Town Employee Compensation Is Out of Whack

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%.

kaiser-2915-exhibit-6-1

The 2016 Kaiser Family Employer Health Benefits Survey found that the average employee contribution for family coverage in 2016 was 30%.

Average $5,227 employee contribution represents 30% of total cost.
Average $5,227 employee contribution represents 30% of total cost.

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.

kaiser-family-2015-exhibit-6-4

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Published in Town Government
Steve Brinser

Author: Steve Brinser

Steve Brinser is an entrepreneur and businessman with over 40 years of diverse financial and executive management experience--in a variety of industries--with companies large and small. He currently serves the Town of Tuftonboro as the Vice-Chair of the budget committee.

2 thoughts on “Town Employee Compensation Is Out of Whack”

  1. Government employees have for decades been an elite class of people. Tuftonboro is just catching up to the State and Federal examples. Until the those who elect our officials are hit hard in their pocket books nothing will change.

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