HomeMy WebLinkAboutStaff Report 3.B 09/21/2015DATE: September 21, 2015
Agenda Item #3.B
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Dianne Dinsmore, Human Resources Director
SUBJECT: Resolution Ratifying the Side Letter of Agreement Between the City of Petaluma
and the Petaluma Professional and Mid -Managers Association For Employees of
Unit 4 (Professional), Unit 9 (Mid -Managers), and Unit 11 (Confidential)
Regarding Establishment of a Retiree Health Savings Account.
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution Ratifying the Side Letter
of Agreement Between the City of Petaluma and the Petaluma Professional and Mid -Managers
Association For Employees of Unit 4 (Professional), Unit 9 (Mid -Managers), and Unit 11
(Confidential) Regarding Establishment of a Retiree Health Savings Account (RHSA).
BACKGROUND
The City of Petaluma and the Petaluma Professional and Mid -Managers Association (PPMMA)
representing employees of Unit 4 (Professional), Unit 9 (Mid -Managers), and Unit 11
(Confidential) recently ratified an agreement for the period July 1, 2014 through June 30, 2016.
The parties agreed all Unit 4, 9 and 11 members would receive a 1% cost of living adjustment
and a one-time lump sum payment of 2% into an employee's 457 or RHSA account, at the
employee's election, effective the first full pay period following approval by the City Council,
and a 2% cost of living adjustment and a one-time lump sum payment of 1% into an employee's
457 or RHSA account, at the employee's election, effective the second full pay period following
approval by the City Council.
DISCUSSION
The current Unit 4, 9 and 11 Memoranda of Understanding (MOU) provide the option to each
member employee to place their lump sum payment in either a 457 Deferred Compensation
account or an RHSA. The City agreed to hold the lump sum payments in an account for any
employees electing the RHSA option until such time as the RHSA was established. Six
employees elected the RHSA.
The City undertook its due diligence to establish an RHSA in the manner discussed by the
Parties. In doing so, the parties have learned that, as a result of the evolving impacts of the
Affordable Care Act, there could be negative consequences to an RHSA not initially foreseen.
The Parties have met and conferred and agreed that the RHSA will not move forward at this time
and all six employees who elected the RHSA option will instead have their lump sum payments
deposited into each employee's 457 account. The City will add to the lump sum payment any
interest the City earned on the funds during the time the City held the funds on behalf of the
employees. All other provisions of the Unit 4, 9 and 11 MOUs remain in effect.
This action ratifies the Side Letter of Agreement reached by the Parties.
FINANCIAL IMPACTS
There is no change to the cost of the July 1, 2014 through June 30, 2016 agreement between the
Parties.
ATTACHMENTS
1. Resolution
2. Exhibit A, Side Letter of Agreement Between the City of Petaluma and the Petaluma
Professional & Mid -Managers Association
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ATTACHMENT 1
RESOLUTION RATIFYING THE SIDE LETTER OF AGREEMENT BETWEEN THE CITY OF
PETALUMA AND THE PETALUMA PROFESSIONAL AND MID -MANAGERS
ASSOCIATION FOR EMPLOYEES OF UNIT 4 (PROFESSIONAL), UNIT 9 (MID -
MANAGERS), AND UNIT 11 (CONFIDENTIAL) REGARDING ESTABLISHMENT OF A
RETIREE HEALTH SAVINGS ACCOUNT
WHEREAS, the City of Petaluma ratified the Memoranda of Understanding between the
City of Petaluma and the Petaluma Professional And Mid -Managers Association for Employees
of Unit 4 (Professional), Unit 9 (Mid -Managers), and Unit 11 (Confidential) which included a
provision for the establishment of a Retiree Health Savings Account; and
WHEREAS, the Parties have learned that, as a result of the evolving impacts of the
Affordable Care Act, there could be negative consequences to an RHSA not initially foreseen;
and
WHEREAS, the Parties have met and conferred and reached agreement on the Side
Letter of Agreement attached hereto as Exhibit A; and
WHEREAS, the City Manager has reviewed and concurs with said Side Letter of
Agreement and does recommend that the City Council ratify this Side Letter of Agreement.
NOW, THEREFORE, BE IT RESOLVED that the Side Letter of Agreement attached
hereto as Exhibit A is ratified and the terms and conditions of said Side Letter of Agreement shall be
effective September 3, 2015 through June 30, 2016.
N
EXHIBIT A
Side Letter of Agreement
Between the
City of Petaluma and the Petaluma Professional &
Mid -Managers Association — Units 4, 9 and 11
Retiree Health Savings Account
September 3, 2015 — June 30, 2016
Representatives of the City of Petaluma and the Petaluma Professional & Mid -Managers Association
("Association") Units 4, 9 and 11 have met and conferred and reached agreement on this Side Letter of
Agreement regarding Section 31 of the Unit 4 MOU, Section 36 of the Unit 9 MOU, and Section 37 of the
Unit 11 MOU, which read:
RETIREE HEALTH SAVINGS ACCOUNT (RHSA)
The City shall make available to members of this Unit the City's Retiree Health Savings Account.
Both parties acknowledge that the Memorandum of Understanding (MOU) for Units 4, 9 and 11 now in
effect were negotiated in good faith. Following ratification, employees in Units 4, 9 and 11 each made an
election to place the lump sum payments made by the City in either a 457 account or the RHSA, with the
understanding that the City would hold the funds for those electing the RHSA until such time that the
RHSA was established, The City undertook its due diligence to establish a Retiree Health Savings
Account in the manner discussed by the Parties. In doing so, the Parties learned that there could be
negative consequences to an RHSA not initially foreseen as a result of the evolving impacts of the
Affordable Care Act. Therefore, parties agree to the following:
All six (6) Unit 4, 9 and 11 employees who elected to place their lump sum payments in an RHSA
shall instead place those payments in a 457 Plan offered by the City. Each employee shall
provide documentation to the Human Resources Department no later October 31, 2015,
indicating which 457 Plan the employee wishes to use for the lump -sum payment. The City
agrees to add to the lump sum payment any interest the City earned on the funds, divided
proportionally between the six (6) employees, during the time the City held the funds on behalf of
the employees.
All other provisions of the Unit 4, 9 and 11 MOUs remain in effect.
For the Petaluma Professional & Mid -Managers Association — Units 4, 9 and 11
Katie Crump, President
Date
Dennis Wallach, Representative Date
For City of Petaluma
Dianne Dinsmore, Director of Human Resources Date
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