The Shifting Total Compensation Paradigm Practical Tools for Negotiations and Recruitment John Yeh, Partner Burke, Williams & Sorensen, LLP ACSA Negotiators Symposium, January 20, 2016 Todays Objectives Basic legal principles Components of compensation (salary, benefits, STRS/PERS) Methodologies for assessing economic value of components LCAP issues Tools for comparing total comp Bargaining strategies COMPONENTS OF COMPENSATION Components of Compensation Direct wage compensation (according to salary schedule) Stipends for extra/ adjunct duty STRS/PERS contribution Health and welfare benefits (medical, dental, vision) What else .. ? Components of Total Compensation Govt Code Sec : Look at overall compensation, including: direct wage compensation vacations, holidays, and other excused time, insurance and pensions, medical and hospitalization benefits, continuity and stability of employment; and all other benefits received. SALARY: BASIC LEGAL PRINCIPLES The Salary Schedule Educ. Code Sec : Each certificated employee shall be classified on the salary schedule on the basis of uniform allowance for years of training and years of experience. Employees shall not be placed in different classifications on the schedule, nor paid different salaries, solely on the basis of the respective grade levels in which such employees serve. The Salary Schedule Educ. Code Sec : District can grant any employee hired after a locally specified date differential credit for prior years of experience or prior units of credit for purposes of initial placement on the salary schedule of the district. Exceptions: teachers of special day and evening classes in elementary schools, teachers of special classes for elementary pupils, teachers of special day and evening high school classes and substitute teachers. The Salary Schedule Agreement to move all teachers in Steps back to Step 17, to allow more rapid advancement of all unit members to highest step, violated uniformity requirement. Adair v. Stockton Unified School Dist. (2008) 162 Cal.App.4th 1436 The Salary Schedule Negotiated Exception to uniform salary schedule requirement: Mandatory bargaining subject, Agreement required to implement non-uniform schedule. Gov. Code Sec (d)&(e) THE ECONOMICS OF WAGE ACCRUAL OScoresheetV Year 1: Higher Starting Salary Year 5: Faster Progression Year 9: Gap Widens to approx. $5,000/Year Year 9: Step Advancement Does Not Top Out Year 15: Takes 15 Years for V to Reach top of O Year 15 and Beyond: Continued increases Source:nturausd.org/ Portals/5/Cert ificated%20S alary%20Sch edules/14- 15%20SY%20 Certificated% 20Salary%20 Schedule%20( Teacher%20S peech%20The rapist%20Nur se%20Counse lor).pdf Source:12.ca.us/hr/SalarySche d/CESALARYSCHEDULE Tchr.pdf Side-by-Side Cumulative Impact 14 WORK YEAR IS 184 DAYS Source:cms/lib/CA /Centricity/ Domain/94/salaryschedules/Affected%20Jan%201%202013/Tea chers.pdf Source: /Centricity/Domain/5 8/ %20Salary%20Schedule%2 0- %20Group%203_Board%20Ap prov% _CERTIFICATED.pdf SDSD Scoresheet DMDM Year 1: Higher Starting Salary Year 5: Faster Progression Year 7: Gap Widens to approx. $9,000/yr Year 7: Step Advancement Does Not Top Out Year 16: Takes 15 Years for SD to Reach top of DM Year 17 and Beyond: Salary Schedule tops out at higher salary Side-by-Side Cumulative Impact Factors Impacting the Economics of Salary Schedule Progression Starting salary Increases between steps Number of years to reach maximum step Maximum salary at highest step Step at which salary maxes out How long employee works at school district Addressing Salary Schedule Progression In Bargaining Be aware of your reality Understand comparable district reality Quantify comparison when possible Avoid unintended consequences Dont get whipsawed IMPACT OF LOCAL CONTROL FUNDING FORMULA (LCFF) LCFF The Basics Base Grants Supplemental & concentration grants LCAP must show use to increase services to unduplicated pupils proportional to increased funding (Ed. Code Sec (a)(1); 5 CCR 15496(a)) LCFF The Basics Districtwide use of supplemental & concentration grants: Enrollment 55% or more: show services principally directed at, and effective in meeting, unduplicated student goals Enrollment less than 55%: show use is most effective to meet unduplicated student goals and basis for determining, including options considered, research, etc. LCFF Impact on Compensation Negotiations Comparability Do the usual indicators of comparability still apply? Demographics, student achievement, geography Does LCFF funding model create new peer districts? LCFF Impact on Peer Benchmarks Ability to Pay Using LCAP to demonstrate the public interest along with ability to pay Limits on supplemental & concentration grant use HEALTH AND WELFARE BENEFITS Health and Welfare Benefits Fundamentals What should the contract specify? Eligibility When eligibility triggered Pro-ration for partial FTE? When eligibility terminated Suspension without pay? Leave of Absence? Resignation/Dismissal? Types of coverage offered Medical, dental, vision Health and Welfare Benefits Costing/Comparisons 3-tiered Highest paid Compare pro-ration rules Data collection challenges THE ECONOMICS OF HEALTH AND WELFARE BENEFITS Health and Welfare Benefits Economics Levels of Coverage Single Employee + 1 Family Health and Welfare Benefits Economics External plan comparisons Co-Pays Deductibles Premiums Contribution caps Internal comparison issues RETIREE HEALTH AND WELFARE BENEFITS Retiree Health and Welfare Benefits Requirements for eligibility? Years of service Types of and scope of coverage Same coverage as current employees, or Coverage in effect on date of retirement Retiree contribution Frozen at date of retirement, or Changes with current status quo At what level, cost, and type of benefits does the retiree vest? Retiree Health and Welfare Benefits Comparing costs Comparing coverage RETIREMENT / PENSION BENEFITS Retirement Benefits - Pension Future retirement benefits and related costs are part and parcel of overall compensation County of Sacramento (2008) PERB Dec. No M. Retirement Benefits - Pension Government Code requires factfinders to consider, weigh, and be guided by overall compensation, including pensions and all other benefits received Gov. Code, Section Pension costs represent a large portion of overall compensation - - future wages Retirement - Employer Contributions 2015/16 10.73% 2016/17 12.58% 2017/18 14.43% 2018/19 16.28% 2019/20 18.13% 2020/21 19.10% 2015/16 12.6% 2016/17 %* 2017/18 %* 2018/19 ?* 2019/20 ?* 2020/21 ?* CalPERSCalSTRS *2016/17 and 2017/18 rates based on April 15, 2015 CalPERS projections; CalPERS previously (March 2014) projected a 20.4% employer contribution rate in 2020/21. Undated projections should be released soon. Retirement Employee Contributions Recognize that employee costs are rising too Retirement Costs (PERS rates use 2014 estimates) 37 Capturing Retirement Costs Include retirement costs when comparing year-over- year compensation increases to CPI TOOLS FOR TRACKING TOTAL COMPENSATION Total Compensation Comparison Wellmade Unified School District Total Compensation Comparisons for Teacher BA + 30 Salary Pension and Health For Year Revised: District Total Employer STRS Rate 1 Match Class Monthly Salary (Top Step) Employer Retirement Cost Cafeteria Plan Max Family Health ER Contribution DentalVision Total Caf., Med, Dental, Vision Total Direct Agency Costs AUSD %BA + 30$5,138.00$551.31$0.00$1,419.47$54.24$15.32$1,489.03$7, BUSD %BA + 30$5,956.00$639.08$0.00$1,948.22$95.00$30.90$2,074.12$8, DUSD %BA + 25$4,985.00$534.89$0.00$1,200.00$154.01$26.87$1,380.88$6, EUSD %BA + 30$5,502.00$590.36$0.00$2,400.06$188.20$23.92$2,612.18$8, JUSD %BA + 30$5,617.00$602.70$0.00$1,988.69$176.93$0.00$2,165.62$8, IUSD %BA + 25$5,309.00$569.66$1,502.00$0.00 $1,502.00$7, LUSD %BA + 35$5,999.00$643.69$1,660.00$0.00 $1,660.00$8, NUSD %BA + 30$6,320.50$678.19$0.00$1,710.11$191.18$31.14$1,932.43$8, PUSD %BA + 30$5,349.00$573.95$0.00$1,681.50$ $1,931.50$7, RUSD %BA + 25$5,366.00$575.77$0.00$119.00$0.00 $119.00$6, SUSD %BA + 30$4,977.00$534.03$0.00$1,812.07$131.63$13.93$1,957.63$7, VUSD %BA + 30$4,201.00$450.77$0.00$1,550.04$143.21$13.30$1,706.55$6, Average:$5,393.29$578.70$263.50$1,319.10$104.95$23.37$1,710.91$7, WUSD %BA + 30$5,765.00$618.58$1,022.00$0.00$125.00$0.00$1,147.00$7, Percentage above/below the average of comparable districts. -2.0% fn 1: For classified employees PERS rates should also identify any EPMC (employer paid member contributions). Individual District Snapshot Measuring Compensation Against CPI OTHER COMPONENTS OF EMPLOYEE COMPENSATION Other Components Additional leave time (negotiated in contract) Personal Necessity Leave Catastrophic Leave Extended Leave Credit for prior service Opportunity for adjunct duties Stipend Opportunities Professional development Prep time Transfer, reassignment and priority rights as to vacancies Longevity Other Components Include in surveys Quantify as salary equivalents as part of total compensation if possible Separate surveys when appropriate Summary Rules governing compensation Components of total compensation Comparing total compensation Strategy QUESTIONS? 48 THANK YOU John Yeh Burke, Williams & Sorensen, LLP