1. 1 Employee Pay: Changes and Transitions 2014-15 April 2, 2014

2. Changes to compensation Payroll processing Benefit Renewals Overview of Program 2

3. COMPENSATING OUR STAFF New compensation program 2014-15 3

4. Board adopted new compensation plan January 2014 Committees reconvened to distribute new income to employees Recommendations by employee groups Initial salary placement- challenges and updates Compensation Overview 4

5. Purpose of new structure: Attract and Retain highly qualified staff Compensation Structure – No more grades AND steps- each position has a base pay and max pay – New hire placement will start at base and get increments for education, experience, and licenses/certifications – Impact on current staff? Employee’s current salary or hourly wage is the starting point for any increases going forward What was adopted 5

6. New Staff; Increased Benefit Cost; New Program Costs New Budget for Salaries, Benefits and Professional Growth Administrative 7.1% Certified 66.4% Classified 26.5% Total M&O Budget 2014-15

7. 2014-15 Implementation Priority is to Begin to Eliminate Compression: – Compression happens where the salary differential between “more senior” staff and “less senior” staff is less than it should be (compression) OR where the salary of a “more senior” staff member is actually less than the salary of a “less senior” staff member (salary inversion) High distribution of employees at step 1 or step 2 on current salary schedules: – Administrators: 70% – Teachers: 60% – Classified Exempt: 67% Implementation Priority for all groups 2014-15: Fix Compression 7

8. 2014-15 $2.4 million in M&O additional funds for compensation for all groups Does not include 301- all funds go to Certified Percentage by group broken down: – Certified 67% – Classified 26% Classified Exempt Classified Hourly – Administrative 7% Compensation Budget 8

9.  Certified Staff has $1.6 Million allocated with $200,000 for Professional Growth = $1.4 Million for increases  Recommendation:  1157 FTE Hired Prior To 2008 will receive a 2% raise = $1,114,117  234 FTE Hired 2008-2010 will receive a 1.5% raise = $100,000  548 Hired 2011-2013 will receive a 1% raise = $229,114  Total: $1,443,231 Certified Recommendation 9

10. Goal with HTF stipend was to retain current staffing in the HTF areas and attract new staff Definition: – Look at graduation rates for specific majors for last three years from college to determine trend – District trend on open positions – Applies for teachers who are teaching in that area, not just on their certificate Paid Annually- lump sum at end of year if evaluation score is at least Performing Currently evaluating other funding sources to create a stipend of value – up to $2,000 Certified- Hard to Fill 10

11. Classified Exempt has $84,000 to distribute Committee Recommended: – If hired prior to 2008 – Receive a 2% increase = $52,000 – If hired between 2008-2011 – Receive 1.5% increase = $19,000 – If hired between 2012-2013 – Receive 1% increase = $10,000 Total $81,000 Classified Exempt Recommendation 11

12. Classified Hourly has $545,000 to distribute Committee Recommendation: – Hired between 1984-February, 2007 = $.34 increase per hour – Hired between March, 2007-June, 2010 = $.22 increase per hour – Hired between July, 2010 and June, 2012 = $.13 increase per hour – Hired between July, 2012-June, 2013 = $.09 increase per hour – Hired between July, 2013-December, 2013 = $.05 increase per hour Total $546,000 Classified Hourly Recommendation 12

13. Administrative has $170,000 to distribute Committee Recommendation: – 1% for everyone =$104,325 – $110 per year since promotion to current position for everyone = $64,838 Total $169,163 Administrative Recommendation 13

14. PAYROLL CHANGES Paying in Arrears starts July 1, 2014 14

15. What is this? Why are we doing this? When are we doing this? Who does this apply to? How does this impact me? Overview- Paying in Arrears 15

16. Moving forward, all staff will be paid after the work has been performed. This is also known as paying in arrears. It significantly modifies the pay schedule. What is this? 16

17. The Arizona Office of the Auditor General has required school districts to establish a payroll system that has a “lag” that allows adequate time between the end of the pay period and the payment of wages to ensure that employees are paid only the wages they have earned. Arizona Constitution prohibits paying wages to any individual for hours not yet worked. Consistency with staff; part-time hourly staff are currently paid in this manner. Why are we doing this? 17

18. This will begin July 1, 2014. When are we doing this? 18

19. This applies to all staff Who does this apply to? 19

20. Part-time hourly working less than 12 months: No change Part-time hourly working 12 months & full-time hourly: Pay for hours worked in pay period only and paid holidays Exempt/Certified/Admin: 1 st check will be for days worked in pay period only and remaining pay will be spread How does this impact me? 20

21. Elementary Secretary (less than 12 month) First day worked: July 14, 2015 First paycheck: – July 31 – Paid for 1 week 7/14-7/17 (4x10) First 80 hour check: – August 14 Paycheck on December 18: – 5 days plus 1 holiday Paycheck on January 15: – No work days plus 3 holidays Paycheck following Spring Break: – April 9 th paycheck paid 5 days Landscaper (12 month) First day worked: July 1, 2014 First payroll in July: July 3- no check (unless chose the 27 pay option for 2013- 14) First paycheck in July: – July 17 – Paid for 2 days and 1 holiday First 80 hour check: July 31 Paycheck on December 18: 5 days plus 1 holiday Paycheck on January 15: 3 work days plus 3 holidays Paycheck following Spring Break: April 9 th paycheck paid 5 days Examples- Classified Non-exempt Full-time 21

22. Start date: July 31, 2014 First payroll: July 31- no pay First paycheck: August 14 for 2 days First leveled check: August 28 All checks for remainder of year will be same as August 28 (exempt status) Last paycheck (balance of contract): June 4, 2015 Example: Certified Teacher 22

23. EMPLOYEE BENEFIT RENEWALS 2014-15 Medical, Dental and Voluntary Benefits 23

24. Budget for 2014-15: $22 million or approximately $7500 per employee – Contributing factors: fewer high cost claimants and removal of retirees from our claims Same budget as 2013-14 resulting in no increase to employee premiums – Increase in costs of ACA fees and additional staff must be provided benefits – No decrease in HSA Contributions $1250 for CDHP 2500 $375 for CDHP 1250 $250 available for PREP (Wellness) – Plan Changes to the Traditional Plan: Increased out of pocket maximum to capture the co-pays and deductible due to ACA ($3750+$750 to $5,000) Increase co-pay for urgent care Changed chiropractic to co-insurance to align with other therapies (Physical, Occupational, Speech) Benefit Renewal Overview 24

25. Moving to one provider of prescription coverage - Optum RX – Change for the Traditional Plan members from Express Scripts – Change for the CDHP Plan members is an expanded drug list Pharmacy Changes 25

26. No change to annual premiums Change the existing Delta Dental Plan to a Standard Delta Plan that includes: – Check-up Plus Plan added- Preventative and Diagnostic covered at 100% – Sealants now covered 100% up to age 19 – Annual maximum benefit $1,000 (reduced from $1500) Impacts approximately 4% of the staff who are on Delta Dental Dental Renewal 26

27. Vision- VSP – Rates increased slightly due to ACA fees – Additional coverage added: Diabetes Testing Frame allowance increased for brand name frames AFLAC – Moving to Group Plan – More plans, guaranteed issue Critical Illness (Includes Cancer and Wellness) Hospitalization (Includes ICU) Accident Advantage Voluntary Benefits 27

28. Currently 22 or 26 pays and 20 pays for voluntary Next year: 20 or 24 deductions for all plans (voluntary will remain at 20) Purpose is to minimize pay period where we anticipate the hours paid would be insufficient to cover the highest premiums – No benefit deductions first or second paycheck of the year – No benefit deduction for January 15 paycheck Will slightly increase deduction, but same total for the year – Example: Currently Traditional Plan – Employee only on 26 pay deduction pays $40.06 x 26 = $ 1,041.56 24 pays will be $43.40 x 24= $1,041.60 20 pays $52.08 x 20= $1,041.60 Changes to Benefit Deductions 28