OPEN – C&HR – INFO 1-2 UM Total Rewards Update Board of Curators January 29 - February 1, 2014

OPEN – C&HR – INFO 1-3 What is Total Rewards?  All of the tools used to recruit, reward, and retain talented faculty and staff.  Includes everything employees perceive to be of value resulting from the employment relationship  Communication strategy and graphic design developed in 2011 to help faculty and staff recognize information, programs and services related to the university’s Total Rewards package

OPEN – C&HR – INFO 1-4 UM Compensation Philosophy  Supportive of the university’s mission and strategy  Fairly and consistently administered  Internally equitable  Externally competitive within the appropriate labor market and higher education industry  Performance based  Structured system-wide but flexible enough to meet campus/hospital needs

OPEN – C&HR – INFO 1-5 Faculty Pay: UM Campuses vs Peers RankPeersMUPeersUMKCPeersUMSLPeersS&T Professor$135,900$117,200$111,300$106,000$108,100$96,700$133,300$117,300 Associate Professor $91,500$78,000$80,600$77,400$79,900$69,700$94,000$81,500 Assistant Professor $80,400$63,800$69,800$64,000$69,000$57,100$88,150$71,900

OPEN – C&HR – INFO 1-6 Staff Compensation Project  Campus-wide project began 2010 and will be fully operational in April 2014  Creates consistency and equity in job evaluation and salary structure  Reduces the number of titles and salary ranges  Enables the organization to compare staff salaries to the market  Provides a career path for employees wishing to advance

OPEN – C&HR – INFO 1-7 Staff Pay MUUMKCUMSLS&TUMSYSHOSPT Staff Count5,2191,2951, Average Staff Salary$46,007$48,926$48,400$45,574$66,396$36,211 Total Salary$240,110,623$63,359,088$49,416,075$31,992,847$30,475,564$9,414,847 Revised Projected Cost to GGS Minimum $1,011,853$288,890$49,055$195,499$61,607$17,767

OPEN – C&HR – INFO 1-8 FY13 Total Rewards Spend = $1.7 Billion Benefit Eligible Employees only

OPEN – C&HR – INFO 1-9 Components of Benefit Spend FY14* Total Spend = $303,603,777 *Based on the flat rate for FY14

OPEN – C&HR – INFO 1-10 Benefit Rate History (actual rates for FY03-FY14 and estimated rates for FY15-FY18)

OPEN – C&HR – INFO 1-11 Benefit Eligible Employees Enrolled for 2014 Business UnitEmployees Enrolled in MedicalDependents MU/Extension8,7198,1479,677 MU Health Care4,5404,0634,767 UM System UMKC2,7152,3532,443 S&T1,2411,1071,442 UMSL1,5391,3841,407 Long-Term Disability Total19,43617,68220,381 91% of benefit eligible employees enroll in medical plans

OPEN – C&HR – INFO 1-12 Medical Cost to Premium Ratio – Plan Year 2013 Plan Year 2013 Active Employees, LTD and Pre-65 Retirees Post-65 Retirees Enrolled18,5194,344 Premiums$186,750,957$19,141,214 Cost (Claims + Admin) $177,170,367$18,008,604 Cost to Premium Ratio* 95%94% * Target is 100% or below.

OPEN – C&HR – INFO Open Enrollment Results (Employees)

OPEN – C&HR – INFO 1-14 Medical Cost Benchmarks-Industry Breakouts UM has 15% lower costs than the Gov’t/Public Sector/Education industry. Source: Towers Watson Benefit 360 Analysis

OPEN – C&HR – INFO 1-15 Medical Cost Benchmarks Understanding Your Population: Plan Value (vs. database by plan type) University of Missouri’s plan values are 10% higher than the database average Source: Towers Watson Benefit 360 Analysis

OPEN – C&HR – INFO 1-16 UM Cost Impact of Affordable Care Act YearProvisionsCost impact Adult child coverage to age 26 No lifetime dollar limits/restricted annual dollar limits on essential health benefits No pre-existing condition exclusions for enrollees under 19 First-dollar preventive care coverage $864,000 No impact Minimal impact 2013 W-2 issued (using 2012 information) Additional Medicare tax & unearned income contribution $2,500 cap on pretax contributions to health FSAs Minimal impact No impact to UM Minimal impact to UM 2014 Revenue raisers Transitional reinsurance fee (TRF) PCORI tax $2.4 Million TRF $43,623 PCORI Employer mandate Automatic enrollment – required to enroll eligible employees in a plan Non-compliance $39 million To be determined 2018 Excise Tax To be determined.

OPEN – C&HR – INFO 1-17 UM’s Two Core Retirement Plans Employee Retirement Investment (new) Plan Retirement, Disability and Death Benefit Plan Defined Benefit Portion Multiplier Formula1.0% of pay2.2% of pay UM DB Contribution Varies based on annual contribution Vesting5 years Employee Mandatory Contribution 1% up to $50,000, 2% of amount above $50,000 1% up to $50,000, 2% of amount above $50,000 Defined Contribution Portion UM Automatic DC Contribution 2% of pay UM Match to employee voluntary contribution 100% up to an additional 3% of pay Vesting3 years (need not be consecutive) UM Contribution Varies based on DB annual contribution

OPEN – C&HR – INFO 1-18 Employee Retirement Investment Plan (New Plan) Since October 2012  2,667 participants (includes terminated employees)  96% of participants retained the opt-in participation rate  Projected that 50% of all retirement plan participants will be in this plan by 2019 and 85% by 2034

OPEN – C&HR – INFO 1-19 History and Projected Future Contributions in Dollars to University Retirement Plan

OPEN – C&HR – INFO 1-20 UM Voluntary Retirement Plans PlanParticipants Market Value as of 9/30/13 401(a)216$33.4 million 403(b)7,287*$498.9 million 457(b)2,993$112.1 million ERIP2,667$1.7 million *Some individuals may have an account at both TIAA and Fidelity

OPEN – C&HR – INFO 1-21 Total Rewards Task Force Objectives  Retirement plan benefits may not be reduced but additional options may be considered  Establish competitive benchmarks for benefit costs  Remain competitive within applicable employee peer groups  Considered of value by employees and retirees  Increase cost predictability for both participants and the university

OPEN – C&HR – INFO Committee Business Regular Committee Agenda Items:  April: Total Rewards Task Force report Annual retirement plan valuation report  June:  October:  December: Other Topics for Consideration? Total Rewards Task Force Implementation Update