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As Northern Arizona University enters into the current fiscal year with a nearly $30 million cut from the state, changes to employee benefits will be implemented to allow the university to meet budget constraints.
Salary and employee-related expenses account for 80 percent of the university’s state budget, and the Arizona Board of Regents recently mandated that each of the three universities make permanent cuts to state-funded employee-related expenditures.
According to a letter from Jennus Burton, vice president for Finance and Administration, a university benefits committee composed of classified and professional staff and faculty members, spent the last several months identifying ways to make up $2 million in savings through modifications to employee benefits.
The committee considered multiple savings scenarios involving the tuition reduction program and health benefits, with the overall goal to keep the university’s Blue Cross Blue Shield plan competitive with the state’s health care plan. Based on those considerations, the committee determined specific changes to health care plans that would yield the necessary savings needed for the university to meet its budget.
Based on the committee’s recommendation, the university will adopt the following changes to medical benefits beginning Jan. 1:
- Increase in monthly health care premiums for the three tiers of Blue Cross Blue Shield coverage as follows:
- Employee only from $30 to $40
- Employee Plus 1 from $85 to $110
- Employee Family from $140 to $215
- Substitute employee-paid AVESIS vision care and remove vision exam and materials
- Assess a 10 percent premium surcharge for retirees younger than 65
- Implement a $150 inpatient hospital copay
- Increase emergency room copay from $85 to $125
- Implement a $50 outpatient surgery copay
- Increase urgent care copay from $25 to $40
To help minimize the impact of the increase, the committee also recommended that benefits deductions be spread over 26 pay periods instead of the 24 current pay periods.
The changes are estimated to save the university $1.82 million in benefits costs for the calendar year 2012.
NAU President John Haeger discussed budget strategies including evaluation of employee benefits during a campuswide forum in May.
“As we shift toward a new funding model in higher education, we must identify ways to permanently trim our existing budget,” Haeger said. “State funding is not likely to return to previous levels.”