Board Members present: Dorothy Anderson, Peter Bartel, Patrick Lanning, and Sandra Bishop. Commissioner Susie Smith was excused.

Others present: Randy Berggren, JoAnn Andersen, Deborrah Brewer, Tom Buckhouse, Terry Bequette, Jay Bozievich, Marty Douglass, Dick Helgeson, Mark McGuire, Roseanna McArthur, Tom Martin, Laurie Muggy, Jim Origliosso, Dick Varner, Jim Wiley, Debra Wright, and Krista Hince of the EWEB staff; Joe Sams, City of Eugene Minutes Recorder, and members of the public.

President Anderson called the EWEB Work Session to order at 5:30.

EMPLOYEE BENEFITS PROJECT PHASE II

To put the project in context Jean Meyers, Human Resources Manager, noted that the "Employee Benefits Phase I" project had been completed in the summer of 2000. She said that project resulted in two major pieces of work.

1. An internal employee survey that helped identify employee opinions around benefits priorities and benefits plan design options.
2. An external survey that was a market comparison done to help EWEB assess its market competitiveness in relationship to other organizations.
   
   Ms. Meyers noted that the results of the surveys had been shared with the Board in September and received Board direction to step back and reconsider a new phase that:
   
   • Involved employees in helping assess and evaluate potential benefit changes and improvements in vacation, medical insurance, and disability insurance.
   
   
3. Do a financial analysis
4. Ask employees about the effects of proposed changes on them and their families.
5. Come up with a series of short and long term recommendations around plan design changes and benefits options.
6. Come up with an implementation strategy and timeline.

Ms. Meyers said that Phase II had been started in December. She said that the project group had learned that benefits costs were increasing sharply across the country. She noted that, if EWEB made no benefits changes, the cost of benefits would still go up 17 percent.

Ms. Meyers introduced Laurie Muggy, a new senior generalist in the Human Resources Department.

Ms. Muggy presented a power point presentation entitled: "Employee Benefits Project Phase II".

The presentation included;

1. The project team's final recommendations for changes to opportunity areas such as medical, dental, disability, and vacation benefits.
2. A review of the Pro's and Con's of each option.
3. Employee feedback on the various components of the recommendation.
4. The preliminary financial impact to EWEB and the preliminary bi-weekly impact to employees.
5. A demonstration of the market competitiveness of each option.
6. A review of the Request for Proposal process and timeline.
7. A clarification of questions regarding the proposed changes.
8. A review of the recommendation to be presented May 1.

In response to a question from Vice President Bartel regarding one of the vacation policy options, Ms. Muggy said that employees had requested that they be allowed take a week's vacation and to "cash out" an additional week's paid vacation to give them money to spend. The project team was not recommending this as a part of their final proposal but wanted to share the employee's request.

In response to a question from Vice President Bartel regarding the cost to the utility of granting employees 25 days of vacation after 20 years of service, Ms. Muggy said that was not something that the project group had planned for.

Vice President Bartel commented that people work better if they have adequate vacation time.

In response to a question from Commissioner Lanning regarding how the costs were figured, Ms. Muggy said they plugged in the current employee population with the proposed vacation schedule.

In response to a comment from Commissioner Bishop that the vacation time "cash out" idea should be an internal policy decision, Ms. Meyers noted that the decision had not yet been made and added that staff was not recommending it.

Ms. Muggy moved the presentation on to medical benefits. She said that staff's recommendation was to move EWEB into a medical plan that was a single option for all active employees and retirees. She said that plan would be very similar to the current Option 1 medical plan.

In response to a question from Vice President Bartel regarding the preferred provider panel, Ms. Muggy said that the Preferred Provider Panel list included all of the State of Oregon and southwest Washington state. She noted that there were over 600 physicians in the Eugene/Springfield area alone.

Moving on to the prescription drug plan, Ms. Muggy stressed that prescription drugs were a major cost driver for EWEB's premium increases. She said that the project group was recommending a three tiered drug plan. She said the tiers divided generic, preferred, and non-preferred prescription drugs into three categories. She stressed that the plan was intended to provide an incentive to choose less expensive medications.

In response to a comment from Commissioner Bishop regarding a $25 increase in the co-pay price for mail order non-preferred medications, Ms. Muggy said that the increase was a trade off from eliminating the current $100 deductible for retail prescription.

Commissioner Bishop stressed the importance of including independent pharmacies in the proposed plan.

Moving on to vision coverage, Ms. Muggy said that staff's recommendation was to continue on with the current 24-month policy with an option for employees to "buy up" to a better coverage at an additional cost of approximately nine dollars a month.

Regarding dental coverage, Ms. Muggy said the goal was to get back to 100 percent coverage for checkups and move to an 80/20 coverage for other dental services.

Regarding disability coverage, Ms. Muggy noted that EWEB did not have disability coverage until 120 days had passed. She said that the utility had ranked low in a market study survey because most employers offered some sort of disability coverage to their employees.

Ms. Muggy said that in the initial hiring period EWEB employees had an opportunity to "buy down" the waiting period to 60 days. She said the price was $1.70 per thousand dollars of wages to purchase that option. She acknowledged that the first 60 days were still not covered by a disability plan.

Ms. Muggy said staff was proposing a short-term disability plan that provided 60 percent income replacement for the first 60 days that an employee was injured or became ill off the job. She noted that the 60 percent disability coverage would begin after an employee had used up all of his/her accrued sick leave and vacation time in which they received 100 percent income replacement.

Ms. Muggy said there was a lot of employee support for allowing employees to donate some of their sick leave or vacation time to others who were in need of the time.

In response to a question from Vice President Bartel regarding how much personal information a person had to divulge to be eligible for this donated time, Ms. Meyers said the employee did not need to reveal any personal information.

Vice President Bartel raised concern over some people being favored for donated time over others. He suggested a pool of donated time that people could draw from.

Ms. Muggy ended the presentation by saying that if the proposed changes were accepted by the Board then EWEB's ranking in the market study would move from 8th to 6th out of 16 employers in the market survey.

Vice President Bartel complimented staff for their work on the plan.

In response to a question from President Anderson regarding the cost for the proposed changes and how it was figured, Ms. Meyers said that the costs were projected by the underwriters and available census data.

The work session adjourned at 7:30 p.m.

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Assistant Secretary President