Item 1.4 - Implementation of RHSP for Non-Safety Bargaining & Mngt./Confidential Groupy
• \ �j AGENDA REPORT
• 0.a
DATE:
March 18, 2014
APPROVED
APPROVED AS AMENDED O
(SEE MINUTES)
DENIED O
REMOVED O
CONTINUED
RESOLUTION NO. H-007
TO: Honorable Mayor and Members of the City Council
FROM: Tina M. White, Interim City Manager '4
INITIATED BV: Scott Edwards, Director of Administrative Services
Lisa Torres, Human Resources Manager
SUBJECT: Implementation of. a Retirement Health Savings Plan for the
Non - Safety Bargaining Unit and Management/Confidential
Group
Summary:
The existing Memorandum of Understanding (MOU) with the Non - Safety Bargaining
Unit :expires on June 30, 2015. Among the MOU provisions, both parties agreed to
establish a joint committee to evaluate the possible implementation of a Retirement
Health Savings Plan (RHSP), which is an investment plan for retirement health -care
costs.
The joint committee recently completed its evaluation of plan provisions, and a tentative
agreement to implement a RHSP was ratified by the Non- Safety Bargaining' Unit on
January 30, 2014. A side letter to the Non - Safety MOU is attached, which summarizes
the RHSP provisions for regular full -time and part-time benefited employees.
With the implementation of a RHSP for the Non - Safety Bargaining ;Unit, the
Management/Confidential Group represents the sole group without a RHSP in',effect.
Accordingly, staff has prepared an addendum to the Management/Confidential Group
Salary and Benefit Plan to implement a RHSP that is similar to the Non - Safety
Bargaining Unit.
Recommended Action:
It is recommended that the City Council:
1. Adopt the resolution approving the side. letter to the Non - Safety MOU,,: and
2. Approve the addendum to the Management/Confidential Group Salary and Benefit
Plan.
1 of 11 March 18, 2014 Item # % Y
Retirement Health Savings Plan
March 18, 2014
Page 2
Background:
The City's existing MOU with the Non - Safety Bargaining Unit expires on June 30, 2015.
Among its provisions, the MOU includes the following under Article 8:
Section 7 — Retirement Health Savings Plan
The City and Bargaining Unit agree to establish a joint committee with up to three (3)
Bargaining Unit Representatives to evaluate the implementation of a Retirement Health
Savings Plan (RHSP) for the Bargaining Unit. This committee will work toward
developing a RHSP recommendation to provide employees with a mechanism to save
for retirement healthcare costs and encourage prudent sick leave usage. The goal is to
complete the evaluation and consider implementation of a RHSP by January 2014.
Management representatives and members of the Non- Safety Bargaining Unit
established a joint committee in August 2013 for this purpose. Following the
committee's review and evaluation, a tentative agreement was reached to implement a
RHSP. The tentative agreement was ratified by the Non - Safety Bargaining Group on
January 30, 2014. With Council approval of the proposed resolution, both Safety and
Non - Safety Bargaining Units will have a RHSP established for their respective
memberships.
The City also has a Salary and Benefit Plan in effect with the Man agement/Confidential
,Group that expires on June 30, 2015. Following the ratification of the RHSP by the
Non - Safety Bargaining Unit, staff approached the unrepresented
Management /Confidential Group to establish a RHSP. An addendum to the Salary and
Benefit Plan is also proposed for Council consideration.
;Findings:
A RHSP is an employer- sponsored, employee- funded, health benefit that aids
participating employees in planning for health -care costs in their retirement.
Key RHSP provisions are as follows:
1. Contributions are mandatory for all members of a designated group that meet
specific criteria.
2. Contributions will be made from an employee's annual conversion of sick leave as
well as the final sick leave payout upon retirement.
3. The first annual conversion is effective the last full pay period of FY 2013 -14 (i.e.,
pay period ending June 22, 2014).
4. Participants can only request withdrawals upon retirement.
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Retirement Health Savings Plan
March 18, 2014
Page 3
5. Contributions and withdrawals are tax - free.
6. Internal Revenue Code medical expenses of the participant, spouse, and /or IRS -
qualified dependent(s) qualify for reimbursement /withdrawal.
7. Any fees related to the RHSP will be paid by employees.
8. In the event of an employee's death, if the employee.,is a participant in the RHSP.
and does not have a surviving spouse or surviving IRS qualified dependents, the
employee's Retirement Health Savings account, balance shall .remain in the trust
(i.e., RHSP) to be allocated among all RHSP employee participants in the same
group. The allocation will be on a pro -rata share,- based upon RHSP employee
participant account balances.
Fiscal Impact:
There is no fiscal impact associated_ with this report.
Environmental Review:
This item is not subject to CEQA review.
Public Notification:
Notice was provided to Chester Mordisini, President of California Teamsters Local 911.
Attachment:
A. Resolution approving the implementation of a Retirement Health Savings Plan for
Non - Safety and Management/Confidential Employees
1
3 of 11 March 18, 2614 Item # /. ��
RESOLUTION NO. 14-
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF POWAY, CALIFORNIA, APPROVING THE IMPLEMENTATION OF
A RETIREMENT HEALTH SAVINGS PLAN FOR NON - SAFETY AND
MANAGEMENT /CONFIDENTIAL 'EMPLOYEES
WHEREAS, the current Memorandum of Understanding (MOU) between the City
and the Non- Safety Employees is in effect through June 30, 2015; and
WHEREAS, the current Salary and Benefit Plan for the Management /Confidential
group is in effect through June 30, 2015; and
WHEREAS, representatives of the California Teamsters Local 911 and the City
of, Poway •completed a thorough evaluation of "a Retirement Health Savings Plan
(RHSP); and
WHEREAS, the City wishes to encourage and support the prudent use of
employee sick leave; and
WHEREAS, the City Council of the City of Poway wishes to adopt said
Retirement Health Savings Plan
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway
as follows:
1 That the City of Poway shall enter into an agreement with ICMA Retirement
Corporation to ,provide a Retirement Health Savings Plan for the employees
of the Non - Safety bargaining unit and the Management/Confidential group
2. That the plan shall be structured according to the provisions set forth in the
Side Letter Agreement between the City of Poway and California Teamsters
Local 911, attached hereto as Exhibit A, and the Addendum to the Salary and
Benefit Plan for the Management/Confidential group, attached hereto as
Exhibit B
PASSED, ADOPTED AND APPROVED by the City Council of the City of Poway
at a regular meeting this ** *day of * ** 2014.
Don Higginson, Mayor
ATTEST:
Sheila rR. Cobian, CMC, City Clerk _
4 of 11 Attachment A March 18, 2014; Item #1.4
Resolution No.
Page 2
STATE OF CALIFORNIA )
) SS
COUNTY OF SAN DIEGO )
I, Sheila R. Cobian, City .Clerk, of the City of Poway, do hereby certify under penalty of
perjury that the foregoing Resolution No. 14 - * ** was duly adopted by the City Council at
a meeting of said City Council held on the * ** day of * ** 2014, and that it was so
adopted by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
Sheila R. Cobian, CIVIC, City Clerk
City of Poway
Attachments:
Exhibit A
Exhibit B
5 of 11 March 18, 2014, Item #1.4
SIDE LETTER AGREEMENT BETWEEN
CITY OF POWAY AND CALIFORNIA TEAMSTERS, LOCAL 911
JULY 1, 2013 THROUGH JUNE 30, 2015
Whereas, the City of Poway ( "City ") is the employer of the City of Poway
employees; and
Whereas, the California Teamsters, Local 911 represents certain City employees
(Non- Safety Employees); and
Whereas, the current Memorandum of Understanding (MOU) between the City
and the Non - Safety Employees is in effect through June 30; 2015; and
Whereas, during MOU negotiations both parties agreed to establish a joint
committee to evaluate the implementation of a Retirement Health Savings Plan (RHSP);
and
Whereas, the joint committee was formed and a thorough evaluation of a RHSP
has been - completed.
Now, therefore, the City and Non- Safety Employees hereby agree to the
following, which replaces the MOU language contained in Article 6, Section 2.F Annual
Conversion of Sick Leave and Article 6, .Section 2.G Payout of Sick Leave, concerning
regular full -time employees, and Article 6, Section 2.F concerning regular part -time
.employees:
PART I. FULL -TIME EMPLOYEES
Article 6. Leaves
r. Section 2 —Sick Leave
F. Annual Conversion of Sick Leave
In the last full pay period of the fiscal year, Non - Safety Employees must convert sick
leave to 'cash under the following conditions:
1. After conversion, employee must have a minimum balance of 168 hours•of sick
leave.
2. The employee has used 32 hours or less of sick leave in the immediately :preceding
12 months. Sick leave use includes use of family sick leave.
3. An employee shall convert 50% of the annual sick leave accrual, less sick leave
used, in the immediately preceding 12 months, up to a maximum of 40 hours.
Example: employee used 16 hours in preceding 12 months
96 hours of annual accrual x 50% = 48 hours
48 hours - 16 used = 32 hours converted to cash
EXHIBIT A March 18, 2014 Item #
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G.Refirernent Health Savings Plan
A Retirement. H ea Ith Savings Plan (RHSP) will be implemented'for regular full-time Non-
Safqty'Employees as follows:
1. Regular full-time employees that satisfy the provisions contained in Article .6; Section
2.F, must contribute 50% of their annual sick leave conversion to �a ;Retirement
Health Savings. Account as a cash deposit. (e.g., an employee that is eligible to
convert 40, hours" of sick .16ave, would receive the equivalent of 20 ' hours In cash
and the equivalent of 20 hours would be contributed to their Retirem , ent Health
Savings, Account as a, cash deposit),
2'. Any fees related' to the RHSP will be paid by employees.
,3. The first annual RHSP contribution shall be the last full pay period of Fiscal Year
I 2013-14•(i.e.j pay period ending June 22, 2014).
4. In the event of a Non7Safety Employee's death, if the Nbn-Safety is -a
participant in the RHSP and does not have-a' surviving spoq . se; or, su ry v n
i i'g I
qualified. dependent/s, the Non-Safety Empl , oyee's Retirement ,Health Savings
account. balance shall remain in the trust (i.e.,, RHSP) to be allo6'ated among all
RHSP Non-Safety Employee participants. The allocation Will be on a pro-rat - a-share,'
based uponPHSP Non-Safety Em
ployee participant account balances.
H. Payout of Sick Leave
After ten (10) years of employment with the City and upon termination or retirement,
a regular full-time employee Will receive compensation for unused sick leave as follows:
1_Upon, retirement, an employee will receive 50% of all sick leave 'hours accrued.
C61cul6tio'ns will be atj:the.employe.e's rate of pay at the time of retirement, subject to
.maximum annual..retirement sick'leave payout restrictions then in effkt;.'
2. Upon retirement, irement, an. employee shall convert 100%. of the .'sick leave payout to a
Retirement Health Savings Abcount.a& a cash deposit.
3. The maximum annual retirement sick leave payout (payout),, currently $5,0.00, shall
increase with the annual- across-the-board salary increases under Article 5, 'as
follows:
a) The maximum payout shall be $5,1 a0, effective February 1, 2014, or as soon
as practicable, subject to the implementation. of a RHSP (e.g., The maximum
.Payout Of $5,000 x'1.02 $5,100).
b) The. maximum payout shall be $5,2021, effective the beginning. of the pay period
Which includes July 1, 20 ' 14, or as soon as practicable, subject to the
implementation of a RHSP*(e.g., The maximum payout of $5,100 x 1.02
$5,202).
c) The maximum payout thereafter shall increase ,by the same percentage as future,
. I EXHIBIT
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March 18, 2014 Item# 11 y
MOU salary increases, effective the same date as that salary increase.
4. Upon leaving• City employment for reasons other than retirement, employee will,.
receive 50% of all sick leave hours accrued. Calculations will be at the employee's-
rate of pay at the time of termination and that payout will not exceed $2,000.
5. Upon the death of an employee, compensation for unused sick leave shall be at- the
same rate as the retirement benefit. Payment shall be made to. the .employee's
designated beneficiary.
PART II. PART -TIME EMPLOYEES
Article 6. Leaves
Section 2 — Sick Leave
F. Retirement Health Savings Plan
A Retirement Health Savings Plan (RHSP) will be implemented for regular part - time',,
Non - Safety Employees as follows:
I. Any fees related to the RHSP will be paid by employees.
Z In the event of a Non - Safety Employee's death, if the Non - Safety Employee is a
participant in the RHSP and does not have a surviving spouse or surviving IRS'
qualified dependent /s, the . Non - Safety Employee's Retirement Health Savings
account, balance shall remain in the trust (i.e., RHSP) to be allocated among all
RHSP.Non- Safety Employee participants. The allocation will be on a pro -rata share,
based upon RHSP Non - Safety Employee participant, account balances.
G. Payout of Sick Leave
After ten (10) years of employment with the City and upon termination or retirement,
a regular part -time employee will receive compensation for unused sick leave as
follows:
1. Upon retirement, a - regular part -time employee shall convert 100% of the sick
leave payout to a Retirement Health Savings Account as a cash deposit.
2. The maximum annual retirement sick leave payout (payout) for_ regular part-time
employees, currently $2,000 ($3,500 for regular three - quarter -time employees),
shall increase with the annual across - the -board salary increases under Article
5, as follows:
a) The maximum payout for regular part-time employees shall be $2,040
($3,570 for regular three - quarter -time employees), effective February 1, 2014,
or as soon as practicable, subject to the implementation of a RHSP (e.g.,`The
maximum payout of $2,000 x 1.02 = $2,040 for regular part -time employees;
$3,500 x 1.02 = $3,570 for regular three - quarter -time employees).
b) The maximum ' payout for regular part -time employees shall be $2,081
EXHIBIT A March 18, 2014 Item # � y
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($3,641 for regular three- quarter -time employees), effective the beginning of the
pay period which includes, July 1, 2014, or as soon as practicable,
subject to the implementation of a RHSP (e.g., The maximum. payout of
$2,040 x 1.02 = $2,081 for regular part -time employees; .$3,570 x 1.02 = $3,641
for regular three- quarter.-time employees).
c) The maximum payout thereafter shall increase by the same percentage as future
MOU salary increases, effective the same date'as that salary increase.
d) Upon leaving City employment for reasons other than 'retirement, regular part-
time employees will receive 25% of all sick leave hours accrued (37.5% for
regular three - quarter -time employees). Calculations will be at the regular part-
time employee's rate of pay at the time of termination and that payout will not
exceed $1,000 ($1,500 for regular three- quarter- timeemployees).
3. Upon the death of an employee, compensation'for unused sick leave.shall be at
the. same rate as the retirement benefit. Payment shall be made, to the.
employee's designated beneficiary.
This agreement does not diminish or affect City's rights as described in the MOU.
EXHIBIT A
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March 18, 2014 Item #
City of Poway
ADDENDUM
Management /Confidential Group
Salary and Benefit Plan
1. This addendum will be effective July 1, 2013 — June 30, 2015.
2. As soon as practicable' following City Council approval on March 18, 2014, a
Retirement Health Savings Plan (RHSP) will be implemented for
Management /Confidential Employees as follows:
Article 2. Leaves
Section 3. _ Sick Leave
E. Annual Conversion of Sick Leave
In the last full, pay period of the fiscal year, Management /Confidential Employees must
convert sick leave to cash under-the following conditions:
1. After conversion, employee must have 'a minimum balance of 168 'hours of
sick leave.
2. The employee has used .32 hours or,. less of sick leave in the immediately
preceding 12 months.
3. Employees ,can convert. 50% of their annual sick leave ,accrual, less sick leave
used in the immediately preceding 12 months, up to a maximum of 40 hours. Sick
leave use includes use of family sick leave.
Example: employee used 16 hours in preceding 12 months .
96. hours of annual accrual x 50% = 48 hours
48 hours — 16 used.= 32 hours converted to cash
F. Retirement Health Savings Plan
1. Employees in Group 1 that satisfy the provisions contained in Article 2, Section
3.E. must contribute 100% of their annual sick leave conversion to a Retirement
Health Savings Account as a cash deposit.-
2. Employees in Group 2 -4 that satisfy the provisions contained in Article `2,
Section 3.E. must contribute 50% of their annual sick leave conversion to a
Retirement Health Savings Account as a cash deposit (e.g., an employee. that
is eligible to convert 40 hours of sick leave would receive the .,equivalent of
20 hours in cash and the equivalent of 20 hours would be contributed to
their Retirement Health Savings Account as a cash deposit).
3. Any fees related to the RHSP will be paid by employees: r.
EXHIBIT B March 18, 2014 Item # 1. q
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4. The first annual RHSP contribution shall be the last full pay period of Fiscal
Year 2013 -14 (i.e., pay period ending June 22, 2014).
5. In the event of a Management /Confidential employee's death, if the
Management/Confidential Employee is a participant in the RHSP and does not
have a surviving spouse or surviving IRS qualified dependent/s, the
Management /Confidential employee's Retirement Health Savings account
balance shall remain in the trust (i.e., RHSP) to be allocated among all RHSP
Management/Confidential employee participants. The allocation will- be --on a pro
rata share, based upon RHSP Management /Confidential employee participant
account balances.
G. Payout of Sick Leave
After five (5) years of employment with the City and upon termination- or retirement,
a Management/Confidential employee will receive compensation for unused sick leave
as follows:
1. Upon retirement, an employee" will receive 50% of all sick leave. hours
accrued. Calculations will be at the employee's rate . of pay at 'the .time of
retirement, subject to `maximum annual retirement sick leave payout restrictions
then in effect.
2. Upon retirement, an employee shall convert 100% of the, sick leave payout to
a Retirement Health Savings Account as a cash deposit...
3. The maximum annual retirement sick leave payout (payout), currently. $5,000,
shall increase with the annual across - the -board salary . increases under
Article 1, as follows:
a) The maximum payout shall be $5,100, effective March 18,'2014, or as soon
as practicable thereafter., subject to the implementation of a RHSP (e.g., The•
maximum payout of $5,000 x 1.02 = $5,100).
b) The maximum payout shall be $5,202, effective the beginning of the pay
period which includes July .1, 2014, or as . soon as practicable
thereafter, subject to the implementation oV a RHSP (e.g., The
maximum payout of $5,100 x 1.02 = $5,202).
c) The maximum payout thereafter shall increase by the., same percentage as
future MOU salary increases, effective the same date as'that salary increase.
4. Upon leaving City employment for reasons other than retirement, .an employee will
receive 50% of,all "sick leave hours accrued. Calculations will be at the employee's
rate of pay at the time of termination and that payout will not exceed $2,000.
5. Upon the death of an employee, compensation for"'unused sick leave shall be at
the same rate. as the retirement benefit. Payment shall be made to the employee's
designated beneficiary.
All other . provisions of the existing Salary and Benefit Plan for the
Management /Confidential Group will remain in effect.
11 of 11 EXHIBIT B March 18, 2014 Item #