EVIP Employee Compensation Plan
February 15, 2012
Under the Economic Vitality Incentive Program (EVIP) adopted by the state last year, the City must meet certain criteria in order to continue receiving non-constitutional state revenue sharing funds. The first criterion was to prepare and make available a citizen’s guide and performance dashboard by October 1, 2011.
The second criterion the city had to meet was to certify to the Michigan Department of Treasury that by January 1, 2012 it had produced and made readily available to the public, a plan with one or more proposals to increase its existing level of cooperation, collaboration, and consolidation, either within the jurisdiction or with other jurisdictions. The City’s EVIP Consolidation of Services Plan was submitted to the state in December 2011.
Click to view the City of Muskegon’s EVIP Employee Compensation Plan
The third and final criterion is to certify to the Michigan Department of Treasury that by May 1, 2012 the City has developed an employee compensation plan, which we intend to implement, with any new, modified, or extended contract or employment agreement, for employees not covered under contract or employment agreement; and that the plan has been made available for public viewing in the clerk’s office or posted on a publicly accessible Internet site. The City of Muskegon’s EVIP Employee Compensation Plan can be viewed by clicking on the nearby image.
The EVIP employee compensation plan must address four specific areas:
- New hires who are eligible for retirement plans are placed on retirement plans that cap annual employer contributions at 10% of base salary for employees who are eligible for social security benefits. For employees who are not eligible for social security benefits, the annual employer contribution is capped at 16.2% of base salary.The City has met this standard. Since 2006, all new City hires are placed in a defined contribution retirement plan. The maximum City contribution for police and fire employees under this plan is 10%; the maximum City contribution for other employees is 6%.
- For defined benefit pension plans, a maximum multiplier of 1.5% for all employees who are eligible for social security benefits, except, where post-employment health care is not provided, the maximum multiplier shall be 2.25%. For all employees who are not eligible for social security benefits, a maximum multiplier of 2.25%, except, where post-employment health care is not provided, the maximum multiplier shall be 3.0%.
The City intends to meet this standard in new employee contracts. Currently, police and fire employees have pension multipliers ranging from 2.75% to 3.00% without Social Security coverage, but with City-provided retiree health coverage. All other City employees currently have a 2.25% pension multiplier with Social Security and City-provided retiree health coverage.
- For defined benefit pension plans, final average compensation for all employees is calculated using a minimum of 3 years of compensation and shall not include more than a total of 240 hours of paid leave. Overtime hours shall not be used in computing the final average compensation for an employee.
Currently, final average compensation (FAC) for all City employees is based on the 3 consecutive years of highest compensation. In recent employee contracts, the City has negotiated exclusion of overtime and limited the inclusion of paid leave to 240 hours for future FAC computations. The City also intends to implement these changes with all remaining employee contracts as they are negotiated.
- Health care premium costs for new hires shall include a minimum employee share of 20%; or, an employer’s share of the local health care plan costs shall be cost competitive with the new state preferred provider organization health plan, on a per employee basis.
The City meets this standard as its health care plan costs are below the new state preferred provider organization health plan, on a per employee basis.