Economic Vitality Incentive Program (EVIP)- Category III Employee Compensation

Revenue Sharing Compliance

Webinar Presentation by:Bob Cady – Roseville

Dave Boerger – SEMCOGBuzz Brown – SEMCOG/Munetrix

April 17, 2013

Agenda• Introductions – Dave Boerger, SEMCOG• EVIP Overview – Buzz Brown, Munetrix/SEMCOG• Best Practice Case Study:

– Bob Cady – Assistant City Manager/Controller - Roseville

• Tools, Techniques & 2014 EVIP Outlook• – Buzz Brown – SEMCOG/Munetrix• Q&A/Wrap-up - Dave Boerger

Webinar Logistics • To ensure an audio connection to the Webinar,

registrants should call-in using the phone number and access code below.– Call-in number: 866-939-8416– Participant code: 3725034

• For questions, type into the text or chat boxes on the lower right hand side of your screen. Each will be answered at the end of the webinar

• For technical help, call Jacque’l Smith at 313-324-3404

Webinar Logistics(cont’d)

• Copies of this presentation will be emailed after the Webinar

• Please compete a webinar evaluation that will be emailed with the presentation

• The webinar will be archived on the SEMCOG website; the link will be emailed with the evaluation.

EVIP Incentivizes Cost Savings to Offset Revenue Drops

Prior Yr Current Year 1 Year 2 Year 3 Year 4 Year 5 $(30,000)

$(20,000)

$(10,000)

$-

$10,000

$20,000

$30,000

$40,000 Millions Financial Forecast

Revenues Expenditures Fund Balance

Costs must be cut or this local

government will likely go into Fi-nancial Emer-gency within three years.

EVIP Pushes Communities to Deal with Fiscal Distress

Fiscal Distress EasingSoutheast Michigan

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

-15%

-10%

-5%

0%

5%

10%

15%

-1.1% 0.0%1.4%

SEV Taxable ValueForecast

Fiscal Best PracticesEVIP Categories Highlighted

1. Lead, engage & communicate openly with stakeholders

2. Consent on fiscal & operational assumptions & targets

3. Have a long range financial plan/multi-year budget

4. Measure performance, compare to others and set goals

5. Publish/update your fiscal data on-line

Fiscal Best Practices EVIP Categories Highlighted (cont’d)

6. Reduce expenses and address unfunded legacy costs

7. Collaborate with neighboring communities

8. Develop contingency plans & alternative scenarios

9. Regularly report fiscal results/keep stakeholders updated

10. Recognize successes and address issues in a timely manner

EVIP Overview & Category III Best Practices

Buzz Brown – Munetrix

http://www.michigan.gov/treasury/0,4679,7-121-1751_2197_58826---,00.html

EVIP Overview

Economic Vitality Incentive Program (EVIP)

• Replaces statutory revenue sharing• 106 out of 257 SE Michigan communities eligible • Encourage local governments to pursue best

practices and cost-control • Recognize the uniqueness of each community

EVIP Fundamentals

• Public Act 63 of 2011 introduced the Economic Vitality Incentive Program in 2012. Public Act 200 updated EVIP in 2013

• An eligible local government will receive 1/3 of their allocated statutory revenue sharing for each of the three categories for which specific requirements are met. 

• The three categories and due dates are:– Accountability and Transparency (10-1-12) – Consolidation of Services (2-1-13) - collaborative grants available– Employee Compensation (6-1-13)

• Each eligible local government must submit a certification form, required attachments and a website link for each category in order to qualify for payment by the dates indicated above.

Counties Now Eligible for EVIP

New this year - County Incentive Program (CIP) • Modeled after EVIP, counties now eligible for shares of

appropriation following essentially same requirements • 62 out of 84 counties eligible • Compliance Dates and Rules for Counties the same

EVIP Category III Options

Earn 1/3rd of your statutory revenue sharing funds via Category 3 Employee Compensation by pursing one of Several Options:

1. Submit an Employee Compensation Plan per PA-200 using form 4888 and submitting to the Dept. of Treasury

2. Certify that you will be opting out of provisions of PA-200 by adopting language from PA-152. This is primarily regarding employer/employee healthcare cost sharing• Opt out with 2/3rd vote of elected body • Must submit Board Action Documents AND form 4978

EVIP Category III Options(Cont’d)

Option 1 - Employee Compensation Plan (PA-200)• When?

– Must be received by Treasury June 1, 2013

• How? – Plan has to be made available for public viewing in the clerk’s

office or posted on a publicly accessible Internet site.– Must submit a copy of your employee compensation plan, and

form 4888 to the Michigan Department of Treasury.

• Forms?– 4888 available using REPORT WIZARD on-line for users at

Munetrix.com– Cover Letter available in Word (Resources) or as part of

REPORT WIZARD

EVIP Category III Options (cont’d)

Options 2 – Certification of PA 152 of 2011 compliance

• 80/20 option with minimum employee cost share; Submit annual resolution with mtg. minutes for Medical

Benefit Plan Coverage Year

• Annual Exemption for Calendar Year Option; submit annual resolution and mtg. minutes showing 2/3’s

vote for Medical Benefit Plan Coverage Year

EVIP Category III Options (cont’d)

EVIP CATEGORY III - EMPLOYEE COMPENSATIONOption 1

Form 4888 NEW HIRES & New Contracts SOCIAL SECURITY ELIGIBLE NOT SOCIAL SECURITY ELIGIBLE

Contributions Retirement Plans (DB or DC) Max. 10% Employer Contribution Max. 16.2% Employer Contribution

Multipliers Multipliers (DB w/ OPEB) 1.50% 2.25%

Multipliers Multipliers (DB w/o OPEB 2.25% 3.00%

FAC Final Average Compensation(FAC) Minimum of 3 years Minimum of 3 years

PTO Paid Leave < 240 Hours < 240 Hours

OT Overtime OT Hours shall not be used in FAC OT Hours shall not be used in FAC

Option 2Form 4978 NEW AND EXISTING EMPLOYEES SOCIAL SECURITY ELIGIBLE NOT SOCIAL SECURITY ELIGIBLE

80/20 Health Care Costs – 80/20 Employees contribute 20% - OR Employees contribute 20% - OR

Health Care (Including 80/20)

Health Care (DB or DC)Makes State Rate Schedule an Option

Rates competitive w/new State Preferred Provider Plan - OR

Rates competitive w/new State Preferred Provider Plan - OR

OPT OUT Penalty if done to “game” Right to Work LawOPT OUT – Requires 2/3rds vote

by the Policy Makers & a New Form and Board Minutes Req’d

OPT OUT – Requires 2/3rds vote by the Policy Makers & a New

Form and Board Minutes Req’d

Suggestions Read the Statutes and get your Legal Counsel’s Opinion

- This is not a data issue so all we can do is try and help you understand the laws and their elements.

- Contact Department of Treasury if you have any doubt.Submit something if you think you will be late. Treasury will help you fix your submittal but they DO NOT TOLERATE TARDINESS (4888-4978)

- All Documents can be found on Munetrix (Resources) and our WIZARD creates form 4888.

- Remember the New Email Address for Treasury- Email: TreasRevenueSharing@michigan.gov- Phone: (517) 373-2697 Fax: (517) 335-3298

Compensation Plan Ideas Applicable to Employees

(from recent survey of Mi. local government officials)

Compensation Plan IdeasApplicable to Retirees

(from recent survey of local government officials)

Best Practices & Case Studies:Bob Cady

Assistant City Manager/Controller – Roseville, MI

Developing Your Employee Compensation Plan

• Identify your fully fringed compensation costs for all employee groups

• Compare your costs to the State benchmarks described earlier

• Solicit input from your employees to identify the relative importance of each compensation element

• Identify potential employee compensation cost savings ideas

• Share the ideas with and solicit feedback from the impacted employee/union groups

Developing Your Employee Compensation Plan

(cont’d)• Develop your EVIP Employee Compensation Plan

• Include status on the actions from your prior year plan

• Qualify any planned actions that have Act 312 implications

• Submit the plan to the State Treasurers Office by June 1, 2013

• Include the plan on your website and/or post @ Clerks office

• Take actions to implement the plan, reporting progress regularly

Lessons Learned Deploying the EVIP Employee

Compensation Plan• Make sure you’ve engaged your elected officials and union

management on the development of the plan

• Be careful what actions are included in the plan because progress to those plans will have to be reported with your EVIP submission the following year.

• Take plenty of time to develop the plan as many stakeholders must be involved in the plan development

• Arrange regular follow-up reviews with elected officials, staff and union officials throughout the year as the plan is being pursued

Live Munetrix DEMO

Roseville On-Line InfoAnd Other Features

Buzz Brown

2014 EVIP OutlookDave Boerger – SEMCOG

• Pending Legislation: HB 4220 (EVIP language begins on pg. 115• PROPOSED Changes include:

Category I - Dashboard/Citizens Guide to include debt reportCategory I - Include salaries, severance packages & service contracts over $25,000Category II - Privatization and innovation efforts added, as well as collaborations with universities and comm. collegesCategory III - Added requirements: Unfunded accrued liabilities, current pension multipliers, penalty for contract settlement between 12/12/12 and 3/28/13 not saving 10%

• Senate legislation includes a 4.5% increase to EVIP funding Stay Tuned for Final adoption language !!!

Wrap-up & Final ThoughtsDave Boerger

• Communities have until June 1 to submit their EVIP Category III employee compensation info.

• Learn from the best practices of Roseville and other EVIP eligible communities to maximize statutory revenue sharing funds

• Employee benefit changes can help a community reduce costs to address fiscal challenges

• Leverage SEMCOG & Munetrix on-line resources or solicit help from SEMCOG’s consulting team at no cost to member local governments

Sampling of Our Services

• Citizen surveys w/ Cobalt

• Comparable benchmark analysis

• Budget assistance

• Performance measurement

• Fiscal assessment process

• Energy efficiencies

• Presentation to elected officials/staff

• Taxable value forecasts

• Financial plan development

• Shared service assistance

• Privatization help

• Court consolidation

• Department consolidation

• Munetrix fiscal information

• AgileGov searchable database

• Millage vote readiness assessment

• Webinar training on timely topics

• Citizen Guide/Dashboard dev.

Q&AWebinar Evaluation

• Type your questions into the text box on the right hand side of your screen

• Complete and return a webinar evaluation that will be emailed along with this presentation shortly after the webinar

• A link to the webinar archive on the SEMCOG website will be included in the email.

For additional information or assistance, contact:

Dave Boerger, SEMCOG248-875-7120boerger@semcog.orgwww.semcog.org

Buzz Brown, Munetrix248-217-7979buzz@munetrix.comwww.munetrix.com