PURPOSE

The purpose of this report is to request City Council approval of an agreement between the City of Burbank and the ICMA Retirement Corporation to make available a Retirement Health Savings (RHS) plan for unrepresented managers and executives.

BACKGROUND

Health care costs across the nation continue to increase at a rapid rate each year.  Last year alone, the Consumer Price Index (CPI) reported a rise in health care costs of 4.64%.  While this continued rise in health care costs affects every employee, it is especially burdensome to retirees on a fixed income.  As such, the International Brotherhood of Electrical Workers (IBEW), Burbank City Employees� Association (BCEA), and the Burbank Management Association (BMA) formed a coalition in 2003 to establish the Burbank Employee�s Retirement Medical Trust (BERMT) to help offset future medical costs for retirees beginning in 2008.  All miscellaneous employees, as well as the City, contribute $20 per pay period to this Trust.  In addition, the Burbank Police Officer�s Association (BPOA) established a Voluntary Employee Beneficiary Association (VEBA) in 1998 where each member contributes 1.5% of their salary to offset future medical costs.  The Burbank Fire Fighter�s (BFF) have also agreed to establish a VEBA on behalf of their members and the approval of this plan is before the Council this evening.  In addition to the above mentioned retiree health care plans, all represented groups except the BCEA, have additional plans in place that help to offset the cost of health care for their retirees.  These plans provide contributions from the City ranging from $44 to $60 per month per employee.   In 2004, a poll of the unrepresented (Z group) managers was taken to ascertain their interest, or lack thereof, in a RHS or VEBA plan.  The majority of this group expressed interest in establishing a RHS plan in order to offset future retirement health care costs as no other retirement medical plan is available to this group except for the BERMT or the mandatory PERS allocation (currently $64.60) for those employees who select PERS health plans upon retirement.    

ANALYSIS AND CONCLUSION

The ICMA Retirement Corporation has developed a plan that will provide City employees the opportunity to set aside money or leave time on a pre-tax basis to help offset the cost of health insurance premiums when the employee retires.  Monies set aside in this RHS plan can be used to pay for health care premiums on a pre-tax basis once the employee has retired.

There is no financial obligation on the part of the City since this program is merely being made available to unrepresented managers and executives and it is up to the individual employee to decide if they wish to participate in this program.  The amount of the contribution that the employee wishes to make is entirely up to the employee.  There is no contribution on the part of the City in this program.

This plan was presented to the City�s unrepresented managers and executives by representatives of the ICMA Retirement Corporation and the representatives made themselves available to answer employee questions.  Based on the positive feedback that staff received form employees regarding these presentations, staff contacted ICMA to proceed with the adoption of the Retirement Health Savings (RHS) plan pending Council approval. 

Staff is also discussing the possibility of extending this RHS plan, if approved, to include the IBEW, BCEA, and BMA at no cost to the City. 

FISCAL IMPACT

This is a voluntary program funded by the individual employee so there is no fiscal impact to the City.

RECOMMENDATION

Staff recommends adoption of the resolution which will make the ICMA Retirement Corporation�s Retirement Health Savings (RHS) plan available to the unrepresented managers and executives.

Respectfully submitted,

Judie Sarquiz

Management Services Director