$14.5 Million Benefit Savings Passed on to State Employees

On Friday Governor Sonny Perdue announced a $14.5 million benefit savings and enhancements to the State Flexible Benefits Program as one step closer to state government becoming an employer of choice and a serious competitor in the marketplace for employee talent.

“Like all Georgians, state employees deserve the best value possible for every one of their hard earned dollars,” said Governor Sonny Perdue. “These contract renegotiations will equal real savings for state employees while also providing better benefits.”

After the close of contract negotiations for Plan Year 2008, the State Personnel Administration (SPA) began benchmarking the State’s Flexible Benefits Program with comparable benefits provided by private sector companies within the state. Findings from those benchmarks show the state has diverse benefit choices, but the benefits do not effectively compete against the private sector.

Immediate steps were taken to work with current vendors to lower rates and provide better coverage. The engagement of vendors and subsequent efforts to renegotiate vendor contracts resulted in an overall savings of $14.5 million in rate reductions over the next two and a half years.

Renegotiated vendor contracts will freeze all benefit premium increases for the next two years. Participants can expect a four to ten percent rate reduction for some benefits and increased plan enhancements in 2009 and 2010 for others. The program savings for 2008 total over $3 million for dental, life, legal, and vision insurances. Rate reductions for 2009, which also includes short term disability insurance, will yield an annual savings of over $5.8 million and a savings of $5.7 million in 2010. Effective June 1, 2008, 95 percent of employees participating in the Flexible Benefits Program will see a decrease in their benefit deductions, resulting in a higher take-home paycheck.

Enhancing flexible benefit choices and rates is one of several strategic initiatives undertaken by SPA to address critical recruitment and retention challenges in state government. The state is taking the necessary steps to create a Total Rewards package that appeals to varying sets of values, attitudes and compensation expectations.

“At a time when benefit costs are rising, it is unprecedented that employees are able to realize a decrease in benefit premiums while receiving an increase in the plan design at no additional cost or premium increases to them or the state for the next two years,” said Steve Stevenson, commissioner of the State Personnel Administration.

The $14.5 million savings is part of the initial phase of benefit vendor contract negotiations. In the coming year, SPA will continue looking at other vendors and opportunities within the marketplace to reduce costs and capture cost savings.

The state of Georgia Flexible Benefits Program currently serves approximately 85,000 state employees, 26,000 county school system employees, and 1,000 county library system employees and their eligible dependents.

For more information about the Flexible Benefits Program, visit the State Personnel Administration web site at www.spa.ga.gov.
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