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Grand Forks City Council discusses employee benefits

Among the employee benefits Grand Forks City Council members fought the most over Monday night were one big one that costs the city plenty of money and two small ones that cost a little.

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Among the employee benefits Grand Forks City Council members fought the most over Monday night were one big one that costs the city plenty of money and two small ones that cost a little.

The big one was pension plans, which represented 40.7 percent of the $9.6 million the city expects to spend on benefits for its 462 employees this year.

The small ones were the health care plan for retired employees and the buyback of unused sick leave, which represented 3.8 percent.

Council members staked out positions, but they really don't know what can be done until the Human Resources Department completes its research.

Council Vice President Eliot Glassheim said the city ought to continue offering pensions because it ensures some stability for retired city employees. The city could make employees bear all the risks, he said, but that would result in a lot of old people who are poor.


Council member Terry Bjerke, who initiated this discussion, said the city shouldn't treat unused sick leave as a kind of bonus plan. It just doesn't seem right to him, he said.

What hasn't been discussed much is the list of employers the Human Resources Department already compares city benefits against. It was updated only last month, and it shows that the city's benefits are actually less generous in most cases.

Council members have said the list ought to include more private employers, though some members cautioned against comparing the city with employers who don't compete with the city for employees.


The list of employers now includes the county; the park district; the cities of Fargo, Bismarck and Minot; UND; Altru Health System; Minnkota Power Cooperative; and Amazon.com.

Pensions are the single biggest cost for the city, but it or some other form of defined benefit is offered by nearly every employer on the list except Amazon.com. In fact, the city is in the same state-run pension plan as several employers on the list, including the city of Fargo and UND.

The city contributes 5.26 percent of an employee's wage, less than several other employers, including the county and the city of Bismarck.

Defined benefit means the employee is guaranteed a certain payment in retirement, meaning the employer is at risk if its investments go south. In contrast, defined contribution, 401(k) plans for example, the employee invests whatever amount he or she feels is reasonable, and bears all the risk.


Most private employers nationwide have moved away from defined benefits for this reason, and several council members, among them Bjerke, Dana Sande and Council President Hal Gershman, said they don't like it either.

Council member Doug Christensen, who chairs the finance committee said he'd like to find some sort of compromise.


The other big benefit is health insurance, which makes up 30.7 percent of total spending on benefits.

Christensen suggested the city investigate switching insurers the way Altru Health System did, offering that it may save money.

Compared to other employers on the list, the city's not as generous, though the list doesn't explain what kind of coverage employees receive. The city pays 75 percent of employees' premiums, meaning the employee pays $114 a month for a single plan or $276 for a family plan.

The city of Bismarck pays 100 percent, as does UND and Minnkota. An employee of Amazon.com pays $55 for a single plan and $280 for a family plan. Altru pays 65 percent to 90 percent depending on the employee's tenure.

No employer offers health care plans for retirees as Grand Forks does, though the city of Minot still does it for employees hired before July 2010. Grand Forks started offering the plan in 2000 when it couldn't afford to give employees much of a raise.


Some employers offer to buy back sick leave as Grand Forks does, but at a much lower rate. Grand Forks will pay for 50 percent of unused sick leave. The city of Fargo pays 44.4 percent and the city of Bismarck pays 40 percent.

Reach Tran at (701) 780-1248; (800) 477-6572, ext. 248; or send email to ttran@gfherald.com .

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