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Home My WebLink AboutItem No. 19 - Resolutions Fixing Employer Contrib PEMHCA CAlPERS19)Resolutions Fixing of the Employer Contribution Under the Public Employees Medical and Hospital Care Act (PEMHCA) at an Equal Amount for Employees and Retirees 1.Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FIXING THE EMPLOYER CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT AT AN EQUAL AMOUNT FOR EMPLOYEES AND ANNUITANTS (CalPERS); and 2.Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FIXING THE EMPLOYER CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT AT AN EQUAL AMOUNT FOR EMPLOYEES AND ANNUITANTS (NON CalPERS). Page 1 of 3 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Jason Simpson, City Manager Prepared by:Shannon Buckley, Assistant City Manager Date:October 24, 2023 Subject:Resolutions Fixing of the Employer Contribution Under the Public Employees Medical and Hospital Care Act (PEMHCA) at an Equal Amount for Employees and Retirees Recommendation 1. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FIXING THE EMPLOYER CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT AT AN EQUAL AMOUNT FOR EMPLOYEES AND ANNUITANTS (CalPERS); and 2. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FIXING THE EMPLOYER CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT AT AN EQUAL AMOUNT FOR EMPLOYEES AND ANNUITANTS (NON CalPERS). Background The City of Lake Elsinore has an existing agreement with the California Public Employees’ Retirement System (CalPERS) to provide its health program to active Lake Elsinore employees and retirees. The CalPERS health program is governed by the Public Employees Medical and Hospital Care Act (PEMHCA) and the California Code of Regulations (CCR) of the California Public Employees Retirement Law (PERL). PEMHCA contains all the rules and regulations a contracting agency must adhere to, and the resolution is the mechanism by which an agency elects to become subject to PEMHCA. One of the requirements of the PEMHCA is the “equal contribution rule.” The equal contribution rule generally requires a PEMHCA employer to pay the same amount toward health insurance premiums for its retirees as for its active employees. The PEMHCA provides that the employer’s equal contribution rate be at least as much as the “PEMHCA minimum,” which is currently $151 per month for 2023 and is subject to an annual adjustment. One way for a PEMHCA employer to potentially save money is to lower its equal contribution commitment for both actives and retirees to the PEMHCA minimum and then separately subsidize actives’ and retirees’ health care premiums through the use of cafeteria plans or health PEMHCA Resolutions Page 2 of 3 reimbursement arrangements (HRAs). In this way, an employer can differentiate between the treatment of active employees and retirees. It can also differentiate within its active employee and retiree groups by providing differing subsidies through cafeteria plans or HRAs. Per the Side Letter to the 2021-2026 LIUNA Memorandum of Understanding (Attachment 1) and Section 11.2.6 of the 2021-2026 LIUNA Memorandum of Understanding (Attachment 2), eligible active employees receive a cafeteria plan contribution of $1,900 monthly minus the PEMHCA minimum. Per Section 11.3.1 of the 2021-2026 LIUNA Memorandum of Understanding (Attachment 3), retirees hired before January 1, 2015, receive an additional contribution equal to the difference between their medical insurance premium total minus the PEMHCA minimum. Employees hired after January 1, 2015, only receive the PEMHCA minimum contribution. No one hired after January 1, 2015, has retired from the City of Lake Elsinore. The City has first established equal contributions to all active and retired employees through acknowledgment in the MOU. The next step is to formalize this change through resolution with CalPERS. This will not only place the City in compliance with the equal contribution rule but also allow for a reduction in the ongoing cost of medical health benefits, especially for future retirees. The City has two employee groups assigned within CalPERS: CalPERS and NON- CalPERS. City Council members fall under the NON-CalPERS group, while all other employees fall under the CalPERS group. This requires the City to have two resolutions (Attachment 4 and Attachment 5). Discussion The City is currently preparing for the administrative change that will take place once these resolutions are in effect. The active employees will not experience any change, but the retirees will. CalPERS invoices the City monthly for the entire premium for each active and retired employee. The resolution will remove the total retiree premium from the City’s invoice and replace it with the PEMHCA minimum amount. For 2024, that new minimum will be $157. The remaining portion of the retiree’s monthly premium will be deducted from their monthly CalPERS pension check. If their premium is more than their pension check, they will be billed by CalPERS. If the retiree was hired before January 1, 2015, the City will send the retiree a reimbursement payment to cover the amount deducted (or billed) by CalPERS. This reimbursement is not taxable. If the retiree was hired after January 1, 2015, the City will not send a reimbursement payment and will only pay the PEMHCA minimum. The City will directly deposit the reimbursement payments on or around the 1st of each month to coordinate with the timing of the monthly pension check. The City has contacted all 59 retirees to discuss this change and securely collect bank account information in preparation for the reimbursement payments. The direct deposits will be handled in-house by Human Resources each month. The effective date for this change is February 1, 2024. Selecting February rather than January will allow Human Resources an entire month to calculate the reimbursement payments after the new 2024 medical rates go into effect. CalPERS regulations state that the contribution change will be effective the first day of the second month following receipt of a newly adopted resolution. A resolution adopted by the City Council and provided to CalPERS before December 31, 2023, will allow for the effective date of February 1, 2024. PEMHCA Resolutions Page 3 of 3 Fiscal Impact The adoption of the proposed resolutions will not have an impact on the adopted budget. Attachments Attachment 1 - 2021-2026 LIUNA MOU Side Letter Attachment 2 - 2021-2026 LIUNA MOU Section 11.2.6 Attachment 3 - 2021-2026 LIUNA MOU Section 11.3.1 Attachment 4 - CalPERS Resolution Attachment 5 - NON CalPERS Resolution SIDE LETTER TO 2021-2026 MEMORANDUM OF UNDERSTANDING BETWEEN CITY OF LAKE ELSINORE AND LIUNA UNION LOCAL 777 This side letter of agreement (“Agreement”) memorializes an agreement entered into between the City of Lake Elsinore (“City”) and LIUNA Union Local 777 (“Union”) (collectively “Parties”) with respect to the following: WHEREAS, the Parties entered into a Memorandum of Understanding with a term of July 1, 2021 to June 30, 2026 (“2021-2026 MOU”); and WHEREAS, the Parties agreed to re-open the 2021-2026 MOU, and WHEREAS, the Parties have met and conferred in good faith pursuant to the Meyers-Milias- Brown Act and have completed the meet and confer process; NOW THEREFORE, the Parties have agreed to the following: 1. The Parties’ 2021-2026 MOU shall remain in full force and effect according to its terms. This Agreement is the complete and final resolution of all matters related to contract reopener negotiations for the 2021-2026 MOU. 2. For the 2022-2023 fiscal year, all Union bargaining unit members who were active in 2022-2023 and are active as of the date of signing this Agreement shall receive a one- time pay adjustment per the new salary schedule attached. Employees will stay in their current step but move to their new range. 3. Effective December 1, 2022, all Union bargaining unit members shall receive $1,900.00 per month for health benefits. 4. Effective immediately, all employees must participate in the Clifton Strengths Finding exercise and training. 5. The Parties agree to meet & confer regarding updating and amending the current salary step language to ensure the new pay scales are incorporated, and the structure remains fair and equitable for all classifications. DocuSign Envelope ID: 8526E133-9105-4F20-B1EC-FF0264B604C6DocuSign Envelope ID: 7D6E9E7C-A0D0-40C4-A222-6B093D9CAE53 This Agreement is subject to final approval by the City Council of the City of Lake Elsinore. Date of agreement: ON BEHALF OF THE CITY OF LAKE ELSINORE Dated:_____________________ APPROVED AS TO LEGAL FORM Dated:_____________________ ON BEHALF OF LIUNA, LOCAL 777 Dated:_____________________ and Dated:_____________________ Jason Simpson, City Manager Laura Drottz Kalty, LCW City Labor Relations Counsel Hector Gonzales, LIUNA 777 Lake Elsinore Chapter President Jennifer Grondahl, LIUNA 777 Labor Relations Representative DocuSign Envelope ID: 8526E133-9105-4F20-B1EC-FF0264B604C6 9/2/2022 | 9:03 AM PDT DocuSign Envelope ID: 7D6E9E7C-A0D0-40C4-A222-6B093D9CAE53 9/7/2022 | 9:54 AM PDT 9/21/2022 | 1:56 PM PDT 10/3/2022 | 12:28 PM PDT +HDOWK&RYHUDJH 7KH &LW\ ZLOO UHPDLQ LQ WKH PHGLFDO FRYHUDJH SURJUDP RIIHUHG E\WKH3XEOLF (PSOR\HHV¶ 5HWLUHPHQW 6\VWHP RI WKH 6WDWH RI &DOLIRUQLD &DO3(56 (DFK HPSOR\HHPD\FKRRVHDQ\RQHRIWKHSODQVRIIHUHGE\&DO3(56 'HQWDO&RYHUDJH 'HQWDOFRYHUDJHZLOOEHSURYLGHGDVDQRSWLRQWKURXJKWKH6HFWLRQ&DIHWHULD 3ODQ D$FWLYHFRYHUDJH7KHSDUWLHVDJUHHWKDWLVVXHVVXFKDVDGPLQLVWUDWLRQRI 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VHUYLFH7KHGDWHRIHOLJLELOLW\VKDOOEHWKHHPSOR\HH¶VRIILFLDO&DO3(56 UHWLUHPHQWGDWH /,81$3HQVLRQ 7KH&LW\ZLOOGHGXFWWKHFXUUHQWFRQWULEXWLRQDPRXQWIURPHDFKHPSOR\HHZKR FKRRVHVWREHHQUROOHGLQWKH/,81$3HQVLRQ3ODQ7KLVGHGXFWLRQZLOODGMXVWEDVHG RQWKH/,81$3HQVLRQ5HKDELOLWDWLRQIHHDJUHHPHQWRUDQ\VXEVHTXHQWDJUHHPHQW EHWZHHQWKH&LW\WKH8QLRQDQGWKH/,81$3HQVLRQ RESOLUTION NO. 2023-___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FIXING THE EMPLOYER CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT AT AN EQUAL AMOUNT FOR EMPLOYEES AND ANNUITANTS (CalPERS) Whereas, City of Lake Elsinore is a contracting agency under Government Code Section 22920 and subject to the Public Employees’ Medical and Hospital Care Act (the “Act”); and text of history of project; and Whereas, Government Code Section 22892(a) provides that a contracting agency subject to Act shall fix the amount of the employer contribution by resolution; and, Whereas, Government Code Section 22892(b) provides that the employer contribution shall be an equal amount for both employees and annuitants, but may not be less than the amount prescribed by Section 22892(b) of the Act. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. That the employer contribution for each employee or annuitant shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan up to a maximum of the PEMHCA Minimum per month, plus administrative fees and Contingency Reserve Fund assessments. Section 2. City of Lake Elsinore has fully complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above. Section 3. That the participation of the employees and annuitants of City of Lake Elsinore shall be subject to determination of its status as an “agency or instrumentality of the state or political subdivision of a State” that is eligible to participate in a governmental plan within the meaning of Section 414(d) of the Internal Revenue Code, upon publication of final Regulations pursuant to such Section. If it is determined that City of Lake Elsinore would not qualify as an agency or instrumentality of the state or political subdivision of a State under such final Regulations, CalPERS may be obligated, and reserves the right to terminate the health coverage of all participants of the employer. Section 4. That the executive body appoint and direct, and it does hereby appoint and direct, City Manager or Designee to file with the Board a verified copy of this resolution, and to perform on behalf of City of Lake Elsinore all functions required of it under the Act. Section 5. That coverage under the Act be effective on February 1, 2024. Section 6. This Resolution shall take effect immediately upon its adoption. Section 7. The City Clerk shall certify to the adoption of this Resolution and enter it into the book of original Resolutions. Margins are set at .05 on all sides. Please do not expand the margins as the left side may be too wide to punch for binding without punching part of the text. Use 11 pt Arial font, full justification and spacing is to be exactly 11 pt. To change this spacing, go to Format/ Paragraph/ Line Spacing – Exactly - 11pt. Please note that some titles of the report are bold and some are in regular print. If your report is 2 or more pages, a header must be inserted, in the upper left hand corner, on subsequent pages. The header must contain a shortened version of the title of the report, the meeting date and page number: Ex: Washington Firehouse May 16, 2001 Page 2 The report should be saved on the F Drive under Agendas and the appropriate meeting date. This template is available at f:/Wsforms/agenda report with descriptions.doc CC Reso No. 2023-___ Page 2 of 2 Passed and Adopted at a regular meeting of the City Council of the City of Lake Elsinore, California, this 24th day of October 24, 2023. Mayor’s Name Mayor Attest: Candice Alvarez, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2023-____ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of October 24, 2023 and that the same was adopted by the following vote: AYES: Council Members Tisdale, Sheridan, and Magee; Mayor Pro Tem Manos; and Mayor Johnson NOES: None ABSENT: None ABSTAIN: None Candice Alvarez, MMC City Clerk RESOLUTION NO. 2023-___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FIXING THE EMPLOYER CONTRIBUTION UNDER THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT AT AN EQUAL AMOUNT FOR EMPLOYEES AND ANNUITANTS (NON CalPERS) Whereas, City of Lake Elsinore is a contracting agency under Government Code Section 22920 and subject to the Public Employees’ Medical and Hospital Care Act (the “Act”); and Whereas, Government Code Section 22892(a) provides that a contracting agency subject to Act shall fix the amount of the employer contribution by resolution; and, Whereas, Government Code Section 22892(b) provides that the employer contribution shall be an equal amount for both employees and annuitants, but may not be less than the amount prescribed by Section 22892(b) of the Act. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. That the employer contribution for each employee or annuitant shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan up to a maximum of the PEMHCA Minimum per month, plus administrative fees and Contingency Reserve Fund assessments. Section 2. City of Lake Elsinore has fully complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above. Section 3. That the participation of the employees and annuitants of City of Lake Elsinore shall be subject to determination of its status as an “agency or instrumentality of the state or political subdivision of a State” that is eligible to participate in a governmental plan within the meaning of Section 414(d) of the Internal Revenue Code, upon publication of final Regulations pursuant to such Section. If it is determined that City of Lake Elsinore would not qualify as an agency or instrumentality of the state or political subdivision of a State under such final Regulations, CalPERS may be obligated, and reserves the right to terminate the health coverage of all participants of the employer. Section 4. That the executive body appoint and direct, and it does hereby appoint and direct, City Manager or Designee to file with the Board a verified copy of this resolution, and to perform on behalf of City of Lake Elsinore all functions required of it under the Act. Section 5. That coverage under the Act be effective on February 1, 2024. Section 6. This Resolution shall take effect immediately upon its adoption. Section 7. The City Clerk shall certify to the adoption of this Resolution and enter it into the book of original Resolutions. Margins are set at .05 on all sides. Please do not expand the margins as the left side may be too wide to punch for binding without punching part of the text. Use 11 pt Arial font, full justification and spacing is to be exactly 11 pt. To change this spacing, go to Format/ Paragraph/ Line Spacing – Exactly - 11pt. Please note that some titles of the report are bold and some are in regular print. If your report is 2 or more pages, a header must be inserted, in the upper left hand corner, on subsequent pages. The header must contain a shortened version of the title of the report, the meeting date and page number: Ex: Washington Firehouse May 16, 2001 Page 2 The report should be saved on the F Drive under Agendas and the appropriate meeting date. This template is available at f:/Wsforms/agenda report with descriptions.doc CC Reso No. 2023-___ Page 2 of 2 Passed and Adopted at a regular meeting of the City Council of the City of Lake Elsinore, California, this 24th day of October 24, 2023. Mayor’s Name Mayor Attest: Candice Alvarez, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2023-____ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of October 24, 2023 and that the same was adopted by the following vote: AYES: Council Members Tisdale, Sheridan, and Magee; Mayor Pro Tem Manos; and Mayor Johnson NOES: None ABSENT: None ABSTAIN: None Candice Alvarez, MMC City Clerk