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HomeMy WebLinkAboutStaff Report 408-07City of Palo Alto City Manager’s Report TO:HONORABLE CITY COL~CIL 2 FROM:CITY MANAGER DEPARTMENT: HUMAN RESOURCES DATE:NOVEMBER 13, 2007 CMR: 408:07 SUBJECT:Adoption of Four Resolutions: (1) Fixing the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act with Respect to Management and Professional Personnel and Council Appointed and Elected Officers Group and Rescinding Resolution No. 8668; (2) Fixing the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act with Respect to Members of the Palo Alto Fire Chiefs’ Association and Rescinding Resolution No. 8666; (3) Fixing the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act with Respect to Members of Local 1319, International Association of Fire Fighters and Rescinding Resolution No. 8667; and (4) Fixing the Employer’s Contribution Under the Public Employees’ Medical and Hospital Care Act with Respect to Members of Local 521, Service Employees’ International Union and Rescinding Resolution 8669 RECOMMENDATION Staff recommends Council adopt the attached resolutions fixing the City of Palo Alto’s healthcare premium costs under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Local 1319, International Association of Firefighters (IAFF); Fire Chiefs’ Association; Management and Professional personnel; and Local 521, Service Employees International Union (SEIU). BACKGROUN~ Unlike the rising healthcare premium costs the City experienced in 2003 and 2004, health insurance premiums costs have stabilized at an increase of approximately 10% each year. In 2003, in an effort to contain escalating healthcare costs, the City began negdtiation with the various employee groups to cap healthcare premiums. Since 2003, the City has had agreements to cap PEMHCA health care premiums with Local 1319, IAFF, Fire Chiefs Association; and the Management and Professional group. In 2006, during negotiations with SEIU, the City was able to reach ageement to reduce its maximum payment for medical premiums from the highest health plan (PERSCare) to the second highest plan (currently Blue Shield HMO) for all current employees as well as future retirees beginning January 2007. The City is currently in negotiations with the Palo Alto Police Association to reach a similar agreement. CMR: 408:07 Page 1 of 3 DISCUSSION In order to implement Memorandum of Agreement provisions for the aforementioned employee groups, the PERS contract amendment process requires Council to approve the attached resolutions which reflect that the health plan rates will be capped at the second highest plan rate offered by PEMHCA. This action reflects the City’s past practice to pay up to the Blue Shield premium rates on behalf of eligible active employees, up to the single party Blue Shield rate for individual retired employees and the required percentage of health care premiums for eligible dependents of retired employees (applying the Blue Shield cap). Capping at the second highest plan rate provides affected employees with a choice of quality health plans while lowering the City’s cost of providing health insurance by offering an option that is lower than the more costly PERSCare PPO health plan. Current employees still have the option of staying in the PERSCare plan and paying the difference in premium or enroll in a lower cost health plans such as PERSChoice, PORAC (if eligible), Blue Shield or Kaiser HMO for which the City pays the premium in full. Retirees who worked in these employee groups and were enrolled in PERSCare Basic prior to 1/01/07 have the difference in premium deducted from their CalPERS retirement check. The City is legally required to reimburse those retirees for the difference between the PERSCare and Blue Shield plans. Employees retiring after 1/01/07 who enroll in PERSCare will be required to pay for the difference between the PERSCare and Blue Shield plans from their CalPERS retirement check. RESOURCE IMPACT The CalPERS contract changes include a 10 percent increase in the 2008 health premium rates, which will increase the City’s healthcare cost by approximately $1.5 million for current and retired employees. The 2007-08 Adopted Budget does not require adjustment to accommodate this contract amendment. The 2008-09 Proposed Budget will include the fiscal impacts of this amendment from the last half of calendar 2008. POLICY IMPLICATIONS This change supports the Finance Committee’s recommendation for staff to bring alternatives forward on how to slow the increase of employee benefits and lessen the impact on infrastructure and other City priorities. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). CMR: 408:07 Page 2 of 3 ATTACHMENTS Attachment 1 -Resolutions fixing the City of Palo Alto contribution under the Public Employees’ Medical and Hospital Care Act at the second highest plan rates for (IAFF), Local 1319, International Association of Firefighters and Fire Chiefs Association, the Management and Professional Personnel group and Service Employees International Union, Local 521. PREPARED BY: Sandra T.R. Blanch, Risk and Benefits Manager DEPARTMENT HEAD: CITY MANAGER APPROVAL: RUSS CARLSEN Director of Human Resources EMILY HARRIS ON Assistant City Manager CMR: 408:07 Page 3 of 3 ***NOT YET APPROVED*** RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO FIXING THE EMPLOYER’S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT WITH RESPECT TO MEMBERS OF LOCAL 521, SERVICE EMPLOYEES’ INTERNATIONAL UNION AND RESCINDING RESOLUTION 8669 WHEREAS, Government Code Section 22825.6 provides that a local agency contracting under the Public Employees’ Medical and Hospital Care Act shall fix the amount of the employer’s contribution at an amount not less than the amount required under the Section 22825 of the Act; and WHEREAS, Government Code Section 22857 provides that a contracting agency may fix the amount of the employer’s contribution for employees and the employer’s contribution for annuitants at different amounts provided that the monthly contribution for annuitants shall be annually increased by an amount not less than 5 percent of the monthly contribution for employees, until such time as the amounts are equal; and WHEREAS, the City of Palo Alto is a local agency contracting under the Act for participation by members in Local 521, Service Employees’ International Union (SEIU); and WHEREAS, pursuant to Resolution No. 7539 the City Council fixed the City’s employer contribution in accordance with the Act; and WHEREAS, pursuant to discussions with the CalPERS Board and its staff, the City in June, 2001 adopted new resolutions (No. 8072) fixing the City’s employer contribution under the Act, to better reflect the intent of both the City and CatPERS under the Act; and WHEREAS, the City now desires to change its employer contributions in accordance with Government Code section 22825 and 22825.6 to cap its contribution at specified dollar amounts and desires that PERS continue to apply the same agreed upon five percent (5%) annual increase calculation for the City’s contribution to annuitant dependents (now incorporating the specified premium caps). follows: NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as SECTION 1. That as of January 1, 2008 the employer’s contribution for each employee shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of his/her family members in a health benefits plan up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area/Sacramento region, plus administrative fees and Contingency Reserve Fund Assessments. 071107 ~s 8260621 1 ***NOT YET APPROVED*** SECTION 2. The City’s employer contribution for each annuitant hired before January 1, 2005 shall be 100% of the single party premium up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area/Sacramento region. Effective January 1, 2008, the City’s contribution for one dependent of an annuitant will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable two-party premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. The City’s contribution for more than one dependent of an annuitant (in 2008) will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable family premium, up to a maximum of the monthly medical premium for the second most expensive medica! plan among the existing array of plans available. Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 80% in 2009, etc.) of the difference between the single party premium and the two-party premium or family premium, as applicable, until such time as the City contributes the same percentage of the applicable premium for annuitants and their dependents. SECTION 3. For employees hired on or after January 1, 2005 the vesting schedule set forth in Government Code section 22893 will apply to the City’s employer contribution for each annuitant. SECTION 4. Resolution No. 8669 is hereby rescinded. // 071107 ~s 8260621 2 ***NOT YET APPROVED*** SECTION 5. The Council finds that this is not a project under the California Environmental Quality Act ("CEQA"), therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Deputy City Attorney City Manager Director of Human Resources Director of Administrative Services 071107 ~s 8260621 3 *’ *NOT YET APPROVED RESOLUTION NO. RESOLUTION OF THE COL~CIL OF THE CITY OF PALO ALTO FIXING THE EMPLOYER’S CONTRIBUTION UNDERTHE PUBLIC EMPLOYEES’ MEDICAL ANDHOSPITAL CAREACT WITH RESPECT TO MEMBERS OF LOCAL 1319, INTERNATIONAL ASSOCIATION OFFIRE FIGHTERS AND RESCINDING RESOLUTION NO.8667 WHEREAS, Government Code Section 22825.6 provides that a local agency contracting under Public Employees’ Medical and Hospital Care Act (the "Act") shall fix the amount of the employer’s contribution at an amount not less than the amount required under Section 22825 of the Act; and WHEREAS, Government Code Section 22857 provides that a contracting agency may fix the amount of the employer’s contribution for employees and the employer’s contribution for annuitants at different amounts provided that the monthly contribution for annuitants shall be annually increased by an amount not less than 5 percent of the monthly contribution for employees, until such time as the amounts are equal; and WHEREAS, the City of Palo Alto is a local agency contracting under the Act for participation by members of local 1319, International Association of Fire Fighters; and WHEREAS, pursuant to Resolution No. 7536, the City Council fixed the City’s employer contribution in accordance with the Act; and WHEREAS, pursuant to discussions with the CalPERS Board and its staff, the City in June, 2001 adopted a new resolution (Resolution No. 8069) fixing the City’s employer contribution under the Act, to better reflect the intent of both the City and CalPERS under the Act; and WHEREAS, the City now desires to change its employer contributions in accordance with Government Code section 22825 and 22825.6 to cap its contribution at specified dollar amounts and desires that PERS continue to apply the same ageed upon five percent (5%) annual increase calculation for the City’s contribution to annuitant dependents (now incorporating the specified premium caps). NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. That as of January 1, 2008 the employer’s contribution for each employee shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of his/her family members in a health benefits plan up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area!Sacramento region, plus administrative fees and Contingency Reserve Fund Assessments. 071104 ~s 8260620 ] ***NOT YET APPROVED*** SECTION 2. The City’s employer contribution for each annuitant hired before January 1, 2004 shall be 100% of the single party premium up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area/Sacramento region. For employees hired on or after January 1, 2004 the vesting schedule set forth in Government Code section 22893 will apply to the City’s employer contribution for each annuitant. Effective January 1, 2008, the City’s contribution for one dependent of an annuitant will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable two-party premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. The City’s contribution for more than one dependent of an annuitant (in 2008) will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable family premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 80% in 2009, etc.) of the difference between the single party premium and the two-party premium or family premium, as applicable, until such time as the City contributes the same percentage of’the applicable premium for annuitants and their dependents. SECTION 3. For employees hired on or after January 1, 2004 the vesting schedule set forth in Government Code section 22893 will apply to the City’s employer contribution for each annuitant. SECTION 4.Resolution No. 8667 is hereby rescinded. SECTION 5.The Council finds that this is not a project under the California Environmental Quality Act ("CEQA"), therefore, no environmental impact assessment is required. INTRODUCTION AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Clerk APPROVED AS TO FORM: Deputy City Attorney Mayor City Manager Director of Human Resources Director of Administrative Services 071104 cis 8260620 2 ***NOT YET APPROVED*** RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO FIXING THE EMPLOYER’S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICALAND HOSPITAL CARE ACT WITH RESPECT TO MEMBERS OF THE PALO ALTO FIRE CHIEFS’ASSOCIATION AND RESCINDING RESOLUTION NO. 8666 WHEREAS, Government Code Section 22825.6 provides that a local agency contracting under Public Employees’ Medical and Hospital Care Act (the "Act") shall fix the amount of the employer’s contribution at an amount not less than the amount required under Section 22825 of the Act; and WHEREAS, Government Code Section 22857 provides that a contracting agency may fix the amount of the employer’s contribution for employees and the employer’s contribution for annuitants at different amounts provided that the monthly contribution for annuitants shall be annually increased by an amount not less than 5 percent of the monthly contribution for employees, until such time as the amounts are equal; and WHEREAS, the City of Palo .Alto is a local agency contracting under the Act for participation by members of the Palo Alto Fire Chiefs’ Association; and WHEREAS, pursuant to Resolution No. 8068 the City Council fixed the City’s employer contribution in accordance with the Act; and WHEREAS, pursuant to discussions with the CalPERS Board and its staff, the City in June, 2001 adopted new resolutions fixing the City’s employer contribution under the Act, to better reflect the intent of both the City and CalPERS under the Act; and WHEREAS, the City now desires to change its employer contributions in accordance with Government Code section 22825 and 22825.6 to cap its contribution at specified dollar amounts and desires that PERS continue to apply the same agreed upon five percent (5%) annual increase calculation for the City’s contribution to annuitant dependents (now incorporating the specified premium caps). NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. That as of January 1, 2008 the employer’s contribution for each employee shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of his/her family members in a health benefits plan up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area/Sacramento region, plus administrative fees and Contingency Reserve Fund Assessments. 071107 cjs 8260619 1 ***NOT YET APPROVED*** SECTION 2. The City’s employer contribution for each annuitant hired before January 1, 2004 shall be 100% of the single party premium up to a maximum of the monthly medical premium for the second most expensive medica! plan among the existing array of plans available within the Bay Area!Sacramento region. Effective January 1, 2008, the City’s contribution for one dependent of an annuitant will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable two-party premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. The City’s contribution for more than one dependent of an annuitant (in 2008) will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable family premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 80% in 2009, etc.) of the difference between the single party premium and the two-pai’ty premium or family premium, as applicable, until such time as the City contributes the same percentage of the applicable premium for annuitants and their dependents. SECTION 3. For employees hired on or after January 1, 2004 the vesting schedule set forth in Government Code section 22893 will apply to the City’s employer contribution for each annuitant. SECTION 4. Resolution No. 8666 is hereby rescinded. // // 071107~s 8260619 2 ***NOT YET APPROVED*** SECTION 5. Environmental Quality Act required. INTRODUCTION AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: The Council ("CEQA"), Deputy City Attorney finds that this is not a project under the California therefore, no environmental impact assessment is APPROVED: Mayor City Manager Director of Human Resources Director of Administrative Services 071107 ~s 8260619 3 ***NOT YET APPROVED*** RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO FIXING THE EMPLOYER’S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT WITH RESPECT TO MANAGEMENT ANDPROFESSIONAL PERSONNEL AND COUNCIL APPOINTEDAND ELECTED OFFICERS GROUP AND RESCINDING RESOLUTION NO. 8668 WHEREAS, Government Code Section 22825.6 provides that a local agency contracting under the Public Employees’ Medical and Hospital Care Act shall fix the amount of the employer’s contribution at an amount not less than the amount required under the Section 22825 of the Act; and WHEREAS, Government Code Section 22857 provides that a contracting agency may fix the amount of the employer’s contribution for employees and the employer’s contribution for annuitants at different amounts provided that the monthly contribution for annuitants shall be annually increased by an amount not less than 5 percent of the monthly contribution for employees, until such time as the amounts are equal; and WHEREAS, the City of Palo Alto is a local agency contracting under the Act for participation by members of the Management and Professional Personnel and Council Appointed and Elected Officers Employee Group (formerly known as "Management, Confidential and Council Appointed and Elected Officers Group"); and WHEREAS, pursuant to Resolution No. 7538 the City Council fixed the City’s employer contribution in accordance with the Act; and WHEREAS, pursuant to discussions with the CalPERS Board and its staff, the City in June 2001 adopted new resolutions fixing the City’s employer contribution under the Act, to better reflect the intent of both the City and CalPERS under the Act; and WHEREAS, the City now desires to change its employer contributions in accordance with Government Code section 22825 and 22825.6 to cap its contribution at specified dollar amounts and desires that PERS continue to apply the same ageed upon five percent (5%) annual increase calculation for the City’s contribution to annuitant dependents (now incorporating the specified premium caps). follows: NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as SECTION 1. That as of January 1, 2008 the employer’s contribution for each employee shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of his/her family members in a health benefits plan up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area/Sacramento region, plus administrative fees and Contingency Reserve Fund Assessments. 071107 ~s 8260618 I ***NOT YET APPROVED*** SECTION 2. The City’s employer contribution for each annuitant hired before January 1, 2004 shall be 100% of the single party premium up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available within the Bay Area/Sacramento region. Effective January 1, 2008, the City’s contribution for one dependent of an annuitant will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable two-party premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. The City’s contribution for more than one dependent of an annuitant (in 2008) will be seventy-five percent (75%) of the difference between the applicable single party premium and the applicable family premium, up to a maximum of the monthly medical premium for the second most expensive medical plan among the existing array of plans available. Each subsequent year, the percentage of the City’s contributions for dependents wil! increase by five percent (5%) (e.g., 80% in 2009, etc.) of the difference between the single party premium and the two-party premium or family premium, as applicable, until such time as the City contributes the same percentage of the applicable premium for annuitants and their dependents. SECTION 3. For employees hired on or after January 1, 2004 the vesting schedule set forth in Government Code section 22893. will apply to the City’s employer contribution for each annuitant. SECTION 4. Resolution No. 8668 is hereby rescinded. /// /// /// /// /// /// 071~07 ~s8260618 2 ***NOT YET APPROVED*** SECTION 5. The Council finds that this is not a project under the California Environmental Quality Act ("CEQA") and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Deputy City Attorney City Manager Director of Human Resources Director of Administrative Services 071107 ~s8260618 3