HomeMy WebLinkAbout4.03 Health Benefit Retire CITY CLERK
File #
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: March 2, 2004
SUBJECT: Electing to Establish a Health Benefit Vesting Requirement for
Future Retirees Under pUblic Employees' Medical and Hospital
Care Act. Report Prepared b: dulie Carter, ATTCM
ATTACHMENTS: Resolution
RECOMMENDATION pt Resolution.
FINANCIAL STATEMENT: The adoption of the post retirement vesting resolution promotes
greater program equity and reduces the City's long-term retiree
medical costs for future employees.
DESCRIPTION:
Background
The City participates in CalPERS Medical Insurance through PEMHCA (Public Employees' Medical and
Hospital Care Act). PEMHCA is the CalPERS Health Benefits Program as authorized by the Government
Code commencing with Section 22751. Under PEMHCA, the City's retiree medical program is lirlked to
the City's active medical program, which means the City must pay the same maximum amount of health
premium for active and retired members.
Under CalPERS the minimum requirement for retirement status is 5 years of CalPERS Service
(cumulative service) and 50 years of age. Most California public agencies participate in CalPERS
retirement, making it convenient for employees to move from one agency to another collecting their
service credits.
During the Fiscal Year 2003-2004 salary and benefit discussions with employees, the City Manager
reqUested a review of the City's current retirement medical coverage including program qualifidations,
equity to the City of Dublin and employees, and the long term fiscal solvency of the program.
Employee Committee
In October 2003 a nine-member employee committee was formed by the City Manager and chargedwith
thc responsibility of reviewing the City's existing retiree medical program in terms o£ qualifications~
equity to thc City of Dublin and employees, and the long term fiscal solvency o£ the program.
COPIES TO:
ITEM NO. ~_
H/cc-for ms/agdastmt.doc /~'~ i
The nine-member employee committee focused its ~f~0RS On the the CalPERS permissible post retii'ement
vesting resolution authorized by Section 22825.5 of the Government Code. This is the Government Code
Section that allows the employer to adopt the vesting requirement prospectively affecting employee~ hired
on or after its adoption. This section of the Government Code is commonly referred to as State 190'
Formula.
Under the State's 190 Formula, agencies must require a minimum of 10 years of CalPERS service credit
(5 years must be completed at the City of Dublin) to receive the pre-approved State retiree medical
coverage benefits. There are three contribution levels under the State's 190 Formula these include.': fixed
benefits based on family status upon retirement, the State's 190 Formula, or one fixed contribution.
Part of the Committee's analysis included reviewing a Tri-Valley Cities survey on retiree medical benefits
for the purpose of reviewing the competitiveness of the State's 190 formula with other Cities' programs;
who may not be members of PEMHCA.
It was the consensus of the employee committee that a vesting component needed to be added to the
City's retiree medical program for future employees. A summary of the proposal is outlined beloW:
10-years minimum PERS service credit to 10 years 50% Kaiser
retire and receive retiree medical 11 years 55% Family Rate
contribution base on vesting percentages; 12 years 60%
with a minimum of 5-years of service with 13 years 65%
the City of Dublin. 14 years 70%
15 years 75 %
16 years 80%
17 years 85%
18 years 90%
19 years 95%
20+ years 100%
For example, an employee hired after the adoption of the vesting Resolution and retiring from the City of
Dublin with 5 years of Dublin service and 5 years of prior CalPERS service would receive 50% of the
Kaiser Family rate; currently $397.05.
On January 12, 2004 the employee committee presented its proposal to the general employee population
and highlighted the fact that the vesting requirement would only apply to employees hired on or after the
adoption of the vesting resolution, which would be proposed to be effective April 1, 2004. There was
overwhelming support for implementation.
Recommendation
Staff recommends adoption of the Resolution electing to establish a health benefit-vesting requirement for
future retirees under PEMHCA, with an effective date of April 1, 2004.
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RESOLUTION NO. - 04
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
ELECTING TO ESTABLISH A HEALTH BENEFIT VESTING REQUIREMENT FOR FUTURE
RETIREES UNDER PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE ACT
WHEREAS; Government Code 22825.5 provides that a local agency contracting under the Public
Employees' medical and Hospital Care Act may amend its resolution to provide a post retirement vesting
requirement to employees who retire from service, and
WHEREAS; City of Dublin is a local agency contracting under the Act, and
WHEREAS; City of Dublin certifies that unrepresented employees are not represented by a
bargaining unit and there s no applicable memorandum of understanding, and
WHEREAS; the credited service for purposes of determining the percentage of employer
contributions shall mean service as defined in Section 20069, except that not less than five years'of that
service shall be performed entirely with the City of Dublin;
NOW, THEREFORE BE IT RESOLVED that the employer's contribution for each active and
retired employee first hired on or after the effective date of this resolution 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 the Kaiser Family rate plus Administrative fees and Contingency
Reserve Fund, but not more than 100 percent of the premium applicable to him or her, nor less than the
100 percent of the weighted average of the health benefits plan premiums for employees or annuitants
enrolled for self alone plus 90 percent of the weighted average of the additional premiums required for
enrollment of family members in the four health benefits plans that have the largest number of
enrollments; and
BE IT FURTHER RESOLVED that the percentage of employer contribution payable for post
retirement health benefits for each retired employee shall be based on the employee's completed years of
credited service based upon Government Code Section 22825.5; plus administrative fees and COntingency
Reserve Fund assessments; and
BE IT FURTHER RESOLVED that coverage under the Act be effective on April 1, 2004.
PASSED, APPROVED AND ADOPTED this 2nd day of March, 2004.
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk Attachment 1