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The Governor’s NEW Offer and your shrinking salary

On Monday, January 23, 2017, the UHPA negotiating team met with the employer once again and received a NEW offer from the Governor…a 1% lump sum payment for the first year, a 1% lump sum payment  for the second year, and a flat rate  for EUTF contributions despite increasing healthcare costs.  As a result, most of you will see your paychecks shrink. Once again, the Governor’s representative was unable to answer any questions regarding the impact of the proposal on our members and the University as a whole.

The fiscal situation of the State was presented by the Budget & Finance Director, Wes Machida who shared that at the Council on Revenues January 4, 2017 meeting, it was reported that although the economy remains strong, due to lower than projected tax revenues, the projected general fund forecast decreased from 5.5% to 3.0% for fiscal year 2017.  This projection, combined with the inflated Employee Retirement System (ERS) unfunded liability, caused by a decrease in the assumed rate  of return from 7.5% to 7.0% and an increase in the life expectancy rate in Hawai‘i is forcing the State to “tighten its belt”.

The Hawaii Employer-Union Health Benefits Trust Fund (EUTF) provided the unions with the approved July 1, 2017 rates for the active plans.  As we expected, the majority of the health plans experienced rate increases, even beyond our expectation of 5%.

To illustrate the impact of the Governor’s offer, we have provided some examples below which take into account the 1% lump sum offer and the actual rate increase in EUTF health care premiums for the HMSA 80/20 and HMSA 90/10 health plans, the two plans that are selected by the majority of our members:

Example #1: over $2,000 in salary shrinkage

Chris is a rank 3 nine month faculty member at the minimum salary of $64,896, with family coverage under HMSA’s 80/20 Medical Plan, with vision, and dental coverage.

2016

  • Salary – $64,896
  • Annual Employee EUTF Premium Contribution – $7,779.12

2017

  • Salary – $64,896
  • 1% lump sum – $648.96 ($486.72)*
  • Annual Employee EUTF Premium Contribution – $10,264.80 (increase of $2,596.80)

If Chris chooses to stay with the same health plan, in one year, Chris’ salary will decrease roughly $2,110.08, even after receiving the 1% lump sum (after taxes).

 

Example #2: over $1,500 in salary shrinkage

Jamie is a rank 4 faculty member at the minimum salary, with two party coverage under HMSA’s 90/10 Medical Plan, with vision, and dental coverage.

2016

  • Salary – $75,720
  • Annual EUTF Premium Contribution – $8,903.76

2017

  • Salary – $75,720
  • 1% lump sum – $757.20 ($567.90)*
  • Annual EUTF Premium Contribution – $11,393.68 (increase of $2,489.72)

If Jamie chooses to stay with the same health plan, in one year, Jamie’s salary will decrease roughly $1,732.52, even after receiving the 1% lump sum (after taxes).

* This assumes a tax rate of 25%

Please note that these examples do not include any cost of living adjustments, which are projected at close to 3%, further shrinking your purchasing power.