May 4, 2004
SUBJECT: MILITARY RESERVIST – EXTENSION OF BENEFITS AND SUPPLEMENTAL SALARY AMENDMENT
REPORT IN BRIEF
This report recommends that the City Council approve a 26 pay period extension of military leave benefits and supplemental salary for eligible employees. This action would increase the eligibility period to a maximum of 52 pay periods, but not beyond June 30, 2005. In addition, this report makes the Basic Allowance for Housing (BAH) received by an employee reimbursable to the City, offers the extended benefits and supplemental salary only for mandatory active duty per Executive Order 13223 issued on September 14, 2001, and extends retroactive coverage of the extended benefits and supplemental salary to any employee currently deployed on mandatory active military duty if there is a gap between the current extension and the recommended extension.
The estimated funding needed for the additional 26 pay period extension of these benefits and supplemental salary ranges from no additional funding required to a maximum of $165,916 depending on the alternative selected and the number of reservists who utilize the extension.
The City has a total of seven known employees who are serving in the military, six of whom have received some supplemental military leave benefits. Of that number two employees are currently deployed. One of those employees has exhausted his 26 pay period extension and the second one will not exhaust his first 26 pay periods until December 2004, assuming that the employee is not released from the military before the end of the calendar year. The other four employees have served periods ranging from 9 to 23 pay periods, but have returned. One employee has not been activated at all; however, he remains a reservist and may be activated.
BACKGROUND
The Council first adopted extended military leave benefits and supplemental salary in October 2001 for up to 13 pay periods for eligible employees. The benefits and supplemental salaries were extended to 26 pay periods in April 2003. The purpose of this action was to minimize the impact that a call to active duty had on the employees and their dependents as a result of the loss of full-time employment income and benefits for such an extended period of time. Six employees have benefited in varying degrees from the extended military leave benefits and supplemental salary.
EXISTING POLICY
Current State law (Military and Veteran’s Code, Section 395) provides that a member in the reserve of the Armed Forces, National Guard or Naval Militia, who has been a public employee for more than one year is entitled to receive his or her salary or compensation as a public employee for the first 30 calendar days of such absence. Pay for those purposes may not exceed 30 days in any one fiscal year, except as otherwise authorized by resolution of a legislative body of a public agency or as provided in a memorandum of understanding reached with an employee organization. Additional protections and rights such as reinstatement to employment after return from duty are extended to employees through the Uniformed Services Employment and Reemployment Rights Act (USERRA) signed into law on October 13, 1994. Under other provisions, seniority rights are also extended to employees in the military as if they were continuously employed. However, USERRA does not require continuation of any or extension of employer-paid benefits for employees on military leave.
Existing City policy continues City provided benefits and supplemental salary for qualified individuals for a period of up to 26 pay periods beyond those required by current State law. Funding for the current program expires on June 30, 2004.
DISCUSSION
It is proposed that extended military leave benefits and supplemental salary be extended for another 26 pay periods for employees currently on leave and to those who may be involuntarily recalled to active duty through June 30, 2005. The employee will reimburse the City the amounts paid for military service plus allowances including the Basic Allowance for Housing (BAH). It is also proposed that the extension be without interruption to those reservists who have already exhausted 26 pay periods of military service, but not to exceed a total of 52 pay periods or extend beyond June 30, 2005. The eligibility requirements remain the same as in the past with the exception that an employee must be called to mandatory active duty pursuant to Executive Order 13223 issued on September 14, 2001. An employee who volunteers for an active duty assignment will not be eligible for extended military leave benefits and supplemental salary.
Those who elect not to return to City employment would be required to repay the City for the cost of benefits and supplemental salary plus interest at the 26-week T bill rate. The rate will be the rate applicable at the time that the final supplemental compensation and benefits were provided and for the period of time that exceeded the mandatory 30 days, when applicable. The City Manager will have the discretion not to require repayment in the event of an employee’s death or disability as a result of active military duty.
Supplemental Salary
The City will begin to provide or continue to provide a bi-weekly check in an amount equal to base salary, plus any other compensation the employee would have received had they been actually working. The amounts paid to the employee as basic salary and allowances for military service plus the BAH will be reported and reimbursed to the City of Sunnyvale. These amounts must be properly documented by military orders, paycheck stubs or similar acceptable documentation as soon as the employee receives it. All payments will be promptly reconciled by payroll to minimize overpayments.
Benefits
The City’s contribution towards applicable benefits (retirement, medical, dental, dental premiums to PSOA, vision and the Employee Assistance Program) will continue to be paid as if the employees was actively at work. The appropriate employee contributions will continue to be deducted from every paycheck. Life Insurance coverage, short-term and long term disability coverage cease upon start of active military duty.
FISCAL IMPACT
The estimated funding needed for an additional 26 pay period extension ranges from no additional funding to a maximum of $165,916 depending on the alternative selected and the number of reservists who utilize the extension. Based on the current usage of extended military reservist leave, it is anticipated that approximately $84,842 will be remaining in the current budget for this leave at the end of FY 2003/2004. This amount is lower than anticipated for two reasons. First, the original budget for this extended military leave was calculated in FY 2002/2003 and did not adjust for salary increases; this impacted the budget by approximately $33,800.
Second, the original appropriation for this leave was reduced to account for operational savings in departments. It was anticipated that contributions from the departments with employees on military leave would occur due to the less expensive cost of backfilling the positions with either overtime or temporary personnel. Based on current staffing levels and the impact of budget reductions, not all budgeted operational savings are available in the current year. This impacted the budget by $19,573.
With the projected carryover of $84,842, the additional funding necessary to extend the benefits and supplemental salaries for another 26 pay periods ranges from no additional funding needed to $165,916 based on best and worst case scenarios. If the two employees currently activated remain deployed through FY 2004/2005 and no one else is activated, the remaining budget of $84,842 will more than cover the cost of $58,385. If all seven employees become activated and are deployed for all of FY 2004/2005, $165,916 would be necessary to fully fund this extension. These scenarios include reimbursements by the employees to the City for the amount received for their military services in the form of salary plus allowance, including the BAH, except for the employee who has not used his original 26 pay periods and is currently deployed. The BAH is included as a reimbursement starting with his 27th pay period of continuous mandatory deployment.
To fund the additional 26 pay period extension, staff recommends carrying over the remaining budget to the FY 2004/2005 budget. Furthermore, staff recommends appropriating $165,916 from the Non-Recurring Events Reserve for FY 2004/2005 to fund the worst case scenario. Unspent funds will be returned to this reserve at the end of FY 2004/2005.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda on the City’s office notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office.
ALTERNATIVES
1. That the City Council adopt a Resolution to extend these benefits and supplemental salary for an additional 26 pay periods to a maximum of 52 pay periods to affected employees with the BAH reimbursement starting as follows. The BAH deductions for those deployed as of the date this Resolution is passed shall start on the 27th pay period of continuous deployment or upon redeployment, whichever comes first. For those not deployed as of the date this Resolution is passed, the BAH deductions shall begin upon deployment effective with the start of FY 2004/2005, with the entire resolution expiring on June 30, 2005.
2. Fund the extension by carrying over the remaining budget to the FY 2004/2005 budget and appropriating $165,916 from the Non-Recurring Events Reserve for FY 2004/2005 to fund the worst case scenario. Unspent funds will be returned to this reserve at the end of FY 2004/2005.
3. That the City Council adopt a Resolution to extend these benefits and supplemental salary for an additional 26 pay periods to a maximum of 52 pay periods to affected employees with the BAH reimbursement starting with FY 2004/2005 for all employees, with the entire resolution expiring on June 30, 2005.
4. The City Council does not adopt a Resolution to extend he current extended military benefits and supplemental salary.
5. The City Council modifies any portion of this recommendation.
RECOMMENDATION
Alternative 1 and 2, adopt a Resolution to extend these benefits and supplemental salary for an additional 26 pay periods to a maximum of 52 pay periods to affected employees with the BAH reimbursement starting as follows. The BAH deductions for those deployed as of the date this Resolution is passed shall start on the 27th pay period of continuous deployment. For those not deployed, as of the date this Resolution is passed, the BAH deductions shall begin upon deployment effective with the start of FY 2004/2005. Fund the extension by carrying over the remaining budget to the FY 2004/2005 budget and appropriating $165,916 from the Non-Recurring Events Reserve for FY 2004/2005 to fund the worst case scenario. Unspent funds will be returned to this reserve at the end of FY 2004/2005.
Prepared by:
Myriam Castaneda
Human Resources Supervisor
Prepared by:
Grace Kim
Budget Manager
Reviewed by:
Mark Gregersen
Director of Human Resources
Reviewed by:
Mary Bradley
Director of Finance
Approved by:
Amy Chan
City Manager
Attachments:
A. Resolution