BOARD OF EDUCATION MONITORING REPORT
POLICY TYPE: EXECUTIVE LIMITATIONS
POLICY TITLE: COMPENSATION AND BENEFITS
POLICY NUMBER: A:080
GLOBAL POLICY PROHIBITION: With respect to employment, compensation, and benefits to employees, consultants, contract workers, and volunteers, the president shall assure fiscal integrity and public image. A review of this policy indicates that the requirements and conditions set out by the Board have been met.
1. POLICY PROHIBITION: The President shall not change his or her own compensation and benefits.
By policy and practice, no employee, including the President, may authorize changes in his or her own compensation and benefits. The President’s compensation and benefits for the period July 1, 2006 through June 30, 2007 were authorized by actions of the Board of Education and are enumerated in employment contracts signed by the Board Chairperson(s) during the respective periods.
2. POLICY PROHIBITION: The President shall not promise permanent or guaranteed employment.
The respective classified and faculty collective bargaining agreements, and the management working conditions agreement, provide no guarantees of permanent employment. Language in each document assures that the College may terminate employees during the trial service or probationary period, including extended trial service probationary periods, for any good faith reason. The College may also terminate employees during the period of regular employment and continued service beyond probation under “just cause” standards, or in the event of financial exigency.
Part-time credit faculty are hired and assigned on a term-by-term basis. No guarantees of additional terms of employment are made although department managers do attempt to project their academic year scheduling needs in advance and such academic year assignments are discussed with part-time faculty. Other employees in non-budgeted assignments such as hourly classified employees are hired on an as-needed basis with no guarantee of permanent employment.
3. A. POLICY PROHIBITION: The President shall establish current compensation and benefits which do not deviate materially from the professional market for the skills employed, are competitive, and are consistent with Board-approved collective bargaining agreements.
The collective bargaining process provides an opportunity to periodically adjust salaries and benefits to reflect current market conditions. Compensation: The following negotiated compensation increases were implemented during the past 48 months:
| Employee Group | Terms of Settlement | |
| Classified Unit | 7/1/01 – 6/30/02: 3.0% plus step for eligible employees. | |
| 7/1/02 – 6/30/03: 3.0% plus step for eligible employees. | ||
| 7/1/03 – 6/30/04: 1.4% plus step for eligible employees. | ||
| 7/1/04 – 6/30/05: 2.3% plus step for eligible employees. | ||
| 7/01/05 – 6/30/06: 2.4% plus step for eligible employees | ||
| 7/01/06 – 6/30/07: 2.4% plus step for eligible employees | ||
| Faculty Unit | 7/1/01 – 6/30/02: 3.7% plus step for eligible employees. | |
| 7/1/02 – 6/30/03: 1.2% plus step for eligible employees. Also added one-half step changing step 10.5 to 11. | ||
| 7/1/03 – 6/30/04: 1.4% plus step for eligible employees. Added 1.0% effective 01/01/04 as part of economic reopener settlement. | ||
| 7/1/04 – 6/30/05: 1.93% plus step for eligible employees. Created new top step #12 at 2% above step 11. | ||
| 7/01/05 – 6/30/06: Guaranteed 3.0% with movement to a new single column salary schedule. Steps allowed for those eligible. Guaranteed 2.0% for part-time faculty with movement to new single column salary schedule. Steps allowed as earned. | ||
| 7/01/06 – 6/30/07: 3.6% plus step for eligible contracted faculty. 2.0% plus step for eligible part-time faculty. | ||
| Management Unit | 7/1/01 – 6/30/02: 3.0% plus new management salary bands and ranges system implemented. Management assignments benchmarked in new salary system with no steps. | |
| 7/1/02 – 6/30/03: 2.4% w/ no “steps”. | ||
| 7/1/03 – 6/30/04: 1.4% w/ no “steps”. | ||
| 7/1/04 – 8/31/05: 3% “COLA,” “step equivalent” and “catch-up” provisions for two years (see above) with no experience “step equivalent” adjustments. | ||
| 9/01/05 – 8/31/06: 3.03% “COLA,” “step equivalent” and .32% “catch-up” adjustment (see above) | ||
| 9/01/06 – 8/31/2007: 2.84% “COLA”, plus “step equivalent”. |
In the most recent multi-year collective bargaining agreement with classified employees, the College and LCCEF agreed to engage in a comprehensive classification and compensation study during 2005/2006. The preliminary results from that classification and compensation study indicate that Lane classified employees are competitively compensated both at the minimum starting level and particularly at the maximum higher levels of the LCCEF salary schedule for a significant number of job assignments at Lane compared to similar and comparable work assignments at numerous local public agencies.
The College also engaged in a collaborative compensation study concerning contracted faculty compensation during recent economic reopener negotiations with LCCEA and the results of this study helped inform faculty compensation agreements for 2003/2004 and 2004/2005. The results of this study of comparative contracted faculty compensation levels and systems have also been used in the recent main contract negotiations with LCCEA, and the comparative compensation data were the primary consideration in the College proposing single column salary schedules for both contracted and part-time faculty. Single column salary schedules are the norm for faculty in other Oregon community colleges. Discussions between the President and MSC regarding management compensation adjustments for the 2004/2005 clarified and corrected the original guidelines of the new band and range management compensation system. The understandings and clarifications achieved between the President and MSC assure that the College may continue to successfully implement the performance-based management compensation system during 2005/2006, and 2006/2007.
Insurance: The significant and explosive increases in the costs of health care insurance, life and long term disability insurance premiums during the past 48 months require a separate analysis of this issue. The College had experienced the following increases in the total cost of health insurance (medical, dental and vision) premiums between January 1, 2000 and June 30, 2005:
| Employee Group | Increases in Premiums* (see below) | |
| Classified Unit | Employee Only: 48.8% | |
| Employee + One: 75.0% | ||
| Full Family: 76.4% | ||
| Faculty Unit | Employee Only: 72.4% | |
| Employee + One: 75.8% | ||
| Full Family: 74.8% | ||
| Management Unit | Employee Only: 29.2% | |
| Employee + One: 44.1% | ||
| Full Family: 45.6% |
*Note: Effective January 2003, the classified and faculty bargaining units, as well and MSC, agreed with the College to reduce the number of health (medical, dental and vision) insurance plan options and established a single plan with an identical level of benefits for all college employees. Therefore, the cost increase comparisons outlined above are not based upon identical plans or the same levels of benefits for the respective employee groups over this period of time. This fact makes any such cost increase comparisons among the respective employee groups problematic because it cannot be asserted that there is a cause and effect relationship between the individual claims experience of the respective groups and the cost increases in the premiums for that specific group of employees. However, the cost increase data are accurate for the respective employee groups for the referenced period strictly based upon the total cost of the health insurance (medical, dental and vision) premiums.
It is also important to note and understand that current employee out-of-paycheck contribution rates (not detailed above) for the three employee groups do vary between and among the three employee groups based upon the differences in the respective collective bargaining histories for each employee group. This fact is relevant given that all three groups are now on the same health insurance (medical, dental and vision) plan with an identical level of benefits.
July 1, 2006 Carrier Change: Effective with the July 1, 2006, health insurance renewal Lane Community College changed from O.E.A. Choice Trust to PacificSource for the College’s medical, prescription and vision health insurance coverage. The College remained with O.E.A. Choice Trust for dental insurance coverage for all employees.
This change in carriers for medical and vision health insurance was the result of a competitive “request for proposal” (RFP) process that was deliberated and decided by all three employee groups through the joint insurance committee (JIC) during spring 2006. Pacific Benefit Consultants, the College health insurance agent-of-record, supported the JIC in the RFP bid analysis and carrier decision making process. Representative members of the JIC voted unanimously to support the recommendation to change medical and vision health insurance carriers effective with the July 1, 2006, premium renewal. Open enrollment with PacificSource was conducted in June 2006.
It is important to note that a combination of moderating health insurance claims experience by College employees during 2005/2006, the RFP and JIC processes noted above, the change to a new carrier (PacificSource) for medical, prescription and vision health insurance, and the decision to pay for health insurance premiums via a “retro experience rated option” funding method (only available because of moderating claims experience) allowed the College to potentially SAVE between $240,000 to possibly over $800,000 in health insurance premiums during 2006/2007. The College currently pays in excess of $8.5 million in employer contributions to the cost of health insurance premiums annually. Credible medical and prescription health insurance claims experience data based upon the change to PacificSource will not be available until mid-January 2007, so it is not possible at this time to project that actual savings on medical, prescription and vision health insurance premiums. However, the $240,000 (approximately 2.8% less) reduction in the cost of health insurance premiums was the minimum guaranteed savings for 2006/2007. This is a notable achievement for the College and our employees given the market trend of double-digit (10% or above) annual rate increases in the cost of health insurance premiums for most employers during the past several years!
Employee Health Clinic - Importance: Finally, it has been critical for the Board of Education to support the College’s strategy to establish an employee health clinic option as one means by which the institution may control future increases in the cost of health insurance premiums. In 2000/2001, according to HR records the College expended approximately $5 million dollars for employee health, life and LTD insurance premiums. In 2005/2006, the College anticipates spending nearly $9 million for similar health insurance, life and LTD insurance premiums. Human Resources projects that the employee health clinic was at least a significant factor, if not the primary factor, in a “below trend” renewal of 4.14%, rather than the market trend of 13% to 17%, for the medical health insurance premium renewal effective July 1, 2005. And employee access to the Lane Health Clinic was a significant factor in the medical insurance carrier change effective July 1, 2006, as well as contributing to the College’s ability to take advantage of the “retro experience rated option” plan through PacificSource noted above.
Most recently, a strong partnership has developed between the College’s Wellness Program, the Lane Health Clinic and employee education about wise and prudent use of health care resources. PacificSource has emerged as a strong partner with the College in these employee health care education efforts. The Lane Health Clinic has also continued to have a very positive impact on reducing health insurance claims by providing a source of primary health care for college employees that potentially keeps a significant portion of the prospective health care claims out of the insurance claims system. The Lane Health Clinic also sponsored numerous flu shot clinics for employees and students during fall 2006, and value-added services of this nature should continue to support better health among College employees as well as students.
3. B. POLICY PROHIBITION: The President shall establish compensation and benefits which do not create obligations over a longer period than prudent.
As noted above, the College and President are clearly focused on the challenges posed by the rapidly increasing cost of employee group health insurance benefits and the long-term financial impact of this obligation. However, this concern and the fiscal challenges it poses for the College must be balanced against the impact of cost-shifting and benefit reductions for employees. That stated, in addition to establishing the employee health clinic for college employees the President and Board of Education have recently taken effective and proactive steps to manage these challenges. For example, early retirement benefits are sunset for all college managers hired after July 1, 1991. Classified employees agreed effective January 2004, to begin self-paying their own long term disability (LTD) insurance premiums in exchange for an increased term life insurance benefit. The College will soon engage all three employee groups during 2006/2007 to refine the College Sick Leave Bank guidelines in order to manage this liability. The Lane Health Clinic and College “LIFE” Wellness Program have been positively featured in newspaper articles in The Register Guard and these initiatives should have additional positive employee wellness and cost containment impacts during 2006/20067. Lastly, the health insurance RFP process (noted above) facilitated by the JIC last spring (2006) has positioned the College to actually reduce the total cost of health insurance premiums during 2006/2007 in spite of continued high health care inflation rates and health insurance premium increases for most other employers.
All of these efforts, proposals and programs have been designed and implemented consistent with a goal to maximize employment benefits for college employees while addressing the financial and budget challenges posed by growing future employee benefit costs.
4. POLICY PROHIBITION: The President shall not establish deferred or long-term compensation and benefits which cause any employee to lose benefits already accrued under any foregoing plan.
The changes and challenges noted above have not been, and will not be implemented in a manner that causes any employee to lose benefits already accrued under any foregoing plan. No other changes are planned or have been implemented during the past 48 months that cause any employee to lose benefits already accrued from any foregoing plan.
