This report recommends that the City Council, in accordance with the Memorandum of Understanding (MOU) with the Service Employees International, Union Local 715 (SEIU), amend the City's contribution to the Public Employees' Retirement System (PERS) for health insurance under the Public Employees' Medical and Hospital Care Act (PEMHCA) as provided by Government Code Section 22825.6 by increasing, effective January 1, 2000, the maximum contribution per month for annuitants (retirees), who were previously represented by SEIU, from $280.00 to $295.00 per month. This action will also amend the Salary Resolution to reflect the new contribution for these annuitants.

In addition, this report also recommends that the City Council change the maximum monthly contribution for management annuitants (retirees) from $710.00 to $827.53, effective January 1, 2000. The unusual increase is due to the recent addition of a new extended service plan of PacifiCare for annuitants in the states of Arizona and Nevada. This plan is 7.5% higher than the plans in California. The amount shown is for retiree plus family coverage. Most retirees have either single coverage at $318.27 or single plus one at the rate of $636.55.

The contract with PERS under PEMHCA requires that contributions to annuitants for medical insurance by the City to be the same as for active employees and requires a contracting agency to have a resolution which has been approved by its legislative body (City Council), filed with the PERS Board establishing the new contribution. This contribution becomes effective on the first day of the second month following the month in which PERS receive the resolution.

This change is in accordance with the Public Employees’ Medical and Hospital Care Act provisions requiring compliance of agencies contracting with PERS and the employee organizations in which the basic medical insurance contribution is calculated by a formula in which the medical contribution is the same for active employees and annuitants.

Since the calculated maximum total the City contributes for medical insurance for active employees represented by SEIU will be $295.00 per month effective January 1, 2000, the maximum basic contribution for medical insurance is $176.77 per month for annuitants.

The cost of this amendment has been provided for in the Fiscal Year 1999/00 Base Budget.

Employee and public contact is by publication on the City Agenda.

That the City Council adopt Alternative 1 above to accomplish the proposed amendment.

Prepared by:

Myriam Castaneda
Human Resources Supervisor

Reviewed by:

David L. Nieto
Director, Human Resources

Approved by:

Robert S. LaSala
City Manager