To: Board of County Commissioners
Through: Patrick Hernandez, Director, Human Resources
Prepared By:
prepared
Dusty Sash, Total Compensation Division Manager, Human Resources; Rachel Beck, Senior Benefits Analyst, Human Resources; Julie Weaver, Senior Compensation Analyst, Human Resources
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presenter
Presenter: Dusty Sash, Total Compensation Division Manager, Human Resources
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Subject:
title
1:15 PM *2025 Total Compensation
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Purpose and Request:
recommended action
The purpose of this study session is to provide information and receive direction for 2025 Total Compensation package.
This includes specific direction for the following benefits: increasing the County’s contribution to the 401a Defined Benefit plan by .25%; replacing the medical HMO+ plan with a traditional PPO; use of the dental reserve to manage premium impact; additional paid time off programs; and approval on the 2025 holiday schedule.
It is also to provide compensation information for: 2025 salary structure adjustments and reclassifications; merit pay adjustments for performance; salary structure adjustments for Sheriff step program and sworn management; and the Emergency Communications Specialists step program adjustments.
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Background and Discussion: Human Resources has been operating Compensation and Benefits in accordance with the Total Compensation Philosophy statement: Arapahoe County will equitably and competitively pay our employees to our defined wage and salary market and adjust as needed to attract new talent and reward performance. While there are five components to Total Compensation (Compensation, Benefits, Work-Life Success, Performance Recognition, and Development & Career Opportunity) we have applied the market competitive rate to compensation and, less formally, to benefits to strive to “pay” at market in accordance with the above philosophy.
To that end, Human Resources participated in market surveys for compensation and benefit plans and analyzed the available results. Following is a summary of the Total Compensation survey findings:
• Medical, Dental, Paid time off plans, tobacco cessation, financial well-being, caregiver support, infants at work and medical gap coverage all lead our market.
• Vision, Flexible Spending Accounts, EAP, Life, AD&D and Disability coverage are all at market.
• Tuition Reimbursement lags the market.
• Overall County Compa-Ratio of 0.99, indicating pay is lagging the market.
The proposals and information presented in this Board Summary Report reflect adjustments to keep/move benefits and compensation to be/remain competitive with the Denver/Boulder market. However, the compensation for sworn staff and emergency communication specialists, is based on the FOP’s request and not on market data in accordance with the County’s pay philosophy.
Benefits Discussion
Retirement Contribution
• Currently, there is a mandatory 9% employee 401(a) defined benefit contribution which the County funds at an additional 9.5% “match”
• Proposal is to increase the County’s contribution to 9.75%
• While contribution to the pension is part of Total Compensation Value Exchange, this is a deferred payment for only those that retire, it does not impact employee’s taxes or take-home pay, therefore, the perceived value of this benefit will be low
• Approximate cost: $497,100
Medical Plan Benchmark Data
The current DHMO plan (County base plan) is valued at 15.3% above market. Plan design (Deductible, Out of Pocket Maximum, Copay, Coinsurance) is slightly more rich than the benchmarks, and the employee share of premiums is lower than the benchmark creating the increased value of the County plan.
• County employee only rate is $132 compared to the benchmark of $160
• County average rate for employee plus dependent(s) is $441 compared to the benchmark of $558
Medical Plan Renewal
The County conducted an out of cycle Medical RFP for the purpose of replacing the current HMO Plus plan with a traditional PPO. Only one response offered a traditional PPO. Arapahoe County will replace the HMO Plus plan with the Choice PPO.
The Choice PPO allows “choice” in providers and facilities:
• Employees can go in-network with Kaiser doctors/facilities
• Employees can go “in-network” with contracted doctors/facilities within Colorado but not on the Kaiser network (these are not Kaiser doctors/facilities)
• Employees can go out-of-network to any provider/facility (that takes insurance).
o The cost per visit/procedure may be more costly
§ No contract to limit charges
§ Employee pays a higher co-insurance percentage (30%)
§ Usual, Reasonable & Customary charges if provider(s) choose to charge more than the average rate for a procedure/service in that area
The Kaiser Renewal is 1.02% or $183,150 based on:
• Days Inpatient increased by 12.1% and there was a cost decrease of 32% for inpatient services; an increase of 11% for outpatient; an increase of 21.1% for Pharmacy; total PMPM costs decreased by 3%
• Wellness Program Design contributed to reduced renewal by -0.30%
• Primary drivers were trend of 9.79%, prior year was 8.1%
Renewal is favorable compared to market.
• National Average 8.5%
• Colorado Average 9.7%
Cost: $183,150 ($155,750 to General Fund)
Contribution recommendation is based on a 7% movement estimate from the DHMO to the new Choice PPO. At 7% movement our contribution strategy will hold the medical plans to 75% County paid. However, if fewer employees move to the Choice PPO the cost to the County will increase and is more employees move to the Choice PPO the cost to the County will decrease. Under this 7% movement scenario, rates will be set so that all employees receive a reduction in premium in 2025.
Medical Plan Contribution Strategy - Tiered Percentage
• DHMO
o Employee Only Coverage at 83% / 17%
o Dependent Coverage at 73% / 27%
• Choice PPO
o Buy Up - employees pay a greater percentage of a more costly plan.
o Employee Only Coverage at 64% / 36%
o Dependent Coverage at 54% / 46%
• Overall
o County pays 75% ($19.5M) with employees sharing the remaining 25% ($6.4M)
2025 Dental Plan Changes
The Delta Dental Renewal is 9.2% or $151,300 based on claims.
• Administrative Fee is a 0% increase.
• Dental Reserve at approximately $750,000
• Adjusting rates to within 1% of contribution strategy and to manage the reserve BUT then only applying a 6.6% of the 9.2% increase to rates
o Contribution Strategy is 75%/25% employee coverage; 50%/50% dependent coverage.
$0 ($0 to General Fund) pulled $106,721 from Dental Reserve
Wellbeing Update
• My Well-being platform enrollment up 19% from 2023
• Health Coaching - 31 participants to date
• Wellness Counts Completion at 40%! Expected to increase on final reporting
• Total Health provided - 837 participants to date
• Total Brain provides brain health assessments and tools - 1006 participants to date
• Your Money Line - provides 10 programs of financial well-being support for employees’ current day to day financial goals. 558 participants to date
• Continue to provide Mental Health First Aid - 344 participants to date
• Pivot Tobacco Cessation Program (Tobacco users cost approximately $9,000 more per year on the medical plan than non-tobacco users. On our plans this is approximately $1,116,000 annually).
o 98 tobacco users enrolled
• Homethrive - caregiver support - 174 enrolled; 527 phone and email conversations
• Participated in 5k with Open Spaces for Community Well-being
Additional Paid Time Off Programs
• Exempt Paid Day Off - address burnout
o One day off every other month
o Does not accumulate
o Is not paid out
• Two additional floating holidays
o Support the County’s value of inclusivity by allowing employees time to celebrate in the community that they value
o Examples: Lunar New Year, Holi, Cinco di Mayo, Festa Junina, Eid al-Adha, Chuseok, Rosh Hashanah, Halloween/Day of the Dead
While there is a soft cost to each of the above, the well-being effects of time off typically allow for greater productivity when at work. In some departments/offices hard costs of overtime and/or temporary support will be required. The Compensation division has no way to anticipate the volume of this need and thus would be asking each department/office to plan for this in their current budgets. In addition, the liability of vacation balances may increase.
Holiday Pay Design Proposal
Offer three (3) floating days (see above) and the thirteen (13) set holidays, in alignment with the dates on the State’s holiday schedule. The schedule below is the suggestion for 2025:
• New Year’s Day - Wednesday, January 1
• Martin Luther King Day - Monday, January 20
• Presidents’ Day - Monday, February 17
• Memorial Day - Monday, May 26
• Juneteenth - Thursday, June 19
• Independence Day - Friday, July 4
• Labor Day - Monday, September 6
• Arapahoe Day - Monday, October 6 (same as Mother Cabrini Day)
• Veterans Day - Tuesday, November 11
• Thanksgiving Day - Thursday, November 27
• Day after Thanksgiving - Friday, November 28
• Christmas Eve - Wednesday, December 24
• Christmas Day - Thursday, December 25
• 3 Floating Holidays
Other Benefits
• Vision - no response to the RFP met the requirements, thus, we have asked for a waiver for 2025 and will reissue the RFP for 2026. In the meantime, VSP has provided additional coverage of Light Care (sunglasses) and increased our frames and contact allowance to $200 without raising premiums.
• EAP, FSA/HRA/COBRA, Caregiver Support, Well-being Platform, Ancillary Plans, Medical Gap Coverage, all under rate guarantee with no rate changes.
Compensation Discussion
2024 Market Review
• 70% of all US employers report a labor shortage and challenges with retention and attraction (PayScale)
• As of June 2024, Denver’s cost of labor was 9% above the national average while cost of living is 14% above the national average (BLS)
• CPI 2.8 (March 2024) vs 5.7 (March 2023) (BLS)
• Arapahoe County Unemployment Rate is at 2.9% (BLS)
• 78% of employees are in positions that match the market and 83% of our Jobs are matched to the market
• Compa-ratio is 0.99 demonstrating our pay is lagging the market by approximately 1% (employee salary/competitive market data)
*BLS = Bureau of Labor Statistics
2024 Market Review
• Historically we have utilized two survey sources:
o Employers Council - main source for public employer data but has some private data
o PayScale - main source for private employer data but has some public data
• In 2024 we tried to use three survey sources
o Employers Council - changed platforms which has led to a loss of public job matches and a lack of accurate and reliable data
o CPEC - Counties and municipalities in the Denver/Boulder area agreement to provide the data to a newly built survey platform (Larimer County built and housed).
o PayScale - no change
Market Indicators on pay
• Market movement approximately 2.7%*
• Merit movement peer average 4.2%**
*based on job movement average after removing outliers of more than 15%
**48% of peers reporting in
Market/Structure Adjustments & Reclassifications
• Market and Structure Adjustments
o Market data moved 2.7% from 2023 to 2024 - applied to all minimums, midpoints and maximums
o Recommend no market funding given our .99 compa-ratio
• Job Reclassifications
o 35 jobs will be reclassified into a higher grade.
§ Reminder: 3-year trend > 5% variance, 2-year trend > 12% variance, 1 year > 20%
o Cost to bring to minimum is $672 to $45,000 (dependent on merit percentage)
Merit Adjustments
• Propose 3.7% budget for merit (performance)
o Can be an adjustment to base rate, lump sum or a combination of both
• Cost of merit adjustment:
o Base: $7,555,450 $8,991,000 Benefit Loaded
o General Fund: $4,155,500 $4,945,000 Benefit Loaded
Sworn Step Structure as requested by the FOP
• The FOP has requested 5% structure movement in 2025 and again in 2026
• 2025 market data indicates the 5% movement would result in the step structure being more competitive than 62% of our peers in 2025
o However, Compensation cannot predict market in 2026
Please note: the 2025 average increase for Deputies who are not maxed out will be 10.4%
The average increase for Sergeants who are not maxed out will be 8.9%
Emergency Communications Specialists Step Structure as requested by the FOP
See attached presentation for structure.
Fiscal Impact: Human Resources has prepared models addressing Total Compensation for 2025. Please refer to the attached presentation.
Alternatives: Alternatives are presented within the body of the BSR and presentation. Within the appendix of the presentation, there is information on turnover costs. We project that if we do not remain competitive, turnover would increase.
Alignment with Strategic Plan:
☒Be fiscally sustainable
☒Provide essential and mandated service
☐Be community focused
Staff Recommendation: Human Resources appreciates that we are reviewing a substantial amount of information and that all final decisions may depend upon information from the County budget process. To meet benefit open enrollment deadlines, it is desired that direction be given during the August 6, 2024, meeting for the increase to the County’s portion of the 401a Defined Benefit contribution, use of Reserve Fund for Dental increase, Implementation of Caregiver Paid Time Off, Implementation of Exempt Paid Day Off, addition of two floating holidays and 2025 holiday schedule. In addition, direction to Budget for 3.7% merit pay budget. Direction on negotiation of structure adjustments for Sheriff step program and sworn management; and Emergency Communications Specialist step program adjustments.
Concurrence: The E-Team and A-Team support these recommendations.