HomeMy WebLinkAbout2003-11-24 City Council (8)8
City of Palo Alto
City Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: HUMAN RESOURCES
DATE:
SUBJECT:
NOVEMBER 24, 2003 CMR: 517:03
APPROVAL OF RESOLUTION FIXING THE AMOUNT OF THE
CITY’S CONTRIBUTION UNDER THE PUBLIC EMPLOYEES
MEDICAL AND HOSPITAL CARE ACT (PEMHCA) HEALTH PLANS
AT THE SPECIFIED CURRENT PEACE OFFICERS RESEARCH
ASSOCIATION (PORAC) RATES FOR IAFF, LOCAL 1319,
INTERNATIONAL ASSOCIATION OF FIREFIGHTERS (IAFF) AND
FIRE CHIEFS ASSOCIATION
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 to reflect that the City shall pay up to the applicable Peace Officers Research
Association (PORAC) premium rate on behalf of eligible active employees, up to the single
party PORAC rate for individual retired employees and the required percentage of health care
premiums for eligible dependents of retired employees (applying the PORAC cap).
BACKGROUND
In 2003, the average health premium costs paid by the City increased by 22%. In 2004, the
health insurance premiums costs will increase by another 18% and costs are expected to
increase yet again in 2005 by at least 17%. With health care costs continuing to increase
significantly each year, the City must make cost containment changes. At the same time, the
City’s goal is to maintain excellent health insurance benefits for its employees, a key
recruitment tool over the past several years.
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. During this collaborative process, alternatives
were explored but were found not to be cost effective. City employees value the stability
CMR: 517:03 Page 1 of 3
of the PEMHCA Health Plans. The Healthcare Committee consensus was that the
preferable alternative to lower costs is to stay in Public Employees’ Medical and Hospital
Care Act (PEMHCA) and cap medical benefits at a lower rate. This alternative was
recently discussed with IAFF, Local 1319, International Association of Firefighters
(IAFF) and Fire Chiefs Association and negotiated.
DISCUSSION
Effective January 1, 2004, the City will cap its contribution to health care premiums at the
PORAC Basic plan rates for (IAFF), Local 1319, International Association of Firefighters
and Fire Chiefs Association. Retirees who worked in this bargaining group who are enrolled
in PERS Care Basic on 1/01/04 will pay, then be reimbursed by the City for the difference
between the PERS Care and PORAC plans due to the City’s differing legal obligations to
these retirees. The plan to cap at the PORAC plan will provide affected employees with a
quality PPO plan and will lower the City’s cost of providing health insurance. During the
open enrollment period in October, employees currently enrolled in the more costly PERS
Care PPO health plan were given the option of staying in that plan, with the option to pay the
difference in premiums, enrolling in PORAC or electing to enroll instead in an available
lower cost HMO.
RESOURCE IMPACT
The following table illustrates the differences in premiums between the higher cost PPO,
PERSCare and the PORAC plan and illustrates the City’s health cost avoidance per
employee:
Employee
Two-Party
Family
Total
Monthly Savings for International Association of Firefighters
PERSCare PORAC Difference Base
Enrollment
(2003)
$ 544.00 $399.00 $145.00 2
$1,089.54 $733.00 $356.54 3
$1,416.40 $931.00 $485.40 4
Cost
Avoidance
(2004)
$3,480.00
$12,835.44
$23,299.20
$39,614.64
The City will have a cost avoidance for calendar year 2004 of $39,615 if this resolution is
adopted.
POLICY IMPLICATIONS
This request does not represent any change to existing City policy.
CMR: 517:03 Page 2 of 3
ENVIRONMENTAL REVIEW
This is not aproject under the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment 1 -Resolution fixing the City of Palo Alto contribution under the Public
Employees’ Medical and Hospital Care Act at the PORAC rates for
(IAFF), Local 1319, International Association of Firefighters and
Fire Chiefs Association.
PREPARED BY Sandra T.R. Blanch, Risk and Benefits Manager
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
LESLIE LOOMIS
Director of Human Resources
Assistant City Manager
CMR: 517:03 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. 8069
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, 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
031117 sm 8120422 1
NOT YET APPROVED
plan up to a maximum of $399.00 dollars per month for an
individual; $733.00 dollars per month for an employee plus one;
and $931.00 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
$399.00. Effective January i, 2004, the City’s contribution for
one dependent of an annuitant will be fifty-five percent (55%)
of the difference between the applicable single party premium
(up to $399.00) and the applicable two-party premium (up to
$733.00). The City’s contribution for more than one dependent
of an annuitant (in 2004) will be fifty-five percent (55%) of
the difference between the applicable single party premium and
the applicable family premium (up to $931.00). Each subsequent
year, the percentage of the City’s contributions for dependents
will increase by five percent (5%) (e.g., 60% in 2005, 65% in
2006, 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. 8069 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
031117 sm 8120422 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’ MEDICAL AND HOSPITAL CARE
ACT WITH RESPECT TO MEMBERS OF THE PALO ALTO
FIRE CHIEFS’ASSOCIATION AND RESCINDING
RESOLUTION NO.8068
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, 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; $733.00 dollars per month for an employee plus one;
and $931.00 dollars per month for a family; plus administrative
fees and Contingency Reserve Funds Assessments.
031117 sm 8120423 1
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, 2004, the City’s contribution for
one dependent of an annuitant will be fifty-five percent (55%)
of the difference between the applicable single party premium
(up to $399.00) and the applicable two-party premium (up to
$733.00). The City’s contribution for more than one dependent
of an annuitant (in 2004) will be fifty-five percent (55%) of
the difference between the applicable single party premium and
the applicable family premium (up to $931.00). Each subsequent
year, the percentage of the City’s contributions for dependents
will increase by five percent (5%) (e.g., 60% in 2005, 65% in
2006, 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. 8068 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
031117 srn 8120423 2