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Here is Your ACE Newsletter!

ACE Newsletter

February 2014

A Periodic Publication of Wisconsin's Association of Career Employees

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ACE Representatives Meet with OSER Director
 
Sally Drew and Bill Rowe met with the Office of State Employment Relations Director, Gregory Gracz in October 2013.  Topics included the compensation plan, civil service one-day appointments, and AB 263 and SB 224. 
READ FULL STORY
 

Civil Service Legislation AB 263 and SB224

While most of the provisions of these bills appeared routine and were related to past collective bargaining, one provision caused ACE Board members concern.
READ FULL STORY


Employees Making Less than $15 Per Hour

The 2013-2015 compensation plan included a provision that made a one-time increase of 25 cents for state employees making less than $15 per hour.  ACE asked OSER for information on the number of employees covered by this provision.
READ FULL STORY


State of Wisconsin Employee Trust Funds Medical Self-Insured Financial Impact Overview

The Wisconsin Department Employee Trust Funds (ETF) commissioned a study from Deloitte on the financial impact of changing to a self-insured medical plan from the current fully-insured medical plan. 
READ FULL STORY


State Pension Funds Returns

Retired public employees will get an increase in their pensions for the first time in six years as the end of the smoothing of the effects of losses from the recession beginning in 2008 occurs.
READ FULL STORY



 
Full newsletter follows

 

ACE Newsletter

February 2014


 
ACE Representatives meet with OSER Director
 
Sally Drew and Bill Rowe met with the Office of State Employment Relations Director, Gregory Gracz in October 2013.  Topics included the compensation plan, civil service one-day appointments, and AB 263 and SB 224.  ACE emphasized support for raising salaries of the lowest paid workers, those earning less than $15 per hour, market adjustments, compensation for educational attainment, and parity between managers/supervisors and their employees.  Mr. Gracz said that tracking and maintaining an adequate work force were major concerns.  He reported that the compensation plan had only provided funding for 48% of the market adjustments called for by market studies.  Mr. Gracz invited ACE to make recommendations for the 2015-2017 compensation plan.

 
Civil Service legislation AB 263 and SB 224
 
While most of the provisions of these bills appeared routine and were related to past collective bargaining, one provision caused ACE Board members concern. 
The bill summary describes this section as follows:
 
The bill specifically provides that statutory provisions relating to annual,
termination, and accumulated sabbatical leave, as well as paid holiday leave, are subject to the leave provision of the state compensation plan. Current law provides, generally, that the state compensation plan may include provisions relating to pay, benefits, and working conditions that supersede the provisions of the civil service and other applicable statutes and rules promulgated by the director of the Office of State Employment Relations and the administrator.
 
ACE is opposed to changes being made to any civil service provisions outside the legislative process and expressed this concern to OSER and JOCER.  This legislation was passed by the Senate 21-12 and by the Assembly 59-39.  The Governor signed the legislation on January 23, 2013 as Wisconsin Act 123.

 
Employees making less than $15 per hour
 
The 2013-2015 compensation plan included a provision that made a one-time increase of 25 cents for state employees making less than $15 per hour.  ACE asked OSER for information on the number of employees covered by this provision.  There are 4,542 employees in 104 general classifications who made less than $15 per hour.  The largest classifications were Custodians (1,404), Resident Care Technician 1 and 2 (618), Office Operations Associate (386), Nursing Assistant 1 and 2 (352), University Services Associate 1 and 2 (299), Food Services Assistant 1 through 4 (226), and Office Operations Associate (131).  The lowest base salary level was $11.397.  ACE Board members believe that all state employees should be paid at least $15 per hour and has urged OSER to continue providing incremental increases in the pay plan and to eventually set the base pay level of for these classifications to $15 per hour.

 
State of Wisconsin Employee Trust Funds Medical Self-Insured Financial Impact Overview
 
The Wisconsin Department Employee Trust Funds (ETF) commissioned a study from Deloitte on the financial impact of changing to a self-insured medical plan from the current fully-insured medical plan.  Currently, 236,000 state covered individuals are in fully-insured managed competition HMO plans and 12,000 are in self-insured plan options (Standard Plan).  Any transition from a fully-insured to a self-insured environment introduces new issues such as those related to claims volatility, risk management, network provider relations, plan design continuity, and provider disruption. 
 
The primary motivator seems to be to avoid the state premium tax of 2% on fully-insured plans, estimated to save up to $23 million.  However, this amount could be offset by $100 million or more generated by the downside assumptions mentioned in the report.  Advantages include use of a single administrator and fewer plan options, more flexibility in plan design, elimination of a risk transfer charge from insurers, and increased ability to manage the timing of cash flows.  Disadvantages include loss of managed competition, possible reduction in negotiated discount rates, potential loss of HMO plan design in lieu of PPO Standard Plan design, more exposure risk, potential payment of a “terminal liability” upon termination of plans, potential loss of embedded dental plans and wellness programs, and the potential shift of some costs to employees. 
 
More study would be needed to determine if a self-insured approach would provide better service and decrease costs.  Neither ETF nor the Group Insurance Board has taken any action on the report to date.

 
State pension funds returns
 
Retired public employees will get an increase in their pensions for the first time in six years as the end of the smoothing of the effects of losses from the recession beginning in 2008 occurs. Preliminary projections indicate that core trust fund annuitants may receive between a 4.4% to 4.8% adjustment and variable trust fund annuitants may receive a 23% to 25% adjustment.  The increases will be formalized in February or March and will be effective May 1, 2014.  The core trust fund ended 2013 with a 13.5% preliminary return and the variable trust fund with a 29% preliminary return. 
 
Strong equity markets, especially in the U.S, and real estate investments (7% of the fund) helped to deliver the positive returns.  Over the past five years, the Investment Board has added $3 billion in excess return.  The Wisconsin Retirement System benefits from diligent oversight that includes regular actuarial reviews to ensure than pension benefits are pre-funded, sustainable for the long-term, and that benefit costs are not transferred to future generations.  Each year, the actuaries analyze demographic and economic data pertaining to both retired and non-retired members. Every five years, ETF and SWIB conduct a 50-year actuarial projections study.  There are currently 173,655 retired employees with 303,483 projected for 2035.  In 2011 there were 1.45 active employees for each retiree.  In 2026 and 2031, it is projected that there will be a low of .86 active employees for each retired employee before the ratio begins to rise again. 
 
For the second consecutive year, Morningstar, Inc. found the Wisconsin Retirement System to be the strongest funded state pension system in the country.  According to the report, Wisconsin’s funded ratio is 99.9% and its liability per capita is $18, the lowest of any public pension plan in the country.  Employees share in fund contributions, and the pension fund is designed to deal with a variable economic climate. 

 
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Our mailing address is:
ACE, P.O. Box 44578
Madison, WI  53744
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