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BizEventz names the 40 Under Forty class of 2014
SYRACUSE, N.Y. — Bizeventz, a company in the Business Journal News Network, has announced the 40 Under Forty class of 2014. This awards program recognizes

Saab Defense is part of winning bid for radar contract Lockheed had sought
DeWITT — A newly awarded U.S. Air Force (USAF) contract should add to the workforce of one suburban Syracuse defense contractor while another plans changes to its local facilities, but says its operations won’t be affected. The sensor systems business unit of Saab Defense and Security USA, LLC of DeWitt, will serve as the main
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DeWITT — A newly awarded U.S. Air Force (USAF) contract should add to the workforce of one suburban Syracuse defense contractor while another plans changes to its local facilities, but says its operations won’t be affected.
The sensor systems business unit of Saab Defense and Security USA, LLC of DeWitt, will serve as the main sub-contractor on a radar contract the USAF has awarded to Waltham, Mass.–based Raytheon Co. (NYSE: RTN).
Saab in 2013 spun off its radar and sensor business and integrated it as a new business unit into Saab’s newly established defense company, Saab Defense and Security USA, according to an email message from John Belanger, vice president of communications for Saab North America, Inc. Saab Sensis is a wholly owned subsidiary of Saab AB, a Swedish defense and security company.
U.S. Senator Charles Schumer (D–N.Y.) announced the contract award in a news release distributed Oct. 6.
The senator expects the contract to create about 100 local jobs in Onondaga County and support the 400 workers already employed at Saab in DeWitt, which are split between the Saab Sensis air-traffic management division on Collamer Crossing Parkway and Saab Defense and Security on Enterprise Parkway.
Under the contract, Saab Defense will work with Raytheon to produce the next generation, three-dimensional [expeditionary] long-range radars (3DELRR) for U.S. troops overseas, according to Schumer’s office.
Lockheed Martin
Lockheed Martin Corp. (NYSE: LMT), which has a plant on Electronics Parkway in Salina employing 1,600 people, also bid on the radar contract but was beaten by Raytheon.
Lockheed issued a statement on Oct. 8, saying no changes are planned in its local operations because of the contract loss, but also laid out a plan to consolidate local facilities.
“There are no plans to change our operations as a result of the recent [radar] announcement. Consistent with the company’s vision, we will continue to make our space utilization here in Syracuse more efficient. We are currently making capital investments over the next year to consolidate our Court Street operations into our existing Electronics Park footprint. This current project is expected to be completed by the end of 2015,” Lockheed said in the statement.
About the radar contract
The first phase of this contract is worth more than $19.5 million. The USAF has authorized spending of up to $71.8 million over the next 4 years on this contract, Schumer’s office said.
The pact could be worth $1.3 billion over the course of 10 years.
The USAF contract calls for the firms to develop and manufacture 35 of these radar systems for deployment around the world.
As a result of this contract, Saab Defense and Raytheon’s 3DELRR system will now serve as the principal ground-based, long-range radar system of the USAF, Schumer’s office said.
“This radar will be a tremendous asset for our armed forces and will help create over 100 good-paying jobs here in Syracuse. Federal contracts like this are incredibly important to the entire Syracuse economy…” Schumer said.
The USAF will use these radar sensors for detecting, identifying, tracking, and reporting aircraft and missiles.
The system will replace the USAF’s current AN/TPS-75 air-surveillance radar system, as the 3DELRR will have the capability to extend air surveillance and better detect airborne threats.
These “major” improvements will provide early warnings for the USAF to allow it to “better prepare” for threats from other aircraft and ballistic missiles, according to Schumer’s office.
“The award of the 3DELRR program to the Raytheon Company is great news for Syracuse and for Saab Defense and Security USA LLC,” Erik Smith, general manager of sensor systems at Saab Defense and Security USA, said in a news release that the office of U.S. Representative Daniel Maffei (D–DeWitt) released on Oct. 6. “Saab is a key partner to Raytheon for this critical U.S. Air Force program,” he said.
Smith credited Maffei’s support of the firms’ pursuit of the USAF contract, according to the Maffei news release.
Contact Reinhardt at ereinhardt@cnybj.com

Binghamton University buys land for future School of Pharmacy
JOHNSON CITY — Binghamton University has plans to build a $60 million, 70,000-square-foot School of Pharmacy and Pharmaceutical Sciences on property near UHS Wilson Medical Center in Johnson City. “By far, the most important factor was its location, close to the hospital,” says Harvey Stenger, president of Binghamton University. He spoke to the Business Journal
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JOHNSON CITY — Binghamton University has plans to build a $60 million, 70,000-square-foot School of Pharmacy and Pharmaceutical Sciences on property near UHS Wilson Medical Center in Johnson City.
“By far, the most important factor was its location, close to the hospital,” says Harvey Stenger, president of Binghamton University.
He spoke to the Business Journal News Network on Oct. 7.
The university purchased a 5-acre property at 96 Corliss Ave. where Indian Valley Industries, Inc. (IVI) currently operates, says Stenger.
IVI manufactures and supplies products relating to environmental protection, erosion control, and the containment of both air and waterborne pollutants, according to its website.
The site was also once home to a manufacturing plant that the Endicott-Johnson Shoe Company operated.
Gov. Andrew Cuomo on Sept. 25 announced the property purchase during a visit to Binghamton University.
The university worked with the Town of Union, City of Johnson City, and the Broome County Industrial Development Agency and issued a request-for-proposals seeking a willing property seller.
“Looking at the different locations and the different prices, we decided 96 Corliss Ave. was the best decision for us,” Stenger says in the interview.
IVI, the firm that currently operates on the property, was the willing seller. Binghamton University bought the property for about $2 million, according to Stenger.
“The [company] felt that the price was fair and they would be able to accommodate [an eventual relocation] and continue their business,” he adds.
Cuomo allocated $10 million in capital resources to support initial planning and development costs, including the acquisition and site preparation, his office said.
The governor called the allocation “a down- payment on a brighter and more prosperous future for the region.”
Beyond the property purchase price, Stenger figures demolition costs could range from $500,000 to $1.5 million and the design cost could be as much as $5 million. Any remaining funds from the initial $10 million allocation will help pay for the start of the construction work, he adds.
“When we made the offer to the governor to do this project, we anticipated and we’re expecting that the state will pay for the entire project of $60 million,” says Stenger.
Construction on the new facility will begin next spring, with completion expected in 2018.
New York expects the construction project to support “hundreds” of construction jobs. Once it opens, the state projects the School of Pharmacy will create more than 100 new private-sector jobs annually and generate an annual regional-economic impact of about $100 million.
“This School of Pharmacy will further distinguish Binghamton as a world-class educational institution, provide research and learning opportunities to hundreds of students and add jobs to the local community, and I am very excited to see it get underway in Johnson City,” Cuomo said in the news release.
Purpose
Binghamton University has “traditional and excellent” expertise in the areas of pharmaceutical sciences in its biomedical engineering and biochemistry departments and in its psychology and chemistry departments, Stenger contends.
“The idea here would be to add that core interdisciplinary degree, the doctor of pharmacy, as well as a Ph.D. in pharmaceutical sciences to build a research program around what we already have,” he says.
Binghamton University seeks to enroll 320 students in the doctor of pharmacy program and 60 students in the Ph.D. program once the new school reaches full capacity.
The school also sees the doctor of pharmacy degree as a “very highly demanded” degree, he adds.
Stenger anticipates the school’s graduates will pursue positions at pharmaceutical companies as well as retail-pharmacy positions.
With the school’s proximity to UHS Wilson Medical Center, Binghamton students will have the opportunity to conduct clinical trials at the facility, he says.
Stenger also sees the new pharmacy school as a “strong economic driver” for the Binghamton area.
He notes that a one-mile radius around any property that the State University of New York owns is available for benefits in the START-UP NY program. The program helps an entrepreneur start, expand, or relocate qualified company in a tax-free zone.
Stenger is also hoping the facility might draw some larger pharmaceutical companies to the Binghamton area under the START-UP NY program.
“The largest pharmaceutical companies are located in New Jersey and Philadelphia, and I think START-UP NY might be able to attract some of them to cross the border into the Southern Tier,” he adds.
Contact Reinhardt at ereinhardt@cnybj.com
CNY Community Foundation awards more than $180,000 in grants
SYRACUSE — The Central New York Community Foundation announced on Oct. 6 that it has awarded more than $180,000 in grants to local organizations seeking to better measure the effectiveness of their programs. While performance management is becoming a “must-have skill” for organizations seeking funding for their programs, research from the Bridgespan Group, a nonprofit
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SYRACUSE — The Central New York Community Foundation announced on Oct. 6 that it has awarded more than $180,000 in grants to local organizations seeking to better measure the effectiveness of their programs.
While performance management is becoming a “must-have skill” for organizations seeking funding for their programs, research from the Bridgespan Group, a nonprofit advisory firm, found that social-sector leaders repeatedly identify performance measurement as one of the most challenging parts of their job, according to a Community Foundation news release. Fewer than 25 percent report that they adequately resource, staff, and prioritize this function.
To address this issue on a local level, the Community Foundation said it launched a performance-management program in 2011, and has awarded nearly $600,000 in grants to date.
Grants are awarded to nonprofit organizations in Onondaga or Madison county to cover the costs of implementing data-measurement tools, training, and software, according to the release.
The program also trains organizations on how to effectively collect and analyze data. In addition to the funding, each performance-management grant recipient can participate in a yearlong learning community to share experiences and challenges with their peers.
“The learning community structure allows us to see these projects unfold, develop and evolve as they are carried out,” Frank Ridzi, director of research and community initiatives at the Community Foundation said in the release. “This gives us the opportunity to be a part of the process and serve as a guide, resource and catalyst along the way.”
The Community Foundation announced that the following 10 organizations in Onondaga County were awarded a performance-management grant for the 2014-2015 year:
The Central New York Community Foundation says it is the largest charitable foundation in the region with more than $172 million in assets. Last year, it awarded $9.5 million in grants to nonprofit organizations. The foundation provides funding to organizations in Onondaga, Madison, Oswego, Cortland, and Cayuga counties.
Contact Collins at ncollins@cnybj.com

USGBC head: OCC didn’t take the easy path in pursuing sustainable building
ONONDAGA — Onondaga Community College (OCC) didn’t take the easy way out when building its award-winning, sustainable Academic II building that spans a gorge, says Rick Fedrizzi, the Syracuse native who co-founded the Washington, D.C.–based U.S. Green Building Council (USGBC). “Somebody here made a decision that that wasn’t good enough. That they didn’t care who
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ONONDAGA — Onondaga Community College (OCC) didn’t take the easy way out when building its award-winning, sustainable Academic II building that spans a gorge, says Rick Fedrizzi, the Syracuse native who co-founded the Washington, D.C.–based U.S. Green Building Council (USGBC).
“Somebody here made a decision that that wasn’t good enough. That they didn’t care who from the outside world saw this. This was something that was going to be meaningful for the students, for the community at large, and ultimately the faculty, to bring this all together here,” he told an audience at OCC during an appearance Oct. 7.
Fedrizzi spoke during a ceremony in which he presented the school with LEED Gold plaques for Academic II and the SRC Arena and Events Center, OCC’s two newest buildings that earned the certification.
LEED an acronym for Leadership in Energy and Environmental Design. It’s a third-party certification system that ensures buildings are designed and constructed using green, or sustainable, building principles.
In his remarks, Fedrizzi also acknowledged the effort from Grand Island, N.Y.–based CannonDesign in designing such a challenging structure.
Sustainable elements
Academic II, which opened for the fall 2013 semester, spans the nearly 60-foot high Furnace Brook gorge on the OCC campus. It’s also home to the school’s music program. The building uses 38 percent less water than a conventional building of this type due to different faucets, toilets, and urinals — saving about 50,000 gallons of water annually.
The building also consumes 25 percent less energy than a conventional building of this type because the lighting and heating, ventilation, and air conditioning (HVAC) systems use energy-efficient technologies, the school said.
In addition, 38 percent of the building materials involved contained recycled content.
The school’s news release also listed the characteristics that OCC said are the reasons the SRC Arena and Events Center earned the same certification.
The facility, which opened in December 2011, hosts sporting events, such as basketball, volleyball, and tennis, as well as trade shows.
The structure uses 39 percent less water than a conventional building due to “efficient” faucets, toilets, and urinals. The building also consumes 26 percent less energy than a traditional building of this type because the lighting and HVAC systems use “energy-efficient technologies,” according to OCC.
In addition, 33 percent of the building materials contain recycled content, and 93 percent of all waste was either reused or recycled during the construction process, the college said.
Contact Reinhardt at ereinhardt@cnybj.com
Cuomo: Funding to benefit dams in Chenango County, statewide
A dam in Chenango County is among those that will benefit from newly announced state funding for design, permitting, and construction inspection and management. The Chenango 7 Wildlife Pond Dam is one of four dams the state is targeting for the work to determine if they meet state-regulatory requirements. Gov. Andrew Cuomo announced the funding
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A dam in Chenango County is among those that will benefit from newly announced state funding for design, permitting, and construction inspection and management.
The Chenango 7 Wildlife Pond Dam is one of four dams the state is targeting for the work to determine if they meet state-regulatory requirements.
Gov. Andrew Cuomo announced the funding in a news release on Oct. 6.
Cuomo announced the state is providing a total of $2 million in NY Works funding to inspect, analyze, and design dams statewide to ensure they meet safety standards and protect residents, homes, and property from storms and floods.
The funding includes $1 million for inspections of 50 state-owned dams and $1 million for specific projects at the four dams located in Chenango, Franklin, and Essex counties.
For these communities, dams are a first line of defense against extreme weather, and we must ensure that they have the strength and resiliency to control water levels, prevent damage and protect the public from flooding,” Cuomo said in the release. “Under our NY Works program, we continue to make smart investments in our infrastructure, and these upgrades and inspections will ensure these dams meet all design and safety standards.”
The inspections of the 50 New York State Department of Environmental Conservation (NYSDEC)-owned dams include screening for potential downstream hazards and verifying dam-safety information in the state’s database.
The dams include six in Oneida County, three in St. Lawrence County, two in Oswego County, two in Madison County, one in Cayuga County, and one in Greene County, Cuomo’s office said.
The full list of 50 dams in the state that are part of the program is available at: http://www.governor.ny.gov/sites/default/files/documents/NYWorksIII-2MDams10-14.pdf
Through NY Works, Cuomo is providing “critical” funding to help “strengthen” infrastructure in the state, including dams, Joe Martens, commissioner, NYSDEC, contended in the release.
“The work being performed will ensure these dams are properly constructed and maintained, which is essential to protecting public safety,” said Martens.
Cuomo’s NY Works task force released its 10-year statewide capital plan in early June 2013, according to the governor’s office.
The task force includes representatives from the finance, labor, planning, and transportation sectors.
The plan coordinates $174 billion in existing capital-investment dollars across 47 state agencies and authorities, Cuomo’s office said in a prior news release.
Customer Lifetime Value: The Most Important ROI Calculation You Will Ever Use
Customer Lifetime Value (CLV) is one of those buzz terms that may make you say, “Huh?” But, it doesn’t have to be. Seemingly, everywhere we turn, the term ROI (return on investment) is discussed. In this digital age, these analytics and calculations are much more accessible than they have ever been. Almost everything can be
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Customer Lifetime Value (CLV) is one of those buzz terms that may make you say, “Huh?” But, it doesn’t have to be. Seemingly, everywhere we turn, the term ROI (return on investment) is discussed. In this digital age, these analytics and calculations are much more accessible than they have ever been. Almost everything can be measured.
CLV is one of the most important measurement tools you will ever use, and while it seems scary, it really is easy. In basic terms, it determines which marketing channels deliver the most valuable customers, and it takes the guesswork out of the allocation of your marketing dollars. CLV actually gives you a justification for going back to the “corporate penny pinchers” and asking for more money to do another marketing campaign.
It’s very easy for us to consider a marketing campaign an immediate success or failure. How many times have we heard (or said), “We didn’t get anything from that campaign, I have not had one customer tell me they saw it,” or “We had 25 potential customers call after we sent out that postcard, what a success.” If the latter happens, everyone claps and high fives, and it is never talked about again.
Now we can truly know the value of what did or did not result from our campaigns six months, a year, or three years after the campaign is complete.
CLV has great appeal as a marketing concept and tool, because, in theory, it represents exactly how much each customer is worth in dollars and exactly how much a company should be willing to spend to acquire each customer. This works especially well in direct-marketing efforts. It is a complement to existing marketing research and does not replace your target-marketing initiatives. It just shows you how to target that market more effectively.
It will show you the most-effective technique and how much to invest in good customers. Increasing your customer satisfaction will boost your CLV, and in the end be worth the efforts. This calculation will help you make informed prospecting decisions and make that dreaded budget conversation with your president and/or
CFO much easier when you can show them the hard numbers.
CLV acts as kind of a GPS for your marketing plan. It can tell us where not to go because it does not work, versus where to go because that has proven to work in the past.
Calculating CLV
Don’t be scared off by the math for your CLV calculation. Here is a simple formula:
– Average value of a sale (multiplied by) Number of repeat transactions (times) Average retention time in months or years for a typical customer.
A simple example would be the lifetime value of a customer who spends $200 every month for three years. The value of that customer would be:
– $200 X 12 months X 3 years = $7,200 in total revenue (or $2,400 per year)
Marketing doesn’t just have to be about branding anymore and shouldn’t be hard to measure. You can tie it naturally into sales numbers making your campaign a sales AND marketing effort— not sales OR marketing.
You will find that marching together toward the same goal is going to be a lot more effective and efficient. While this is a challenge for many companies, it should be a top priority for the leadership team. A mutual understanding between salespeople and marketing people and how they are imperative to the success of a campaign, are essential to any organization’s success. CLV is a great first step to get where you want to go.
Jenn Cline is a sales and marketing strategist at ABC Creative Group. She also consults with the Business Journal News Network. Contact her at jenn@abcideabased.com.

MedTech develops scholarship program
SYRACUSE — A new scholarship program introduced in September by MedTech will help students obtain hands-on experience with medical products as it also works to create a pipeline of talent for Central New York’s medical-device makers. The scholarship, a $3,750 matching grant, will benefit students participating in Engineering World Health’s (EWH) Summer Institute, where students
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SYRACUSE — A new scholarship program introduced in September by MedTech will help students obtain hands-on experience with medical products as it also works to create a pipeline of talent for Central New York’s medical-device makers.
The scholarship, a $3,750 matching grant, will benefit students participating in Engineering World Health’s (EWH) Summer Institute, where students travel to low-income countries to use or repair medical products in the field at a hospital or clinic. The scholarship will help cover the cost of travel and lodging.
The idea stemmed from discussions on how MedTech could celebrate its 10th anniversary, says Jessica Crawford, the organization’s president. MedTech is a Syracuse–based association of pharmaceutical, bioscience, and medical technology companies in New York state, as well as their suppliers, service providers, and research universities. Members include Welch Allyn, ConMed Corp., Rheonix, and Volpi USA.
“We wanted to find a way to help celebrate that milestone,” Crawford says of the anniversary. Along with being a great way for MedTech to give back to its member companies and the medical technology community, “it’s a nice way for our companies to feed their talent pipeline,” she notes.
Medical-device manufacturing is a big business in Central New York with medical device and equipment employment being 69 percent more concentrated in the region than the national average, according to MedTech’s recent 2014 bio/med industry report.
Students participating in the MedTech/EWH program not only gain valuable hands-on experience during the Summer Institute, but also benefit from mentorship opportunities with MedTech member companies, Crawford explains. In fact, that mentorship element is strongly encouraged and will factor into the scholarship selection.
As part of their mentorships, students could help create product-development opportunities and help medical facilities in a number of countries such as Nicaragua, Rwanda, and Tanzania.
“We hope these mentorship relationships are long-lasting,” says Crawford, who joined MedTech in the fall of 2012.
EWH works with college engineering students through university-based chapters including those at the Rochester Institute of Technology, University of Rochester, and Cornell University. Chapters are planned at the Rensselaer Polytechnic Institute and the University at Buffalo.
EWH will expand its footprint in New York through MedTech’s academic affiliates, which include Binghamton University, SUNY Oswego, and SUNY Upstate Medical University.
“We are delighted with the connection to MedTech,” EWH CEO Leslie Calman said in a news release. “This helps us expand our reach to the outstanding university program throughout New York state and many medical-device providers and engineers who can help improve the state of health-care services in countries that are in great need.”
Scholarship recipients are also expected to work on EWH’s “Projects that Matter” program with a company mentor and enter the EWH Design Competition with their chapter. The contest promotes the design of medical devices that can offer significant impact at reduced costs to serve the developing world.
Based on funding secured thus far, Crawford says she expects MedTech will be able to award one or two scholarships for the 2015 Summer Institute. Applications for the scholarship are due by Feb. 6, and Crawford hopes to announce the first winners at the organization’s annual member dinner next June.
For more information on MedTech and the scholarship program, visit www.medtech.org.
Contact the Business Journal at news@cnybj.com

Goodman Impress program aims to prepare Whitman students beyond the classroom
SYRACUSE — The Martin J. Whitman School of Management at Syracuse University is using a new program to help its students prepare for life after college, including pursuing and keeping jobs. The Goodman Impress program works to help students focus on their “soft skills,” such as exhibiting self awareness, confidence, resilience, communication and social skills,
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SYRACUSE — The Martin J. Whitman School of Management at Syracuse University is using a new program to help its students prepare for life after college, including pursuing and keeping jobs.
The Goodman Impress program works to help students focus on their “soft skills,” such as exhibiting self awareness, confidence, resilience, communication and social skills, and the ability to “synthesize classroom content into the broader global context.”
That’s according to a section on the Whitman website describing the Goodman Impress program.
The Goodman Impress program is named in honor of Kenneth Goodman, who graduated from SU in 1970, to recognize his generosity in helping the Whitman School “mold future generations of professionally prepared business leaders,” according to the website.
The 2014-15 academic year marks the first time the Whitman School is using the program. Students and faculty held a launch gathering on Sept. 11 inside the school.
“It’s a program intended to help our students develop outside the classroom,” Amanda Nicholson, associate dean for undergraduate programs, said while speaking with reporters at the event.
The program is the result of feedback from Whitman stakeholders, Joseph Personte, Impress program manager, explained to reporters at the same event.
Whitman heard “from business partners and also from recent alums who came back to us and said that they did feel ill-prepared when they went out to their first job,” Personte said.
A group of 40 Whitman stakeholders, including faculty, staff, and young alums, in October 2013 brainstormed ways to develop undergraduates into “competent, engaged, and ethical business professionals with strong leadership skills,” according to the Whitman website.
“The goal of the session was how can we improve the Whitman experience for students,” Personte said.
Focusing particularly on “soft skills” and extracurricular experiences, the goal was to develop a program that would ensure undergraduates leave Whitman with a “sustainable competitive advantage” throughout their lives and careers.
Their collaboration generated the Goodman Impress program.
How it works
Every new student admitted into the Whitman School becomes part of one of four groups or “houses.” They include Adams, Harrison, Marshall, and Waverly and are named after well-known streets on or near the SU campus.
Each of these houses will have its own insignia and the leadership of a faculty house master.
“A lot of people have heard of that and have called it the Harry Potter model,” said Personte.
Harry Potter is the main character in a series of fantasy novels that British author J.K. Rowling wrote. The series included the Hogwarts School of Witchcraft and Wizardry, which was divided into four houses.
House masters are chosen for their excellence in teaching, communication, and student engagement, the Whitman website explained.
The four house masters will guide students through their first business course at Whitman and encourage them to become involved in extracurricular activities through which they can earn points.
The activities are centered on five learning objectives, including personal and professional-leadership development; major and industry exploration; certifications; global context; and community engagement, according to Whitman.
Every student will collect points for participation in activities such as leadership workshops; roundtables with visiting speakers; bonding exercises and competitions; community engagement; and certifications, such as Excel, system applications and products (SAP), and Bloomberg.
Students are working to earn points for their personal point total and for the point total of the house to which the student belongs.
A “gamification”-technology system will count and log the students’ points. The system will capture the students’ progress on a daily basis in the competition among the students and the four houses.
“They’ve been on their phones … they play with Game Boys or Wiis all their lives … this is what they do, they understand that,” said Nicholson.
Redwood City, Calif.–based Bunchball, Inc., which describes itself as “the leader in gamification” works with the Whitman School on the Goodman Impress program.
“We’re using modern-day technology to really enhance what our business community needs and that’s looking people in the eye, that’s sticking out a firm handshake and being able to talk one on one with people with clear and concise communications skills,” he said.
Students can check into the Impress program through a mobile web application on their phone. They also have the Impress dashboard page on their iPad, laptop, or personal computer, he adds.
A student’s point total at the end of each year determines his or her Impress level.
Students must earn a minimum number of points over four years to graduate. At the same time, Whitman will award a “Goodman Cup” to the house with the most points during an annual celebration.
Contact Reinhardt at ereinhardt@cnybj.com
Survey: health-care costs to edge up nationally rise more sharply in upstate New York
Early responses from a “major” Mercer survey indicate employers are predicting that their health-benefit cost per employee will rise 3.9 percent on average in 2015. Cost growth slowed to 2.1 percent in 2013, a 15-year low, but appears to be edging back up. That’s according to a news release that Mercer, a health-care consultant, released on
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Early responses from a “major” Mercer survey indicate employers are predicting that their health-benefit cost per employee will rise 3.9 percent on average in 2015.
Cost growth slowed to 2.1 percent in 2013, a 15-year low, but appears to be edging back up.
That’s according to a news release that Mercer, a health-care consultant, released on Sept. 11. Mercer is a wholly owned subsidiary of New York City–based
Marsh & McLennan Companies (NYSE: MMC).
But those findings are “pretty different” compared to what Mercer is seeing among its upstate New York clients, says Thomas Flynn, Mercer’s health and benefits leader for Upstate.
He spoke with the Business Journal News Network on Oct. 8.
“Locally we’ve been seeing increases that have been several percentage points higher than that,” says Flynn.
He points to Excellus BlueCross BlueShield’s 12.2 percent rate increase for its book of business for employers with fewer than 100 employees.
Excellus had requested a 16.4 percent increase, but the New York State Department of Financial Services reduced it to 12.2 percent.
The department in early September also cut New York insurers’ overall, average rate-increase of nearly 14 percent for small-group plans down to 6.7 percent. That figure is higher than the finding in the Mercer national survey.
Nationally, the projected increase for 2015 reflects actions employers will take to manage costs, according to Mercer.
If they made no changes to their plans for 2015, employers’ costs would rise, on average, 5.9 percent. However, only 32 percent of respondents are simply renewing their existing plans without making changes.
Those results are based on responses from more than 1,700 employers on Mercer’s National Survey of Employer-Sponsored Health Plans collected through Sept. 1. The survey remains in the field, the company said.
“The average projected increase for 2015 may still be relatively low, but it does not come easily,” said Tracy Watts, senior partner and Mercer’s national health-reform leader. “Employers have to work hard each year to keep cost increases manageable. And health reform is certainly creating new challenges.”
Enrollment growth
Under the national health-reform law, 22 percent of employer health-plan sponsors are likely to see enrollment grow next year when they are required to open their plans to all employees working 30 or more hours per week.
Mercer called the 22 percent figure “a significant number.”
Mercer notes 63 percent were in compliance before reform was enacted, and 15 percent made the “necessary” changes last year for 2014.
Among large retail and hospitality businesses, which typically employ many part-time workers, 39 percent will need to extend coverage in 2015.
“…the first year that … they’ll be measuring toward that penalty for the employer shared-responsibility program,” says Flynn.
The Affordable Care Act has a provision for 2015 requiring firms to offer coverage to 70 percent of their full-time workforce, he adds. If not, they face a penalty of $2,000 per full-time employee.
“And that’s indexed at 4 percent, so it actually will be $2,080 per employee next year,” says Flynn.
Analysts and observers have speculated that employers would reduce staff or cut hours to limit the number of employees becoming eligible in 2015. However, the early results indicate few of the surveyed employers believe they will take either of those routes.
At the same time, many companies say they will manage schedules more carefully to avoid workers’ occasionally working 30 or more hours in a week or to make it clear to new hires that they will work fewer than 30 hours (31 percent).
The survey found 53 percent of those employers must extend coverage to more employees in 2015.
It’s “hard to predict” how many newly eligible employees will choose to enroll in health plans when given the chance, Mercer contends.
Those newly eligible are “generally lower-paid, variable-hour workers,” Mercer said.
The tax penalty for individuals who do not obtain coverage will rise in 2015, to a minimum penalty of $325 per individual.
When this penalty first went into effect in 2014, the minimum amount was only $95, and few employers dealt with “significant” growth in enrollment, according to Mercer.
CDHPs
One strategy employers are using to soften the increase in health spending in 2015 is adding a low-cost, high-deductible health plan for the newly eligible employees, or for all employees.
Consumer-directed health plans (CDHPs) that are eligible for a health-savings account cost, on average, 20 percent less than traditional health plans.
Health reform is “clearly accelerating that trend,” according to Mercer.
For the last five years, Flynn says the increase in the number of Mercer clients that have implemented, or examined implementing, CDHPs for the first time has been “dramatic.”
“I’d be counting it on one hand the number of clients that over the last year did not look at one,” he adds.
While about half of large employers offer a CDHP today, nearly three-fourths (73 percent) say they will have a CDHP in place within three years.
And 20 percent say it will be the only choice available to employees.
As of now, only 6 percent of large employers have moved to “full-replacement” CDHPs, Mercer said.
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