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Background and Charge

Executive Sponsors:

UMHS Leads:

The Background:

The University of Michigan has a long history of providing competitive paid time off programs for eligible staff. A competitive position has generally been described as being ±5% from the market average, constituting a range of 95-105 with market average being 100.

Medical School(UMMS) paid time off is comprised of:

This plan is offered to UMMS staff and is the same as the plan offered to University staff.

Hospital & Health Centers(UMHHC) paid time off is comprised of:

This plan is offered to UMHHC, EVPMA (shared services), and Michigan Health Corp staff members.

*The accrual rates for vacation days for Medical School staff differs from the accrual rates of the HHC staff’s PTO plan. The HHC PTO accrual is used to cover short-term sick absences.

Currently, all staff within UMHS are provided with seven holidays and an identical Extended Sick Time benefit. The benefit provides for six months at 100% of pay and six months at 50% of pay, for a total of 12 months of paid sick time, after two years of service; renewable every five years. These benefits are equal to those offered to University staff.

UMMS paid time off benefit is above market with a Market Index of 108. This places UMMS between the 4th and 5th highest position when compared to 23 Academic Peer Institutions. Additionally, this benefit comprises 39% of the overall value of All UMMS benefits.

The UMHHC paid time off benefit is also above market, with a Market Index of 118. This places UMHHC between the 1st and 2nd highest position compared to six (6) local Health System peers and above the top position compared to the 11 national/regional peers. This benefit comprises 41% of the overall value of all UMHHC benefits.

It is part of the University’s continuing effort to more effectively balance responsible financial stewardship with safeguarding our ability to attract and retain premier staff, protect the overall competitiveness and long-term viability of U-M’s benefit programs, and direct resources toward the UMHS core mission of education, research and patient care. Given the highly competitive position we enjoy with these benefits, an opportunity exists to review our paid time off benefit programs.

The Charge:

The Committee on Paid Time Off Programs is charged with reviewing and making recommendations on options to reduce the UMHS cost to provide the current paid time off programs to UMMS staff and HHC staff. The plans under review include vacation, short-term sick, season days, PTO and short term disability (extended sick plan).

A market analysis conducted by Hewitt identified a variety of benefit approaches that would ensure the Health System’s overall benefit package remains at or above market for higher education and health care. These approaches resulted in significant recurring cost savings to UMHS in both the short and long term. The Committee will consider a combination of existing staff and new hire accruals, sell back feature, maximum allowable roll-over accruals, and extended sick time eligibility and percentage of replacement pay provided to achieve a plan that results in a position at or above market (.95 to 1.05) and recurring savings to UMHS in the range of:

Principles and considerations that guide the Committee’s recommendations include the following:

The Committee may decide to take into consideration differences in their recommendations for current staff compared to “New” hires.

The Objective:

The Committee on Paid Time Off Programs is asked to provide advice, guidance and recommendations that will better align UMHS Paid Time Off benefits with the market concerning:

1. Accrual Rates and Eligibility for existing and “New” hires
2. Eligibility and Income replacement benefit for our Extended Sick Benefit plan

The Committee is also asked to identify and propose:

Approach and timeline for the implementation of the recommendations.

The Scope:

The scope covers current and future staff within UMHS. The Committee may form and charge subcommittees to work on specific tasks, as appropriate.

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