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HomeMy WebLinkAboutAgenda - 01-20-2000 - 9c Orange County Board of Commissioners Action Agenda Item Abstract Meeting Date: January 18, 2000 Action Agenda Item No. g- c Subject: Solid Waste Employee Transfer Plan -Employee Pay and Benefits Department: Personnel Public Hearing: Yes No X Budget Amendment Needed: Yes No X Attachment(s): - Solid Waste Agreement Employee Provisions 2 -Working List of Benefits Covered Information Contact: Elaine Holmes, Personnel Director Extension 2550 Telephone Number: Hillsborough 732-8181 Chapel Hill 968-4501 Durham Mebane 688-7331 227-2031 Purpose: To consider approving in concept the plan for managing employee pay and benefits with the transfer of Town of Chapel Hill Solid Waste employees to Orange County effective March 20, 2000. To meet the March 20 effective date, it is necessary that the Board consider the transfer plan now so that work can be completed in time. for March 20 implementation. Background: In August the Orange County Board of Commissioners approved the "Agreement for Solid Waste Management." Subsequently in September the Towns of Chapel Hill and Carrboro approved the agreement. Under this agreement, Town of Chapel Hill Solid Waste Department employees will. become Orange County employees effective March 20, 2000. There are 28 permanent Town of Chapel Hill Solid Waste employees and about five temporary employees. Interlocal Agreement Provisions Attachment 1 contains the provisions from the Solid Waste Agreement covering terms of the employee transfer from the Town to the County. In summary, this provides that: ^ With the transfer to Orange County, each transferred employee's total compensation (pay and benefits) will be maintained at a "substantially equivalent" level to the total compensation provided by the Town of Chapel Hill as of the transfer date, although the combination of pay and benefits for any employee will change because of the differences in benefits provided by the Town and the County. 2 r' o After the transfer, the employees will become Orange County employees and all components of the employees' compensation will be subject to the same changes in salary and benefits as other Orange County employees. Overall Objective While there are many similarities in the pay and benefits provided by the Town of Chapel Hill and Orange County, there also are differences in the pay and benefits and the relative level of employer contribution to these various benefits. The overall objective of the "substantial equivalency" policy is to assure the Solid Waste employees are kept whole with the transfer to Orange County. The plan described below reflects on-going discussions of Town of Chapel Hill and Orange County staff. Determination of "Substantially Equivalent" Compensation To determine "substantially equivalent" pay and benefits, staff plans the following steps: 1. Benefits Comparison Compare in detail the benefit provided and cost for each Town of Chapel Hill and Orange County employee benefit.. (Attachment 2 is the working list of the benefits covered in this analysis.) 2. Benefits Calculation a. Place a monetary value on each benefit provided by the Town and the County. b. For each employee, calculate the total monetary value. of the benefits provided by the Town of Chapel Hill as compared to Orange County. Example: Employee A. B. Jones, With 10 Years Town Service, Employee Only Health Insurance Coverage and a Town Salary of $25,000 Benefit (See Attachment 2) Town County 401 (k) Plan Contribution $1,250 $390 Health Insurance $2,201 $2,399 Dental Insurance 0 $166 Longevity Pay $650 $375 Vacation Leave $1,923 (20 days) $2,076 (21.6 days) ll Etc. $ $ Grand Total (for Benefits Shown only) $6,024 $5,406 c. For employees for whom the value of the Town's benefits exceeds that for the County's benefits, add to the employee's Town salary as of the transfer date the dollar difference between the total monetary value of the Town and County benefits \ to maintain a "substantially equivalent" total compensation package. For employees for whom the value of the County's benefits exceeds that for the Town's benefits, make no adjustment in the Town salary. 3. County Salary Determination a. Complete a position classification study to determine the classification and salary grade for each position in the Orange County Classification and Pay Plan 3 b. Take the salary derived in Item 2c above (that includes the dollar difference necessary to provide substantial equivalency) and determine whether that salary includes in dollar amount added to the Town's salary at least the dollar equivalent to the difference between the Town's five percent 401(k) plan contribution and the County's $15 per pay period contribution. If the salary does not provide this additional amount, adjust it so that it does. (This is approximately a 3 - 4 percent increase depending on the employee's salary level.) c. Place the salary on step in the County's Salary Schedule for the classification assigned the position in the Orange County Classification and Pay Plan. Additional Information Notes Supplemental Retirement - 401 ~k) Plan Under the Internal Revenue Service regulations and as advised by the State 401(k) plan administrator, the County may not continue to make the five percent 401(k) contribution for Solid Waste employees that the Town makes. This is because other County employees do not receive this same contribution. The effect of the handling planned here is to "cash out" the difference between the Town and County 401(k) plan contribution and include that contribution in the employee's salary. An individual employee then may voluntarily decide to contribute all or part of this salary amount to the 401(k) plan as an employee contribution. Future Pay and Benefits. Including Post Retirement Benefits The planned pay and benefits model does not. attempt to project future pay or benefits in either the Town or the County. It also does not factor in differences in pay programs such as cost of living, merit or future pay advancement in the salary range. When the Town employees become Orange County employees, their future pay and benefits wi{{ be the same as those provided for other County employees. General Valuation Issues The method set out in this abstract to determine substantially equivalent pay and benefits is objective and quantifiable. However, from any one employee's standpoint the mix of benefits (even if the total value is identical) in one organization may be preferred over the other organization's mix. This may mean that the individual employee may place a higher personal value on one benefit than another. For example, one employee may value time off more highly (advantage Orange County) and another employee may value more the 4 / subsidy for dependent health insurance (advantage Chapel Hill). Thus, it is possible that an individual employee may not be satisfied with the pay and benefits handling even though it is objective, quantifiable and provides a substantially equivalent result. Implementation It also is planned to incorporate the following principles in implementation. 1. Service Credit Transferred employees will receive credit for their service as a permanent employee with the Town of Chapel Hill in calculating their total Orange County service. In this way, any County program that varies with service such as Longevity Pay or Vacation Leave will take account of the previous Chapel Hill service. For example, an employee with 10 years of Town service will be credited with 10 years of County service. Creditable service in the North Carolina Local Government Employees' Retirement System also will transfer. 2. Vacation and Sick Leave Transfer Any accumulated, unused Vacation and Sick Leave balances as of the transfer date will transfer to the County. 3. Benefit Make Up and Salary Range Maximum If these Solid Waste employees approach the maximum salary of their assigned County salary range in the future, permit the salary to exceed the maximum of the salary range to the extent this is necessary to keep the "benefit make-up" intact so long as that employee is an Orange County employee. 4. New Solid Waste Employees Hired March 20 and After Any Solid Waste employees hired on or after the transfer effective date (March 20) will be hired as Orange County employees with no adjustment for differences with Chapel Hill. Next Steps With the Board's approval of the planned pay and benefits handling, staff will continue with the implementation process including: 1. Completion of a position classification study to determine the classification of each position in the Orange County Classification and Pay Plan. 2. Completing the detailed comparison, analysis and valuation of benefits. 3. Addressing other personnel policy questions and issues identified. 4. Developing the final implementation package and bringing it back to the Board for final review, most likely in February 2000. 5 5. Implementing an on-going communications program with the Solid Waste employees to brief them on the pay and benefits handling and discuss questions, both as a group and in individual employee meetings with worksheets showing the final pay and benefits information for each employee. Financial Impact: The cost of employee pay and benefits far the Solid Waste employees is funded from the Landfill Fund. Prior to implementation, staff will identify any costs associated with the transfer. To the extent there is any additional cost, it will be funded from the Landfill Fund.. Recommendation: The Manager recommends the Board approve in concept the plan for managing employee pay and benefits with the transfer of Town of Chapel Hill Solid Waste employees to Orange County effective March Z0, 2000. 6 y; Attachment 1 Provisions From the Solid Waste Agreement Covering the Transfer of Town of Chapel Hill Solid Waste Employees to Orange County 1. The County will assume solid waste management responsibility as follows.... Take on employees All of the System employees will be transferred to the County and become County employees subject to the supervision of the County Manager in the same fashion as other County employees. The parties acknowledge that it is an important objective of this agreement that the current total compensation package for System employees be maintained at a substantially equivalent level through their transfer to the County, although the combination of salary and benefits for any employee may change. The parties recognize that all components of compensation to System employees after the transfer will be subject to changes in salaries and benefits in the same fashion as other County employees. The County and Chapel Hifl will develop a detailed scheduled comparing the total pre-transfer and post-transfer compensation for each System employee. Chapel Hill will send a copy of the completed schedule to Carrboro. Exhibit A -Definitions "System Employees" means employees of Chapel Hill directly engaged in carrying out System business (but expressly not including employees of Chapel Hill's sanitation department). Working List Benefits Covered In Analysis Attachment 2 Benefit Provided By A. Benefits included In Monetary Valuation 1. Social Security Both 2. Retirement System Both 3. 401(k) Plan Contribution Both 4. Health Insurance Both 5. Dental Insurance Orange County 6. Life Insurance Both 7. Disability Insurance (Short and Long Term) Chapel Hill 8. Unemployment Insurance Both 9. Longevity Pay Both 10. Employee Assistance Program Both 11. Holidays Both 12. Holiday Pay Both 13. Vacation Leave Both 14. Sick Leave Both 15. Petty Leave Orange County 16. Funeral Leave Both 17. Personal Leave Orange County 18. Family Leave Orange County 19. Workers Compensation Both 20.Tuition Reimbursement Both B. Benefits Not Included in Monetary Valuation 1. Pre-Tax Insurance Payments Both 2. Medical and Dependent Care Spending Accounts Both 3. Retiree Health Insurance Both 4. Option to Purchase Supplemental Life Insurance Both 5. Leave without pay Both 6. Credit Union Both 7. 457 Supplemental Retirement Program Both 8. Direct Deposit Both 9. Employee Discounts Both 10. Shared Leave Both