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HomeMy WebLinkAboutStaff Report 420-06City City of Palo Alto Manager’s Report 2 TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT: HUMAN RESOURCES NOVEMBER 20, 2006 CMR: 420:06 APPROVAL OF FOUR RESOLUTIONS FIXING THE AMOUNT OF THE CITY’S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES MEDICAL AND HOSPITAL CARE ACT (PEMHCA) FOR LOCAL 1319, INTERNATIONAL ASSOCIATION OF FIREFIGHTERS (IAFF); FIRE CHIEF’S ASSOCIATION, MANAGEMENT AND PROFESSIONAL PERSONNEL AND LOCAL 715, SERVICE EMPLOYEES INTERNATIONAL UNION RECOMMENDATION Staff recommends Council approve 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 for Local 715, Service Employees International Union (SEIU). The purpose of this recommendation is to complete the PERS contract amendment process required to implement the Memorandum of Agreement provisions for these bargaining groups. BACKGROUND Rising healthcare premium costs continue to be a major issue for the City over the last several years. In 2003, the average health premium costs paid by the City increased by 22%. In 2004, the health insurance premiums costs increased by another 18% and by 10% yet again in 2005. In 2006 the cost increased by 9% and in 2007 the rates will go up approximately 12%. In 2003, in an effort to contain escalating healthcare costs, the City began negotiation 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. This year during negotiations with SEIU, the City was able to reach agreement to reduce its maximum payment for medical premiums from the highest health plan (PERSCare) to the second highest (currently Blue Shield HMO) for all current employees as well as future retirees cap beginning January 2007. CMR: 420:06 Page 1 of 3 DISCUSSION In order to implement Memorandum of Agreement provisions for the aforementioned bargaining groups, the PERS contract amendment process requires Council to approve the attached resolutions which reflect the 2007 Blue Shield premium rates. This action reflect 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 Blue Shield plan rate will provide affected employees with a quality HMO plan 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 bargaining groups and who are enrolled in PERSCare Basic prior to 1/01/07 will 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 12 percent increase in the 2007 health premium rates, which will increase the City’s healthcare cost by approximately $1.6 million for current and retired employees. However, the cap in health benefits negotiated with SEIU represents $450,000 annual net savings in medical premium payments made by the City for Current employees. Additional cost avoidance after January 2007 will result from capping future retiree medical benefits. The 2006-07 Adopted Budget does not require adjustment to accommodate this contract amendment. The 2007-09 Proposed Budget will include the fiscal impacts of this amendment from the last half of calendar 2007. 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: 420:06 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 Blue Shield 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 715. PREPARED BY: DEPARTMENT HEAD: Sandra T.R. Blanch, Risk and Benefits Manager RUSS CARLSON Director of Human Resources CITY MANAGER APPROVAL: HARRISON Assistant City Manager CMR: 420:06 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 TOMEMBERS OF LOCAL 715, SERVICE EMPLOYEES’ INTERNATIONAL UNION AND RESCINDING RESOLUTION 8072 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 715, 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 CalPERS under the Act with regard to the City’s contributions for retiree dependents; 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). 061115 syn 0130029 1 NOT YET APPROVED NOW, THEREFORE, the <Council of the City of Palo Alto does RESOLVE as follows: SECTION i. That the employer’s contribution for each employee or annuitant shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan or plans up to a maximum of $484.21 with respect to~ employees or annuitants enrolled for self alone, $968.42 for an employee or annuitant enrolled for self and one family member, and $1,258.95 for an employee or annuitant enrolled for self and two or more family members plus administrative fees and Contingency Reserve Fund assessments. SECTION 2. The City’s employer contribution for each annuitant shall be 100% of the single party premium up to $484.21. Effective January i, 2007, the City’s contribution for one dependent of an annuitant will be seventy percent (70%) of the difference between the applicable single party premium (up to $484.21) and the applicable two-party premium (up to $968.42). The City’s contribution for more than one dependent of an annuitant (in 2007) will be seventy percent (70%) of the difference between the. applicable single party premium and the applicable family premium (up to $1,258.95). Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 75% in 2008, 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. Resolution No. 8072 is hereby rescinded. III III III III III 061115 sin 0130029 NOT YET APPROVED SECTION 4. under the California Environmental Quality Act and, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: The Council finds that this is not a project therefore, City Clerk APPROVED AS TO FORM: Mayor APPROVED: Senior Assistant City Attorney City Manager Director of Human Resources Director~of Administrative Services 061115 syn 0130029 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 AND PROFESSIONAL PERSONNEL AND COUNCIL APPOINTED AND ELECTED OFFICERS GROUP AND RESCINDING RESOLUTION NO.8570 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 andCouncil 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 with regard to the City’s contributions for retiree dependents; and 061115 syn 0130028 NOT YET APPROVED 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 RESOLVE as follows: SECTION i. That as of January I, 2007 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 $484.21 dollars per month for an individual; $968.42 dollars per month for an employee plus one; and $1,258.95 per month for a family; plus administrative fees ahd Contingency Reserve Fund Assessments. SECTION 2. The City’s employer contribution for each annuitant shall be 100% of the single party premium up to $484.21. Effective January i, 2007, the City’s contribution for one dependent of an annuitant will be seventy percent (70%) of the difference between the applicable single party premium (up to $484.21) and the applicable two-party premium (up to $968.42). The City’s contribution for more than one dependent of an annuitant (in 2007) will be seventy percent (70%) of the difference between the applicable single party premium and the applicable family premium (up to $1,258.95). Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 75% in 2008, 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. Resolution No. 8570 is hereby rescinded. II II II 061115 syn 0130028 2 NOT YET APPROVED SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act 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 061115 syn 0130028 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 THE PALO ALTO FIRE CHIEFS’ASSOCIATION AND RESCINDING RESOLUTION NO. 8571 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, 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 i. That as of January i, 2007, the employer’s contribution for each employee shall be the amount necessary to pay the full cost of his/her family members in a health benefits plan up to a maximum of $484.21 dollars per month for an individual; $968.42 dollars per month for an employee plus one; and $1,258.95 dollars per month for a family; plus administrative fees and Contingency Reserve Funds Assessments. 061115 syn 0130026 1 NOT YET APPROVED SECTION 2. The City’s employer contribution for each annuitant shall be 100% of the single party premium up to $484.21. Effective January i, 2007, the City’s contribution for one dependent of an annuitant will be seventy percent (70%) of the difference between the applicable single party premium (up to $484.21) and the applicable two-party premium (up to $968.42). The City’s contribution for more than one dependent of an annuitant (in 2007) will be seventy percent (70%) of the difference between the applicable single party premium and the applicable family premium (up to $1,258.95). Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 75% in 2008, 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. Resolution No. 8571 is hereby rescinded. SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act ("CEQA"). Therefore, no environmental assessment is required. INTRODUCTION AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: Mayor City Manager Director of Human Resources Director of Administrative Services 061115 syn 0130026 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 1319, INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS AND RESCINDING RESOLUTION NO. 8569 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 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 I. That as of January i, 2007, the employer’s contribution for each employee shall be the amount necessary to pay the full cost of his/her family members in a health benefits 061115 syn 0130027 1 NOT YET APPROVED plan up to a maximum of $484.21 dollars per month for an individual; $968.42 dollars per month for an employee plus one; and $1,258.95 dollars per month for a family; plus administrative fees and Contingency Reserve Funds Assessments. SECTION 2. The City’s employer contribution for each annuitant shall be 100% of the single party premium up to $484.21. Effective January i, .2007, the City’s contribution for one dependent of an annuitant will be sixty-five percent (65%) of the difference between the applicable single party premium (up to $484.21) and the applicable two-party premium (up to $968.42). The City’s contribution for more than one dependent of an annuitant (in 2007) will be seventy percent (70%) of the difference between the applicable single party premium and the applicable family premium (up to $1,258.95). Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g. 75% in 2008, 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. Resolution No. 8569 is hereby rescinded. SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act ("CEQA"). Therefore, no environmental assessment is required. INTRODUCTION AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney Mayor City Manager Director of Human Resources 061115 syn 0130027 Director of Administrative Services