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R-9664 RESOLUTION NO. 9664 (ees) (CITY COUNCIL SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AUTHORIZING THE CITY MANAGER TO EXECUTE A MEMORANDUM OF UNDERSTANDING SETTING THE TERMS AND CONDITIONS OF MEDICAL INSURANCE COVERAGE WITH MANAGEMENT TEAM ASSOCIATES, SUPERVISORY TEAM ASSOCIATES, ADMINISTRATIVE TEAM ASSOCIATES, MUNICIPAL EMPLOYEES ASSOCIATION, PUBLIC ATTORNEYS' UNION, UNITED TRANSPORTATION UNION (LOCAL 1785), PUBLIC ATTORNEYS' LEGAL SUPPORT STAFF UNION AND EXECUTIVE PAY PLAN PARTICIPANTS WHEREAS, the City administration and representatives of the City's miscellaneous employee (non-safety) bargaining units have met and conferred under the terms of Ordinance No. 801 (CCS) and have reached agreement on the terms and conditions of medical insurance coverage; and WHEREAS, Section 2.06 of Ordinance No. 801 (CCS) of the City of Santa Monica requires preparation of a written Memorandum of Understanding between the administration and employees if an agreement can be reached; and WHEREAS, Section 2.06 of Ordinance No. 801 (CCS) further provides that any such Memorandum of Understanding shall not be binding unless and until presented to the governing body for determination; and WH EREAS, the purpose of the Memorandum of Understanding is to promote and provide harmonious relations, cooperation, and understanding between the City and its miscellaneous employee (non-safety) bargaining units; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: Section 1. The City Council of the City of Santa Monica does hereby approve and authorize the City Manager to execute the Memorandum of Understanding setting the terms and conditions of medical insurance coverage for miscellaneous (non-safety) City employees which has been ratified by the City's miscellaneous employee (non-safety) bargaining units, a copy of which is attached hereto. Section 2. The provisions setting the terms and conditions of medical insurance coverage, currently contained in the separate Memorandums of Understanding between the City and the following bargaining units will be superceded by the attached Memorandum of Understanding: Management Team Associates, Supervisory Team Associates, Administrative Team Associates, Municipal Employees Association, Public Attorneys' Union, United Transportation Union (Local 1785), Public Attorneys' Legal Support Staff Union and Executive Pay Plan participants. Section 3. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: (medical insurance.umbrella agreement.Council Resolulion.061201) Adopted and approved this 12th of June, 2001. I, Maria M. Stewart, City Clerk of the City of Santa Monica, do hereby certify that the foregoing Resolution No. 9664 (CCS) was duly adopted at a meeting of the Santa Monica City Council held on the 12th of June, 2001, by the following vote: Ayes: Council members: Noes: Council members: Abstain: Council members: Absent: Council members: O'Connor, McKeown, Genser, Mayor Feinstein None None Holbrook, Katz, Mayor Pro T em Holbrook ATTEST: MEMORANDUM OF UNDERSTANDING (UMBRELLA AGREEMENT) SETTING THE TERMS AND CONDITIONS OF MEDICAL INSURANCE COVERAGE FOR ALL MISCELLANEOUS CITY EMPLOYEES BETWEEN CITY OF SANTA MONICA AND MANAGEMENT TEAM ASSOCIATES, SUPERVISORY TEAM ASSOCIATES, ADMINISTRATIVE TEAM ASSOCIATES, MUNICIPAL EMPLOYEES ASSOCIATION, PUBLIC ATTORNEYS' UNION, UNITED TRANSPORTATION UNION(LOCAL 1785), PUBLIC ATTORNEYS' LEGAL SUPPORT STAFF UNION AND EXECUTIVE PAY PLAN PARTICIPANTS The term of this Agreement shall be from July 1, 2001 through June 30, 2004. Employees covered hereunder shall be all miscellaneous (i. e., non-safety) City employees covered by the California Public Employees' Retirement System (Ca1PERS) and represented by the Coalition, which is comprised of the following City bargaining units: Administrative Team Associates (ATA) , Management Team Associates (MTA) , Municipal Employees Association (MEA), Public Attorneys Union (PAU), Public Attorneys' Legal Support Staff Union (PALSSU), Supervisory Team Associates (STA) and United Transportation Union, Local (UTU). This Agreement shall also cover members of the Executive Pay Plan (EPP). This Agreement shall not cover or pertain to safety (i.e., Police and Fire) employees covered by CalPERS. However, this Agreement shall apply to a successor recognized employee organization for any bargaining unit which is a member of the Coalition as of July 1, 2001. Subject to the provisions of this Section, the City shall contract with the California Public Employees' Retirement System (CalPERS) to make available to those miscellaneous employees and their eligible dependents and to miscellaneous eligible retirees and dependents to the extent required by law the medical insurance benefits available under the Public Employees' Medical and Hospital Care Act, as set forth in Section 22761, et. seq., of the California Government Code (hereinafter referred to as the CalPERS Program) . Each employee covered hereunder desiring to be covered hereunder may contribute, on a pre-tax basis, monies into an Internal Revenue -1- Code Section 125 plan established for the purpose of employees to pay health insurance costs which responsibility of the employee. enabling are the For active miscellaneous employees and their dependents who are eligible to participate in the medical insurance plans provided under the CalPERS Program ("Eligible Employee"), a composite medical insurance premium for the CalPERS Program shall be set at the beginning of each medical plan year. For the purpose of calculating the composite medical insurance premium, only the cost of the least expensive Preferred Provider Option (PPOl medical insurance plan will be used in those cases where an employee elects coverage under another PPO medical insurance plan. The composite medical insurance premium shall be derived by dividing (a) the total monthly premiums, including any administrative fees and/or contingency reserves required by CalPERS, for all eligible employees plus any cash-in-lieu of insurance payments made to employees electing to not participate in the CalPERS Program and any premiums paid to CalPERS on behalf of retiree annuitants by (b) the number of eligible employees as of that date, which would include employees electing the cash-in-lieu option. The City will establish a "composite" monthly insurance premium, as described in this paragraph, in the administration of the medical insurance program; and such composite premium will be the same for every eligible employee, regardless of family status or medical plan selected. The composite monthly insurance premium shall be set once a year and shall have no effect on the payment of the City's insurance premium contribution. If new eligible employees are hired, those employees will receive the same medical insurance premium contribution as other employees covered by this Agreement. The cost of coverage under the CalPERS Program for each miscellaneous retiree annuitant shall be the actual premium established by CalPERS for the type of coverage elected by the retiree annuitant. The City shall contribute toward the payment of premiums under the CalPERS Program on behalf of each eligible active employee who elects to participate in the CalPERS Program the sum of $16.00 per month. The City shall contribute toward the payment of premiums under the CalPERS Program on behalf of each eligible miscellaneous retiree annuitant the minimum amount required by the CalPERS, not to exceed the $16.00 per month contribution made by the City on behalf of each active employee. In addition, each month the City shall contribute on behalf of each eligible active miscellaneous employee toward a cafeteria plan the amount of the composite medical insurance premium, described in the fourth full paragraph of this Agreement, not to exceed the City -2- medical insurance contribution cap of $475 per month less the $16 per month contribution to CaIPERS. Each eligible employee shall have the right to elect medical coverage from those available under the Public Employees Medical and Hospital Care Act (PEM and HCA) . Each eligible employee can use this City contribution to cover all or a portion of the cost of medical insurance for the employee and his/her eligible dependents under one of the CalPERS Program options. Regardless of the actual cost of medical coverage under the PEM and HCA, the cost of each option under the CalPERS program (the "CaIPERS Program Option") is the monthly composite medical insurance premium defined in the fourth full paragraph of this Agreement. However, those employees who elect a PPO medical insurance plan other than the least expensive PPO medical insurance plan offered by CalPERS will be required to pay, through payroll deduction, the difference between the premium of the PPO medical insurance plan selected and the PPO premium which would have been incurred had the employee selected the least expensive PPO medical insurance plan. In the event the cost of the CalPERS Program Option is greater than the sum of the (1) City's contribution to the cafeteria plan pursuant to this paragraph and the $16/month contribution to CalPERS / the difference shall be paid by each eligible employee through a payroll deduction or a contribution from the employee's 125 plan account. Any tax liability associated with the contribution made by the City to the cafeteria plan shall be paid by the employee upon whose behalf the contribution to the cafeteria plan is made. Pursuant to the terms of the cafeteria plan, any eligible employee electing not to receive medical coverage pursuant to the options available under the PEM and HCA shall be entitled to a lump sum monthly cash payment in the amount of $150.00, with the difference between the City contribution to the cafeteria plan on the employee's behalf and the $150.00 lump sum payment being used to offset the premiums incurred under the CalPERS Program for current program participants. From July 1/ 2001 through June 30, 2004, the City shall contribute $142 per month on behalf of each eligible active miscellaneous employee covered by this Agreement into a trust to be established and administered by the employees covered hereunder in accordance with federal and state laws. Until such time that the Trust has been established, the City will place the City contributions towards the Trust in an interest bearing account. Once the Trust has been established, those contributions and all accrued interest on those contributions will be deposited by the City in the appropriate Trust account. The trust will be used to pay all or part of insurance premiums for eligible retiree annuitants and dependents. The employees covered hereunder shall be responsible for all costs associated with establishing and administering the -3- trust. City contributions to said trust shall be governed by applicable federal and state laws. The City shall not be responsible for any tax liability associated with contributions to and/or payments made from the trust. The monthly contribution for an active employee will only be made for each month that the employee is eligible to receive medical insurance coverage under the CalPERS Program. Under the terms of this Agreement, City contributions to the trust shall cease as of June 30, 2004. As regards the tax liability provision of the third and sixth fuil paragraph of this Agreement, the City warrants that the cafeteria plan is a bona fide IRS Section 125 cafeteria plan. The regular and intended effect of the implementation of the plan, under current law, is to enable employees to choose between the receipt of benefits which are not subject to either State or Federal income tax and benefits which are subject to tax without the choice resulting in a taxable event. Thus, the tax liability provision shall be interpreted to mean that, in the event of a change in IRS regulations or tax law that makes cafeteria benefits taxable, the employee (not the City) is responsible for the taxes. In the absence of such a change, the provision pertaining to tax liability shall have no effect. If the City is required by CalPERS to make payments for contingency reserves, 100% of those costs shall be included in the calculation of the composite monthly insurance premium. Employees covered hereunder shall be obligated to pay to CalPERS all of the amounts required for administrative fees for covered employees and their eligible dependents and retiree annuitants and eligible dependents. The amount required by CalPERS for administrative fees for covered employees and their dependents and retiree annuitants and eligible dependents shall be included in the calculation of the composite monthly insurance premium established for active employees covered hereunder. If during the term of this Agreement the City shall be required to pay an amount greater than $16.00 per month for health insurance premiums on behalf of each retiree annuitant and any eligible dependents, the City shall be reimbursed for the aggregate increased cost obtained by multiplying the amount of the required contribution in excess of $16.00 by the total number of retiree annuitants participating in the CalPERS prograrn (1) by direct payment from the employees covered hereunder or (2) by reducing the amount of the City's cafeteria contribution on behalf of active employees, on a pro-rata basis. -4- IN WITNESS WHEREOF, the parties hereto have caused this Memorandum of Understanding to be executed this day of June, 2001. ADMINISTRATIVE TEAM ASSOCIATES Lauralee Asch, President ~AGEMENT TEAM ASSOCIATES Renee Cowhig, President MUNICIPAL EMPLOYEES ASSOCIATION David Shirey, President PUBLIC ATTORNEYS' UNION David Armstrong, PAU Representative PUBLIC ATTORNEYS' LEGAL SUPPORT STAFF UNION Judy Silverman, PALSSU Representative -5- CITY OF SANTA MONICA Susan E. McCarthy City Manager ATTEST: City Clerk APPROVED AS TO FORM: SUPERVISORY TEAM ASSOCIATES Carl Olson, President UNITED TRANSPORTATION UNION (LOCAL 1785) Percival Palmer, General Chairman EXECUTIVE PAY PLAN Craig Perkins, EPP Representative (F: \labor\MOU\MOV .medical insurance .miscellaneous employees. 2001-2004) -6-