PURPOSE

The purpose of this report is to request City Council approval of a proposed resolution required by the Public Employees� Retirement System (PERS) to fix the employer�s contribution under the Public Employees� Medical and Hospital Care Act for Burbank Management Association (BMA) employees.

BACKGROUND

As a negotiated agreement, in August of 2000, the City Council agreed to provide a total of $18,000 a year to employees who retired while members of the BMA from the period of June 29, 1992 until December 31, 2003.  There were 15 employees who were eligible at the time of the adopted Memorandum of Understanding (MOU).  The total was calculated at $100 per employee for 12 months ($100 per month x 15 employees x 12 months = $18,000 per year). 

While the total of $18,000 that the City and the BMA negotiated in 2000 has not changed, the number of eligible retired individuals increased from 15 to 25.  As a member of the PERS health care plan system, the City is required to pay all retired employees who select a PERS retiree health care plan a statutory monthly amount of $64.60.  However, when the BMA MOU was approved in 2000, the statutory amount that the City was paying was $25 per month.  The language in the 2000 MOU was ambiguous as to whether or not the $100 that was negotiated for the retirees between June 29, 1992 and December 31, 2003 was in addition to the PERS statutory required amount.  The City took the position that it was only required to pay the negotiated total of $125 per employee per month.  The BMA disagreed and thought the City should be paying the $100 plus the current statutory amount of $64.60 (not $25) and filed a grievance on the matter.  A mediator was hired to help the parties find a resolution.       

ANALYSIS AND CONCLUSION

As a result of the grievance, the mediator helped to broker a settlement that was in the best interest of each party.  The City and BMA ultimately agreed that $18,000 was the total annual amount that the City was obligated to pay the retirees beyond the PERS statutory requirement pursuant to the 2000 MOU.  It should be noted that this PERS statutory amount will increase to $80.80 on January 1, 2007, and $97 on January 1, 2008.  The parties further agreed that no retroactive pay would be given to the retired employees and that instead the new payment would begin on January 1, 2007 whereby the City will pay the 25 retirees the PERS statutory amount of $80.80 plus the $60 as required in the 2000 MOU.   

It was agreed that the $18,000 will be distributed to each eligible employee based on the following formula: $18,000 divided by 12 months divided by 25 employees which amounts to $60 per month per employee.  The City will continue to modify the individual monthly amount as the number of eligible retirees changes using the same formula described above until the number is back to the original amount of 15.  At that time the City contribution will remain at $100 per month per employee until there are no eligible employees remaining.   

FISCAL IMPACT

There is no fiscal impact to this mediated settlement.    

RECOMMENDATION

Staff recommends that the City Council approve the proposed resolution.

Respectfully submitted,

Judie Sarquiz

Management Services Director