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f \mou amend local 1109.1997.bancroft pms
Council Meeting: January 13, 1998
Santa Monica, California
TO Mayor and CIty CounCIl
FROM: City Staff
SUBJECT Adoption of Resolution Amending Memorandum of Understanding
between the City of Santa MOnica and the Santa MOnica Firefighters,
Local 1109, IAFF
INTRODUCTION
This report requests that CounCil adopt the attached Resolution authorizing the City
Manager to execute an amendment to the Memorandum of Understanding (MOU)
between the City of Santa MOnica and the Santa MOnica Firefighters, Local 1109 IAFF,
(Local 1109) to provide for a monthly employee contnbutlon towards the cost of
medical Insurance coverage Under the proposed amendment, the employee medical
Insurance premium contribution Will result In a cIty-paid contnbutlon of the same
amount Into a Post Employment Health Plan
BACKGROUND
The current Memorandum of Understanding (MOU) between the CIty and Local 1109
has been In effect since July 1, 1996. Under the terms of the MOU, a Post
Employment Health Plan (PEHP) was Implemented. The Internal Revenue Service rules
and regulations requIre that non-taxed contnbutlons mto the PEHP be employer
contributions. Under the terms of the current MOU, the City makes contnbutlons Into
the PEHP
Local 1109 wishes to amend the MO U to Increase the city-paid
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JAN 1 3 1998
contributions Into the PEHP. In return for an Increase In the City's contribution Into the
PEHP, Local 11 09 employees have agreed to make a contribution of the same amount
towards the cost of city-provided medical Insurance. Currently, the City pays the
entire medical Insurance premium on behalf of each employee and his/her eligible
dependents. Per the attached amendment to the MOU between the City and Local
1109, the Increase In the City's contribution Into the PEHP would be directly offset by
employee medical Insurance premIum contributions
BUDOI;T/FINANCIAL IMPACT
There Will be no financial Impact for the City as a result of the proposed modifications
to the agreement between the City and Local 1109.
RECOMMENDATION
It IS recommended that Council authorize the City Manager to execute the attached
amendment to the MOU between the City and Local 1109.
Prepared by: Karen Bancroft
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RESOLUTION NO. 9232
(CITY COUNCIL SERIES)
AMENDMENT TO THE
MEMORANDUM OF UNDERSTANDING
BETWEEN
CITY OF SANTA MONICA, CALIFORNIA
AND
SANTA MONICA FIREFIGHTERS, LOCAL 1109 IAFF
WHEREAS, the Memorandum of Understanding between the City of Santa
MOnica and the Santa MOnica FIrefighters, Local 1109 IAFF (Local 1109) has been In
effect since July 1, 1996 and
WHEREAS, Section 3.01 (Health Insurance) provides for a medical Insurance
program and the establishment of a Post Employment Health Plan (PEHP);
WHEREAS, the City of Santa MOnica and the Santa MOnica Firefighters,
Local 1109 IAFF wish to modify Section 3 01 of the eXisting Memorandum of
Understanding with regard to the Post Employment Health Plan and the city-prOVided
medical Insurance program;
NOW, THEREFORE, both parties to the Memorandum of Understanding between
the City of Santa MOnica and the Santa MOnica Firefighters, Local 1109 IAFF, agree
to modify the eXisting Memorandum of Understanding to replace Subsection A
(Medical Insurance) of Section 3 01 (Health Insurance) with the follOWing language
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Subject to the provIsions of thIs Section, the City shall contract wIth the Public
Employees I Retirement System (PERS) to make available to those employees and their
eligible dependents and to eligible retirees and dependents to the extent required by
law the health Insurance benefits available under the Public Employees' Medical and
Hospital Care Act, as set forth In Section 22761, et. sea., of the California
Government Code (hereinafter referred to as the PERS Program). The health Insurance
benefits available under the PERS Program shall replace any other health Insurance
benefits available under non-PERS Program health Insurance benefits maintained
through the City, prOVided, however, that the City shall contInue to prOVide to all
employees covered by thiS Agreement and eligible dependents the benefits avaIlable
under the eXisting dental Insurance plans malntamed by the City, With the City to pay
100% of the premium for said dental Insurance plans, prOVIded that employees and
dependents partiCipate In the City-provided dental Insurance plans
Each employee desJrlng to be covered hereunder may contribute, on a pre-tax
baSIS, monies Into an Internal Revenue Code Section 125 plan established for the
purpose of enabling employees to pay the employee portion of the total cost of
medical Insurance coverage on a pre-tax baSIS
For employees and their dependents electmg medical coverage under the PERS
Program (a Participating Employee"), a composite medical Insurance premium for the
PERS Program shall be set at the beginning of each medical plan year and shall be
derived by diViding (a) the total monthly premiums, including any administratIve fees
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and any contingency reserves required by PERS, for all Partlclpatmg employees and
dependents covered hereunder based on their elections pursuant to the fifth paragraph
by (b) the number of Participating employees covered hereunder as of that date and
then subtracting from that quotient $110. The City Will create 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
Participating 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 employees
are hired, those employees Will receive the same medical Insurance premium
contnbutlon as other employees covered by thIs MOU The cost of coverage under the
PERS Program for each retiree annuitant shall be the actual premium established by
PERS for the type of coverage elected by the retiree annuitant
The City shall contnbute toward the payment of premiums under the PERS
Program on behalf of each eligible employee and, to the extent required by law, each
eligible retiree annuitant, the sum of $16.00 per month.
In addition, each month the City shall contribute on behalf of each eligible
employee toward a cafetena plan the lesser of (I) $459, which IS the City's medical
Insurance contribution cap of $475 per month less the $1 6 per month contribution to
PERS, and (II) the difference between (a) the composite monthly Insurance premium
as calculated In the third paragraph of thiS Section 3.01 and (b) the $16 contribution
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set forth In the fourth full paragraph of thIs SectIon 3.01. 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 contnbutlon to cover all or a portIon of the cost of medical Insurance for
the employee and hIs/her eligible dependents under one of the PERS Program options
Irrespective of the actual cost of medIcal coverage under the PEM and HCA, the cost
of each optIOn under the PERS program (the "PERS Program Option") IS the monthly
composite medIcal Insurance premium defmed In the third full paragraph of this Section
3.01 plus $110. In the event the cost of the PERS Program option IS greater than the
sum of the (1) CIty's contnbutlon to the cafetena plan pursuant to this paragraph and
the $1 6/month contribution to PERS, the difference shall be paid through one of the
follOWIng two arrangements selected by Local 1109: (a) payment to first be made from
the employee's 125 Plan account With any additional payments requIred to be made
by direct payroll deduction by each employee or {b} direct payment by local 1109
Any tax liability associated With the contnbutlon made by the City to the cafeteria plan
shall be paid by the employee upon whose behalf the contnbutlon to the cafetena plan
IS made Pursuant to the terms of the cafetena plan, any eligible employee electmg
not to receive medical coverage pursuant to the options avaIlable under the PEM and
HCA shall be entitled to a cash payment equal to the City contnbutlon to the cafetena
plan on his/her behalf.
In the event the monthly composite medical Insurance premium IS less than the
City's medlcalmsurance premium contributIon cap, which IS set at $475 per month,
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the difference Will be contributed by the City on behalf of each eligible employee Into
a Post Employment Health Plan (PEHP) Each eligible employee will have his/her own
trust account established In PEHP.
As regards the tax liability prOVISion of the second and fifth full paragraph of this
Section 3 01, the City warrants that the cafeteria plan IS a bona fide IRS Section 125
cafetena 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 pertamlng
to tax liability shall have no effect.
Effective July 1, 1997, the maximum amount of the City's contribution to the
cafeteria plan shall be the difference between (a) the highest medical Insurance
premium contribution "cap" established for any of the City's other bargaining units for
FY97-98 and (b) $16.00. In the event the monthly composite medical Insurance
premium IS greater than the City's medical Insurance premium contribution cap, as
descnbed above, the difference between the monthly composite medical Insurance
premium and the City's Contnbutlon cap shall be paid through one of the follOWing
two arrangements selected by Local 1109 (a) direct payroll deduction by each covered
employee or (b) direct payment by Local 1109.
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If the City IS required by PERS to make payments for contingency reserves,
100% of those costs shall be Included In the calculation of the composite monthly
Insurance premium.
Local 1109 shall be obligated to pay to PERS 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 PERS for administrative
fees for covered employees and therr 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 ehglble dependents, either {a} the City shall be reimbursed for the
aggregate Increased cost obtained by multiplYing the amount of the required
contnbutlon In excess of $16.00 by the total number of retIree annuitants participating
In the PERS Program (1) by direct payment from Local 1109 or (2) by redUCing the
amount of the City's cafeteria contribution on behalf of active employees, on a pro-rata
baSIS, or (b) Local 1109 shall have the alternative option to cause the City to
discontinue to contract for Insurance benefits With PERS under the PERS Program and,
Instead, to allow all active and retired employees and eligible dependents to enroll In
one of the non-PERS Program medical Insurance plans offered by the City. In the
event that Local 1109 exerCises thIS latter option, the City shall pay up to the highest
Insurance premium contnbutlon "cap" established for any of the City's other
.
bargaining Units for the fiscal year In which the change occurs for active employees
and eligible dependents provided that employees covered hereunder partiCipate In the
City-offered medical Insurance programs The CIty's oblIgation to SUbsidize Insurance
premiums for retirees would cease In the event that Local 1109 exercises Its option
to cause the City to discontinue to contract for Insurance benefits With PERS under the
PERS Program If the "composite" Insurance premium established for non-PERS
medical Insurance programs prOVided by the CIty should Increase as a result of Local
1109 employees gOing back mto the non-PERS medrcal rnsurance programs, Local
1109 Will be obligated to cover the total additional cost to the City (a) through drrect
payroll deduction by the employee electing said coverage, calculated on a pro-rata
basrs, or (b) by direct payment from Local 1109
It IS agreed that the Intent of thiS SectIon IS (a) to prOVide an option for
employees under the MOU to select the PERS FIre Fighter Plan; and lb) to provide a
City Insurance premium contribution. It IS not the Intent of the parties to reqUire such
employees to remain In the PERS general plan In the event the Frre Fighter Plan IS
canceled or merged.
The parties agree that they Will meet and confer regarding health Insurance
matters In the event of any of the follOWing contingencies: (a) If the PERS Fire Fighter
Plan IS canceled by PERS; or (b) If the costs of the PERS Fire Fighter Plan (including
any admmistratlve fees and contIngency reserves reqUired by PERS) exceed the City's
Insurance premium contribution ("cap"). It IS the Intent of the City, In the event of
such problems arising With the PERS Firefighter Plan, to permit and to faCIlitate the
return of all City Firefighter employees covered by PERS to a medical Insurance plan
then currently provided by the City to Its other employees, If such a return would not
create a breach of the City's PERS contract.
The parties understand that COBRA participants who, prior to electing COBRA
coverage, were covered by plans available to this bargaining unit shall continue to be
covered by those plans, or by the successors to those plans, and said coverage shall
be the financial responsibility of the COBRA participant.
Except as expressly modified herein, all other terms and conditions set forth In the
Memorandum of Understanding between the City of Santa Monica and the Santa
MOnica Firefighters, Local 1109, IAFF, shall remain In full force and effect.
IN WITNESS WHEREOF, the parties have executed thiS ModificatIOn to the
Memorandum of Understanding between the City of Santa MOnica and the Santa
MOnica Firefighters, Local 1109, IAFF, as of the date of the adoption of thiS
modIfication by City CouncIl.
SANTA MONICA FIREFIGHTERS
LOCAL NO. 1109, IAFF
CITY OF SANTA MONICA
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~orge Menta, President
By
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Dan Matthks, Vice President
Ji. L.)( -
Rlc::zar " mer, Board of Directors
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Steve Wells, Board of Directors
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Dirk Ball/oard of Jlrec~~r~
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Ker+.fiOKdr,-S6ard of Directors
APPROVED AS TO FORM:
Attest.
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Marsha Jones N/1outne
City Attorney
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Crty Clefk 0
iflre mou amend . 997i
Adopted and approved this 13th of January, 1998
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Robert Holbrook, Mayor
I, Mana M Stewart, City Clerk of the City of Santa MOnica, do hereby certify that
the foregoing Resolution 9232 (CCS) was duly adopted at a meeting of the City CounCil
held on the 13th of January, 1998 by the follOWing vote
Ayes Councllmembers Ebner, Feinstein, Genser, Greenberg, Holbrook,
O'Connor, Rosenstein
Noes Councllmembers None
Abstain Councllmembers None
Absent Councllmembers None
ATTEST
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Mana M Stewart, City Clerk