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sr-092810-3jCity Council Meeting: September 28, 2010 Agenda Item: ~,S To: Mayor and City Council From: Donna C. Peter, Director of Human Resources Subject: Resolution Authorizing the City Manager to Execute a Memorandum of Understanding Setting the Terms and Conditions of Medical Insurance Coverage with the Coalition of Santa Monica City Employees Recommended Action Staff recommends that City Council adopt the attached Resolution authorizing the City Manager to execute a Memorandum of Understanding (MOU) establishing the terms and conditions of medical insurance coverage with the City's miscellaneous employee (non-safety) bargaining units, the participants of the Executive Pay Plan and the Santa Monica Firefighters, Local 1109 (IAFF) as represented by the Coalition of Santa Monica City Employees. Executive Summary The current Memorandum of Understanding (MOU) expired June 30, 2010. Per the terms and conditions of that MOU, negotiations with the Coalition for a successor MOU has resulted in a new agreement. Sufficient funds are included in the current 2010-2011 fiscal year adopted budget for the City's contributions towards medical insurance premiums and the monthly contributions into the medical trusts. This agreement will result in three changes to the existing structure of employee benefits provided by the City of Santa Monica to the represented employees: 1) Effective January 1,2011, employees will begin contributing a flat dollar amount towards the cost of their medical insurance. 2) City costs for medical insurance for permanent part-time employees hired after July 1, 2010 will be limited to the cost of one of the HMO plans available. 3) A comprehensive employee wellness plan will be implemented. Funding for this plan will be shared by the Coalition and the City. Discussion Through the meet and confer process, the City and the Coalition of Santa Monica City Employees, comprised of representatives from the City's miscellaneous employee (non- safety) bargaining units (Management Team Associations, Supervisory Team Associates, Administrative Team Associates, Municipal Employees Association, Public Attorneys Union, Public Attorneys' Legal Support Staff Union, United Transportation Union (Local 1785), Executive Pay Plan Participants) and the Santa Monica Firefighters, Local 1109 (IAFF), agreed to a Memorandum of Understanding (umbrella agreement) setting forth the terms and conditions of medical insurance coverage for their employee groups. As part of the negotiation process, staff conducted a market survey of medical benefits using nine established comparable cities. All nine cities required employees to share in the cost of their medical benefits. The term of the umbrella agreement is 18 months, from July 1, 2010 through December 31, 2011. The provisions of the agreement are as follows: the City shall contribute towards medical premiums an amount equal to the actual cost of the medical insurance premium for the medical plan that an eligible employee is enrolled in, less any required employee contributions. Effective January 1, 2011, each- active eligible employee will contribute apre-tax monthly flat dollar amount towards the medical premium for their City-provided medical insurance plan. During the term of the agreement, the reserve/trust account established in 2005 will be utilized to subsidize a portion of the employee's contribution. Permanent part-time City employees will have the option of electing from one of the City-provided HMO medical insurance plans. Permanent part-time City employees may, at their option, pay the difference between the premium of the less costly HMO medical insurance plan and the PPO-type Plan plus any employee contribution for the selected plan. 2 The City will implement a comprehensive wellness program, which will include incentives and services to promote the well being and healthiness of employees. A portion of the cost to establish and maintain the wellness program will be funded by the reserve/trust account in an amount not to exceed $95,000. The MOU also provides for continuing City contributions into existing medical trusts that are to be used to reimburse all or part of the health insurance premiums for eligible retirees and dependents. During the term of the MOU, the City will continue to contribute $142/month on behalf of each eligible active non-sworn employee into a medical trust established and administered by the non-sworn employees. The City will also continue to contribute $142/month on behalf of each eligible active employee represented by Local 1109 (Firefighters) into a medical trust established and administered by Local 1109. Financial Impacts & Budget Actions The provisions contained in this agreement will result in an overall savings of $1,091,262 over the term of the agreement. Sufficient funds are included in the current 2010-2011 fiscal year budget for the City's contributions towards medical insurance premiums and the monthly contributions into the medical trusts. No additional appropriation or budget action will be necessary. Budget authority for. FY2011-2012 will be requested in the annual budget cycle for City Council approval. Prepared by: Grace Quitzon, Acting Senior Human Resources Analyst Approved: Forwarded to Council: ~ ~~ ~- Donna C. Peter Rod Gould Director, Human Resources City Manager Attachments: A. Resolution 3 Reference Resolution No. 10532 (CCS).