November 1, 2005

SUBJECT: AMENDMENT OF CITY’S CONTRIBUTION FOR PERS MEDICAL INSURANCE FOR SEA ANNUITANTS

REPORT IN BRIEF

This report recommends that the City Council, in accordance with the Memorandum of Understanding (MOU) with Sunnyvale Employees’ Association (SEA), amend the City’s contribution to the California Public Employees’ Retirement System (PERS) for medical  insurance under the Public Employees’ Medical and Hospital Care Act (PEMHCA) as provided by Government Code Section 22892 to increase the maximum monthly contribution for SEA annuitants from $452.59 to $470.93, effective January 1, 2006.

BACKGROUND

The contract with PERS under PEMHCA requires that contributions for annuitants 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 (and the contribution’s effective date) be the same for active employees and annuitants.

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 annuitants, the City’s contribution needs to be increased.  Since the maximum amount the City contributes for medical insurance for active employees represented by SEA will be $470.93 per month effective January 1, 2006, the maximum basic contribution for medical insurance must be $470.93 per month for annuitants.

FISCAL IMPACT

The cost of this amendment has been provided in the 2005/2006 Base Budget.

Conclusion

In order to comply with the PERS requirement that the same amount be contributed towards the medical contribution for both active employees and annuitants, the City’s maximum contribution of those annuitants previously represented by SEA needs to be increased by $18.34 per month effective January 1, 2006.

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:  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.

Reviewed by:

Erwin Young, Director, Human Resources Department

Prepared by: Myriam Castaneda, Human Resources Supervisor

Approved by:

Amy Chan

City Manager

Attachments

A. PERS Resolution