I am concerned that Tuftonboro’s town-employee compensation in general and benefits in particular are simply out of whack.
I am the Vice-Chair of the Budget Committee, but I am writing as a concerned citizen. The town should be run with respect for the taxpayer, balanced with a desire to fairly compensate employees. However, lately it seems taxpayers are being ignored.
The town pays an average of $25,675 in family health benefits to each full-time employee, almost equal to the current per capita income in Tuftonboro of $33,143. Something is seriously wrong.
Tuftonboro’s employee-benefit costs equal $526,675 in 2016. That represents 46.6% of total salaries. Most businesses use 30-35% of salary as a rule of thumb when providing benefits. I am not aware of a business in Caroll County with fewer than 25 employees that pays these kinds of benefits. Frankly, in my 43 years of business experience, I have not encountered any small business that paid benefits equal to 46.6% of salaries.
The Kaiser Family Foundation and Health Research & Education Trust recently found in their Employer Health Benefits Survey for 2015 that the average employee contribution for family coverage from 1999 to 2015 was 28%.
The 2016 Kaiser Family Employer Health Benefits Survey found that the average employee contribution for family coverage in 2016 was 30%.
But Tuftonboro town employees pay nothing toward their own health insurance coverage—not even their co-pays. That is just incredible!
Tuftonboro spends $302,742 on the cost of health and dental insurance for roughly 20 full-time employees. That’s 57.5% of what we spend on benefits.
Moreover, the Kaiser Family surveys found that total premiums for family coverage averaged $17,546 (Exhibit 6.4 above) in their 2015 report and $18,142 (Exhibit A above) in their 2016 report — yet Tuftonboro pays $23,291! That’s around 1/3 more. Why is that?
Here are some ways that we as a town can find cost savings:
- Establish cost sharing by employees using the Kaiser Family survey’s 1999–2015 average contribution of 28%. Such cost sharing has been commonplace in the business world for over 30 years! This would save the taxpayers $80,000 annually.
- Restructure or “shop” the town’s health plan to reduce the cost so that it equals the Kaiser Family survey’s average cost of $17,546. This would save the taxpayers roughly $6,000 per employee, or another $80,000 annually.
- Stop paying employee co-pays and deductibles (the Health Reimbursement Adjustment line item on the 2016 Tuftonboro employee compensation spreadsheet). This would save the taxpayers $9,000 annually.
- Drop the town’s fully paid dental plan. This would save the taxpayers $18,000 annually.
The annual savings that the taxpayers would receive if we adopted these four steps would be roughly $187,000.
I believe the selectmen, as the town management team, have an obligation and a fiduciary responsibility to prudently manage the town’s affairs in a cost-effective manner. As such, it is important to balance the interests of both the town’s employees and its taxpayers.