August 9, 2005
SUBJECT: AMENDMENT OF CITY’S CONTRIBUTION FOR PERS MEDICAL INSURANCE FOR SEIU ANNUITANTS (RETIREES)
REPORT IN BRIEF
This report recommends that the City Council, in accordance with the Memorandum of Understanding (MOU) with Service Employees International Union, Local 715 (SEIU), if approved by City Council, amend the City’s contribution to the Public Employees’ Retirement System (PERS) for medical insurance under the Public Employees’ Medical and Hospital Care Act (PEMHCA) as provided by Government Code Section 22825.6 to increase the maximum monthly contribution for SEIU retirees from $206.29 to $248.92, effective July 1, 2005.
BACKGROUND
The contract with PERS under PEMHCA requires that contributions for retirees for medical insurance by the City to be the same as for active employees. The contract also requires a contracting agency to have a resolution which has been approved by its legislative body, filed with the PERS Board establishing the new contribution.
EXISTING POLICY
The City’s contract with the PEMHCA provisions requires compliance of agencies contracting with PERS and employee organizations that the employer’s contribution towards basic medical insurance be the same for active employees and annuitants (retirees) and the contribution’s effective date be also the same.
DISCUSSION
This amendment is in accordance with the above mentioned contract. In order to meet the PERS requirement that the same amount be contributed towards the medical contribution for both active employees and retirees, the City’s contribution needs to be increased. Since the maximum amount the City contributes for medical insurance for active employees represented by SEIU will be $248.92 per month effective July 1, 2005, the maximum basic contribution for medical insurance is $248.92 per month for retirees.
FISCAL IMPACT
The cost of this amendment is discussed in detail in the Report to Council titled “Adoption of Service Employees International Union (SEIU) Local 715 Memorandum of Understanding and Amendment to the Salary Resolution” which is being presented to City Council on August 9th, 2005. The estimated cost of this benefit for Fiscal Year 2005/2006 is $5,500.
Conclusion
In order to comply with the PERS requirement that the same amount be contributed towards the medical contribution for both active employees and retirees, the City’s maximum contribution of those retirees previously represented by SEIU needs to be increased by $42.63 per month effective July 1, 2005.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda on the City’s official 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. Adopt the resolution amending the City’s contribution for medical insurance with PERS to conform to the Public Employees’ Medical and Hospital Care Act, and to amend the Salary Resolution to reflect the change in contribution.
2. Do not adopt the resolution amending the City’s contribution for medical insurance with PERS and thereby fail to comply with the Public Employees’ Medical and Hospital Care Act.
RECOMMENDATION
Staff recommends approval of Alternative #1, provided that the Memorandum of Understanding between the City and SEIU is approved by City Council.
Reviewed by: