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Home My WebLink About5.E.1. Adoption of revised Contribution Schedules for Non-Union Post Employment Health Savings Plan-Res. No. 6581 City of Shakopee 5: ~, J~ Memorandum (':'n~'i~[~~T liU .", 'l'-'Cj TO: Mayor and City Council !"";~'v~H'~ ! Mark McNeill, City Administrator FROM: Kris Wilson, Assistant City Administrator' SUBJECT: Adoption of Revised Contribution Schedules for Non-Union Post Employment Health Care Savings Plan DATE: February 15, 2006 Introduction The City Council is asked to adopt the attached resolution, amending the City's Personnel Handbook in regards to the Post Employment Health Care Savings Plan. Background In 2005, the City began participating in the Post Employment Health Care Savings Plan (HCSP) offered by the Minnesota State Retirement System (MSRS). This benefit provides a means of saving money tax-free for qualifying medical expenses employees are likely to incur when they retire or otherwise leave employment with the City. As required by state and federal law, the City provides retirees with the opportunity to continue on the City's group health insurance indefinitely so long as they pay the full amount of the monthly premiums. Funds from employees' HCSP accounts are commonly used to make these premium payments, or to cover COBRA payments in the case of departing employees who have a gap insurance coverage when moving on to another employer. One ofthe key elements ofthese savings plans is that they are group plans - contribution schedules must be set up by the employer and all qualifying employees that are part of a particular group are required to contribute according to that contribution schedule. There can be no individual choice regarding contributions. However, once funds are deposited into an employee's account, there are a variety of investment options that individual employees can select from for their own accounts. Plan regulations require that the contribution schedules be adopted as part of a collective bargaining agreement or personnel policy. Therefore, the City's three union groups each have a contribution schedule as part of their signed contracts. These contribution schedules run with the duration of the union contract, and can be modified each time the contract comes up for negotiation. For non-union employees, the contribution schedules must be adopted as part of the City's personnel handbook and can be modified only once every two years. Since the non-union contribution schedule was first adopted in January of 2005, this is our first opportunity to make changes to that schedule since we began participating in the program. Several employees indicated a desire to see changes to the contribution schedule, so informational meetings, with a presentation by MSRS, were scheduled in early January and employees were given an opportunity to complete a survey indicating their contribution preferences. The contribution schedules included in the attached resolution reflect a general consensus' of impacted employees. They do not change the amount of the City contribution, which will continue to be $25 per month for each benefits-eligible employee. The grouping of employees by years of service have been modified to create more steps in the plan; and the amount of each employee's paycheck, as well as the percentage of unused sick leave and vacation deposited when an employee leaves the City, have been changed by small amounts. The changes generally reflect an increase in the amount of money being deposited into the plan for employees with more years of service. In order to better meet the desires of employees, the City's non-union employees are also being divided into two plans - one for exempt and one for non-exempt employees. Again, though, the City contribution is the same for both groups. If adopted, the revised contribution schedules would become effective with employee's March 2 paychecks. Budget Impact Adoption ofthe revised contribution schedules will have no budget impact for the City, as the City contribution is not changing. Relationship to Vision This is a housekeeping item. Requested Action: If the Council concurs, it should offer Resolution No. 6581, A Resolution of the City of Shakopee, Minnesota, Amending Resolution No. 4213, Adopting a Personnel Handbook, and move its adoption. RESOLUTION No. 6581 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNESOTA, AMENDING RESOLUTION NO. 4213, ADOPTING A PERSONNEL HANDOBOOK WHEREAS, on May 2, 1995, the City Council adopted Resolution No. 4213, adopting a new Personnel Handbook for the Employees of the City; and WHEREAS, on December 21,2004, the City Council adopted Resolution No. 6158 amending that Handbook in regards to SECTION IV BENEFITS, C. Post Employment Health Plan; and WHEREAS, the City again finds it desirable to amend SECTION IV BENEFITS, C. Post Employment Health Plan. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, that SECTION IV BENEFITS, C. Post Employment Health Plan of the City's Personnel Handbook is hereby amended to read as follows: C. Post Employment Health Care Savings Plan The City shall establish a Post Employment Health Care Savings Plan, administered by the Minnesota State Retirement System, for all benefits- eligible employees. The City shall contribute an equal dollar amount, as determined by the City Council, for each eligible employee. All eligible non-union employees shall make additional contributions according to the following schedules: MSRS Post Employment Health Care Savings Plan Non-Union, Non-Exempt Employee Contribution Schedule Years of Service with the Beginning of 2nd 11-15 16-20 21-25 26-30 City of Shakopee Hire - 1 year year - 5 yrs 6-10 year years years years years 31 yrs. + % of Payroll Contribution 0 1% 1.5% 2% 2.5% 3% 4% 5% City Contribution $25 $25 $25 $25 $25 $25 $25 $25 Contribution of Severance Pay N/A N/A 50% 100% 100% 100% 100% 100% Contribution of Accrued Vacation 0 0 50% 100% 100% 100% 100% 100% Accelerated Sick Leave Severance Pavout The City of Shakopee appreciates employees, who through long-term service and dedication, contribute to making the city a successful and positive service provider. In recognition thereof, the City acknowledges such long-term service by providing an accelerated sick leave payout formula listed below for the employee who meets all the following conditions: · Full-time or part-time benefit-eligible employee with the City of Shakopee for 15 continuous years or more. · Employee must reach the age (usually age 55, as governed by Minnesota Statutes, 2004,353.29 and related chapters) and service requirements to be qualified for retirement under PERA. · Employee is separating employment in good standing. . . · The percentage of the severance pay-out shall be based on a maximum of 960 hours of accumulated sick leave calculated on the basis of the employee's current annual base pay. · The accelerated severance payment will be deposited in the employee's HCSP account not later than the first regularly scheduled payday following the employee's final day of employment. Completion of Continuous % of Accrued Completion of Continuous Accrued Years of Service with Sick Leave Years of Service with the Sick Leave the City of Shakopee Paid Out City of Shakopee Paid Out 0- 5 years 0 20 years 65% 6-14 years 45% 21 years 67% 15 years 55% 22 years 69% 16 years 57% 23 years 71% 17 years 59% 24 years 73% 18 years 61% 25 years + 75% 19 years 63% * Anniversary date of full-time employment or part-time benefit-eligible date is used to compute years of service with the City of Shakopee, MSRS POST EMPLOYMENT HEALTH CARE SAVINGS PLAN NON-UNION, EXEMPT EMPLOYEE CONTRIBUTION SCHEDULE Years of Service with Hire - Beginning 2nd Beginning 10th Beginning of21 st Beginning of City of Shakopee year 1 year - 9 vears year-20 years year - 30 years 31 st year on % of per payroll contribution 0% 1% 2% 4% 5% City Contribution $25/mo $25/mo $25/mo $25/mo $25/mo Contribution of Severance Pay None 50% 100% 100% 100% Contribution of None 50% 100% 100% 100% Accrued Vacation Accelerated Sick Leave Severance Payout The City of Shakopee appreciates employees, who through long-term service and dedication, contribute to making the city a successful and positive service provider. In recognition thereof, the City acknowledges such long-term service by providing an accelerated sick leave payout formula listed below for the employee who meets all the following conditions: . Full-time or part-time benefit-eligible employee with the City of Shakopee for 15 continuous years or more. . Employee must reach the age (usually age 55, as governed by Minnesota Statutes, 2004, 353.29 and related chapters) and service requirements to be qualified for retirement under PERA. . Employee is separating employment in good standing. . The percentage of the severance pay-out shall be based on a maximum of 960 hours of accumulated sick leave calculated on the basis of the employee's current annual base pay. . The accelerated severance payment will be deposited in the employee's HCSP account not later than the first regularly scheduled payday following the employee's final day of employment. Completion of Continuous Years of % of Accrued Sick Completion of Continuous Service % of Accrued Sick Service With the City of Shakopee* Leave Paid Out With the City of Shakopee Leave Paid Out 0- 5 years 0% 20 years 65% 6-14 years 45% 21 years 67% 15 years 55% 22 years 69% 16 years 57% 23 years 71% 17 years 59% 24 years 73% 18 years 61% 25 years + 75% 19 years 63% * Anniversary date of full-time employment or part-time benefit-eligible date is used to compute years of service with Shakopee. BE IT FURTHER RESOLVED, that all previous language of SECTION IV BENEFITS, C. Post Employment Health Plan is hereby deleted and RESOLUTION No. 6158 is hereby repealed in its entirety. Adopted in adjourned regular session of the City Council of the City of Shakopee, Minnesota, held this 20th day of February, 2007. Mayor of the City of Shakopee ATTEST: City Clerk