CCP 11-27-2007 - Laserfiche WebLink

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Of Report Number: al- ;T9 IINEW Agenda Section: W RIGHTON Report Date 11/21/2007 the city that works for you Council Meeting Date 11/27/2007 • REQUEST FOR COUNCIL CONSIDERATION ITEM DESCRIPTION: Consideration of an Ordinance Amending Section 21-67 (Subd. 8) and Section 21-69 of the New Brighton City Code DEPARTMENT HEAD'S APPROVAL: Schawn P. Johnson, Assistant to the City Manager CITY MANAGER'S APPROVAL: No comments to supplement this report 0 Comments attached Recommendation: City Council approval of an Ordinance amends sections 21.67 (Subd. 8) and 21-69 of the New Brighton City Code. Legislative History: In 2003, the City of New Brighton began offering its employees the opportunity to participate in a Retirement Health Savings (RHS) Plan through the ICMA Retirement Corporation. At this time, all union and non union full-time and regular part-time employees are eligible to participate in the ICMA RHS plan. The ICMA RHS plan allows employees to contribute pre-tax dollars to pay for medical costs upon retirement. At this time, employees have the option of contributing 1 % of their annual base • wage and/or their sick leave severance dollars to the plan. All employee dollars that are contributed to the RHS plan are pre-taxed and are withdrawn as tax-free to pay for medical costs such as premiums, co-pays, prescriptions, and other out of pocket expenses. The employee invests these dollars in selected ICMA Vantagepoint Mutual Funds that provide a wide range of investments options. The employee then manages their funds as needed. Upon retirement, the employee can withdraw money out of their account to pay for medical costs. The employee is required to meet the PERA eligibility standards for retirement and terminate employment with the City of New Brighton in order to utilize their RHS account. Explanation: In 2007, the City of New Brighton was notified by the ICMA Retirement Corporation that the voluntary and/or elective features of the ICMA Retirement Health Savings Plan were not in compliance with federal regulations set-forth by the Internal Revenue Services. In order to bring the City's RHS plan into compliance, staff is recommending that the following changes to Section 21-67 (Subd 8) "Severance" and Section 21-69 "Post Retirement Health Savings Plan" of the City Code be considered by the City Council: Current Language- Sec. 21-67. Sick Leave (Subd 8). (8) Severance: Minimum 20 years of service: An employee who leaves the organization in good standing with a minimum of twenty (20) years of full-time service with the City, will be eligible to choose • between putting (50%) of accrued sick leave (up to 480 hours) in the employee's post retirement health savings plan (RHS), subject to such provisions of the plan, or receiving 40% percent of accrued sick leave to a maximum payment of 384 hours in the form of cash payout. HAAssistant to the City Manager\Council Memo's\Amending the Retirement HSA Language in the City Code-Nov 15, 2007.doc