UPEA would like to take this opportunity to bring you up-to-date on the Association’s efforts concerning the critical issues of retirement and health care. Over the past four months, a taskforce of UPEA members appointed by the UPEA State Board of Directors, have been meeting to interview legislative leaders, state retirement officials, health insurance experts, and others in order to prepare for the upcoming Legislative Session. The time has been well spent.
As you know, the state retirement fund has experienced significant losses due to the recession. For the system to remain solvent it must be at least 80% funded. Currently the retirement system is about 87% funded.
In order to address the losses, some organizations, like the League of Cities and Towns have proposed a myriad of solutions such as suspending the 401(k) contribution, extending the vesting period, and transitioning the public safety / firefighter years of service from 20 years to 25 years. We believe that such proposals are premature.
UPEA will join the Utah Education Association (UEA) and the Utah School Employees’ Association (USEA) in issuing a joint statement which opposes any long term changes to the retirement system based on a temporary drop in the investment fund.
The UPEA taskforce is also closely monitoring health care reform on the state and national level and will be producing a series of position papers.
UPEA is adamant about preserving your retirement benefits. The Utah Retirement building is named after UPEA’s founder and first President Leonard W. McDonald, the architect of the Utah State Retirement System. We the leadership of UPEA intends to uphold this legacy.
Wednesday, August 19, 2009
Friday, July 10, 2009
Pension System Options
The national financial crisis has caused pension systems and 401(k)s to lose money. The Utah Retirement System (URS) lost about $4 Billion last year. During the upcoming 2010 Legislative Session, URS may ask the legislature to increase Utah public employee contribution rates by 3 to 4 percent ($80-$100 million). However, lawmakers will decide between various options that affect public employee retirement benefits.
UPEA has been monitoring potential changes to the retirement system. URS presented several options for consideration during a February 5, 2009 Legislative Independent Entities Appropriations Subcommittee Meeting (click here to hear audio).
URS’s legal council, Dan Anderson said, “URS isn't making any recommendations regarding changes, they are only bringing forth information as a place to begin discussions for making adjustments to the system, if desired by the committee.”
Some of the adjustments that could be considered are listed and explained below. Please keep in mind that none of these proposals are final. However, as public employees, we need to be educated on each of the alternatives so we can make a difference in the process.
Suspend/Lower Post Retired (“Double Dippers”) contribution to 401(k).
o Utah currently has a very generous post-retirement (“double dipping”) benefit policy. There is political momentum to change the benefit for the employees that “double dip” to save money. The concern is whether or not any changes can be legally made to the current employees using the post-retirement benefits.
Extend final Average Salary Period (for example from 3 years to 5 years).
o This proposal would allow the salary averages of the highest 5 years to be used in calculating your retirement benefit.
UPEA has been monitoring potential changes to the retirement system. URS presented several options for consideration during a February 5, 2009 Legislative Independent Entities Appropriations Subcommittee Meeting (click here to hear audio).
URS’s legal council, Dan Anderson said, “URS isn't making any recommendations regarding changes, they are only bringing forth information as a place to begin discussions for making adjustments to the system, if desired by the committee.”
Some of the adjustments that could be considered are listed and explained below. Please keep in mind that none of these proposals are final. However, as public employees, we need to be educated on each of the alternatives so we can make a difference in the process.
Suspend/Lower Post Retired (“Double Dippers”) contribution to 401(k).
o Utah currently has a very generous post-retirement (“double dipping”) benefit policy. There is political momentum to change the benefit for the employees that “double dip” to save money. The concern is whether or not any changes can be legally made to the current employees using the post-retirement benefits.
Extend final Average Salary Period (for example from 3 years to 5 years).
o This proposal would allow the salary averages of the highest 5 years to be used in calculating your retirement benefit.
Make COLAs Discretionary/ Delay COLA.
o COLA’s on retirement disbursements could potentially be deferred until a specific anniversary date of retirement (for example 3 years after retiring) or until a retiree reaches a certain age (for example 65).
Increase the vesting period.
o Vesting periods for new employees could potentially increase (from 4 years to 6 years).
Put a minimum age condition on the 30 year benefit.
o One of the suggestions is to change the minimum age that an employee can retire without a penalty (55, 57, 60,etc…). The question is how would this apply to current employees? Would they be grandfathered?
Partial benefit payments until a certain age.
o This proposal would allow for an employee to receive partial retirement benefits until they reach a certain age (phased retirement).
Reduce the multiplier.
o Reducing the retirement multiplier (number of years x 2% x 3 highest average salaries) from 2% to 1.9%. The question is whether current employees would be grandfathered?
Increase 20 year public safety and firefighter requirement to 25 years.
o Would current employees be grandfathered?
Put a minimum age condition on the 20 year public safety and firefighter benefit (48, 50, 52, etc…).
o One of the suggestions is to change the minimum age that an employee can retire without penalty (48, 50, 52,etc…). Would current employees be grandfathered?
Change to the contributory system. Employees are currently on the non-contributory system.
o Such a move would allow employees to participate in funding their retirement benefit. Such a move would shift some of the risk to the individual.
Create a hybrid contributory/non-contributory system.
o This would allow the system to potentially have the employee participate in funding their retirement benefit, while still having part of their benefit be made up of the non-contributory system. (for example, employees might contribute 1% - 3% of their own salary to the pension).
Make the retirement benefit optional – employees can choose how they would like to participate at the time of hire.
Turn the defined benefit system (pension) into a defined contribution (401 (k)) system.
Basing your retirement eligibility by age + years of service.
o This proposal would say that you would need to follow the rule of 85 (or 90, 95, etc…). This would mean that you would need to have 30 years of service if you were to retire at the age of 55 (age + years of service = 85).
UPEA has been very busy this summer working on the retirement issues. The UPEA State Board recently created a taskforce that is discussing potential legislative action that may affect employee pensions and 401(k)s.
In addition, UPEA is spearheading a political training program this summer. This program will help public employees understand the political process, and empower public employees to institute positive change. The training will be conducted in a 3-part series that includes “Politics 101”, “Grassroots: How You Can Make A Difference”, and “How to Become A Delegate”. We will begin scheduling classes throughout the agencies this summer. If you would like to have UPEA come to a staff meeting, or come present at your worksite, please call 1-800-224-8732.
Wednesday, June 17, 2009
June Interim Committees Examine Public Employee Affairs
UPEA field staff member Christy Cushing attended the Government Operations and Political Subdivisions Interim Committee Meeting on Wednesday June 17, 2009. The following is an update of the discussion:
State Employee Compensation – Briefing
Policy Analyst Benjamin Christensen reviewed slides describing the three parts within state employee compensation, which include employees, salary and compensation spending. Most notable, Christensen said that over the past ten years, the number of state employees has decreased from .896% to .764% in 2009. Currently the average state employee makes $44,903 and the average costs of benefits (i.e. health insurance and leave) are $23,908.
Over the last ten years, state employee compensation has barely risen above inflation; whereas, county employees’ compensation has risen 15-24% above inflation. Jeff Herring and Debbie Cragun from DHRM discussed some of the issues with state employee compensation.
Herring noted that “employees are typically viewed as a cost,” and asked “how do we maximize a return on our investment.” Herring continued to explain the need to balance compensation and benefits to employees. State employees’ compensation is benefit driven, not pay, and in order to compete and draw applicants, we need to design a compensation package that will attract and retain employees.
Cragun noted that DHRM is mandated by statute to complete an annual survey and compile data, researching state employee compensation and benefits packages. To complete this annual research, DHRM uses both local and regional comparative data. The 2008 salary survey showed that “state employees’ salary ranges are -9.9% below market” and “actual average salaries are 13.9% below market.” Below-market compensation perpetuates the issues of compression.
Cragun said, “compression occurs when you have a large percentage of your workforce at the lower end of the salary range.” She added, “Employees are not moved through salary ranges as intended. In the private sector, within three to five years of employment, employees should be at midpoint in pay; yet 72% of the State’s workforce are below midpoint” with an average of 10.6 years of service.”
Utah’s highly educated, highly skilled, and highly certified workforce continue to be significantly underpaid and undervalued.
Cragun asked, “With the worker shortage looming on the horizon and non-competitive wages, who will fill these jobs?”
Herring said, “In this economy, there is not an issue of high turnover, however when the economy turns around, our older workforce will retire and it will be more challenging to recruit and retain state employees, resulting in a substandard workforce, solutions should include balancing compensation for the workforce as a whole…we must be concerned with both salary ranges and actual pay.”
Co-Chair Rep. Frank noted that the Committee would carefully look at the data, as the legislature values its employees and knows they could be working elsewhere.
Four-day Work Week for State Employees Program – Update
Jeff Herring, Executive Director of DHRM gave an overview for a survey about the 4/10 work week. Herring explained that “government is in existence to serve the taxpayer” and there are certain “factors that will be involved as to whether or not [the 4-10 Initiative] will be continued and/or modified.”
The employee surveys from July 2008, November 2008, and May 2009 show that the majority of state employees preferred the 4/10 work week. In addition, since the 4-10 work weeks’ inception, overall leave usage decreased 5.3%, overtime pay decreased 18.2%, and comp time decreased 19.7%. The overall estimated approximate cost savings averages out to $1,108,598.
Nevertheless, Herring said that there needs to be more “focus on customer service and partners (League of Counties and Towns, and individual Counties) and get data from them to see about keeping or modifying” the four day work week.
Consolidation of State Agency Functions
Rep. Wayne Harper discussed the ways to consolidate the Department of Health, Human Services, Environmental Quality, and Workforce Services into either three or one agency(s). Rep. Harper said that there are duplicate services being offered at these four state agencies.
Rep. Harper presented the example of an average citizen trying to claim and acquire unemployment benefits and how he/she must go from agency to agency to acquire those benefits.
Rep. Bigelow, who is a member of the Govt. Ops Committee asked Rep. Harper how he proposed addressing the extensive effort required to research consolidating theses four large state agencies, which, he said, “demands attention from the Executive Branch.”
Rep. Harper said he hoped to get some small working groups together from the Executive Directors of DOH, DHS, DWS, and DEQ with the Governor’s Office and legislative staff to discuss consolidation in detail.
Co-Chair Rep. Hunsaker asked Rep. Harper if he proposed “to identify specific or general savings” with consolidating the four agencies. Rep. Harper said the intent is to realize specific savings based on the elimination of appointed positions.
In addition, Rep. Harper said that the Committee Members should look into consolidating the administrative services within the Department of Community and Culture. He believes this task would be easier than consolidating DOH, DHS, DWS, and DEQ.
Rep. Janice Fisher, a member of the Govt Ops. Committee noted that she does not believe that “bigger is better by combining” and that the idea of consolidating agencies makes her nervous, especially if the sole purpose is for efficiency. Rep. Fisher continued to say that she would “hate to combine departments and lose skilled people. We should look at the efficiencies, but need to be very, very careful.”
UPEA will continue to monitor Rep. Harper’s proposal to consolidate the DOH, DHS, DWS, and DEQ.
Workforce Services and Community and Economic Development Interim Committee
UPEA staff member Todd Losser attended the Workforce Services and Community and Economic Development Interim Committee today at 2:00 p.m. A presentation by Executive Director Kristen Cox, Jon Pierpont, and Steve Cuthbert was given to the Committee for an update on the new Eligibility Services Division and eREP computer system update.
The goals of the division are to have a centralized division, standardized workload, reduced cost, and to meet customer needs. The division was created through a new design and business model and will be operating June 22nd. Employees will have timely feedback on their performance and will be monitored more closely. Skills testing will take place every year to ensure employees are meeting the required skills to do their job. UPEA will continue to monitor the new Eligibility Division.
State Employee Compensation – Briefing
Policy Analyst Benjamin Christensen reviewed slides describing the three parts within state employee compensation, which include employees, salary and compensation spending. Most notable, Christensen said that over the past ten years, the number of state employees has decreased from .896% to .764% in 2009. Currently the average state employee makes $44,903 and the average costs of benefits (i.e. health insurance and leave) are $23,908.
Over the last ten years, state employee compensation has barely risen above inflation; whereas, county employees’ compensation has risen 15-24% above inflation. Jeff Herring and Debbie Cragun from DHRM discussed some of the issues with state employee compensation.
Herring noted that “employees are typically viewed as a cost,” and asked “how do we maximize a return on our investment.” Herring continued to explain the need to balance compensation and benefits to employees. State employees’ compensation is benefit driven, not pay, and in order to compete and draw applicants, we need to design a compensation package that will attract and retain employees.
Cragun noted that DHRM is mandated by statute to complete an annual survey and compile data, researching state employee compensation and benefits packages. To complete this annual research, DHRM uses both local and regional comparative data. The 2008 salary survey showed that “state employees’ salary ranges are -9.9% below market” and “actual average salaries are 13.9% below market.” Below-market compensation perpetuates the issues of compression.
Cragun said, “compression occurs when you have a large percentage of your workforce at the lower end of the salary range.” She added, “Employees are not moved through salary ranges as intended. In the private sector, within three to five years of employment, employees should be at midpoint in pay; yet 72% of the State’s workforce are below midpoint” with an average of 10.6 years of service.”
Utah’s highly educated, highly skilled, and highly certified workforce continue to be significantly underpaid and undervalued.
Cragun asked, “With the worker shortage looming on the horizon and non-competitive wages, who will fill these jobs?”
Herring said, “In this economy, there is not an issue of high turnover, however when the economy turns around, our older workforce will retire and it will be more challenging to recruit and retain state employees, resulting in a substandard workforce, solutions should include balancing compensation for the workforce as a whole…we must be concerned with both salary ranges and actual pay.”
Co-Chair Rep. Frank noted that the Committee would carefully look at the data, as the legislature values its employees and knows they could be working elsewhere.
Four-day Work Week for State Employees Program – Update
Jeff Herring, Executive Director of DHRM gave an overview for a survey about the 4/10 work week. Herring explained that “government is in existence to serve the taxpayer” and there are certain “factors that will be involved as to whether or not [the 4-10 Initiative] will be continued and/or modified.”
The employee surveys from July 2008, November 2008, and May 2009 show that the majority of state employees preferred the 4/10 work week. In addition, since the 4-10 work weeks’ inception, overall leave usage decreased 5.3%, overtime pay decreased 18.2%, and comp time decreased 19.7%. The overall estimated approximate cost savings averages out to $1,108,598.
Nevertheless, Herring said that there needs to be more “focus on customer service and partners (League of Counties and Towns, and individual Counties) and get data from them to see about keeping or modifying” the four day work week.
Consolidation of State Agency Functions
Rep. Wayne Harper discussed the ways to consolidate the Department of Health, Human Services, Environmental Quality, and Workforce Services into either three or one agency(s). Rep. Harper said that there are duplicate services being offered at these four state agencies.
Rep. Harper presented the example of an average citizen trying to claim and acquire unemployment benefits and how he/she must go from agency to agency to acquire those benefits.
Rep. Bigelow, who is a member of the Govt. Ops Committee asked Rep. Harper how he proposed addressing the extensive effort required to research consolidating theses four large state agencies, which, he said, “demands attention from the Executive Branch.”
Rep. Harper said he hoped to get some small working groups together from the Executive Directors of DOH, DHS, DWS, and DEQ with the Governor’s Office and legislative staff to discuss consolidation in detail.
Co-Chair Rep. Hunsaker asked Rep. Harper if he proposed “to identify specific or general savings” with consolidating the four agencies. Rep. Harper said the intent is to realize specific savings based on the elimination of appointed positions.
In addition, Rep. Harper said that the Committee Members should look into consolidating the administrative services within the Department of Community and Culture. He believes this task would be easier than consolidating DOH, DHS, DWS, and DEQ.
Rep. Janice Fisher, a member of the Govt Ops. Committee noted that she does not believe that “bigger is better by combining” and that the idea of consolidating agencies makes her nervous, especially if the sole purpose is for efficiency. Rep. Fisher continued to say that she would “hate to combine departments and lose skilled people. We should look at the efficiencies, but need to be very, very careful.”
UPEA will continue to monitor Rep. Harper’s proposal to consolidate the DOH, DHS, DWS, and DEQ.
Workforce Services and Community and Economic Development Interim Committee
UPEA staff member Todd Losser attended the Workforce Services and Community and Economic Development Interim Committee today at 2:00 p.m. A presentation by Executive Director Kristen Cox, Jon Pierpont, and Steve Cuthbert was given to the Committee for an update on the new Eligibility Services Division and eREP computer system update.
The goals of the division are to have a centralized division, standardized workload, reduced cost, and to meet customer needs. The division was created through a new design and business model and will be operating June 22nd. Employees will have timely feedback on their performance and will be monitored more closely. Skills testing will take place every year to ensure employees are meeting the required skills to do their job. UPEA will continue to monitor the new Eligibility Division.
Monday, June 15, 2009
UPEA's Involvement with DSPD
UPEA has had numerous conversations with DSPD employees who are members, legislators and DSPD administrators. Those who are receiving UPEA communiqués should know that UPEA has been involved since March 26th when DSPD Executive Director, Alan Ormsby, met with supervisors to address budget cuts. A day after that meeting, Ormsby issued a memo that detailed options for fixing the DSPD budget while maintaining services to DSPD clients. One of the key issues to emerge from that memo was a so-called last minute budget cut:
“Then the last day they decided to replace 2.5 million dollars in funding for the State Hospital. And the way they did that is they took that money out of the rest of the Department. So the Department got cuts--the Executive Director’s office got cut $650,000; ORS got cut about a million; Aging Services got cut about $265,000, and DSPD got cut $607,000. Legislators may not have recognized exactly what that meant. The way they made us take the cuts were pretty drastic. They took $106,000 out of administration (State Office), and then they took $501,000 out of support coordination, and they targeted it that way, and that is probably the hardest thing. If we could have balanced the $607,000 cut across USDC and across services, we could have handled that fairly easily. Cut was pointed. Some speculate it may have been a slap to Lisa Michelle Church, and others have speculated it may have been due to simple ideology. Rep. Dougal has always been for smaller government & may have thought he needed to do more to shrink Human Services.” (Excerpt from DSPD March 26th Memo).
Subsequently, UPEA began contacting allies in the Health and Human Services Joint Appropriations subcommittee. This committee is responsible for HHS budgets. We did not contact Rep. Christine Johnson because she does not belong to this subcommittee. We contacted Rep. Paul Ray, who said the committee would examine the issue. On Wednesday, May 20th, UPEA issued an email stating that funding had been restored, thanks to legislative allies. However, Ormsby contacted UPEA the next day stating that the funding restoration was to fix a math error. DSPD employees were in the same predicament of losing their jobs.
UPEA has played a direct role in representing DSPD employees to the legislature, news media and policy-makers. Members and non-members alike may meet with UPEA any time to discuss our measures and future options. If employees would like to meet with a UPEA representative, please call me directly to schedule a time: 801-264-8732 ext. 209.
Also, UPEA will be monitoring, among other issues, item 3 on the HHS interim meeting agenda for Wednesday, June 17th. Lisa Michelle Church is requesting policy guidance in light of budget reductions for DSPD. Here is the agenda: http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2009&Com=INTHHS
I’ll issue a report to all members when I know more.
Thanks!
“Then the last day they decided to replace 2.5 million dollars in funding for the State Hospital. And the way they did that is they took that money out of the rest of the Department. So the Department got cuts--the Executive Director’s office got cut $650,000; ORS got cut about a million; Aging Services got cut about $265,000, and DSPD got cut $607,000. Legislators may not have recognized exactly what that meant. The way they made us take the cuts were pretty drastic. They took $106,000 out of administration (State Office), and then they took $501,000 out of support coordination, and they targeted it that way, and that is probably the hardest thing. If we could have balanced the $607,000 cut across USDC and across services, we could have handled that fairly easily. Cut was pointed. Some speculate it may have been a slap to Lisa Michelle Church, and others have speculated it may have been due to simple ideology. Rep. Dougal has always been for smaller government & may have thought he needed to do more to shrink Human Services.” (Excerpt from DSPD March 26th Memo).
Subsequently, UPEA began contacting allies in the Health and Human Services Joint Appropriations subcommittee. This committee is responsible for HHS budgets. We did not contact Rep. Christine Johnson because she does not belong to this subcommittee. We contacted Rep. Paul Ray, who said the committee would examine the issue. On Wednesday, May 20th, UPEA issued an email stating that funding had been restored, thanks to legislative allies. However, Ormsby contacted UPEA the next day stating that the funding restoration was to fix a math error. DSPD employees were in the same predicament of losing their jobs.
UPEA has played a direct role in representing DSPD employees to the legislature, news media and policy-makers. Members and non-members alike may meet with UPEA any time to discuss our measures and future options. If employees would like to meet with a UPEA representative, please call me directly to schedule a time: 801-264-8732 ext. 209.
Also, UPEA will be monitoring, among other issues, item 3 on the HHS interim meeting agenda for Wednesday, June 17th. Lisa Michelle Church is requesting policy guidance in light of budget reductions for DSPD. Here is the agenda: http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2009&Com=INTHHS
I’ll issue a report to all members when I know more.
Thanks!
Thursday, May 21, 2009
ORS Admin. Says Agency is Hopeful for 2010
Despite recent cuts during the 2009 1st Special Session of the State Legislature, the Office of Recovery Services is hopeful that they can manage cuts without significant layoffs. ORS administration said that the legislature has increased the amount of money it is willing to draw from federal stimulus money without using General Fund money. However, the agency will still implement changes to accomodate mounting budget cuts.
Wednesday, May 20, 2009
DSPD Funding Restored, ORS Stunted by Cuts
The UPEA staff have been monitoring today's Interim and 1st Special Session of the 2009 Legislature. Prior to today, UPEA met with policymakers to discuss the loss of funding in DSPD that resulted in a loss of Federal Match funds. UPEA is happy to report that the funding cut during the session has been restored by House Bill 1003. UPEA would like to thank Rep. Paul Ray, the Governor's Office, and other members of the committee who helped with this issue.
UPEA is concerned that the Office of Recovery Services will lose a significant portion of their funding with Senate Bill 1004 (see lines 214-219). UPEA has been putting in calls with legislators and ORS. We will update members when we know more.
UPEA is concerned that the Office of Recovery Services will lose a significant portion of their funding with Senate Bill 1004 (see lines 214-219). UPEA has been putting in calls with legislators and ORS. We will update members when we know more.
Wednesday, April 1, 2009
Question of Privatization
In the last hours of the 2009 Legislative session, the legislature passed an amendment to reduce DSPD’s budget by $600,000. Last week, DSPD supervisors and directors met to discuss their options. Many employees were aware of the deliberations. Subsequently, the supervisors decided to release minutes from the meeting outlining options that included converting line staff at DSPD to private coordinators.
Members immediately notified UPEA about the issue and media called to find out what was going on. As of now, the privatization issue is a proposal in its early stages. UPEA does not believe DSPD can be privatized without legislative action. However, UPEA is scheduling meetings with DHS and the governor’s office to assess the situation. Here is what we know, directly from Lisa-Michelle Church’s office:
Members immediately notified UPEA about the issue and media called to find out what was going on. As of now, the privatization issue is a proposal in its early stages. UPEA does not believe DSPD can be privatized without legislative action. However, UPEA is scheduling meetings with DHS and the governor’s office to assess the situation. Here is what we know, directly from Lisa-Michelle Church’s office:
- During the past few years, an increasing number of Disabilities caseworkers (support coordinators) have opted to leave the agency and work as private caseworker providers. Medicaid regulations and Division of Services for People with Disabilities’ rule authorize this option. Since September 2008, 25 Division employed support coordinators quit to become private support coordinators. The Division is in the process of determining whether accelerating the trend toward private support coordination makes sense in light of the budget cuts.
- No decisions have been made in terms of level or a time line for privatizing the support coordination services. The Division’s focus is on preservation of services within the fiscal constraints and mainlining quality of service.
The Division is looking at the possibility of privatizing support coordination services due to a 2.8 million dollar general fund budget. Medicaid requirements allow any willing provider to participate. The state would be following national trends toward privatizing these services. - In the planning process, the Division will be engaging various stakeholders. We recognize employees are anxious as we move forward with the discussions but this should not be interpreted as privatization so much as balancing the “any willing provider” portion of Medicaid against fiscal limits presented by budget cuts.
UPEA opposes privatization because it would reduce or eliminate employee benefits and decrease services to the public it serves. We will update employees as we find out more.
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