2004-07-20 PLEASE TURN OFF AT CELL PHONES & PAGERS IN COUNCIL CHAMBERS.
CITY OF MOUND MISSION STATEMENT: The City of Mound, through teamwork and cooperation, provides at a reasonable
cost, quality services that respond to the needs of all citizens, fostering a safe, attractive and flourishing community.
AGENDA
MOUND CITY COUNCIL TUESDAY, JULY 20, 2004 - 6:30-9:00 P.M.
SPECIAL MEETING MOUND CITY COUNCIL CHAMBERS
*Consent Agenda: Items listed under the Consent Agenda are considered routine in nature and will be enacted by a single roll call
vote. There will be no separate discussion of these items unless a Council Member or Citizen so requests. In that event the item will
be removed from the Consent Agenda and considered in normal sequence.
Page
1. Open meeting
Ehler's and Associates on Key Financial Strategies - discussion and any
necessary action (see binder and enclosed sub-agenda)
3. Staff presentation of Post Employment Health Care Savings Plan - 1-6
discussion and any necessary action
4. Adjourn
To:
From:
Re:
Date:
Mayor and Council
Kandis Hanson
Health Care Savings Plan
July 16, 2004
With this packet you are receiving the final Health Care Savings Plan proposal made by
the Personnel Committee to all full time City employees. The cost analysis reflects
numbers based on Dec. 31, 2003 data. No adjustments were made for salary increases or
cost of living adjustments.
As you well know, this issue has a long history. Back in 1990 and 1991 many local units
of government decided to take measures to control escalating costs for health and dental
insurance for retired employees. The City of Mound discontinued offering its employees
post retirement health care coverage starting January 1, 1993. A number of employees
retired at the end of 1992 so that they could qualify for the benefit which included full
coverage for health and dental insurance by the City for themselves and their spouses.
Since then, during every union negotiation round the City has been confronted and asked
to reinstate the post retirement benefit and the City has stood firm in its position, given
the large cost involved.
In 2000 the mayor and council recognized that post retirement health cost for employees
needed to be addressed and I was asked to look for options that could be looked into.
In 2002 the State of Minnesota made available a plan for local government employees for
this purpose and the Council approved a policy for the employees to contribute a
percentage of their salary free of taxes toward health care costs. And in January of 2003
the employer started contributing 1% toward the plan.
It was a good start, but we all realize that the policy needed to be revamped so that all
employees would participate. During the last few months employees had various
meetings to discuss a unified proposal. The personnel committee reviewed their proposal
and ultimately agreed to present the final policy to the full council for consideration and
approval.
I believe that we reached a good compromise and I think that this plan will provide some
relief to the employees' future medical costs.
Thank you for your consideration of this issue and please feel free to call me with any
questions that you might have.
d I1 II, ~
City of Mound
Health Care Savings Plan
Total Employer Cost by Year by Fund
07114/2004
Summary of Employer Cost by Fund
General Fund
Fire Area Fund
Docks Fund
Water Fund
Sewer Fund
Liquor Store Fund
Total
Increase %
Increase $
20O4
128,533
896
72
16,857
39,O37
22,488
207,884
20O5
160,374
1,344
108
21,043
47,782
26,737
257,389
23.81%
49,504
2OO6
176,349
1,793
144
22,883
51,124
28,855
281,147
9.23%
23,759
2O07
205,215
2,689
217
26,077
56,727
32,439
323,362
15.02%
42,215
2O08
236,432
3,585
289
29,746
63,411
36,675
370,139
14.47%
46,776
City of Mound
Health Care Savings Plan - Summary
Employer Costs
07114/2004
A - Employer Contributions to the Plan - Severance Pay Schedule
2004 20o5
2oo6
General Fund 111,811 122,168 129,781
Fire Area Fund 0 0 0
Docks Fund 0 0 0
Water Fund 15,100 14,847 15,808
Sewer Fund 37,068 37,605 39,963
Liquor Store Fund 20,859 20,203 21,507
Total 184,837 194,823 207,058
Increase 5.40% 8.28%
B - Employer Cash Contributions to the Plan
2004 2005 2006
General Fund 16,723 25,084 33,446
Fire Area Fund 896 1,344 1,793
Docks Fund 72 108 144
Water Fund 1,757 2,635 3,514
Sewer Fund 1,970 2,954 3,939
Liquor Store Fund 1,629 2,444 3,258
Total 23,047 34,571 46,094
Increase 50.00% 33.33%
C - Annual Employer Contributions to the Plan from Sick Leave Balance,~
2004 2005 2006
General Fund 0 13,122 13,122
Fire Area Fund 0 0 0
Docks Fund 0 0 0
Water Fund 0 3,561 3,561
Sewer Fund 0 7,222 7,222
Liquor Store Fund 0 4,090 4,090
Total _0 27,995 27,995
Increase 0.00%
2OO7
141,924
0
0
17,245
43,596
23,462
226,227
9.26%
2OO7
50,169
2,689
217
5,271
5,909
4,888
69,141
50.00%
20O7
13,122
0
0
3,561
7,222
4,090
27,995
0.00%
20O8
156,419
0
0
19,158
48,310
26,069
249,956
10.49%
2008
66,891
3,585
289
7,028
7,878
6,517
92,188
33.33%
20O8
13,122
0
0
3,561
7,222
4,090
27,995
0.00%
Grand Total 207,884 257,389 281,147 323,362 370,139
Increase 23.81% 9.23% 15.02% 14.47%
J # it ~
SECTION 14A - HEALTH CARE SAVINGS PLAN (The Plan)
14A.1
Monthly Contribution to the Plan
All full time employees will make the following contribution of their gross pay,
on a monthly basis, to the plan beginning January 1~ 2005.
All Non-Union Employees shall contribute in accordance with the following
schedule:
Income Level Points Years with City Points
$30,000 - 39,999 1 0 - 5 1
$40,000 - 49,999 2 6 - 10 2
$50,000 = 59,999 3 11 - 15 3
$60,000 - 69,999 4 16 - 20 4
$70,000 - 79,999 5 21 - 25 5
$80,000 + 6 26 + 6
Total points shall determine percent of contribution to the plan as follows:
Points Percent
1-3 3%
4-5 4%
6-7 5%
8-9 6%
10 7%
11 8%
All non-union employees with less than $ 3,000.00 in severance from accrued
vacation and/or comp time shall receive such monies in a severance check.
All non-union employees who have over $ 3,000.00 in severance from accrued
vacation and/or comp time shall receive $ 3,000.00 in a severance check and the
remaining amount shall be contributed to the plan.
All Police Patrol Union Employees shall contribute in accordance with the
following schedule:
Income Level Percent
Up to $40,000 1%
$40,000-$50,000 2%
$50,000-$60,000 3%
OverS60,000 4%
All police patrol union employees with less than $ 3,000.00 in severance from
accrued vacation and/or comp time shall receive such monies in a severance
check. All police patrol union employees who have over $ 3,000.00 in severance
from accrued vacation and/or comp time shall receive $ 3,000.00 in a severance
check and the remaining amount shall be contributed to the plan.
All Police Supervisors shall contribute in accordance with the following
schedule:
Years with City Percent
1-5 3%
6-10 4%
11 or more 5 %
All accrued vacation and/or comp time shall be contributed to the plan at
retirement or termination.
All Public Works and Parks Union Employees shall contribute in accordance
with the following schedule:
Years with City Percent
0-5 1.0 %
6-15 2.0 %
16 - 20 2.5 %
21 -25 3.0%
26 or more 5.0 %
After each pay period comp time in excess of 60 hours accrual shall be
contributed to the plan. All accrued vacation and/or comp time shall be
contributed to the plan at retirement or termination.
14A.2 Each employee group may choose to modify their plan every two years.
14A.3 The employer will contribute to the plan in accordance with the following
schedule starting January 1, 2005.
1.5% of employee gross pay as of 1-1-05
2.0% of employee gross pay as of 1-1-06
3.0% of employee gross pay as of 1-1-07
4.0% of employee gross pay as of 1-1-08
14A.4
Annual Contribution to the Plan
All full time employees shall contribute annually 50% of all sick leave over 900
hours to the Plan to a maximum of 200 hours per year at current rate of pay
starting January 1, 2005. Contribution to the plan will be determined based on
the employee's sick leave balance on December 31 st of the preceding year and
deposited into the employee's HCSP account prior to the second payroll check of
January.
14A.5
Contribution at Retirement or Termination
At the time of retirement or termination, the employee shall contribute 100% of
the sick leave portion of severance pay calculated according to section 18.1 to the
Plan.
Change Administrative Code to Read:
16.3
An employee can carry over up to 480 hours of all earned vacation from one year
to the next. All vacation time over that amount must be approved by the City
Manager.
18.1
The following is the schedule of the sick leave portion of severance pay which
shall become effective for all Full time employees after completing five (5) years
of service. There will be no severance pay for less than five (5) years of service.
The following schedule is based on a percentage of unused accumulated sick
leave.
After 5 years of service
After 10 years of service
After 15 years of service
After 20 years of service
After 25 years of service
2005 2006 2007 2008
41% 44% 48% 53%
46% 49% 54% 59%
52% 55% 60% 66%
57% 60% 66% 73%
62% 66% 72% 80%
18.2 Sick leave shall be paid to the plan in accordance with Section 14A.5 of the
Administrative Code.
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