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Home My WebLink About2004-11-22 City Council (2)City of Palo Alto City Manager’s Report 3 TO:HONORABLE CITY COUNCIL FROM: DATE: SUBJECT: CITY MANAGER DEPARTMENT: HUMAN RESOURCES NOVEMBER 22, 2004 CMR:473:04 APPROVAL OF THREE RESOLUTIONS FIXING THE AMOUNT OF THE CITY’S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES MEDICAL AND HOSPITAL CARE ACT (PEMHCA) FOR IAFF, LOCAL 1319, INTERNATIONAL ASSOCIATION OF FIREFIGHTERS (IAFF) AND MANAGEMENT AND PROFESSIONAL PERSONNEL RECOMMENDATION This report recommends Council approve the attached resolution fixing the City of Palo Alto’s contribution under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for IAFF, Local 1319, International Association of Firefighters (IAFF) and Fire Chiefs’ Association and for Management and Professional Personnel to reflect that the City shall 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). BACKGROUND 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 costs will increase yet again in 2005 by 11.5%. The City’s goal is to maintain excellent health insurance benefits for its employees, not only a key recruitment tool but also as an incentive to keep employees working for the City of Palo Alto. In May 2003, a Healthcare Committee was formed with representatives from each of the City’s bargaining groups and Human Resources Department staff to address the escalating costs of employee benefits. The Committee concluded that City employees value the stability of the PEMHCA Health Plans, and that the preferable alternative to looking at alternative healthcare plans lower costs is to stay in PEMHCA and to cap medical benefits at a lower rate. In 2004, the City again looked at alternatives, participating as part of the Bay Area Medical Review Committee (BAMR), a committee of twenty Northern California public agency representatives. The goal of the committee was to explore alternate health care models and ascertain what viable CMR: 473:04 Page 1 of 3 options may be available. Unfortunately, the City of Palo Alto was the largest public agency interested in the possibility of ajoint venture and would therefore be required to assume the highest costs with risk of little to gain. Instead, during this year’s labor negotiations, the City was able to reach agreement to cap health care premiums with Local 1319, International Association of Firefighters(IAFF) and the Fire Chiefs Association. The.Management and Professional Personnel group also agreed to cap medical costs at the Blue Shield plan rate. DISCUSSION Effective January 1, 2005, the City will cap its contribution to health care premiums at the Blue Shield plan rates for Local 1319, International Association of Firefighters and Fire Chiefs Association, as well as for the Management and Professional Personnel group. Retirees who worked in this bargaining group who are enrolled in PERSCare Basic on 1/01/05 will pay, then be reimbursed by the City for the difference between the PERSCare and Blue Shield plans due to the City’s differing legal obligations to these retirees. Capping at the Blue Shield plan rate will provide affected employees with a quality HMO plan and will still lower the City’s cost of providing health insurance by offering an option that is lower than the more costly PERSCare PPO health plan. Employees still have the option of staying in the PERSCare plan, with the option to pay the difference in premiums, or enrolling in lower cost health plans such as PERSChoice, PORAC (if eligible) or Kaiser HMO. RESOURCE IMPACT The increase in premiums between the 2005 Blue Shield Basic Plan rates compared to the 2004 PERS Choice Basic Plan rates is: single $40.55; 2-party $81.10; family $105.43. This CalPERS contract amendment raises the maximum benefit cost to the City by $140,000 and involves 132 employees. Approximately half of the increase results from year-over-year premium inflation and the remaining from the shift to the Blue Shield Basic Plan cap. However, if the City had not implemented the cap, the potential exposure for the monthly premium rate if these employees had been allowed to select PERSCare would have been $497,804. By capping the premium cost at the Blue Shield HMO rate, the total monthly premium totals $313,139 resulting in a monthiy savings of $184.666. The 2004-05 Adjusted Budget does not require any changes to accommodate this contract amendment. The 2005-06 Proposed Budget will include the fiscal impacts of this amendment from the last half of calendar 2005. POLICY IMPLICATIONS This request does not represent any change to existing City policy. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). CMR: 473:04 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 and the Management and Professional Personnel group. PREPARED BY DEPARTMENT I-lEAD: CITY MANAGER APPROVAL: Sandra T.R. Blanch, Risk and Benefits Manager LESLIE LOOMIS Director of Human Resources EMILY "I~A-RRI S ON Assistant City Manager CMR: 473:04 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 1319, INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS AND RESCINDING RESOLUTION NO. 8369 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, 2005, 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 041117 syn 0091529 ,1 NOT YET APPROVED plan up to a maximum of $399.00 dollars per month for an individual; $779.92 dollars per month for an employee plus one; and $1,013.90 dollars per month for a family; plus administrative fees and Contingency Reserve Funds Assessments. SECTION 2. The City’s employe~ contribution for each annuitant shall be 100% of the single party premium up to $399.00. Effective January i, 2005, the City’s contribution for one dependent of an annuitant will be sixty percent (60%) of the difference between the applicable single party premium (up to $399.00) and the applicable two-party premium (up to $779.92). The City’s contribution for more than one dependent of an annuitant (in 2005) will be sixty percent (60%) of the difference between the applicable single party premium and the applicable family premium (up to $i,013.90). Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 65% in 2006, 70% in 2007, 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. 8369 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: Mayor City Manager Senior Asst. City Attorney Director of Human Resources Director of Administrative Services 041117 syn 0091529 2 NOT YET APPROVED RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF ALTO FIXING THE EMPLOYER’S CONTRIBUTION THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL ’ACT WITH RESPECT TO MEMBERS OF THE PALO FIRE CHIEFS’ASSOCIATION AND RESOLUTION NO. 8368 RESCINDING 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 C±ty’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, 2004, 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 $399.00 dollars per month for an individual; $779.92 dollars per month for an employee plus one; and $1,013.90 dollars per month for a family; plus administrative fees and Contingency Reserve Funds Assessments. 041117 syn 0091527 NOT YET APPROVED SECTION 2. The City’s employer contribution for each annuitant shall be 100% of the single party premium up to $399.00 Effective January i, 2005, the City’s contribution for one dependent of an annuitant will be sixty percent (60%) of the difference between the applicable single party premium (up to $399.00) and the applicable two-party premium (up to $779.92). The City’s contribution for more than one dependent of an annuitant (in 2005) will be sixty percent (60%) of the difference between the applicable single party premium and the applicable family premium (up to $1,013.90). Each subsequent year, the percentage of the City’s contributions for dependents will increase by five percent (5%) (e.g., 65% in 2006, 70% in 2007., 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. 8368 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 Director of Administrative Services 041117 syn 0091527 2 NOT YET APPROVED RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF ALTO FIXING THE EMPLOYER’S CONTRIBUTION 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. 8358 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 ASt; 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 with regard to the City’s contributions for retiree dependents; and 041117 syn 0091528 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, 2005, 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 $389.96 dollars per month for an individual; $779.92 dollars per month for an employee plus one; and $1,013.90 per month for a family; 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 $389.96. Effective January i, 2005, the City’s contribution for one dependent of an annuitant will be sixty percent (60%) of the difference between the applicable single party premium (up to $389.96) and the applicable two-party premium (up to $779.92). The City’s contribution for more than one dependent of an annuitant (in 2005) will be sixty percent (60%) of the difference between the applicable single party premium and the applicable family premium (up. to $i~_013.90) . Each subsequent year, the percentage of the City’s contributioms for dependents will increase by five percent (5%) (e.g., " 65% in 2006, 70% in 2007, 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. 8358 is hereby rescinded. // // // 041117 syn 0091528 2 NOT YET APPROVED SECTION 4. under the California Environmental Quality Act and, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ~BSENT: ABSTENTIONS: The Council finds that this is not a project therefore, ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: City Attorney City Manager Director of Human Resources Director-of Administrative Services 041117 syn 0091528 3