SR-602-004 (8)
PE:medical ins.umbrella MOU.stfrpt.2005-2007.bancroft.pms Santa Monica, California
Council Meeting: April 12, 2005
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Resolution Authorizing the City Manager to Execute a Revised 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, Executive Pay Plan
Participants and the Santa Monica Firefighters, Local 1109 (IAFF) and
Appropriation of Budget Changes
INTRODUCTION
This report requests that Council adopt the attached Resolution authorizing the City
Manager to execute a revised Memorandum of Understanding (MOU) establishing the
terms and conditions of medical insurance coverage with the City's miscellaneous
employee (non-safety) bargaining units and adding the Santa Monica Firefighters, Local
1109 (IAFF), as one of the bargaining units covered by the MOU. This report also
requests approval of appropriations and other budget actions.
BACKGROUND
The current Memorandum of Understanding (MOU) expired on December 31, 2004. Per
the terms and conditions of that MOU, negotiations with the City?s miscellaneous employee
(non-safety) bargaining units and the Santa Monica Firefighters, Local 1109 (IAFF) for a
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successor MOU commenced and resulted in a new agreement that has been ratified by all
of the bargaining units covered by the agreement.
The three-year agreement covers the period from January 1, 2005 through June 30, 2007.
For the first year, the agreement provides for a 12% adjustment to the City?s contribution
towards the cost of medical insurance coverage, increasing the City?s contribution cap from
$475/month to $532/month per covered employee. For the second and third years of the
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agreement, the City?s contribution cap will be increased each January 1 by a percentage
required to cover the composite medical insurance premium or by 12%, whichever is less.
In exchange for a 3-year agreement, the City will use FY2003-04 budget savings to
establish a reserve account in the amount of $2.65 million for the non-sworn employees to
be used for contributions to the miscellaneous employees? retiree medical trust and the
payment of out-of-pocket medical insurance contributions by covered employees; and a
lump sum payment in the amount of $250,000 into the Firefighters? retiree medical trust.
BUDGET/FINANCIAL IMPACT
Assuming a maximum increase of 12% in future years, the cost of increases to the City
medical premium contribution amounts for the 1630 budgeted non-sworn and Firefighter
employees are as follows:
FY2004/05: $ 557,500
FY2005/06: $1,740,800
FY2006/07 $3,070,900
FY2004/05 budget increases can be appropriated from available fund balances. Future
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year cost increases will be presented in their appropriate budgets.
The one-time cost of the lump sum contributions into the reserve account for non-sworn
employees and into the Firefighters? retiree medical trust is $2,900,000. These funds were
set-aside from FY2004/05 year-end savings as a designation on the balance sheet.
In order to make these funds available for use, the following actions are required:
1. Release $2,900,000 from the Council Policy balance sheet designation.
2. Establish a reserve on the balance sheet for Miscellaneous Employee Benefits in
the amount of $2,650,000.
3. Appropriate $250,000 to expenditure account #01312.511930 for the contribution to
the Firefighters? retiree medical trust.
4. Appropriate $557,500 to expenditure account #01274.511740 for medical premium
payments.
5. Authorize the City Manager to charge individual funds their proportionate share of
expenses and make year-end budget changes as necessary.
RECOMMENDATION
It is recommended that Council adopt the attached Resolution authorizing the City
Manager to execute the Memorandum of Understanding setting the terms and conditions of
medical insurance coverage for the City?s non-safety employees and the Santa Monica
Firefighters, Local 1109 (IAFF) and approve the budget appropriations and other actions
identified above.
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Prepared By: Karen Bancroft, Director of Human Resources
See Adopted Resolution No. 10031 (CCS).
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