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SUMMARY OF FY18 RECOMMENDATIONS

A. SUMMARY OF AGENCY REQUESTS

Montgomery County Public Schools (MCPS): The MCPS workforce for FY18, as recommended by the Board of Education (BOE), is 22,284.33 FTEs, or 103.83 FTEs greater than the approved FY17 workforce of 22,180.50 FTEs. Labor negotiations with the public schools' bargaining units, the Service Employees International Union (SEIU), the Montgomery County Education Association (MCEA), the Montgomery County Association of Administrators and Personnel (MCAAP), and the Montgomery County Business and Operations Administrators (MCBOA) are ongoing. MCPS' budget request contains funding for anticipated agreements. For more information on compensation and workforce changes, please see the Board of Education's FY18 requested budget document.

Montgomery College (MC): There is a decrease of 3.0 FTEs in the size of the Montgomery College complement for FY18, as requested by the College and its Board of Trustees. This is accompanied by an increase in personnel costs of about $7.5 million. The primary factors for these cost increases are annualizations of FY17 compensation changes and anticipated FY18 wage adjustments. Negotiations are ongoing however, and merit and general wage adjustment increases are not known at the time of this publication. For more information on compensation and workforce changes, please consult the Adopted FY18 Montgomery College Operating Budget Request, available on the College's website.

Maryland-National Capital Park & Planning Commission (M-NCPPC): The net impact on the M-NCPPC workforce for FY18, as recommended by the Planning Board, is an increase of 35.7 FTEs. The Commission's requested budget includes a decrease in personnel costs of $4.9 million. The decrease also includes retirement and group insurance adjustments, a compensation placeholder (to address collectively bargained compensation increases and pass-through costs) and a reclassification placeholder. For more information on compensation and workforce changes, please see the M-NCPPC FY18 requested budget document.

Montgomery County Government (MCG): The net impact on the County government workforce for FY18, as recommended by the Executive, is an increase of 154 positions.

The recommended budget contains an increase in total personnel costs of $24.0 million, or 2.2 percent. The primary factors in these changes are:

FactorMillions
General Wage Adjustment$13.5
Decrease in required retirement contribution-$4.0
Service increments and longevity$7.0
Other negotiated increases$0.8
Net increase in positions and other changes in personnel costs, including annualization of positions, turnover, and lapse$6.8

The decrease in required retirement contribution is primarily due to revised actuarial assumptions and changes to the amortization period based on the County's five-year experience study, resulting in a reduced required County contribution into the retirement plans.

The recommendations in the remainder of this section are for the County government and are based upon the bargained agreements with the United Food and Commercial Workers, Local 1994 (Municipal and County Government Employees Organization - MCGEO), the International Association of Fire Fighters (IAFF), Local 1664, the Fraternal Order of Police (FOP), Lodge 35, and Montgomery County Volunteer Fire and Rescue Association (MCVFRA). Certain provisions of the agreements have been extended to unrepresented employees, as noted below.

B. COUNTY GOVERNMENT SALARY AND WAGES

GENERAL WAGE ADJUSTMENT: The Executive recommends the following general wage adjustments (GWA) in FY18: 2 percent effective the first full pay period after July 1, 2017 for all employees in the Police bargaining unit and Police uniformed managers, 2 percent effective the first full pay period after August 1, 2017 for all employees in the Office, Professional, and Technical (OPT) and Service, Labor, and Trades (SLT) units, and all non-represented employees, including Management Leadership Service (MLS) employees, and 2 percent effective the first full pay period after October 1, 2017 for all employees in the Fire and Rescue bargaining unit and Fire and Rescue uniformed managers.

FY18 salary schedules can be found on the County's website at:
http://www.montgomerycountymd.gov/HR/compensation/Compensation.html.

SERVICE INCREMENTS: The Executive recommends service increments of 3.5 percent for all eligible employees.

LONGEVITY INCREMENTS: The Executive recommends longevity increments in FY18 for all eligible employees, and recommends increasing the longevity amount from 3 percent to 3.5 percent for all employees on the Deputy Sheriffs and Correctional Officers Salary Schedules, effective July 1, 2017. The Executive also recommends adjusting the second longevity step for all employees in the Fire and Rescue bargaining unit, currently provided after completing 28 years of service, to employees who complete 24 years of service, effective July 1, 2017.

PERFORMANCE-BASED PAY: The Executive recommends $1,984,118 in the Compensation Adjustment and Employee Benefits NDA to fund performance-based pay increases for MLS employees.

C. COUNTY GOVERNMENT: EMPLOYEE BENEFITS
The following employee benefits are funded in the Executive's recommended budget through a combination of lump sum or payroll-based contributions.
  • FICA (Social Security & Medicare)
  • Workers' Compensation
  • Group Insurance
  • Employees' Retirement System
  • Retirement Savings Plan

Social Security and Medicare: Contributions are collected from County departments and agencies each payday based on actual payroll. Since contribution rates and salary maximums change at the start of the calendar year, figures used in the recommended fiscal year budget represent an average of the rates set for 2017 and projected changes for 2018. The employer rates are 6.2 percent for social security and 1.45 percent for Medicare and are not expected to change.

Workers' Compensation: This is handled through the County's Risk Management program under the Department of Finance. Departments with significant non-tax revenues make annual contributions to the Liability and Property Coverage Self-Insurance Fund. A lump sum contribution to the Fund for insurance for the remaining County departments is made annually through the Risk Management (General Fund portion) Non-Departmental Account. Participating County agencies also make annual lump sum contributions. Contributions for all members are set each year based on an actuarial valuation of exposures, past and projected claims experience along with administrative expenses.

Group Insurance Benefits : The contributions for health insurance are based on an actuarially determined countywide average fixed rate of $11,651 per position, and the contribution for life insurance is based on fixed rates per coverage amounts based on an employee's salary.

It is projected for the long-term that the annual cost of group insurance for the County, including active employees and retirees, could increase an average of approximately eight percent annually between FY18 and FY23. Contribution rates during this period will be set based on various factors, including the fund balance in the Health Insurance Fund and claims cost experience.

Retirement Benefits: Montgomery County government maintains a system of retirement pay and benefits for its employees which are intended to provide income during their retirement years. The Employees' Retirement System, which currently provides benefits to approximately 6,453 retirees and survivors, is administered by Montgomery County Employee Retirement Plans (MCERP). MCERP oversees all facets of the retirement plans including investments, administration, and accounting. Retirement plan design changes occurring through the collective bargaining process and by other means are coordinated with MCERP in consultation with the Office of Human Resources, the County's actuaries, the Finance Department, and the Office of Management and Budget.

Consolidated Retiree Health Benefits Trust: Beginning in FY08, the County implemented a plan to set aside funds for retiree health benefits, similar to the County's 50 year-old practice of pre-funding for retiree pension benefits. The reasons for doing this are simple: Due to exponential growth in expected retiree health costs, the cost of funding these benefits, which were being paid out as the bills came due, would soon become unaffordable. Setting aside money now and investing it in a Trust Fund, which is invested in a similar manner as the pension fund, not only is a prudent and responsible approach, but will result in significant savings over the long-term.

As a first step in addressing the future costs of retiree health benefits, County agencies developed current estimates of the costs of health benefits for current and future retirees. These estimates, made by actuarial consultants, concluded that the County's total future cost of retiree health benefits if paid out today, and in today's dollars, is $1.8 billion - approximately 31 percent of the total FY18 budget for all agencies.

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One approach used to address retiree health benefits funding is to determine an amount which, if set aside on an annual basis and actively invested through a trust vehicle, will build up over time and provide sufficient funds to pay future retiree health benefits and any accrued interest on unfunded liability. This amount, known as an Annual OPEB Cost or "AOC", is estimated at $120.4 million. This amount consists of two pieces - the annual amount the County would usually pay out for health benefits for current retirees (the pay as you go amount), plus the additional amount estimated as needed to fund retirees' future health benefits (the pre-funding portion). The pay as you go amount can be reasonably projected based on known facts about current retirees, and the pre-funding portion is estimated on an actuarial basis.

The County committed to an approach of "ramping up" to the AOC amount over several years, with the amount set aside each year increasing steadily until the full AOC is reached. In FY11, the County Council enacted Bill 17-11 which established the Consolidated Retiree Health Benefits Trust. The Bill amended existing law and provided a funding mechanism to pay for other post employment benefits for employees of Montgomery County Public Schools and Montgomery County College. In FY15, the County and all other agencies implemented the Medicare Part D Employer Group Waiver Program for Medicare eligible retirees/survivors effective January 1, 2015. This will reduce retiree drug insurance costs and the County's OPEB liability. The County achieved full pre-funding in FY15, consistent with Council resolution No. 16-555. In FY17, these contributions were $43.5 million (County General Fund), $63.1 million (MCPS Consolidated Trust), and $1.5 million (Montgomery College Consolidated Trust). A detailed breakdown of FY18 recommended contributions to the Consolidated Retiree Health Benefit Trust for County Government tax supported agencies, participating agencies, Montgomery County Public Schools, and Montgomery College is displayed in the table above. The Executive is recommending that the Retiree Health Benefits Trust provide $27.2 million to Montgomery County Public Schools for the payment of retiree health insurance claims in FY18.

Retirement Plans: Montgomery County government maintains three retirement plans for its employees: a defined benefit pension plan, a defined contribution plan, and a deferred compensation plan for its employees and participating agencies.

  1. The Employees' Retirement System (ERS), a defined benefit pension plan, was established through legislation in 1965 and is described in the Montgomery County Code, Section 33. As of June 30, 2016, there were 6,453 retirees and survivors and 5,513 active members, including 1,526 in the Guaranteed Retirement Income Plan (GRIP). Retirement plan design changes occurring through the collective bargaining process and by other means are coordinated by the MCERP staff, in consultation with the County's actuaries, the Office of Human Resources, the Finance Department, and the Office of Management and Budget.

    The ERS consists of four plans including a Mandatory Integrated Retirement Plan, an Optional Non-Integrated Retirement Plan, an Optional Integrated Plan, and a Guaranteed Retirement Income Plan. The GRIP is a Cash Balance Plan that began in FY10 as a result of negotiations between Montgomery County and UFCW Local 1994 MCGEO. Eligibility to participate has been passed through to non-represented employees and participants of participating agencies. All full- and part-time non-public safety employees hired before January 1, 2009 enrolled in the RSP were eligible to make a one-time irrevocable election to transfer to the GRIP by June 1, 2009. Eligible employees hired after January 1, 2009, have the option to participate in either the RSP or the GRIP. As with the RSP, the County and employee each make contributions at a set percentage of pay. The salient feature of the GRIP is that the plan provides guaranteed annual earnings of 7.25%, credited monthly.

  2. The Retirement Savings Plan (RSP), a defined contribution plan, was established for all new OPT/SLT (non-public safety) and non-represented employees hired on or after October 1, 1994. Eligible employees hired after January 1, 2009, have the option to participate in either the RSP or the GRIP. Eligible employees in the ERS are allowed to transfer to the Retirement Savings Plan. Both regular full-time and part-time employees can participate. Under this plan, the County and employee each make contributions at a set percentage of pay. These monies are deposited into employee accounts and invested based on each employee's selection of an investment vehicle(s) established by the Board of Investment Trustees.

  3. The Montgomery County Deferred Compensation Plan (DCP) was established by the County to make a deferred compensation plan available pursuant to Section 457 of the Internal Revenue Code. Employee contributions are made on a voluntary basis with the monies deposited into employee accounts and invested based on each employee's selection of an investment vehicle(s) established by the Board of Investment Trustees. In FY 2005, the County established the Montgomery County Union Employees Deferred Compensation Plan for employees covered by a collective bargaining agreement. This Plan is administered by the three unions representing Montgomery County employees.

The Board of Investment Trustees manages the assets of the ERS through its investment managers in accordance with the Board's asset allocation strategy. The Board also administers the investment program for the Retirement Savings Plan and the Montgomery County Deferred Compensation Plan. The Montgomery County Union Employees Deferred Compensation Plan is administered by the three unions representing Montgomery County employees. The Board currently consists of 13 trustees including: the Directors of Human Resources, Finance, and Management and Budget; the Council Administrator; one member recommended by each employee organization; one active employee not represented by an employee organization; one retired employee; two members of the public recommended by the County Council; and two members of the general public.

Change in Retirement System Membership: The number of active non-public safety in the ERS declined by 90 and the number of public safety employees decreased by 112, for a combined total active enrollment of 3,987. GRIP membership increased by 174 employees, to 1,526 in FY17. The RSP had 86 fewer active employees enrolled in FY17 than in FY16, for a total FY17 enrollment of 3,670.

Funds for the County's contribution to the ERS for each member employee are included in the appropriate County government departmental budget or agency budget. The County uses multiple contribution rates designating the percentage of payroll for the various employee groups to determine the retirement contribution.

County contributions are determined using actuarially sound assumptions to assure the financial health of the Fund. Factors that affect the County's contributions include the impact of compensation adjustments, changes in the size of the workforce, investment returns, and collectively bargained benefit changes. The ERS contribution rates reflect projections of revenues and expenses to the fund. Revenues include County and member contributions which are set at fixed percentages of salaries and investment income which is driven by both earnings in the various financial markets and the size of the Fund balance invested.

Expenses of the Fund include pension payments which are affected by mandated cost-of-living increases and changes in the number of retirees and survivors; administrative and operational expenses of the Fund managers and financial consultants; and charges for services provided by the MCERP staff, as well as staff from Finance and Human Resources.

COLLECTIVE BARGAINING

Fire and Rescue Bargaining Unit:

The current agreement expires on June 30, 2017. The negotiated agreement becomes effective July 1, 2017, and expires on June 30, 2019. The agreement's salient economic terms include:

  • General Wage Adjustment. A 2 percent GWA will be paid the first full pay period following October 1, 2017.
  • Service Increments. A service increment of 3.5 percent will be paid in FY18 up to the maximum base salary for the grade for eligible unit members.
  • Longevity step increases. A longevity step increase will be paid to eligible employees.
  • Adjusted longevity step. The second longevity step, currently available after completion of 28 years of service, will be available after completion of 24 years of service, effective July 1, 2017.
  • Pharmacy Benefit Management Program. Beginning July 1, 2017, pharmacy benefit management programs will be implemented for the High Option and Standard Option prescription plans for unit members.
MCGEO Bargaining Unit:

The current agreement expires on June 30, 2017. The negotiated agreement becomes effective July 1, 2017, and expires on June 30, 2019. The agreement's salient economic terms include:

  • General Wage Adjustment. A 2 percent GWA will be paid the first full pay period following August 1, 2017.
  • Service Increments. A service increment of 3.5 percent will be paid in FY18 up to the maximum base salary for the grade for eligible unit members.
  • Longevity step increases. A longevity step increase will be paid to eligible employees.
  • Longevity step adjustment. The amount of the longevity step will increase from 3 percent to 3.5 percent for eligible unit members on the Deputy Sheriffs and Correctional Officers Uniform Salary Schedules.
  • Additional step. An additional step will be added at the top of the Deputy Sheriffs and Correctional Officers Uniform Salary Schedules for certain ranks.
  • Seasonal Wage Adjustment. A $0.25 an hour adjustment effective the first full pay period after July 1, 2017 for seasonal employees not impacted by the County minimum wage increase.
  • Uniforms and equipment. Increases in the reimbursement allowance for boots, uniforms, and tools to eligible employees.

Police Bargaining Unit:

The current agreement expires on June 30, 2017. The negotiated agreement becomes effective July 1, 2017, and expires on June 30, 2018. The agreement's salient economic terms include:

  • General Wage Adjustment. A 2 percent GWA will be paid the first full pay period following July 1, 2017.
  • Service Increments. A service increment of 3.5 percent will be paid in FY18 up to the maximum base salary for the grade for eligible unit members.
  • Longevity step increases. A longevity step increase will be paid to eligible employees.
Volunteer Fire and Rescue Bargaining Unit:

The current agreement became effective on July 1, 2014, and expires on June 30, 2017. The negotiated agreement becomes effective July 1, 2017, and expires on June 30, 2020. The agreement's salient economic terms include:

  • Nominal fee. A nominal fee increase will be paid in FY18. The nominal fee for eligible volunteers increases in July 2017 by $10 to $435 and by $25 to $650, depending on level of service.
  • Association funding. Funding for the Association will increase by 1.75% on July 1, 2017.
  • Uniforms and equipment. Funding in the amount of $135,000 will be provided in FY18 to purchase 50 gear sets.
  • Training. An increase of $3,000 will be provided for Volunteer Basic Orientation Course training.

WORKFORCE ANALYSIS

Basis: Workforce analysis has been performed on changes to tax supported and non-tax supported full-time equivalent (FTE) positions in the Executive's Recommended FY18 Operating Budget for the County government.

Overall changes are calculated in comparison to the Approved Personnel Complement for FY17, which began on July 1, 2016. Changes shown reflect such factors as the addition of grant-funded positions; abolishments and creations to implement approved job sharing agreements; and other miscellaneous changes. Changes recommended by the Executive for FY18 are in three categories: current year position changes due to supplemental appropriations or other actions; new fiscal year position changes scheduled to take effect July 1, 2017; and technical changes.

Summary: The recommended budget includes funding for 9,448 full-time positions, a net increase of 146 from the approved FY17 Personnel Complement of 9,302 full-time positions. Funding for 974 part-time positions is also included, a net increase of 8 positions from the approved FY17 Personnel Complement of 966 positions. FTEs increased by 150.1 to 10,181.3.

Detailed below are the significant net changes in the number of positions in the FY18 Recommended Budget.

Workforce ChangesPosition Change
Police - Change is due to the addition of six new officers for Bethesda, five new officers for Gaithersburg/Montgomery Village, nine new positions for the Emergency Communications Center, eight new positions for the Cadet program, and three new positions for the school bus camera program contract. This is offset by a reduction of five Patrol Services Assistant positions.26
Health and Human Services - Change is due to the conversion of nine contractual positions to merit positions within the African American Health Program, Asian American Health Initiative, and Latino Health Initiative; four positions to support school health staffing for two schools; four positions related to a conversion of temporary positions to merit for the Neighborhood Opportunity Network; four positions to implement the Safe Space Program; two additional positions in the Adult Protective Services Investigative Unit; two positions for Mental Health Court; and a reduction due to a technical adjustment from a prior year item.24
Mass Transit - Change is due to the addition of twenty-three bus operators for the new MD 355 Extra Service.23
Housing and Community Affairs - Change is due to the addition of fourteen positions needed to implement Bill 19-15, Landlord - Tenant Relations - Licensing of Rental Housing - Landlord Tenant Obligations. These positions will enhance landlord-tenant outreach, tenant protections, and housing code enforcement through the addition of program staff, funding for information technology improvements, translation of the standard lease and other housing-related information, and greater education and outreach.14
Recreation - Change is due to the conversion of seven temporary positions to permanent positions; one position to support a new youth initiative for Food, Fun, and Fitness/TeenWorks; and one position to support the Maryland Senior Olympics.9
Libraries - Change is due to expanding library hours at three branches: Kensington Park, Little Falls, and Twinbrook.8

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