4.2. ERMUSR 12-13-2011Elk River:
Municipal U
13069 Orono Parkway
Elk River, MN 55330
UTILITIES COMMISSION MEETING
pONENEB B1
~~~~~~
P _~ycp c D T O $ E0.V E
phone: 763.441.2020
Fax: 763.441.8099
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. -Utilities Director
John Dietz -Chair
Daryl Thompson -Vice Chair
Al Nadeau -Trustee
MEETING DATE: AGENDA ITEM NUMBER:
December 13, 2011 4.2
SUBJECT:
2012 Wa e and Benefits
BACKGROUND:
At the recommendation of staff during the October 2011 Utilities Commission meeting, the
Commission formed a Wage and Benefits Committee. The Utilities Commission created the
committee to be comprised of one Commissioner, John Dietz -Utilities Chair, and three Utilities
managers, Troy Adams -Utilities Director, Theresa Slominski -Finance and Office Manager,
and Mark Fuchs -Electric Superintendent. The intent for the creation was to have the
committee review and analyze wage and benefits information, receive comments and questions
from employees relating to wage and benefits, function as a forum for discussion, and ultimately
present wage and benefit information to the Utilities Commission. The Wage and Benefits
Committee would not have authority to award or change wages or benefits; this authority is that
of the Utilities Commission. On October 26, November 2, and November 30, the Committee
met to review wage and benefit information.
DISCUSSION:
Of the topics discussed, the Committee agreed to bring the following compensation items to the
Commission for their review and consideration:
Waves
Because of the timing on wage negotiations for many of the metro utilities used in the metro-
average survey, the information used includes many estimates. The survey was updated in
early December to reflect the most current information for the utilities used in the metro-
average survey. The results from the survey indicate that the ERMU Journeyman
Lineworker position will be 7.15% below the average and 13.36% below the top. These
survey numbers indicate that without any increase in wage the ERMU Journeyman
Lineworker position will be the lowest paid on the survey. To not lose ground with the
metro-average trend, the ERMU Journeyman Lineworker position would need an increase of
2.30%. By comparison, an increase of 2.43% would be needed to meet the average of the
municipal utilities in the survey and an increase of 4.15% would be needed to meet the top
metro municipal in the survey. This, however, ignores the local labor competition that
borders E1tMLI.
The numbers indicate that during the last three years of economic downturn, the ERMU
Journeyman Lineworker position wage rate has fallen behind the local labor competition to
the bottom. For the Utilities to get into a better position for retention and development of
future leaders, the Utilities would need to do three things. First, the Utilities would need to
cease falling fixrther behind by at minimum keeping pace with the labor wage trend. Second
and in addition minimum of keeping pace with the labor wage trend, the Utilities would need
to work towards eliminating the wage disparity by chipping away at the difference. Third,
the Utilities would need to communicate the intent of the company's direction to the
employees to rebuild trust and build.loyalty and commitment. Last yeaz staff proposed
similar concept with a plan to work towazds re-obtaining the metro-average. With the
current wage dispazity and assuming a constant trend in labor wage change as indicated this
yeaz, the ERMU Journeyman Lineworker position could reach the metro-average in 2 years
by awarding a 5% wage increase each of those 2 yeazs. It would take 3 yeazs with an annual
increase of 4%, 7 years with an annual increase of 3%, and 25 years with an annual increase
of 2.5%. Once behind, it becomes difficult to catch up. The further behind the wage gets,
the more drastic the measures needed to eliminate the disparity.
Benefits
Of course wages are only one component to the compensation package. Insurance, vacation,
holidays, and other benefits also are part of the complete compensation package. It was
discussed in the Committee meeting that ERMU has an excellent health insurance plan with a
generous employer contribution. One of the other similar municipal utilities in the survey
does have the exact same health insurance plan with a similaz employer contribution; the
others have HSAs or high deductible insurance plans. In 2010, staff conducted an extensive
analysis of the metro-average survey utilities' of their benefits which including health
insurance. At that time this information had been presented to the Commission. This
analysis was also reviewed by the Committee in October.
For 2012, E12MU's health insurance plan renewal will recognize a 9.5% decrease in rates, or
an approximate overall savings of $49,746. Based onthe-current 80/20 health insurance cost
sharing, the employer shaze of this savings is $39,796.80.
The Dental, Long Term Disability (LTD), and Life Insurance were also discussed by the
Committee because ERMiJ received notice of the substantial increase in the renewal rates
which would result in an overall increase of $9,819.72. Based on the current 75/25 dental
insurance cost shazing and the current 100% employer coverage for LTD and life insurance,
the employer share of these components' increase in cost from the prior yeaz is $8,195.28.
An effort in negotiating these increases downwazd by our insurance broker was unsuccessful
so we went out for bids on these insurance items. The low alternate bid for the LTD and Life
through Sunlife would decrease the employer cost from the prior yeaz by $2,719.68. The low
alternate bid for the Dental through Metlife would decrease the employer cost from the prior
yeaz by $400.28. Further analysis into the Metlife network found that less than 20% of the
employees' current dentists would be covered as "in-network". The cost to the employer to
renew our current dental based on the 75/25 cost sharing is an increase from the prior year of
$4,873.32.
At the October Commission meeting, a presentation on Long Term Care (LTC) was made.
This is an insurance that is not currently offered by ERMU to their employees. This
insurance option was discussed by the Committee meeting and specific pricing was provided
for the Committee. Based on feedback from the employees, the Committee discussed the
LTC and determined that there was not enough support for an employer funded LTC to bring
it forward to the Commission. The option would still be there for an employee funded LTC
program through ERMU. The employee funded LTC would not have a financial impact to
ERMU.
Other
There were also a number of items brought to the Committee by the employees for
discussion. Of those items discussed, the Committee decided to bring two of those topics
forward for the Commission's consideration.
First, some employees requested the Committee look into uniform laundry services. It was
found that the average cost to use a laundry service would run approximately $15,600 per
year. This would be in addition to the approximate $8,925 spent for shirts and pants now.
By comparison the average cost of using a rental service, which includes laundry service,
would cost approximately $13,506.48 per year. The cost of purchasing and installing a
washer and dryer at the plant would run about $2,000. The Committee and staff discussed
and agreed that purchasing a washer and dryer would be the most cost effective solution and
that the topic would be brought forward to the Commission for consideration.
Second, some employees requested the Committee look into the On-Call Holiday
Compensation, specifically, look at adding a compensatory day as compensation for being
on-call over a holiday. This is a benefit offered by other utilities. Currently those on call are
paid a stipend. These stipends for water and electric have a combined total annual cost of
$1,885.47 for 201 I. Awarding an On-Call Holiday Compensatory Day would not have a
cash impact to the Utilities. It would, however, have in impact to production due to the
additional days off for water and electric employees on call for the 11 observed holidays.
ATTACHMENTS:
• ERMU 2012 Metro-Average Wage Survey Spreadsheet
• ERMU 2012 Metro-Average Wage Survey Graph
• 2012 Budget -Wage and Benefits Committee Review
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