Of Pay And Perks

March 6, 2012       Mark Hrywna      

Paul Logli might have seemed like a before repentance Grinch when he joined the United Way of Rock River Valley as president and chief executive officer in December 2008. The Rockford, Ill.-based affiliate of United Way Worldwide went through a sharp contraction not long after he arrived — a result of the downward spiraling economy. It also discontinued its tuition reimbursement and 401(k) matching contributions.

Fifteen of its 26 employees were laid off, with about half of the cuts a direct result of discontinued funding for a specific anti-truancy program. In addition to not getting pay increases, employees worked 4½-day weeks for much of 2009.

“I took over at probably the low point of the United Way here,” said Logli, a board member of the affiliate during the ’80s and ’90s who initially joined as interim CEO. “One of the major factors was the economic downturn in 2008,” he said.

Logli said they were able to maintain em­ployee contributions to health insurance at about 20 percent. “We tried to stick with it, for them and their families,” he said.

The Rock River Valley affiliate, which has an annual operating budget of about $4.5 million, is rebounding from the tough years. Employees are back to working a full five-day week, received average 3-percent pay hikes in 2011, and matching contributions to the 401(k) program have been restored. While the tuition reimbursement hasn’t yet been reinstated, Logli said they might examine some type of health club membership or discounts for employees.

“Even in the upper Midwest, ‘the Rust Belt,’ we’re seeing a recovery in the manufacturing sector; especially those that have taken advantage of global markets, are showing recovery. That’s what’s leading the recovery in our market, anyway.”

On average, nonprofits paid at least 85 percent of the cost of healthcare benefits for a single employee, according to The Non­Profit Times/Bluewater Solutions Non­Profit Organizations Salary & Benefits Report. For an employee plus one, or an em­ployee on a family plan, the overall average was between 62 and 70 percent.

Healthcare costs had become such a problem for United Way of Salt Lake (UWSL) that it made sweeping changes about five years ago. “Rather than having employees pay a lot more, we quit paying family coverage,” said Deborah Bayle, president and CEO. “Peo­ple who have family coverage have to pay for that,” she said, with United Way paying all but $25 on individual premiums and employees paying all but $65 for family coverage. Employees also pay higher de­ductibles now, about $2,000 — $5,000 on a family plan — compared to $500 under the previous plan.

“It was killing us. The cost of health insurance was taking such a big percentage of our benefits, we couldn’t afford to keep it and have our rates go up 20 percent a year. The last couple of years, we’ve been able to keep it fairly stable,” said Bayle.

UWSL Chief Financial Officer Kevin Grim­mett estimated that health insurance in­creases were running about 12 to 15 percent every year before the switch, and now are closer to 7 percent annually.

“Healthcare is a huge issue for us,” said Rich Souto, chief operating officer of Harlem RBI in New York City. The ability to continue to provide a generous healthcare package is a challenge as it continues to increase costs, especially with the organization’s growth in personnel each year. “We try to have a healthcare plan that requires employees contribute the minimum we can afford. With that, we’re often finding it’s a struggle finding plans that can provide effective care for family and affordable for organization,” he said.

The nonprofit used to pay 100 percent of health coverage for employees but two years ago enacted a modest payroll deduction, ranging from 2.5 percent to 15 percent. A decision was made that, even though the amount is nominal, em­ployees “share in the cost and be aware of that cost,” he said.

At the American Lung Association (ALA) national headquarters in New York City, it was an effort just to keep healthcare benefit costs to a 10-percent increase last year, ac­cord­ing to Adrienne Glasgow, chief financial officer. The employee share was not changed, but she said they’ve been unable to commit to that for 2012.

A single employee pays 8 percent of premium while an employee on a family plan pays about 35 percent, which might incease, according to Glasgow. “Any­thing you pay is out of pocket but we’ll probably have to look at that,” she said.

More than four of every five of the nearly 1,000 nonprofits surveyed for The NonProfit Times/Bluewater Solutions Nonprofit Or­gani­za­tions Salary & Benefits Report responded that they offer some type of medical plan. The most common offerings were:

  • Preferred Provider Organization (PPO), 54.2 percent;
  • Health Maintenance Organization (HMO), 30.7 percent;
  • Point of Service (POS), 9.3 percent;
  • Exclusive Provider Organization (EPO), 3.6 percent; and,
  • Indemnity (Traditional Fee-for-Service), 1.5 percent.

Less common among nonprofit offerings were dental insurance benefits, but still, more than 64 percent of organizations offered some type of plan to employees, with the most popular being:

  • Dental Preferred Provider Organization (DPPO), 43.4 percent;
  • Dental Point of Service (DPOS), 10.74 percent;
  • Dental Health Maintenance Organiza­tion (DHMO), 7.6 percent;
  • Indemnity (Traditional Fee-for-Service), 4.15 percent;
  • Dental Reimbursement Plan, 3.44 percent; and,
  • Dental Exclusive Provider Organization (DEPO), 1 percent.

Vision insurance was half as commonly offered as dental insurance, with almost 31 percent offering it to employees. Ap­prox­imately a quarter of nonprofits surveyed of­fered a Vision Maintenance Organization (VMO) and more than 6 percent offered Vision Preferred Provider Organization (VPO).

Almost two-thirds of organizations that participated in the annual salary and benefits survey reported offering a retirement plan. Among those organizations that did offer some type of plan, a 403(b) plan was the most common, at 20 percent, followed by a 401(k) at 14 percent. Only 6 percent of nonprofits surveyed said they offered a SEP-IRA and 3.3 percent said they had a defined benefit pension. Only 2 percent of those surveyed said they had a Section 457 plan. After layoffs at the ALA’s national headquarters in New York City, focus groups were instituted to get feedback from employees. “We’re trying to listen to employees…to hear what’s most important to them,” Glas­gow said. One of the things learned was that staff preferred keeping medical benefits and deductibles in line with existing benefits, according to Glasgow. “We’re tweaking things as best we could,” she said. ALA made changes to its defined benefit plan as a result of the feedback.

UWSL cut staff by about one-third when the economy collapsed quickly during 2008. They’ve added about three people since, and this past July, with the acquisition of a 2-1-1 program from a different nonprofit, added eight employees.At its low point in 2008, United Way of Salt Lake had about 29 employees, which today numbers about 40. All employees took unpaid furlough of one week and management took two weeks.

UWSL, which has an annual operating budget of about $11 million, terminated its defined benefit plan, Bayle said, moving to a 403(b) with a 50-percent match up to 6 percent of an employee’s salary.

Back at Harlem RBI in New York City, employees can contribute to a 403(b) but the organization hasn’t been able to supplement it. It might be a consideration in the future, Souto said. “We would like to consider a way we can at least supplement savings our employees are committed to having, for example, through a contribution to their 403(b) or a match,” he said.

Some nonprofit leaders believe that if they can’t be as competitive with salaries or pay increases, other benefits might lure potential employees, or at least sweeten the pot. For Tony Turo, executive director of Ursuline Senior Services, a flexible work environment makes a big difference.

Employees at the Pittsburgh, Pa.-based organization have several options when it comes to putting in their 40 hours a week or starting and ending their workdays. Turo said some choose to work four, 10-hour days per week while others work nine, nine-hour days to earn an additional day off each pay period. Flex-time is a nice compromise when a charity can’t provide more competitive salaries, he said.

“We’ve been able to attract and retain em­ployees, especially younger, family-oriented employees,” he said, thanks to flex-time, as well as a generous paid time off policy. “It doesn’t take long in this organization to build up to several weeks of vacation each year and a lot of flexibility in terms of how to use that,” Turo said.

It also helps that more than half of the Ursuline’s employees have the type of work, like professional care management, where they’re out of the office more than half the time. In fact, Turo last year equipped the almost three-dozen staffers with smartphones in an effort to provide more flexibility and communication when they’re not in the office. Ursuline has a staff of about 74, with an annual operating budget of just less than $5 million.

Flex-time also is very popular at the United Way of Salt Lake, particularly it’s “9-80” plan, where employees can work nine hours a day and then get every other Friday off. “They love that,” said Bayle. Employees also get off the week between Christmas and New Year’s Day. Salary increases, though, have been hard to come by, with no hikes during the worst years in 2008 and 2009, said Bayle. A 1.5-percent increase was provided last year, and a 2-percent bump is budgeted for this year.

Among the most popular benefits offered by organizations surveyed in The NonProfit Times/Bluewater Solutions Nonprofit Or­ganiza­tions Salary & Benefits Report were:

  • Paid company holidays, 85 percent;
  • Medical insurance, 82 percent;
  • Paid vacation, 70 percent;
  • Paid sick leave, 65 percent;
  • Paid bereavement time, 64 percent;
  • Dental insurance, 64 percent;
  • Retirement plan, 64 percent;
  • Basic life information for employee, 55 percent;
  • Flextime, 49 percent; and,
  • Employee travel-accident insurance, 42 percent.

More than one in five nonprofits offer “special” perks and benefits to the president, CEO or executive director. Among the most common found in the survey were:

  • Car or car allowance, 44.96 percent;
  • Additional vacation days, 37.98 percent;
  • Excess life insurance, 27.13 percent;
  • Reserved parking, 15.5 percent;
  • Supplemental executive retirement plan (SERP), 14.73 percent;
  • Supplemental disability insurance, 13.18 percent;
  • Private club membership, 10.08 percent;
  • Travel expenses for spouse, 6.98 percent;
  • Executive physical, 5.43 percent; and,
  • Financial, legal, tax or pre-retirement counseling, 2.33 percent.

One of the challenges for Turo is getting more of his 75 employees involved in the “value-added” aspects of their health plan. Things such as discounts to fitness clubs and smoking cessation treatments are offered through the plan. Turo gets frustrated when he sees the lack of use. “There’s money in the plan to be used, but I don’t see a great degree of use of them,” he said. He plans to bring in representatives of the various benefit plans for in-service programs and walk staff through the fine print of their health insurance.

“It’s not that they’re not given information, but clearly they’ve not availed themselves to it,” Turo said. “I’d like to help them understand that instead of thinking of the health plan as what you use when you go to the doctor, look at it more proactively; we’re paying for benefits that you can use even when you’re not sick.”

Kelly Gadreau sees health plans becoming more wellness focused, with incentives for employees to be more preventive with their health, instead of waiting until something is wrong.

“It’s like going to the dentist, people are just afraid. You know you probably have a cavity because your tooth hurts but if you wait too long, it’s going to be a root canal,” he said. As CEO and executive director of the YMCA of Greenville-Hunt County in Texas, Gadreau also has an incentive: his YMCA branch gets a 3-percent reimbursement on its premium when all six full-time employees participate in the wellness initiatives.

“Educating employees on benefits about early detection and hitting things before they get worse are all throughout our plans,” said Gadreau. “We have 100 percent; I really push it,” he said.

To be competitive with other area em­ployers the YMCA branch, located in Green­ville, Texas, about an hour north of Dallas, gives $400 per month to each employee to cover the cost of the health benefits. “The board, to be as competitive as we can, wanted to cover costs,” Gadreau said. Another key benefit, he said, is the retirement plan. Anyone who works 1,000 hours per year is eligible for the plan after the second year. The employee pays 5 percent toward retirement and the local Y pays 7 percent. “It’s a huge benefit for us,” Gadreau said.