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SUMMARY OF FY21 RECOMMENDATIONS

A. SUMMARY OF AGENCY REQUESTS

Montgomery County Public Schools (MCPS): The MCPS workforce for FY21, as recommended by the Board of Education (BOE), is 23,489.840 FTEs, or 582.467 FTEs greater than the approved FY20 workforce of 22,907.373 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 the anticipated agreements. For more information on compensation and workforce changes, please see the Board of Education's FY21 requested budget document.

Montgomery College (MC): The College and its Board of Trustees has proposed a maintenance of effort budget that continues its current staff complement. The FY21 Current Fund increase in personnel costs of about $2.2 million to adjust FY21 wages to a fair, reasonable, and sustainable level. Negotiations with the bargaining units 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 FY21 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 FY21, as recommended by the Planning Board, is an increase of 26.43 FTEs. The Commission's requested budget includes an increase in personnel costs of $6.0 million. The increase 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 FY21 requested budget document.

Montgomery County Government (MCG): The net impact on the County government workforce for FY21, as recommended by the Executive, is an increase of 189 positions.

The recommended budget contains an increase in total personnel costs of $21.1 million, or 1.7 percent. The primary factors in these changes are:

FactorMillions
General Wage Adjustment$9.7
Decrease in required retirement contribution-$12.6
Decrease in group insurance
-$3.1
Service increments and longevity$8.1
Other changes in personnel costs, including annualization of positions, turnover, and lapse$18.9

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 the 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 FY21: 1.0 percent effective the first full pay period after July 1, 2020 for all employees in the Police bargaining unit; 2.25 percent effective the first full pay period after August 1, 2020 for all employees in the Fire and Rescue bargaining unit and Fire and Rescue uniformed management; 1.25 percent effective the first full pay period after October 1, 2020 for all employees in the Office, Professional, and Technical (OPT), and Service, Labor, and Trades (SLT) units, as well all employees on the Deputy Sheriffs and Correctional Officers Uniform Salary Schedules, and all non-represented employees, including Management Leadership Service (MLS) and Police Leadership Service (PLS) employees.

FY21 salary schedules can be found on the County's website at:
http://www.montgomerycountymd.gov/HR/compensation/Compensation.html.

Lump-Sum Payments: The Executive recommends a lump-sum bonus payment of $1,000 for employees in the OPT and SLT units, as well as on the Deputy Sheriffs and Correctional Officers schedules, who are not eligible for a service increment in FY21.

Service Increments: The Executive recommends service increments of 3.5 percent for all eligible employees.

Longevity Increments: The Executive recommends longevity increments in FY21 for all eligible employees.

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 and PLS employees, as well as General Salary Schedule 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 2020 and projected changes for 2021. The employer rates of 6.2 percent for social security and 1.45 percent for Medicare 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 $13,006 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 seven percent annually between FY21 and FY26. 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.

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. Due to exponential growth in expected retiree health costs, the County had determined the cost of funding these benefits, which were being paid out as the bills came due, would 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.

County agencies develop 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 $1.9 billion - approximately 29.2 percent of the total FY21 budget for all agencies.

imageThe County's approach 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 Actuarially Determined Contribution or "ADC", is estimated at $76.0 million. This amount normally 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 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's policy is to pay the full amount of ADC each year. 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 (OPEB) for employees of MCPS and MC. 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 has reduced 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 FY20, these contributions were budgeted at $34.7 million (County General Fund), $78.5 million (MCPS Consolidated Trust), and $5.4 million (MC Consolidated Trust).

A detailed breakdown of FY21 recommended contributions to the Consolidated Retiree Health Benefit Trust for County government tax supported agencies, participating agencies, MCPS, and MC is displayed in the table above. The Executive is recommending that the Retiree Health Benefits Trust provide $27.2 million to MCPS for the payment of retiree health insurance claims in FY21.

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 6,731 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.

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, 2019, there were 6,731 retirees and survivors and 6,003 active members, including 2,254 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 County Council Executive Director; 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 increased by 12 and the number of public safety employees decreased by 141, for a combined total active enrollment of 3,749 in FY20. The decrease for active public safety numbers is the result of identifying Group J participants in non-public safety as of the July 1, 2019 valuation; this group had inadvertently been listed in the public safety count . GRIP membership increased by 128 employees, to 2,254 in FY20. The RSP had 136 fewer active employees enrolled in FY20 than in FY19, for a total FY20 enrollment of 3,380.

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, 2020. The negotiated agreement becomes effective July 1, 2020, and expires on June 30, 2022. The agreement's salient economic terms include:

  • Assignment Pay Differentials. An assignment pay differential was added for two new groups within the Fire and Rescue bargaining unit.
  • Special Duty Differentials. An increase was added to special duty differentials for unit members assigned to the Emergency Communications Center.
  • General Wage Adjustment. A 2.25 percent GWA will be paid the first full pay period following August 1, 2020.
  • Service Increments. A service increment of 3.5 percent will be paid in FY21 up to the maximum base salary for the grade for eligible unit members.
  • Longevity step increases. Longevity step increases will be paid to eligible employees.
  • Tuition Assistance. A dedicated amount of funding for use by bargaining unit members was added for tuition assistance.

MCGEO Bargaining Unit: The current agreement expires on June 30, 2020. The negotiated agreement becomes effective July 1, 2020, and expires on June 30, 2023. The agreement's salient economic terms include:

  • General Wage Adjustment. A 1.25 percent GWA will be paid the first full pay period following October 1, 2020.
  • Service Increments. A service increment of 3.5 percent will be paid in FY21 up to the maximum base salary for the grade for eligible unit members.
  • Deferred Service Increment. A service increment of 3.5 percent for any eligible bargaining unit member who was scheduled to receive a service increment in FY11, but which was not funded by the County Council, was split into three phases; the second phase of 1.25 percent will be paid in FY21 to eligible unit members the first full pay period following July 1, 2020.
  • Longevity step increases. Longevity step increases will be paid to eligible employees.
  • Lump sum payment. A $1,000 lump sum payment for eligible unit members who are not eligible for a service increment in FY21 will be paid the first full pay period following July 1, 2020. Unit members eligible for less than a full 3.5 percent service increment, with a value less than $1,000, will receive a lump sum payment, the combined amount of which will be $1,000, paid the pay period following their increment date.
  • Retirement contribution ratio shift. The employer contribution rate will increase by 1 percent, and the employee contribution rate will decrease by 1 percent, for all eligible unit members the first full pay period following July 1, 2020.
  • Military Service Credit. A credit for up to two years of service for eligible unit members in Group E retirement plans for military service will be applied to eligible retirement accounts.
  • Additional Retirement Group. A new retirement group will be created in the ERS for eligible unit members in the Emergency Communications Center.
  • Sick leave payout program. A sick leave payout program will be created in FY21 for eligible unit members leaving County service with at least 10 years of service.
  • Resident Supervisors. Eligible unit members in the Resident Supervisors job classification in the Department of Correction and Rehabilitation will be moved from Group J retirement to Group E retirement.
  • Holiday Pay. An adjustment of the requirements to receive holiday pay from "normal" day to "work" day.
  • Shift Differential. An adjustment to the shift start time and amount of the shift differential from $1.40 per hour for shift starts between 2:00PM and 10:59PM, and $1.56 per hour for shift starts between 11:00PM and 5:00AM to $1.42 per hour for shift starts between 12:00PM and 7:59PM, and $1.87 per hour for shift starts between 8:00PM and 5:59AM.
  • Field Training Pay Differential. An addition in the job classifications eligible for field training pay differential.
  • Transit Subsidy. An increase in the Get-In Program transit subsidy from $75 per month to up to $265 per month.
  • Seasonal Wage Adjustment. A $0.50 an hour adjustment will be provided effective the first full pay period after July 1, 2020 for seasonal employees not affected by the County minimum wage increase.
  • Crisis Center Stipend. A stipend of $1,500 will be paid in FY21 to eligible unit members in the Health and Human Services Crisis Center.
  • Labor Management Relations Committee (LMRC) Funding. Increase in LMRC funding by $50,000 in FY21.

Police Bargaining Unit: The current agreement expires on June 30, 2020. The negotiated agreement becomes effective July 1, 2020, and expires on June 30, 2023. The agreement's salient economic terms include:

  • General Wage Adjustment. A 1 percent GWA will be paid the first full pay period following July 1, 2020.
  • Service Increments. A service increment of 3.5 percent will be paid in FY21 up to the maximum base salary for the grade for eligible unit members.
  • Salary Schedule Adjustment. A salary schedule adjustment of 3.5 percent for all eligible unit members receiving less than the maximum base salary will be paid the first full pay period following July 1, 2020
  • Longevity step increases. A longevity step increase will be paid to eligible employees.

Volunteer Fire and Rescue Bargaining Unit: The current agreement expires on June 30, 2020. The negotiated agreement becomes effective on July 1, 2020, and expires on June 30, 2023. The agreement's salient economic terms include:

  • Nominal fee. A nominal fee increase will be paid in FY21. The nominal fee for eligible volunteers increases in July 2019 by $45 to $500 and by $100 to $800, depending on level of service.
  • Association funding. Funding for the Association will increase to $312,789 on July 1, 2020. This includes funding in FY21 for the purchase of a new vehicle.
  • Uniforms and equipment. Funding in the amount of $135,000 will be provided in FY20 to purchase 50 gear sets.
  • Training. Funding in the amount of $21,000 will be provided for Volunteer Basic Orientation Course training, and $15,000 will be provided for training and Pro-Board certification.
  • Length of Service Award Program (LOSAP). An increase in LOSAP of 3 percent will be provided to all members, and an additional 2.5 percent increase will be made for certain active members, on July 1, 2020.

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 FY21 Operating Budget for the County government.

Overall changes are calculated in comparison to the Approved Personnel Complement for FY20, which began on July 1, 2019. 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 FY21 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, 2020; and technical changes.

Summary: The recommended budget includes funding for 9,829 full-time positions, a net increase of 162 from the approved FY20 Personnel Complement of 9,667 full-time positions. Funding for 1,002 part-time positions is also included, a net increase of 27 positions from the approved FY20 Personnel Complement of 975 positions. FTEs increased by 184.0 to 10,617.2.

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Detailed below are the significant net changes in the number of positions in the FY21 Recommended Budget.

Workforce ChangesPosition Change

Health and Human Services - Change is related to school health room staffing for County schools, the conversion of contractual brokers to merit staff, staff to support both Adult and Early Childhood care programs, and staff to open a new Wellness Center at Seneca Valley High School.

67
Fire and Rescue Service - Change is due to positions added to eliminate the need for overtime while firefighter/rescuers are engaged in full-time paramedic training, and other operational improvements.24

Alcohol Beverage Services - Change is due to the opening of two retail stores in FY21 and recommended changes to the personnel complement to achieve operational improvements.

16

Police - Change is due to the implementation of Police Activities League and crossing guards for new schools.

12

Public Libraries - Change is due to the addition of public service hours to Long Branch, White Oak, and Twinbrook libraries, as well as additions for early literacy outreach.

10


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