Council
Meeting: December 16, 2003 Santa
Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Resolution Authorizing the City Manager to Execute
a Revised Memorandum of Understanding Setting the Terms and Conditions of
Medical Insurance Coverage with Management Team Associates, Supervisory Team
Associates, Administrative Team Associates, Municipal Employees Association,
Public Attorneys’ Union, United Transportation Union (Local 1785), Public
Attorneys’ Legal Support Staff Union and Executive Pay Plan Participants and
Establishing a Flexible Spending Account Plan
INTRODUCTION
This report requests that Council adopt the attached
Resolution authorizing the City Manager to execute a revised Memorandum of
Understanding (MOU) setting the terms and conditions of medical insurance
coverage with the City's miscellaneous employee (non‑safety) bargaining
units and establishing a flexible spending account plan for covered
employees.
BACKGROUND
A Memorandum of Understanding (umbrella agreement)
sets forth the terms and conditions of medical insurance coverage for the
City’s non-safety bargaining units. The
term of the umbrella agreement is from July 1, 2001 through June 30, 2004. The umbrella agreement currently provides
for medical insurance coverage though the CalPERS HealthCare Program.
Due to unanticipated medical insurance premium
increases under the CalPERS HealthCare Program for the 2004 medical plan year,
the composite medical insurance premium will exceed the cap on City
contributions towards the cost of medical insurance for miscellaneous City
employees by approximately $123.00 per month per employee as of January 1, 2004. Through the meet and confer process, the
City’s Health Insurance Committee, comprised of representatives from the City’s miscellaneous employee (non-safety) bargaining units, and the City
decided to replace the CalPERS HealthCare Program with a City-provided medical
insurance program that offers coverage through Aetna and Kaiser. This change would result in reducing the
cost of medical insurance coverage for non-safety employees and eliminating an
out-of-pocket medical insurance premium contribution by employees. The parties also decided that the term of
the umbrella agreement should be extended to December 31, 2004, making the term
of the agreement the same as the medical plan year used by medical insurance companies. Finally, the parties decided that a flexible
spending account option should be established to enable employees to use
pre-tax dollars to pay for their out-of-pocket health care expenses, with the
flexible spending account to be administered by Aetna.
The revised umbrella agreement will retain the
current cap on the City’s contribution towards medical insurance premiums for
active City employees and their eligible dependents and will continue the
current City contribution to a medical trust established by the City’s
miscellaneous employees. The changes to
the current umbrella agreement are as follows:
The term of the agreement will be from January 1, 2004 through December
31, 2004. The CalPERS HealthCare
Program will be replaced with a City-provided medical insurance program. A flexible spending account will be
established, effective as of the 2004 calendar year.
BUDGET/FINANCIAL IMPACT
There is no increase in City expenditures associated
with the revisions to the Memorandum of Understanding between the City and its
miscellaneous employee (non-safety) bargaining units for the FY2003-2004 budget
year.
RECOMMENDATION
It is recommended that Council adopt the attached
Resolution authorizing the City Manager to execute the revised Memorandum of
Understanding (umbrella agreement) setting the terms and conditions of medical
insurance coverage for the City’s non-safety employees and establishing a
flexible spending account plan for covered employees.
Prepared By:
Karen Bancroft, Director of Human Resources