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Agenda Item No:
Meeting Date: October 5, 2009
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Management Services — Human Resources
Prepared by: (o�
Jim Schutz, Assistant City Manager,�l City Manager Approval:.
Leslie Loomis, Human Resources Director A/
SUBJECT: RESOLUTION FIXING THE EMPLOYER'S CONTRIBUTION UNDER THE
PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE ACT
RECOMMENDATION: Staff recommends the Council adopt the attached resolution
fixing the City of San Rafael's healthcare premium costs under the Public Employees'
Medical and Hospital Care Act (PEMHCA).
BACKGROUND:
Due to the rising costs of health care and the City's Other Post Employment Benefits
(OPEB) liability, the City moved to a full flex cafeteria plan in accordance with IRS Code
Section 125 effective January 1, 2009 for Management employees, Mid -Management
employees and Elected Officials. One of the implementing steps of this process was to
fix the City's contribution under PEMHCA. The City Council took that action on October
6, 2008.
Since this time, the City has entered into contracts with various bargaining units which
include full flex cafeteria plans. The newer (non -management) plans are all effective
January 1, 2010. The goal of the plans is the same - to control City health care costs
into the future and significantly reduce the health benefit of new employees at
retirement thus reducing our longer term OPEB costs.
ANALYSIS:
A Cafeteria Plan is a plan regulated by the IRS under Code Section 125 that enables
agencies participating in CalPERS medical plans (PEMHCA) to offer their employees a
choice between taxable income and non-taxable benefits. CaIPERS establishes a
minimum employer contribution per employee per month, the PEMHCA minimum
contribution, pursuant to government code section 22892. This amount annually
adjusts based on the health care component of the Consumer Price Index.
FOR CITY CLERK ONLY
File No.:
Council Meeting:
Disposition:
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
The City will revert to the PEMHCA minimum contribution ($105/month in 2010) for all
other bargaining groups effective January 1, 2010. Active employees participating in
the City's cafeteria plan will receive a monthly flex dollar allowance, including the
PEMHCA minimum, to purchase benefits. All employees hired on or after January 1,
2010 shall be eligible to receive the PEMHCA minimum contribution upon their
retirement from the City.
In order to implement the PEMCHA minimum contribution for all other groups, CaIPERS
requires Council to approve the attached resolution which reflects that the health plan
rates will be capped at the PEMHCA minimum contribution rate effective January 1,
2010 and all subsequent years.
FISCAL IMPACT: This change in the PERS contract will not result in immediate cost
savings to the City, but will result in future savings as new employees are hired. The
main reduction will be realized in future years because employees hired after January 1,
2010 will only receive retiree health coverage at the PEMCHA minimum.
OPTIONS:
1. Approve Resolution as recommended
2. Direct staff to seek additional information or other alternatives to this resolution
ACTION REQUIRED: Adopt a resolution.
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
RAFAEL FIXING THE EMPLOYER'S ANNUAL CONTRIBUTION UNDER
THE PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE ACT.
WHEREAS, Government Code Section 22892(a) provides that a contracting agency
under the Public Employees' Medical and Hospital Care Act (PEMHCA) shall fix the amount of
the employer's contribution at an amount not less than the amount required under Section
22892(b)(1) of the Act; and
WHEREAS, City of San Rafael, hereinafter referred to as Special District, is a contracting
agency under the Act.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES
RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
That the employer's contribution for each employee, retired employee or survivor 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 up to a maximum of the fixed rate as defined
above plus administrative fees and Contingency Fund Assessments and the annual
adjustment to the PEMHCA minimum as determined by CalPERS. The units "Managers,
Elected City Council, City Attorney and City Clerk" and "Mid -Managers" have already fixed
rates. The remaining units shall now also be included:
BARGAINING UNIT
701 — MAPE Miscellaneous
702 — MAPE Supervisory
703 —MAPE Childcare
704 —Police
705 —Fire
I, Esther C. Beirne, Clerk of the City of San Rafael, hereby certify that the foregoing
Resolution was duly and regularly introduced and adopted at a regular meeting of the City
Council of the City of San Rafael, held on Monday, the 5th of October, 2009, by the following
vote, to wit:
AYES:
Councilmembers:
NOES:
Councilmembers:
ABSENT:
Councilmembers:
Esther C. Beirne, City Clerk