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HomeMy WebLinkAbout06 - MOU Retiree Medical ProgramCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. ..6 January 23, 2007 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Sharon Wood, Assistant City Manager 949 - 644 -3222, swood@city.newport- beach.ca.us SUBJECT: Supplemental Memoranda of Understanding Regarding Retiree Medical Program with City Employees Association, Fire Management Association, Firefighters Association, Employees League, and Professional and Technical Employees Association RECOMMENDATION: Approve and authorize the Mayor to execute the Supplemental Memoranda of Understanding (SMOUs). DISCUSSION: The City reached agreement on a new, defined benefit, retiree medical program with all of its full -time employee associations in 2005. This program was innovative, and was developed with considerable input from special outside counsel with expertise in federal income tax regulations. Through staffs continuing consultation with counsel, we have learned that one provision of the program was not structured tightly enough to avoid a possible "constructive receipt" of income problem. That provision is the ability to convert leave time remaining at the time of separation from City service to the employee's medical expense reimbursement account. The proposed SMOUs correct this potential problem by strengthening the language regarding the ability to change the percent of conversion selected by each association, and by requiring that the same percent be applied whenever an employee wishes to convert leave balance to cash. Because of the latter change, which affects employees throughout their careers with the City, some associations also chose to change the percent of conversion they had selected when the program was initiated. There is no cost to the City for these changes. This agenda item would approve the proposed changes for all but three associations. New MOUs with the Police Employees and Management Associations, which include Supplemental Memoranda of Understanding January 23, 2007 Page 2 the provisions described here, are also on this City Council agenda. We are in negotiations with the Lifeguard Management Association, and will include the revised retiree medical provisions in their new. MOU. Submitted by: Sharon Wood Assistant City Manager Attachments: Supplemental Memoranda of Understanding with: 1. City Employees Association 2. Fire Management Association 3. Firefighters Association 4. Employees League 5. Professional and Technical Employees Association 7 SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach and the Newport Beach City Employees Association for the term commencing July 1, 2005 and concluding June 30, 2007, and the SMOU between the parties executed December 13, 2005. SECTION 2 — Retiree Health Benefits is amended to read as follows 2. Effective December 24. 2005 iii. Part C contributions (leave settlement as determined by Association): The Association has determined that the level of contribution for all employees it represents will be 0% of sick and flex leave. Any future changes are subject to the following constraints. All employees within the Association must participate :at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the Association decides to participate in Part C contributions, at any level, this same level of participation is mandatory for any conversion of leave to cash by its members, with the exception of "spillover" amounts above the maximum accumulation balance. No such spillover payments will be included in Part C contributions. Use of leave for time off purposes is not constrained by this prohibition. 1 z Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and species that sick leave hours are "cashed out" on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation/flex leave participation, and thresholds must be separately identified by the Association. All other provisions of the MOU and SMOU executed December 13, 2005 remain in effect. Executed this day of 2007. NEWPORT BEACH CITY EMPLOYEES ASSOCIATION 0 CITY OF NEWPORT BEACH By: Mayor ATTEST: City APPROVED AS TO FORM: City Attorney 2 u SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach and the Newport Beach Fire Management Association for the term commencing January 1, 2005 and concluding December 31, 2007. SECTION 4 — Fringe Benefits, Subsection D. Retiree Health Benefits Program is amended to read as follows 2. Effective December.24. 2005 iii. Part C contributions (leave settlement as determined by Association): The Association has determined .that the level of contribution for all employees it represents will be 100% of sick and 0% of flex leave. Any future changes are subject to the following constraints. All employees within the Association must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out' for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50 %would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the Association decides to participate in Part C contributions, at any level, this same level of participation is mandatory for any conversion of leave to cash by its members, with the exception of "spillover" amounts above the maximum accumulation balance. No such spillover payments will be included in Part C contributions. Use of leave for time off purposes is not constrained by this prohibition. 4z Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and specifies that sick leave hours are 'bashed out" on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation /flex leave participation, and thresholds must be separately identified by the Association. All other provisions of the MOU remain in effect. Executed this day of 2007. NEWPORT BEACH FIRE MANAGEMENT ASSOCIATION IN CITY OF NEWPORT BEACH By: Mayor ATTEST: City APPROVED AS TO FORM: City Attorney 7 SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach and the Newport Beach Firefighters Association for the term commencing January 1, 2005 and concluding December 31, 2007. SECTION 4 — Fringe Benefits, Subsection E. Retiree Health Benefits Program is amended to read as follows 2. Effective December 24. 2005 iii. Part C contributions (leave settlement as determined by Association): The Association has determined that the level of contribution for all employees it represents will be 50% of sick and flex leave. Any future changes. are subject to the following constraints. All employees within the Association must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the Association decides to participate in Part C contributions, at any level, this same level of participation is mandatory for any conversion of leave to cash by its members, with the exception of "spillover" amounts above the maximum accumulation balance. No such spillover payments will be included in Part C contributions. Use of leave for time off purposes is not constrained by this prohibition. 'T Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which species the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and specifies that sick leave hours are "cashed out" on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation/flex leave participation, and thresholds must be separately identiflied by the Association. All other provisions of the MOU remain in effect. Executed this day of 2007. NEWPORT BEACH FIREFIGHTERS ASSOCIATION an CITY OF NEWPORT BEACH By: Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney Q SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach and the Newport Beach Employees League for the term commencing July 1, 2005 and concluding June 30, 2007, and the SMOU between the parties executed December 13, 2005. SECTION 2 — Retiree Health Benefits is amended to read as follows 2. Effective December 24. 2005 iii. Part C contributions (leave settlement as determined by Association): The Association has determined that the level of contribution for all employees it represents will be 0% of sick and flex leave. Any future changes are subject to the following constraints. All employees within the Association must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in.the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the Association decides to participate in Part C contributions, at any level, this same level of participation is mandatory for any conversion of leave to cash by its members, with the exception of "spillover" amounts above the maximum accumulation balance. No such spillover payments will be included in Part C contributions. Use of leave for time off purposes is not constrained by this prohibition. O Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out' at 800, and specifies that sick leave hours are "cashed out' on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation/flex leave participation, and thresholds must be separately identified by the Association. All other provisions of the MOU and SMOU executed December 13, 2005 remain in effect. Executed this day of 2007. CITY OF NEWPORT BEACH By: Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney NEWPORT BEACH EMPLOYEES LEAGUE 2 I r, SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMO.U) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach and the Newport Beach Professional and Technical Employees Association for the term commencing July 1, 2005 and concluding June 30, 2007, and the SMOU between the parties executed December 13, 2005. SECTION 2 — Retiree Health Benefits is amended to read as follows. 2. Effective December 24. 2005 iii. Part C contributions (leave settlement as determined by Association): The Association has determined that the level of contribution for all employees it represents will be 0% of sick and flex leave. Any future changes are subject to the following constraints. All employees within the Association must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash . equivalent for leave hours to .be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City. would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the Association decides to participate in. Part C contributions, at any level, this same level of participation is mandatory for any conversion of leave to. cash by its members, with the exception of "spillover" amounts above the maximum accumulation balance. No such spillover payments will be included in Part C contributions. Use of leave for time off purposes is not constrained by this prohibition. 1 Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "bashed out," based on time of service. The manual also caps the number of hours that can be 'bashed out' at 800, and specifies that sick leave hours are "cashed out' on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacationtflex leave participation, and thresholds must be separately identified by the Association. All other provisions of the MOU and SMOU executed December 13, 2005 remain in effect. Executed this day of 2007. NEWPORT BEACH PROFESSIONAL AND TECHNICAL EMPLOYEES ASSOCIATION M CITY OF NEWPORT BEACH By: Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney irk 4 -�