SR 10-25-2011 3E10_
City of City Council Report
Santa Monica"
City Council Meeting: October 25, 2011
Agenda Item:
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 the 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 and the participants of the Executive Pay Plan
as represented by the Coalition of Santa Monica City Employees.
Executive Summary
The current MOU with the Coalition of Santa Monica City Employees for medical
insurance coverage would expire on December 31, 2011. Per the terms and conditions
of that MOU, negotiations with the Coalition for a successor MOU have resulted in a
new agreement. Sufficient funds are included in the adopted FY 2011 -2013 budget for
the City's contributions towards medical insurance premiums. Costs associated with this
agreement that extend into FY 2013 -2014 are within the current projections used in the
budget forecast.
This agreement would 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, 2012, active employees covered under the agreement would
to contribute 5% towards the cost of their medical insurance premium, not to
exceed a 15% annual increase per year through the term of this agreement.
2) Effective January 1, 2012, the City shall make a one -time lump sum contribution
of $250,000 into the Reserve Fund established in the 2005 MOU between the
City of Santa Monica and the Coalition.
3) At the beginning of each calendar year of this agreement, the City's contributions
to the Retiree Medical Trust, currently at $142 per month on behalf of each
eligible employee, would increase by 2 %.
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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), and Executive Pay Plan Participants), agreed to a Memorandum of
Understanding (umbrella agreement) setting forth the terms and conditions of medical
insurance coverage for their employee groups.
The term of the umbrella agreement is three years, from January 1, 2012 through
December 31, 2014. 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, 2012, each active eligible
employee would contribute a pre -tax monthly amount equal to 5% of the actual premium
cost towards the medical premium for their City - provided medical insurance plan.
Should the cost of annual premiums for the medical plans increase, the employee
contribution would increase no more than 15% per year for their selected plans.
Effective January 1, 2012, the City shall make a one -time lump sum contribution of
$250,000 into the Reserve Fund established in the 2005 MOU between the City of
Santa Monica and the Coalition. During the term of the agreement, the Reserve Fund
would be utilized to subsidize a portion of the employee's contribution.
The MOU also provides for continuing City contributions into the Retiree Medical Trust.
The Retiree Medical Trust is used to reimburse' all or part of the health insurance
premiums for eligible retirees and dependents. At the beginning of each calendar year
of this Agreement, the City's contribution would increase by 2 %. Effective January 1,
2012, the amount of the contribution would increase to $144.84 per month per eligible
employee. Effective January 1, 2013, the amount would increase to $147.74 per month
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per eligible employee. Effective January 1, 2014, the amount would increase to
$150.69 per eligible employee.
Financial Impacts & Budget Actions
MOU provisions with financial impact include a $250,000 one -time payment to the
Reserve Fund, and an annual 2% increase in City contributions to the Retiree Medical
Trust for the MOU term. City contributions for the 2% annual increase are $29,612 in
FY 2011 -2012, $59,817 in FY 2012 -2013, $61,013 in FY 2013 -2014 and $30,808 for
FY 2014 -2015. Sufficient funds are available in the FY 2011 -2013 budget due to
medical plan cost savings (see Staff Report from October 11, 2011). No additional
appropriation is needed. Budget authority for FY 2013 -2014 will be requested in the
FY 2013 -2015 budget cycle for City Council approval.
Prepared by: Grace Quitzon, Senior Human Resources Analyst
Approved:
Donna C. Peter
Director, Human Resources
Attachments:
A. Resolution
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Forwarded to Council:
Rod Gould
City Manager
Reference Contract No.
9494 (CCS) and
Resolution No. 10625
(CCS).