Staff Council Discussion with Richard Cate, Vice President for Finance and Treasurer
Staff Council's Compensation, Benefits and Budget Committee Asks the Tough Questions on the FY15 Budget and Benefits Cost Share Review
- By Staff Council
On February 13, 2014, Staff Council's Compensation, Benefits and Budget Committee (CBB) met with Richard Cate, Vice President for Finance & Treasurer, to discuss concerns around the FY15 Budget and the Benefits Cost Share Review taking place by the University Benefits Advisory Council (UBAC).
Below are the questions and responses from that discussion.
NOTE: Since this discussion, there have been additional developments with the Benefits Cost Share Review and Dependent Tuition Remission and Retirement Savings Plans are no longer being considered.
If you have any additional questions of concerns, please contact the Staff Council at Staff.Council@uvm.edu or 656-4493.
FY15 Budget Questions
1. There is concern that there will be no salary increase announcement for unrepresented staff and faculty prior to July 1 as a result of contract negotiations. Is it likely that July 1 will come and go with no increase for staff? What is the plan? When will staff know what to expect?
Richard Cate: As contract negotiations are just beginning with the bargaining units, it becomes challenging to discuss salary increases for non-represented staff and faculty without jeopardizing the collective bargaining process. The Administration has not discussed whether or not to declare non-represented staff and faculty increases before the union negotiations have been completed.
2. We have heard that some departments are budgeting a 2.0% pay increase in their preliminary plans for FY15. Is that a number that has been suggested by the Administration?
Richard Cate: We have not provided any instructions to Units/Divisions/Colleges about budgeting for a pay increase. Some units, especially those that do not get support from the general fund salary pool, may simply be using a generic inflation factor in order to draft their FY 15 budget plans.
What about the cost of living? The cost of living has actually been running under 2%.
3. Since non-represented staff are the largest group of employees at the University, and since in some sense they are the easiest to manage, would the Administration be wise to view them as a driver rather than relegating them to the status of follower?
Richard Cate: Non-represented staff salary and benefits are taken into consideration in that the Administration has to consider the entire cost of salary and benefits for all employees as negotiations proceed. As you know, we try to keep the benefits of represented and non-represented employees relatively aligned.
4. We’ve heard that something like 31% of the General Fund budget is not related to salary and benefits. Staff talk a lot about cutting the waste in the way those dollars are spent, but most of our ideas get no traction. Why is that?
Richard Cate: We do listen to the feedback we receive from employees about how to cut costs and save money. We have made some changes based on the ideas that have been submitted but we have to look at how the proposals would impact the entire institution. In doing this we often identify unintended consequences that would result from the proposal that cause us not to implement change.
Committee Member: Is there a way for employees to be notified in the future about ideas that are not implemented?
Richard Cate: We know that it is important for staff to get feedback about the status of their proposals and will be including this information on the budget website.
Committee Member: Perhaps explaining why a certain course of action was taken or not taken could help alleviate this problem.
Benefits Cost Share Questions
5. What is the average cost to the University of Dependent Tuition Remission? How many dependent children are being covered?
Richard Cate: The average cost of dependent tuition remission for UVM is approximately $5 million per year. There are currently 428 dependents of UVM faculty and staff who are attending UVM and receiving dependent tuition remission.
6. What percentage of faculty and staff utilize Dependent Tuition Remission in a given year?
Richard Cate: 11% of faculty and staff utilize dependent tuition remission in a given year.
7. What is the average cost to the University for staff who take advantage of tuition remission for themselves?
Richard Cate: The average cost of staff and faculty (vast majority are staff) who take advantage of tuition remission for themselves is $2 million a year.
8. What is the cost to the University in terms of lost revenue for dependents coming from other Vermont institutions?
Richard Cate: It is currently costing us $192,000 for dependents of employees at the Vermont State Colleges to attend UVM. There are 41 students at UVM who receive tuition remission in this manner.
On the other hand, it is costing us $650,000 for dependents of UVM employees to attend Vermont State Colleges.
9. We have heard that Barbara Johnson will provide UBAC with various cost-sharing scenarios at their February 20 meeting. It would be transparent and useful for affected employees to know how much cost savings could be realized by the University according to the various scenarios. Since the UBAC is an open meeting, would you be amenable to ensuring that these scenarios are posted on the Cost Share website?
Richard Cate: Again it is difficult for the University to share any information like scenarios ahead of negotiations with collective bargaining units. Since the time of this discussion, the administration decided to provide some scenarios and they will be available on the UBAC website.
Committee Member: This should be clearly communicated to employees so that they understand why the UBAC process is not more specific.
10. Will changes to the Benefits Cost Share formulas affect the healthcare costs of current retirees?
Richard Cate: There are no plans to change the cost share formulas for benefits of those who have already retired.
11. How will changes affect the retirement healthcare costs of retirement-eligible staff who choose to retire by June 30 of this year?
Richard Cate: If you retire by June 30, 2014 you will not be affected at all by any of the cost share changes being discussed. Any changes pertaining to current employees would not be implemented until at least July 1, 2014.
Committee Member: If there are no scenarios, how will staff who may be considering retiring on June 30, 2014 make an informed choice. They have to take into consideration Post Retirement Medical Benefits, but will not be able to factor in the benefits cost share changes.
Richard Cate: I do understand how challenging that might be. I suspect that although we might wind up changing cost share formulas for healthcare for all active employees, we would be unlikely to change retirement savings account contributions for those closest to retirement.
12. How will changes affect the retirement healthcare costs of retirement-eligible staff who choose to retire after June 30 of this year?
Richard Cate: The only way to guarantee the current healthcare cost share is to retire by June 30, 2014. No benefits for current retirees will be impacted except for the fact that health insurance premiums will increase, so there will likely be a dollar increase in the cost share of retirees even though they will be paying the same percentage.
13. What has been the conversation around making any changes to Dependent Tuition Remission effective for newly-hired staff only? What has been the conversation around making any changes income-sensitive?
Richard Cate: There is no big push to change this benefit, but it is important to look at it at this time. Grandfathering changes and making them income sensitive (high wage earners pay more; low wage earners pay less) are always considerations. I can tell you that if any changes were to occur, they would not impact current students who are receiving dependent tuition remission.
14. What has been the conversation about grandfathering the Retirement Savings Account arrangement for current staff—or for current staff of a certain age?
Richard Cate: There hasn’t been a specific discussion about grandfathering on this or any other of the benefits being reviewed through the UBAC review.
15. There seems to be some conversation around structuring the Retirement Savings Account arrangement in such a way that more people participate and those who participate are encouraged to save more. We think that’s a great idea, but would not such changes likely wind up costing the University more money? Is that not at cross-purposes with the goal of saving the University money?
Richard Cate: The University has a number of goals. In this case, we have concerns that there are people who are not contributing at all to a retirement savings account. We want faculty and staff to be prepared for retirement when the time comes.
16. What are the specific proposals being considered for each of the Cost Share categories (Health Insurance, Tuition Remission, and Retirement Savings)?
Richard Cate: No decisions have been made and these topics are the subject of collective bargaining.
17. The Administration has indicated a desire to make cost-share changes prior to July 1. That makes this feel like a really quick conversation—and a “conversation” in a vacuum, given the fact that we have no sense of goals, no sense of scope, no data and no scenarios. We are being asked for feedback, but we are not being given anything of substance to respond to. Certainly we will get the knee-jerk response: “Please don’t touch my benefits!” but does the Administration really expect to gain anything useful from such a monologue? Does the Administration recognize that calling this a “conversation” may instead backfire—if not this time, then at some point in the near future?
Richard Cate: I understand the concern but the Administration is making this effort (UBAC deliberations and Town Hall meetings) to get input in order to inform the decision making process.
Committee Member: I don’t think that most people feel as though they are going to get a vote. People feel that decisions have already been made and these conversations are not really sincere. This breeds mistrust in the Administration.
Richard Cate: I understand, but I can honestly tell you that no decisions have been made.
Committee Member: It would have been helpful if this Benefits Cost Share discussion had been communicated to campus by the President, instead of through News You Should Know. It didn’t feel as if the Administration were viewing this discussion as seriously as employees are reacting to it.
Committee Member: What about including a cafeteria plan for healthcare that would allow you to choose certain types of coverage?
Richard Cate: Federal rules are such that we cannot have a cafeteria plan where employees could opt out of health insurance because everyone has to be offered and have health insurance. Footnote: The Administration continues to monitor changes in Federal and State laws to determine what degree of flexibility will be available in regard to offering multiple health insurance options.
Committee Member: Richard, you should consider doing something similar to Provost Rosowsky’s “Across the Green,” but shorter, in terms of communicating out regularly about the budget.
If you have additional questions or concerns, please contact the Staff Council at Staff.Council@uvm.edu or 656-4493.