/year Total EE Total Employee Employer City HSA City Cost level 2 Health Dental Premium Portion Portion Contribution Contribution Max out of Pocket Single 461.06 47.58 508.64 - 508.64 125.00 633.64 3,000 per person Family 1,189.28 47.58 1,236.86 336.86 900.00 125.00 1,025.00 5,000 per person/6,000 per family Est. 6% increase Union 1,315.00 Incl.1,315.00 290.00 1,025.00 - 1,025.00 3,000 per person/7,000 per family Premiums Page 4 of 4 A summary of the maximum costs (premium plus out-of-pocket) for each plan is shown below. The two HSA plans are noted in the red box. Attachments A. Summary of HealthPartners HSA plan benefits B. Summary of PEIP HSA plan benefits Single Family PEIP Advantage 7,961.52 20,753.76 Max out of pocket 2,000.00 4,000.00 Tier 2 Annual 9,961.52 24,753.76 Monthly 830.13 2,062.81 Value 7,179.84 18,669.36 Max out of pocket 3,200.00 6,400.00 Tier 2 Annual 10,379.84 25,069.36 Monthly 864.99 2,089.11 PEIP HSA 5,532.72 14,271.36 Max out of pocket 3,000.00 6,000.00 Tier 2 Annual 8,532.72 20,271.36 Monthly 711.06 1,689.28 Current Health Partners 8,027.48 21,988.92 Average of current employees Max out of pocket 2,000.00 4,000.00 Annual 10,027.48 25,988.92 Monthly 835.62 2,165.74 DATE: November 5, 2018 TO: Honorable Mayor and City Councilmembers FROM: Dave Perrault, City Administrator SUBJECT: TCAAP Public Forum Planning Update Budgeted Amount: Actual Amount: Funding Source: N/A N/A N/A Council Should Consider The Council should provide further direction on the planning of the upcoming TCAAP Public Forum. Background A verbal update will be provided. Attachment N/A AGENDA ITEM –1B MEMORANDUM