Oregon Health & Science University won a high-profile concession in its recently concluded contract negotiations with AFSCME Local 328, which represents about 5,300 employees at the city's largest employer.
As public-sector employers struggle to contain benefit costs, the practice of employers paying a six percent pension contribution on employees' behalf has come under scrutiny.
The practice dates to 1979, when the Legislature approved the employer pick-up as a method of providing compensation when the state and local governments were broke. Since then, according to a 2011 City Club review of the Public Employee Retirement System, about 70 percent of public employees see their employers pay the six percent.
But after five months of contract talks that concluded in mid-August, OHSU finally got AFSCME to agree that employees will in future pay the six percent themselves. In exchange, workers got a supplemental pay increase that compensates them for some, although not all, of the six percent that will now be deducted from their pre-tax pay.
Wages Employees will receive the following across-the-board increases over a 3-year contract: July 2012: 2.5% (paid retroactively following ratification of the agreement) July 2013 1.5% January 2014: 1.0% July 2014: 2.5% Additionally, a 1% lump-sum bonus will be paid in July 2014. The agreed-upon increases maintain market-competitive wages and will help mitigate the impact of the transition of the PERS employee pick-up.
Health Insurance Benefits Employees will see no change in contribution percentages (100% for employee-only coverage; 88% for dependent coverage; 77% of full-time contribution for part-time employees). Increases to OHSU's contribution toward benefits will be capped at 10%. We are pleased that we are able to retain the current health insurance benefits for AFSCME-represented employees, which we know are highly valued, while adding some measure of cost control for OHSU.
Retirement Benefits Employees enrolled in a PERS retirement plan will begin paying their own 6% employee pick-up effective with the first pay period of January 2014. To ease the impact of this transition on take-home pay, employees who remain enrolled in PERS will receive the following: Employees fully vested in a PERS plan: A 5% pay differential from January 2014 to July 2014. A 3% pay differential from July 2014 through the pay period prior to the expiration of the contract in 2015. Employees enrolled in the PERS OPSRP plan as of the date of the ratification of the agreement, but not yet vested: A 6% pay differential from January 2014 to July 2014. A 4% pay differential from July 2014 through the pay period prior to the expiration of the contract in 2015.