HomeMy WebLinkAboutStaff Report 5.A 08/06/2012 ARentaaw Ite vw#5.A
:C• :::
1859
DATE: August 6,2012
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manager
SUBJECT: Ratification of the Compensation Plan for Employees in Unit 8— Department
Directors
RECOMMENDATION
It is recommended that the City Council adopt the Resolution ratifying the Compensation Plan
for employees in Unit 8 —Department Directors.
BACKGROUND
The Compensation Plan for employees in Unit 8 - Department Directors expired on June 30,
2009. The City Manager recommends approval of the Unit 8 Compensation Plan for the period
of July I, 2009 through June 30, 2014.
DISCUSSION
Employees in Unit 8 are not represented and the City Manager makes recommendations to the
City Council on matters related to employees' compensation, benefits and terms of employment.
The proposal has been presented to and reviewed by the affected employees and they are in
support and agreement with the changes to the Compensation Plan for the period July 1, 2009
through June 30, 2014. The main changes to the Compensation Plan are the second-tier
retirement formula for newly hired employees and the cap that is placed on health cost increases
in 2013 and 2014: Second-.tier safety employees will receive a retirement benefit that provides:a
3% at 55 formula retirement plan, and a three-year final average compensation, instead of the
current.benefit of 3% at 50 formula retirement plan and one-year final average compensation.
Second-tier miscellaneous employees will receive a retirement benefit that provides a 2% at 60
formula retirement.plan and a three-year final average compensation, instead of the current
benefit of 2%at 55 formula retirement plan and one-year final average compensation.
Following adoption°of the Unit 8 Compensation Plan, the City may proceed to amend its contract
with'Ca1PERS for Safety employees (Police and Fire). Effective upon agreement with the City's
other Miscellaneous bargaining-units, the City would amend its contract with CaIPERS for
Agenda Review
_
City Attorneys, . „v1 Finance Director City Manager_
Miscellaneous employees. The reduced retirement benefit becomes effective upon an
amendment to the Ca1PERS contract. City of Petaluma safety employees would continue to make
an employee paid contribution of 9% towards their retirement, and miscellaneous employees will
continue to make a 7% contribution.
The Compensation Plan includes an increase in the City's health plan contribution for
FY 2009/2010, 2010/2011 and.201 1/2012 that has been budgeted and paid.
The Compensation Plan provides that the City contribute a monthly benefit that includes an
increase of 9% effective January 1, 2013, and that employees pay any portion of an increase
exceeding 9%. The City's contribution for FY 2012/2013 has been budgeted. The Kaiser Plan
rate for 2014 is unknown and the Compensation Plan provides for a monthly benefit that depends
upon the actual percentage increase:in the Kaiser-Bay-Area/Sacramento premium. The
Compensation Plan indicates that the City's contribution for 2014 shall be up to a 9% increase or
the actual 2014 CaIPERS Health Premium for Kaiser-Bay-Area/Sacramento for current
employees and their covered family members, whichever is less. Any increase in excess of9%
will be the responsibility of the employee.
Another change to the Compensation Plan was the addition of a provision that permits
employees to carry forward up to forty (40) hours of unused.administrative leave into the next
fiscal year. This gives more flexibility on the use of administrative leave and has no financial
impact.
FINANCIAL IMPACTS
There are no changes to salary.
There will be no immediate:savings to the City when the second-tier is implemented.
Ultimately, it is expected that City costs will decrease as the mix of first-tier employees
decreases and new second-tier employees increase. When the mix of all first and second tier
employees reaches a 50-50% ratio, employer costs for all safety employees is estimated by
Ca1PERS to decrease by 1.55%. In current dollars a decrease of 1.55% would reduce the City's
annual employer contribution for safety members by $182,490. For miscellaneous employees
with a 50-50% ratio in the first and second tiers; employer contributions are estimated by
CaIPERS to decrease by 1.7%. In current dollars a decrease of 1.7% would reduce the City's
annual employer contribution for miscellaneous members by$203,330. A total reduced City
annual employer contribution for safety and miscellaneous employees is estimated to be
$385,820.
Health premiums for the,Kaiser Plan increased by 4.56% effective January 1, 2010, 6.8%
effective January 1, 2011 and 7.3% effective January 1, 2012. The City continued to provide
Unit 8 employees with<a:monthly'benefit that included those increases. The.costs for the
increase in the City's contribution for FY 2009/2010, 2010/2011 and 2011/2012 was budgeted
and paid.
The Kaiser Plan will increase by 9.53% effective January 1, 2013. The Compensation Plan
provides that-the Cityycontribute a monthly benefit of 9% effective January 1, 2013, thus the
employee share forhealth benefits will increase by .53%. The City's contribution for FY
2012/2013 has been budgeted.
•
The Kaiser Plan rate for 2014 is unknown and it is recommended that the City provide
employees with a monthly benefit that depends upon the actual percentage increase in the
Kaiser-Bay-Area/Sacramento premium..The Compensation Plan provides that the City's
additional benefit contribution for 2014 shall be uptoa`9% increase of the.2013 Health Plan
Rate contribution amount, less the City's PEMHCA contribution,times 95% or an amount equal
to the actual 2014 CaIPERS Health Premium for Kaiser-Bay-Area/Sacramento, less the City's
PEMHCA contribution, times ninety-five percent (95%) for current employees and their covered
family members, whichever is less. Similar to 2013 and as indicated previously, any portion of
an increase in excess of 9% will become the responsibility of the covered employee.
The employee pays the difference between the cost of his or her health plan premium and the City's
PEMHCA contribution and additional benefit amount.
Additional Benefit—Effective January 1,2009—Increase of 7.99%in Kaiser Rate
2009 Kaiser City PEMHCA Maximum Additional Total Benefit
Coverage Rate Contribution Benefit Contributed by the
Contributed by the City City
Single $508.30 $101.00 $386.94 $487.94
2-Party $1,016.60: $101.00 $869.82 $970.82
Family $1,321.58 $101.00 $1,159.55 $1,260.55
Additional Benefit—Effective January 1,2010.-Increase of 4.56%in Kaiser Rate
City Maximum Additional Total Benefit
Coverage 2010 Kaiser Rate PEMHCA Benefit Contributed by the Contributed by the City
Contribution City
Single $53256 $105.00 $406.18 $511.18
2-Party $1,065.12 $105.00 $912.11 $1,017.11
Family $1,384.66 $105.00 $1,215(68 $1,320.68
Additional Benefit—Effective January 1,2011 —Increase of 6.8%in Kaiser Rate
City PEMHCA Maximum Additional Total Benefit
Coverage 2011 Kaiser Rate Contribution Benefit Contributed by the Contributed by the City
City
Single $568.99 $108.00 $437.94 $545.94
2-Party $1,137.98 $108.00 $978.48 $1,086.48
Family $1,479.37 $108.00 $1,302.80 $1,410.80
Additional Benefit—Effective January I,.2012—Increase of 7.3%in Kaiser Rate
2012 City Maximum Additional Total Benefit
Coverage PEMHCA Benefit Contributed Contributed by the
Kaiser Rate Contribution by the City City
Single $610.44 $112.00 $473.52 $585.52
2-Party $1,220.88 $112.00 $1,053.44, $1,165.44
Family $1,587.14 $112.00 $1,401.38 $1,513.38
3
Additional Benefit.-Effective January I,2013 -Actual increase in,the Kaiser rate was 9.53%. City to pick up
9.0%of the rate increase
2013 Health Total Benefit
City Maximum Additional Contributed by the
Plan Rate(9% Y
Coverage PEMHCA Benefit Contributed 2012 Contribution by the City City
Kaiser Rate
Single $665.38 $115.00 $522.86 $637.86
2-Party $1,330.76, $115.00 $1,154.97 $1,269.97
Family $1,729.9& $115.00 $1,534.23 $1,649.23
Additional Benefit-Effective January 1,2014
Up t6..9%
Increase of 2013 City's Maximum
Health Plan Rate Additional Benefit
Coverage or actual 2014 PEMHCA Contributed
Kaiser.Rate, Contribution by the City
whichever is less,
Up to$725i26.or 9% Increase of2013 Health Plan Rate specified in section 21.6,less
Single actual whichever Unknown the City's PEMHCA contribution,times 95%or the actual.2014
CaIPERS Health Premium for Kaiser-Bay-Area/Sacramento, less
is less the City's PEMHCA contribution,times 95%,whichever is less.
Up to$1,450.53
• 2-Party or actual Unknown
whichever
is less
Up to$1,885.68
Family Or actual Unknown
whichever
is less
The Unit 8 Compensation Plan is on a fiscal year basis from July 1 to June 30. CaIPERS.health
plan rate increases are on a calendar year basis. The City provides a cash-in-lieu program for
employees who do not,enroll in the health plan. That program provides eligible employees with
a benefit amount of half or fifty percent of the benefit that the City would otherwise contribute
towards the health plan.
The total cost of health benefits for Unit d3 employees on a fiscal year basis, including the cash-
in-lieu program isestimated'to be as follows:
FY 2008-2009 $66,176
FY 2009-2010 $ 70,347
FY 2010-2011 $ 78,208
FY 2011-2012 $`66,852
FY 2012-2013 $ 83209
FY 2013-2014 $90,678
ATTACHMENTS
1. Resolution Ratifying the Compensation Plan-for Employees_in Unit 8 - Department
Directors.
2. Attachment A— Summary of Changes to the Compensation Plan for employees in
Unit 8 — Department Directors for Fiscal Years'2009—2014.
Z Items listed below are large in volume and are not attached to this report.but may be viewed in the
City Clerk's office.
Unit 8 Compensation Plan FY 2009.—2014
Resolution No. 20.127XX N.C.S.
of the City of Petaluma, California
RESOLUTION RATIFYING THE COMPENSATION PLAN FOR
EMPLOYEES OF UNIT 8 DEPARTMENT DIRECTORS
WHEREAS,the employees in Unit 8 are not represented by ally recognized employee
organization; and,
WHEREAS, the City Manager, pursuant to Section 28, of the Charter of the City of
Petaluma, and as the City's Municipal Employees' Relations Officer (Resolution No. 5375
N.C.S.) is required and empowered to make a recommendation to the City Council on matters
related to employees' compensation;and,
WHEREAS, the City Manager has reviewed and concurs with.the proposed 2009-2014
Compensation Plan for employees in Unit 8 Department Directors and does recommend that the
City Council ratify said Compensation Plan.
NOW, THEREFORE, BE IT RESOLVED that the 2009—2014 Compensation Plan
for Unit,8 Department Directors, being in the best interests of the City, is ratified and the terms
and conditions of said Compensation Plan shall be effective July 1, 2009 through June 30, 2014.
W
ATTACHMENT A
Summary of Changes to the 2009 —2014 Compensation Plan
for Unit 8 - Department Directors
A complete copy of the 2009— 2014 Compensation Plan for Unit 8 is on file
in the City Clerk's office.
I. Benefits
1. Second-tier Retirement in CaIPERS
New MOU language that provides for a different level of benefits (two-tiered retirement)
for newly hired Safety — Police, Safety - Fire and Miscellaneous employees. Effective
upon agreement with the City's.other Miscellaneous or Safety bargaining units, the City
shall amend its contract with CaIPERS. The.amended contract shall provide that Safety—
Police employees hired after the effective date.ofthe amendment shall receive the 3% at
55 formula retirement plan and the three-year final average compensation; instead of the
current benefit of 3% at 50 formula retirement plan and one-year final average
compensation. The amended contract shall provide that Safety— Fire employees hired
after the effective date of the amendment shall receivethe:3% at 55 formula retirement
plan, no Post Retirement Survival Allowance— 50% as provided by Sections
21624/26/28, and the three-year final average compensation; instead of the current
benefit of 3% at 50 formula retirement plan, Post Retitement.Survival Allowance-50% as
provided by Sections 21624/26/28, and one-year final average compensation. The
amended contract shall provide that Miscellaneous employees hired after the effective
date of the amendment shall receive the.2% at 60 formula retirement plan and the three-
year final average compensation; instead of the current.benefit of 2% at 55 formula
retirement plan and one-year final average compensation.
2. Health Benefits—Active:Employees and Retired Employees
Revised language that reflects the City's increased contribution amount towards health
insurance and the increased PEMHCA rates for 2010, 2011,2012,2013 and 2014.
II. Other Changes to the Compensation.Plan
1. Administrative Leave
New language that enables employees to carry forward up to forty (40) hours of unused
administrative leave into the next fiscal year.
III. Revised new language to reflect either change in policy, practice or law
1. Term of Compensation Plan—July I, 2009 through June 30, 2014.
2. CaIPERS Updated reference to CaIPERS sections to reflect CaIPERS changes.
1