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Commissioner suggests reducing employee benefits to increase salaries

Washington County Commissioner Ethan Flynn addressed members of the Cultural, Industrial and Agricultural Committee during their Nov. 7 meeting regarding ways the county could save money by reducing employee benefits.
“My biggest concern is a person making $50,000 could cost the county $75,626 per year, and a person making $25,000 could cost the county $45,312.50,” he said.
According to Flynn, a handout he provided at the meeting showing a breakdown of benefits for both salary levels on a family insurance plan had been reviewed by the county auditors who said it was a pretty good estimate.
“I want to urge the committee to consider how we could reduce compensation, even if it means bumping up the salaries, which would help the county be more competitive,” he said.
The question of whether the county is spending money on a “cadillac” benefits plan to the detriment of employees receiving pay increases has been discussed before by the CIA Committee.
Washington County employees have not had to increase their contributions to the benefits plan in more than 15 years. They also had received no pay increases for the last three years, prior to the 3 percent increase included in the 2011-2012 budget.
“I’m young and in shape and fairly healthy, and if I was hired in the sheriff’s department (for example), I would rather get more compensation in pay than benefits,” Flynn said. “I think it could improve morale and retention.”
Flynn said he pays 5 percent to the Tennessee Consolidated Retirement System and a portion of his insurance premium at Volunteer High School where he is employed as a math instructor.
He estimates the county is paying 13.75 percent in retirement for an employee making $25,000 a year.
The county also pays worker’s compensation and unemployment.
“Close to 60 percent of insurance is benefits,” said Commissioner David Shanks. “Nobody in the private sector is at 60 percent.”
Commission Chair Greg Matherly said he asked Vice Chair Lee Chase to head up a study of the county’s payments to TCRS.
“As far as benefits, TCRS has never been a big subject,” Matherly said. “It only became one because it started costing us more.”
County Attorney John Rambo said Washington County is currently under a defined benefit pension plan with TCRS, but has the option to go to a defined contribution plan.
Under the TCRS defined benefit pension plan, the amount of any future retirement benefits is determined by a benefit formula rather than an account balance.
In most cases, the amount of the benefit will be affected by three factors: the employee’s length of service, the employee’s final average salary, and the Social Security integration level in the year the employee retires or dies. The average final compensation is the average of the employee’s five highest consecutive years of salary.
Under a defined contribution plan, such as a 401(k), the income the employee receives during retirement is based upon how much money the plan accumulated and how much income that amount can generate.
Flynn said he is not advocating the 5 percent contribution toward retirement, but wanted to mention it as an option.
“It would be insane for people to pay who aren’t going to get the benefit because they’re not here for five years,” he said.
Matherly said the county also loses the benefit of the cost that goes into training new employees if they leave for higher paying jobs.
“The thing about driving a cadillac is if you can’t afford groceries, it’s not much of a benefit,” he said.
Matherly said he has talked with Mayor Dan Eldridge about the possibility of moving the money around.
Shanks had a different idea.
“In my opinion, on a long-term basis, the county needs to self-insure, and properly fund and administer the program,” he said.
Flynn also thinks it would be better if employees paid a percentage of the plan rather than a fixed amount.
“They would have a stake in getting the best plan because if the plan price goes up, they would pay more,” he said.
Rambo advised getting input from the county officials before changes are made since they are the ones who hire, manage and retain employees.
CIA Chairman Mark Ferguson said establishing a full-time human resources/benefits coordinator position might be in the county’s best interest.