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HomeMy WebLinkAbout02-21-2012 c5 repeal rmt/counci lj acEnaa aepont C I T Y O F S A N L U I S O B I S P O FROM :Monica Irons, Human Resources Directo r Shelly Stanwyck, Parks and Recreation Directo r SUBJECT :REPEAL OF A 2004 RESOLUTION AUTHORIZING CONFIDENTIAL , DEPARTMENT HEAD, AND MANAGEMENT PARTICIPATION IN THE SA N LUIS OBISPO EMPLOYEES RETIREMENT MEDICAL TRUS T RECOMMENDATIO N Adopt a resolution repealing Resolution No. 9562 (2004 Series) and terminating the confidential , department head, and managers' participation in the San Luis Obispo Employees Retiremen t Medical Trust . DISCUSSIO N What is the San Luis Obispo Retirement Medical Trust ? The San Luis Obispo Retirement Medical Trust (RMT) was established in July of 2004 by a coalition of employees, which included the San Luis Obispo City Employees Association (SLOCEA) and the San Luis Obispo Management Group (which included all Confidential , Management, and some Department Head employees). The purpose of the RMT was to create a private entity into which self-assessed mandatory contributions ($100 a month to the trust and $6 .5 0 to SLOCEA) were made by employees in the above referenced groups . How is Participation Presently Accomplished ? Participation in the RMT was initiated via a resolution by Council on May 18, 2004 (Attachment 1). Since then contributions to the RMT have been made by confidential, management, and som e department head employees (neither of the appointed officials participate nor do the Fire Chief o r Police Chief). The contributions have been through a payroll deduction, which is presently at $10 0 a month . An additional monthly payroll deduction of $6 .50 has gone to SLOCEA to reimburse i t for the costs of these employees' participation in its trust . The City's Rol e The City's role in the RMT has been extremely limited . The City was neither involved in th e establishment or administration of the trust fund . The trust fund has been and continues to b e managed by a Board of Trustees comprised of members of various groups, but predominatel y SLOCEA members . SLOCEA and the Board of Trustees are solely responsible for IRS approval s and administration of the fund . The City's sole responsibility has been to facilitate the designate d amounts to the trust on behalf of participants . Those funds arise solely from the individua l participants' payments and no financial contribution at any time has been made by the City . How Did This Recommendation Come About ? A conversation was started during the Confidential, Department Heads, and Managers groups ' respective concession discussions last fall about their continued participation in the RMT an d Meeting Date 2/21/201 2 Item NumberC5 Repeal of RMT Participation Page 2 required membership in SLOCEA . At that time, many individuals expressed a desire to learn mor e about the RMT and to have the opportunity to evaluate continued participation by the above groups . Parks and Recreation Director Shelly Stanwyck volunteered to facilitate meetings of the groups an d they met three times : on November 15, 2011 ; December 12, 2011 ; and January 10, 2012 . Two themes emerged . The first was that the Trustees were doing a terrific job and their voluntee r efforts to manage the trust were uniformly praised . The second was that it was timely, given th e global change in economic circumstances and good personal financial planning practices, fo r Confidentials, Department Heads, and Managers to evaluate their continued participation in th e RMT . Questions were identified and information shared . Notably the attendees discussed SLOCEA's rol e in the Trust . Because it is presently expected that members of SLOCEA will not be discussin g continued participation in the trust until after they have completed their ongoing contrac t negotiations, it was suggested that management wait to make a decision on participation unti l SLOCEA had taken one . Ultimately, the group determined that they wanted to continue discussion s and develop a consensus recommendation . To facilitate concensus among the group, a "poll" period was available from January 12 th through January 26`h . Participants were asked to weigh in on two options : (1) I want to stop participating i n the RMT now (defining what that entails will be a next step) and (2) I want to wait for SLOCEA t o finish its negotiations and take a position on the RMT before I decide how I want to proceed wit h the RMT . Roughly two thirds of members of the groups indicated that they want to stop participation in th e RMT immediately . Based on input from all three groups indicating a desire to stop participation i n the RMT now, it is necessary at this time to repeal the 2004 Resolution and all other references i n prior resolutions (including, but not limited to, the management compensation resolution) that migh t otherwise be in conflict . By this action these groups' participation in the RMT and the automati c payroll deductions will terminate . All such payments will cease by the employees in these groups ' paychecks of March 8, 2012 . Notification has been provided to the Trustees of the Retiree Medica l Trust and no response has been received as of the time of writing this report . FISCAL IMPAC T The cost and expense of the RMT have been funded solely by employee participants . No costs hav e incurred to the City for implementation or administration . All contributions have arisen fro m payroll deductions from participating employees . ALTERNATIVE S 1 . Do not repeal Resolution No . 9562 (2004 Series).This alternative is not recommende d because this is a decision that the Confidentials, Managers, and Department Heads have arrived a t as self-determined participants . The fiscal implications of the decision are solely borne by th e participants and there is no City interest impacted by the participation decision . Repeal of RMT Participation Page 3 2 .Continue consideration of the request .The Council could continue consideration of thi s item if more information is needed to arrive at a decision . This alternative is not recommende d because the decision has already been made by the affected employees to withdraw participation i n the RMT, and participation is funded solely by employee participants . ATTACHMENT S 1.Council Agenda Report and Resolution 9562 (2004 Series ) 2.Proposed Resolution (2012 Series) Attachment 1~ counci lj acen0a uEpoTZ t CITY OF SAN LUIS OBISP O FROM : Monica Moloney, Director of Human Resourcesll 'k Prepared by : Karen Jenny, Risk Manager 7 SUBJECT : RESOLUTION TO INCLUDE DEPARTMENT HEADS, MANAGERS AN D CONFIDENTIAL EMPLOYEES IN THE RETIREE MEDICAL TRUST FUND CAO RECOMMENDATIO N Adopt a resolution authorizing participation of department heads, managers and confidentia l employees in the Retiree Medical Trust Fund established by the San Luis Obispo Cit y Employees' Association (SLOCEA). DISCUSSION City paid health insurance benefits after retirement has long been an interest of city employees . Because of its expense to the City,we have attempted over the past several years to find creativ e ways to increase compensation for the purposes of calculating retirement . This gives retiree s more income with which they can purchase their own insurance or defray whatever othe r expenses they have after retirement. A source of funding for retirees specifically dedicated to health insurance and other medical expenses continues to be of great interest to employees . During negotiations last fall SLOCEA expressed an interest in establishing a trust fund for medica l expenses for retirees . The trust fund has two significant advantages for employees : 1 ) contributions into the trust fund are tax deferred ; 2) since benefits from the fund can only be use d for medical expenses, the benefits are also tax-exempt when received . SLOCEA approached the department head and management group and the confidential employees about participating in the trust fund . Following an informational meeting wit h representatives of SLOCEA and the trust fund consultant, department heads, managers an d confidential employees voted to participate in SLOCEA's Retiree Medical Trust Fund, when it i s established effective July 1, 2004 . Appointed Officials and Department Heads with a safet y retirement classification (i .e . Police Chief and Fire Chief) will not participate in the trust fund. Contributions to the trust fund will be from a payroll deduction of $25 per person per pay period beginning the first pay period in July,2004 from all non-safety department heads, managemen t employees and confidential employees .They will additionally pay $3 .25 per person per pay perio d to SLOCEA to reimburse SLOCEA's additional costs for expanding participation in the trust fund . The appointed officials and the Police and Fire Chiefs will not participate . Messina*-(t-c 1NC/L[ Attachment 1 Resolution to Include Department Heads, Managers and Confidential Employees in the Retire e Medical Trust Fund Paste2 The City is not involved in the establishment or administration of the trust fund . The trust fun d will be administered by a Board of Trustees composed of SLOCEA members and managemen t representatives . SLOCEA and the Board of Trustees are solely responsible for obtaining an y necessary IRS approvals, establishing and administering the trust fund . The City's sole responsibility will be to forward the designated amounts to the trust . FISCAL IMPACT The cost and expenses of the trust fund will be funded by the employees with no cost to the City fo r implementation or administration . Contributions to the trust fund will be from participatin g employees through payroll deduction . ALTERNATIVES Since the cost will be funded by the participating employees, no alternatives are presented . ATTACHMENT Resolution G :1 Agenda Reports\Retiree Medical Trust Fund For Managers And Department Heads .Doc Alla c RESOLUTION NO . (2004 Series ) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISP O .AUTHORIZING PARTICIPATION OF DEPARTMENT HEADS, MANAGEMEN T EMPLOYEES, AND CONFIDENTIAL EMPLOYEES IN THE RETIREE MEDICAL TRUST FUND ESTABLISHED BY THE SAN LUIS OBISPO CITY EMPLOYEES' ASSOCIATIO N WHEREAS,the San Luis Obispo City Employees' Association (SLOCEA) is establishing a Retiree Medical Benefit Trust (Trust) to provide for health insurance and other medical expens e reimbursement to unit employees after retirement, effective July 1, 2004 ; and WHEREAS,department heads, management employees, and confidential employees hav e expressed interest in participating in the Trust as a group, and SLOCEA is willing to include them ; and WHEREAS, the Trust will be administered separately by a Board of Trustees composed o f participants in the Trust, and the City's sole responsibility is to forward the designated amounts t o the Trust ; and, WHEREAS,the cost and expenses of the Trust will be funded by the participatin g employee groups . NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obisp o as follows: SECTION 1 .Department heads, management employees and confidential employees ar e authorized to participate in the Retiree Medical Benefit Trust . Appointed officials and department heads with a safety retirement classification (i .e., Police Chief and Fire Chief) are excluded fro m participation in the Trust . SECTION 2 . The Trust will be funded by a $25 per person per pay period payroll deductio n effective the first pay period in July, 2004 . Any future contribution increases to the Trust negotiate d by SLOCEA will be binding to all participants . SECTION 3. Department heads, management employees and confidential employees wil l also have a payroll deduction of $3 .25 per person per pay period as associate members of SLOCE A for the sole purpose of participation in the Trust . SECTION 4 . The Director of Finance and Information Technology is authorized to mak e the payroll deductions and forward same to the Trust and SLOCEA . Upon motion of , seconded by and on the following roll call vote : AYES : NOES : ABSENT: The foregoing resolution was adopted this day of , 2004 . R 3 AttaceigNe 'r Resolution No.(2004 Series ) Page 2 David F. Romero,Mayor ATTEST : Lee Price, C .M.C . City Clerk APPROVED AS TO FORM : Jozl 'P. Lowell City Attorney ATTACHMENT 2 RESOLUTION NO .(2012 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUI S OBISPO REPEALING RESOLUTION NO . 9562 (2004 Series) AN D TERMINATING THE CONFIDENTIAL, DEPARTMENT HEAD, AND MANAGEMENT EMPLOYEES PARTICIPATION IN THE SAN LUI S OBISPO EMPLOYEES RETIREMENT MEDICAL TRUS T WHEREAS the San Luis Obispo Employees' Association (SLOCEA) established a retiree medical benefit trust (RMT) to provide for health insurance and other medical expens e reimbursement to unit employees after retirement effective July 1, 2004 ; and WHEREAS a majority of confidential, department head (excluding appointed officials , police chief, and fire chief), and management employees decided and were authorized t o participate in the RMT in May 2004 as a group and SLOCEA was willing to include them ; and WHEREAS the RMT has been administered separately by a Board of Trustee s composed of participants in the Trust and the City's sole responsibility has been to forward th e designated amounts on behalf of confidential, department head, and management employees ; and WHEREAS the cost and expense of the RMT has been funded and will continue to b e funded solely by members of participating employee groups ; and WHEREAS the confidential, department head, and management employees have me t three times to discuss this matter and a majority of those employees have determined that they n o longer want to participate in the RMT ; NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Lui s Obispo as follows : SECTION 1 : Resolution No . 9562 (2004 Series) and all prior resolutions, or portion s thereof, inconsistent herewith are hereby rescinded and repealed . SECTION 2 : March 8, 2012, all contributions to the RMT via payroll deductions o f confidentials, department heads, and managers shall cease . SECTION 3 : Effective March 8, 2012 all contributions to SLOCEA via payrol l deductions of confidentials, department heads, and managers shall cease . SECTION 4 : The Director of Finance and Information Technology is authorized t o make this change in payroll deductions . Upon motion of , seconded by , and o n the following roll call vote : ATTACHMENT 2 AYES : NOES : ABSENT : The foregoing resolution was adopted this day of , 2012 . Jan Marx, Mayo r ATTEST : Elaina Can o City Clerk /s/ Christine Dietrick Christine Dietric k City Attorney Page intentionally lef t blank .