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 the Burbank City Employees� Association (BCEA), International Brotherhood of Electrical Workers � Local 18 Unit 50 (IBEW), and Burbank Management Association (BMA). 

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 medical care costs of 4.20%. While this continued rise in medical care costs affects every employee, it is especially burdensome to retirees on a fixed income.  As such, the BCEA, IBEW, and BMA formed a coalition in 2003 to establish the Burbank Employees� Retirement Medical Trust (BERMT) to help offset future medical costs for retirees beginning in 2008.  All miscellaneous employees, as well as the City, contribute $26.25 per pay period to this Trust.  In addition, the Burbank Police Officers� Association (BPOA) established a Voluntary Employee Beneficiary Association (VEBA) in 1998 where each member contributes 1.50% of their salary to offset future medical costs.  In January 2006, the Burbank Fire Fighters� (BFF) established a VEBA on behalf of their members; and the Council approved a contribution of $44 per month per employee be placed in a retiree medical account for IBEW members effective July 1, 2007.  If approved, this RHS will be the plan established for the IBEW contribution.  Also, in January 2006, the Council approved the adoption of an ICMA RHS plan for unrepresented managers and executives.  At that time, staff discussed the possibility of extending the RHS plan to include the BCEA, IBEW, and BMA at no cost to the City.  In addition to the above mentioned retiree health care plans, the City provides the mandatory PERS allocation (currently $64.60 per month) to all retirees who select PERS health plans upon retirement.    

ANALYSIS AND CONCLUSION

The ICMA Retirement Corporation has developed a plan that will provide the BCEA, IBEW, and BMA employees the opportunity to set aside money or leave time on a pre-tax basis to help offset the cost of medical care when the employee retirees.  Once retired, these monies can then be used to pay for medical costs on a pre-tax basis also. 

There is no financial obligation on the part of the City since this program is merely being made available to the miscellaneous collective bargaining groups and it is up to the individual employee to decide if they wish to participate in this program.  The amount of 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, except for the $44 per month to IBEW employees that was approved by the City Council in January, 2006.  

This plan was presented to the BCEA, IBEW, and BMA by representatives of the ICMA Retirement Corporation and the representatives made themselves available to answer questions.  Subsequent to these presentations, each of the collectively bargaining groups informed staff that they wished to proceed with the adoption of the ICMA�s Retirement Health Savings (RHS) plan pending Council approval.   

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 Burbank City Employees� Association, International Brotherhood of Electrical Workers � Local 18 Unit 50, and Burbank Management Association. 

Respectfully submitted,

Judie Sarquiz

Management Services Director