Budget and compensation revisited

A 4.5% "grid increase" has been requested for the FY2010 budget and it will probably be the last time a "grid increase" is used to include our step increases within the budget request. It looks like the System will not be going back to the old way of doing step increases, either, and are investigating other options. The Staff Compensation Task Force is looking into other ideas, including merit-based raises (possibly with evaluations required), using an end-of-year bonus concept, and others. They're always looking for ideas, so feel free to pass them on, if you have one! (Once one is decided upon and approved, it won't be put in place until FY2010 at the earliest we're told).

There is also a high probability that health care premiums will be going up, as early as next July 1. There's still discussion and calculations to be made to determine exactly how much it can go up; we will let you know as soon as we hear anything.

Another item the SCTF is working on is the fact that the "grid increase" request for FY2010 is 4.5%. Being that the request is based on the cost-of-living in Anchorage (which is currently already at 4.6%), the chance that the new rates almost definitely won't cover the cost-of-living increase in addition to the health care premium increase is incredibly high. The SCTF is meeting next week and hopes to get some answers and ideas out of it.

Health Care costs to keep increasing

Mike Humphrey attended our Staff Council meeting last week and gave an update on the status of health care costs for the University and answered our questions. Here are some of the highlights of his discussion:

Health care costs are increasing throughout the nation and Blue Cross predicts costs to increase 10-15% per year. After looking through our plans, they've discovered some inconsistencies in plans including, but not limited to deductibles. The biggest difference potential is in pharmaceutical costs and the generic utilization rate being lower than expected.

Some of the things UA/HR, with Blue Cross are considering changing are:

• Increasing the preventive benefits of our current plan (since it hasn't changed from the original $400/plan year from about 2001)
  
• Increasing employee contributions to the pharmaceutical plan, be it by increased co-pays, or other means. Our current pharmaceutical plan provides for a minimal difference between name and generic prescription rates. Due to this minor difference the employee "generic utilization" rate is even below the national standard and is being looked into as an option for the university to lower its share of the costs.
  
• Enhancing vision benefits. Research shows an eye exam can often tell a doctor a lot about a person's health, i.e. such as whether their cholesterol is higher than it should be. UA is looking into providing more benefits for vision care, at least for an eye exam, as it can help predict and diagnose other possible problems.
  

These are being looked into for the future, probably not as early as the next year or two, but in the future. Over the last few years some costs (and university contribution) have increased while employee contribution has been going down. Because of this, the proportion the university provides has greatly increased to far more than the standard. To help alleviate this problem, the university is implementing a change to the percentage of health care costs to which they contribute.

The standard is about 80% costs covered by the university, and 20% by the employee. The last few years have brought UA's up to 96%/4%. Over the next three years the university's proportion will be phased down to 85% next year, then each of the following two years to 83%.

Because of the last few years, the plan has an over-recovery of about $6 Million that may be applied towards these new changes to slow the rate down for employee contributions. Costs will go up, that is definite. How much, though, at this point is still to be seen.

If you have any questions or comments, please forward them to either Glyn or Dee to be passed on, or send them directly to Mike Humphrey. It has been recommended, if you email Mike directly, to CC: Kayt Sunwood or Barbara Oleson from Staff Council, as they are on the health care committee, as well.