The cost of benefits for Hawaii state employees is 60 percent of their salaries, double the national average for the private sector.

Trimming those state employee benefits to help rein in the deficit has been a touchy topic as Gov. Neil Abercrombie and the Legislature hash out ways to close an $800 million budget gap and deal with billions in unfunded retirement and health-care costs.

More than a dozen proposals before the Legislature would limit retirement benefits and health coverage in some way — for both existing and future state government employees. The proposals cover everything from increasing how much employees chip in toward their pensions and health premiums to increasing the eligible retirement age. But most proposals have been changed to apply only to future hires, meaning any projected savings wouldn’t be realized immediately.

Abercrombie has warned that “the very stability of the state, our capacity to pay pensions at all, to pay medical premiums at all, is threatened.”

To help put into perspective the $1.1 billion the state spends on fringe benefits, Civil Beat decided to look at how much typical state employees earn in total compensation compared with their private-sector counterparts. We’ve previously published the names and salaries of state workers. This time, we’re looking at their total benefits package.

Hawaii Public Compensation: $40,000 = $64,000

Hawaii public employees on average get fringe benefits that amount to an additional 60 percent of an employee’s salary, according to the state Department of Human Resources Development. That means an employee who earns $40,000 in base pay actually gets $64,000 in total compensation if you add in their benefits from the state.

That ratio is higher than the national average. On average, benefits cost state and local governments an additional 34.5 percent of an employee’s base pay. By comparison, the average private-sector employer pays out an additional 29 percent of an employee’s base pay in benefits, according to the U.S. Bureau of Labor Statistics.

In Hawaii, benefit costs for public workers are expected to increase significantly this year. Lawmakers are expected to pass a bill authorizing the $18 million needed to increase the state’s share of employees’ health premiums from a 50-50 split to 60-40 from March 1 to June 30 — an agreement Abercrombie signed off on with labor unions shortly after taking office. The governor has said he intends to maintain the split, which would cost the state $108 million over the next two budget years.

Lawmakers are also expected to pass another measure that would increase how much the state contributes toward retirement benefit plans over the next four years. The state’s contributions, which are a percentage of payroll, are currently 19.7 percent for police officers, firefighters and corrections officers, and 15 percent for all other employees. The rates are expected to increase to 25 percent for police and fire employees, and 17 percent for all other employees by fiscal 2015. Each percentage point increase represents about $40 million annually.

Colbert Matsumoto, chairman of the Employees’ Retirement System board of trustees, called for even higher contribution rates in an opinion piece published by the Honolulu Star-Advertiser. Matsumoto said the retirement fund needs increases in fiscal 2012 to 19.5 percent for general employees and 28.5 percent for police and fire employees.

By contrast, state and city governments on the mainland are slashing retirement and health benefits for government workers to address budget gaps. In California, lawmakers want to eliminate collective bargaining of pension benefits for public employees. In Wisconsin, the Assembly advanced a measure that would require public workers to cover more of their pensions and health plans and eliminate their right to collectively bargain benefits. And in New Jersey, state workers are being asked to pay higher co-payments for their medical benefits.

More Than Just a Paycheck

New hires to Hawaii state government are introduced to their benefits program with this line: “More than just a paycheck.”

The state’s summary of employee benefits continues: “As an employee of the state of Hawaii, you are part of our ohana — our family. And families care about each other, which is why we offer you a compensation package designed to meet your needs now and throughout your career with the state. The salary you receive from the state is only a part of your total compensation.”

Employee salaries make up 60 percent of Hawaii’s general fund — or about $3 billion — with the average state employee earning between $44,375 and $65,0921. (By comparison, the average private-sector worker in Hawaii earns $42,760 a year, according to the Bureau of Labor Statistics.)

The state spends another $1.1 billion on employee “fringe benefits” — extra benefits supplementing an employee’s salary, including health insurance, retirement benefits, vacation and sick leave, and workers’ compensation and unemployment benefits. (The 60 percent cost does not cover the unfunded retirement and health-care liabilities.)

Here’s a comparison of compensation packages for a sampling of state and private-sector jobs. The analysis is by no means comprehensive, but shows that in two cases where we could find private-sector jobs in Hawaii with benefit packages similar to those offered by the state, the state pays higher wages and more in non-wage benefits.

That seems consistent with an analysis by The New York Times, which found public sector employees work fewer hours than their private sector counterparts and earn higher pay per hour, as well as better benefits.

However the paper found a variation from occupation to occupation, with workers without a college degree benefiting more from public employment than workers with a college degree.

Neither job examined by Civil Beat required a college degree.

Receptionist, Account Collector in Private Sector

Salary: $29,900 for receptionists and information clerks; $36,020 for bill and account collectors in office and administrative support occupations2.

The following are based on benefits offered by Honolulu-based Hawaii Medical Service Association, one of the state’s largest health insurance providers with 700,000 members and about 1,500 employees.

Health Insurance: Plans offered cover between 80 percent and 90 percent of eligible charges for most services. After three months of employment, HMSA pays full premium for group life insurance coverage of 2.5 times employee’s annual salary, plus $10,000 coverage for their spouse and $2,000 for each child. Plan includes accidental death and dismemberment coverage equal to 2.5 times the annual salary.

Retirement, 401(k): After six months of employment, employees eligible to participate in 401(k) plan that includes company matches. Employees also eligible for a company-paid pension plan after one year of service.

Vacation: Defined as personal days, employees earn five paid personal days in their first year, increasing to 28 personal days after nine years of employment.

Sick Leave: Counted as personal days above.

Paid Holidays: Up to nine days a year.

State of Hawaii Receptionist, Office Assistant

Salary: $33,600 for receptionist/clerk; $25,668 for office assistant. These are the bottom salaries for these positions.

Health Insurance: State covers about 60 percent of health premium costs effective March 1. The state offers coverage through Hawaii Medical Associates, Hawaii Medical Services Association, Kaiser and Hawaii Dental Service.

The monthly employee cost for single medical coverage under a basic HMO plan with HMSA is $194 with the state covering $232, according to the Hawaii Employer-Union Health Benefits Trust Fund. For two-person coverage, the employee cost increases to $471.50.

State pays full premium for life insurance coverage, which comes out to about $50 a year. At the University of Hawaii, this would be twice an annual salary, up to a maximum of $250,000.

Retirement: Pension contributions are calculated as a percentage of payroll. The employer contribution rates (from the state and counties) are currently 19.7 percent for police officers, firefighters and corrections officers, and 15 percent for all other employees. The employee contribution rates are currently 12.2 percent for police officers, firefighters and corrections officers, and 7.8 percent for all other employees.

Employees hired after June 30, 2006 are enrolled in what’s called the Hybrid Plan. After five years of service, employees under this plan can retire at age 62. They can retire earlier, at age 55, after working 30 years. Benefits are calculated by multiplying an employee’s years of service by 2 percent and multiplying that by what’s known as their “average final compensation,” defined as the average monthly earnings for their three highest paid years. That means an employee who retired after working 25 years would receive a pension of 50 percent of their “high three” earnings.

Because retirement benefits are based on total compensation, employees can boost their pensions with overtime pay, bonuses and lump sum payouts for vacation and sick leave. To save money, Abercrombie had proposed legislation to stop overtime pay and bonuses from being counted. But lawmakers are instead considering a revised bill that would allow current and future workers to gain higher pensions from at least 50 percent of their overtime. But it would take six years to get to that level because the percentage would first drop to 75 percent, and then by 5 percentage-point increments per year down to 50 percent.

Vacation: 21 days a year from the first year of employment. Employees can accumulate and carry over up to a total of 90 days (720 hours) of vacation a year. Any excess is forfeited.

Sick Leave: 21 days a year from the first year of employment. There is no limit on the amount employees can accumulate. The state’s benefits brochure adds: “Plus, unused accumulated sick leave may eventually be used to increase your retirement benefits.”

Paid Holidays: 13 a year and 14 during election years.

Cashier, Retail Salesperson in Private Sector

Salary: $21,570 for cashiers in sales occupations; $25,930 for retail salespersons2.

The following are based on benefits offered by Honolulu-based ABC Stores, a chain of about 80 convenience stores with more than 900 employees.

Health Insurance: Fully paid single coverage for full-time employees following an unspecified “introductory period.” Medical plans offered include Kaiser, Hawaii Medical Service Association and Hawaii Dental Service. (It cost the average private-sector employer in Hawaii $3,655 annually for single coverage premiums last year, according to the National Conference of State Legislatures.)

ABC Stores pays for 50 percent of the premiums for life insurance and accidental death and dismemberment insurance.

Retirement, 401(k): Employees can participate in 401(k) plan that includes company matches. Employees also can opt to have their share of profit-sharing contributions put toward their 401(k).

Vacation: Based on years of service:

  • One week for 1 to 4 years of service
  • Two weeks for 5 to 9 years
  • Three weeks for 10 to 14 years
  • Four weeks for 15 or more years

Sick Leave: Up to seven days a year.

Paid Holidays: Up to seven days a year.

State of Hawaii Cashier Clerk at University of Hawaii Campus

Salary: $26,364

Health Insurance: Identical to state worker above.

State pays full premium for life insurance coverage. The retirement, vacation, sick leave and holidays are identical to those for the state workers in the previous comparison.

DISCUSSION: *What do you think about how the state compensates its employees versus how private employers compensate their employees in Hawaii? Join the conversation.

  1. For state employees covered by collective bargaining agreements, only salary ranges are made public under the state’s open records law. If all employees earned salaries at the lowest end of these ranges, the average salary of public employees would be $44,375. If all employees earned the highest end of the ranges, the average salary would be $65,092. The actual average is somewhere in between those two figures.

  2. Hawaii-specific averages according to the U.S. Bureau of Labor Statistics

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