CC 2016-12-13_09b Resolution_Full Flex Cafeteria Plan
MEMORANDUM
TO: CITY COUNCIL
FROM: DEBORAH MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES
BY: KAREN SISKO, HUMAN RESOURCES MANAGER
SUBJECT: CONSIDERATION OF A RESOLUTION ADOPTING AN AMENDMENT
TO THE FULL FLEX CAFETERIA PLAN SECTION 125 TO UPDATE
THE CAFETERIA PLAN RATES FOR 2017
DATE: DECEMBER 13, 2016
RECOMMENDATION:
It is recommended the City Council adopt a resolution establishing an amendment to
the Full Flex Cafeteria Section 125 Plan (“Cafeteria Plan”) for the Management Group,
the Arroyo Grande Police Officers’ Association (“AGPOA”), the Service Employees
International Union, Local 620 (“SEIU”), the International Association of Fire Fighters,
Local 4403 (“IAFF”), and the Five Cities Fire Authority (“FCFA”) Management Group.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There will be an increase in cafeteria plan costs of approximately $43,900 in FY 2016-
17 as discussed in the staff reports that approved the negotiated contracts. The budget
will be amended at mid-year to reflect the increase in cafeteria plan costs. Minimal staff
time is projected to make the changes.
BACKGROUND:
In 2008, the City implemented the equal contribution plan under the California Public
Employees’ Retirement System (CalPERS) Health Benefit Program to control costs of
retiree medical insurance. In doing so, the City was required to provide a Cafeteria Plan
to its employees. Under a Cafeteria Plan, employees are given flex dollars to spend on
their benefits, which include medical, dental, and vision insurance. An employee may
opt out of medical coverage only if they can provide proof of other coverage. The
Cafeteria Plan was adopted on November 13, 2007 for the Management Group and the
IAFF with an effective date of January 1, 2008. An amendment to the plan document
was adopted on August 12, 2008, with an effective date of January 1, 2009 to include
employees represented by the AGPOA and SEIU.
Item 9.b. - Page 1
CITY COUNCIL
CONSIDERATION OF A RESOLUTION ADOPTING AN AMEDNMENT TO THE FULL
FLEX CAFETERIA PLAN SECTION 125 TO UPDATE THE CAFETERIA PLAN RATES
FOR 2017
DECEMBER 13, 2016
PAGE 2
ANALYSIS OF ISSUES:
Under the CalPERS Health Benefit Program equal contribution plan, the City is required
to provide the same benefit to active employees as retired employees. The amount
designated is the minimum amount required by CalPERS. For 2017, the minimum is
$128.00. This amount is increased annually by a cost of living adjustment. Under the
Cafeteria Plan, the City designates this minimum amount as the medical contribution
towards active employees. Under the equal contribution plan, this same amount is then
designated as the retiree medical contribution. The City’s contributions towards the
Cafeteria Plan are negotiated with each bargaining unit. The Cafeteria Plan rates for
2017 are the only items changed in the amendment. The adjustment is necessary
because increased amounts are not issued to the City by CalPERS until August for the
upcoming year.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
- Adopt the resolution;
- Modify as appropriate and adopt the Resolution; or
- Provide direction to staff.
ADVANTAGES:
The Cafeteria Plan was established in conjunction with the CalPERS Health Benefit
Program equal contribution plan for employee groups to assist in managing future
retiree medical costs. Approval of staff’s recommendation will maintain the City’s
medical benefits consistent with contractual obligations set forth in the terms of the
existing labor agreements.
DISADVANTAGES:
There are no disadvantages to the Cafeteria Plan.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
Item 9.b. - Page 2
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARROYO GRANDE ADOPTING AN AMENDMENT TO THE FULL
FLEX CAFETERIA PLAN SECTION 125 TO UPDATE THE
CAFETERIA PLAN RATES FOR 2017
WHEREAS, the City Council of the City of Arroyo Grande (“City”) deems it in the best
interest of the City and the employees in the Arroyo Grande Police Officers’ Association,
the Service Employees International Union, Local 620, the unrepresented Management
group, the International Association of Fire Fighters, Local 4403, and the Five Cities Fire
Authority Management group to amend the Full Flex Cafeteria Plan Section 125 to
update the Cafeteria Plan rates for 2017; and
WHEREAS, the City has met and conferred with the Arroyo Grande Police Officers’
Association, the Service Employees International Union, Local 620, and the
International Association of Fire Fighters, Local 4403 and incorporated the Cafeteria
Plan provisions into their respective Memorandums of Understanding; and
WHEREAS, a copy of the City of Arroyo Grande Full Flex Cafeteria Plan Section 125 is
on file in the Administrative Services Department.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo
Grande that:
1. An amendment is made to the Full Flex Cafeteria Plan Section 125 to update the
Cafeteria Plan rates for 2017, marked Exhibit “A”, attached and incorporated herein
by this reference.
2. The terms of this Resolution as contained in Exhibit “A” shall become effective
December 1, 2016.
On motion of Council Member , seconded by Council Member
, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of , 2016.
Item 9.b. - Page 3
RESOLUTION NO.
PAGE 2
JIM HILL, MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
ROBERT McFALL, INTERIM CITY MANAGER
APPROVED AS TO FORM:
HEATHER WHITHAM, CITY ATTORNEY
Item 9.b. - Page 4
Exhibit “A”
AMENDMENT
This document amends and replaces Appendix B of the City of Arroyo Grande Full Flex
Cafeteria Plan Section 125 Document. This amendment shall become effective
December 1, 2016. Appendix B shall now read:
APPENDIX B
FLEX-DOLLAR ALLOWANCE
ARROYO GRANDE MANAGEMENT EMPLOYEES
With Medical Coverage Total Monthly
Employee Benefit
Employee Only $665.19
Employee Plus One $1,233.91
Employee Plus Two or more $1,584.50
If employee waives medical coverage (cash
back option)
$564.07
ARROYO GRANDE POLICE OFFICERS’ ASSOCIATION
EMPLOYEES
With Medical Coverage Total Monthly
Employee Benefit
Employee Only $665.19
Employee Plus One $1,233.91
Employee Plus Two or more $1,584.50
If employee waives medical coverage (cash
back option)
$564.07
ARROYO GRANDE SERVICE EMPLOYEES INTERNATIONAL
UNION, LOCAL 620 EMPLOYEES
With Medical Coverage Total Monthly
Employee Benefit
Employee Only $665.19
Employee Plus One $1,233.91
Employee Plus Two or more $1,584.50
If employee waives medical coverage (cash
back option)
$564.07
Item 9.b. - Page 5
Amendment to Full Flex Cafeteria Plan Section 125
Page 2
INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS,
LOCAL 4403 EMPLOYEES
With Medical Coverage Total Monthly
Employee Benefit
Employee Only $735.43
Employee Plus One $1,374.61
Employee Plus Two or more $1,767.10
If employee waives medical coverage (cash
back option)
$634.69
FCFA MANAGEMENT GROUP
With Medical Coverage Total Monthly
Employee Benefit
Employee Only $724.68
Employee Plus One $1,353.18
Employee Plus Two or more $1,739.14
If employee waives medical coverage (cash
back option)
$624.09
CITY OF ARROYO GRANDE
BY:
Robert McFall, Interim City Manager
Item 9.b. - Page 6