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Title:
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Adoption of a Resolution to Establish a Retiree Health Savings Plan.
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City of Culver City, California
Agenda Item Report
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Meeting Date: 03/08/2010 Item Number: C-2
CITY COUNCIL AGENDA ITEM: Adoption of a Resolution to Establish a Retiree
Health Savings Plan
Contact Person/Dept.: Serena Wright Phone Number: 310-253-5640
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Dates:
Public Notification: (E-Mail) Meetings and Agendas – City Council (03/03/2010);
Department Approval:
Serena Wright (03/01/10)
City Attorney Approval:
Carol Schwab (by H. Baker) (03/03/10)
Chief Financial Officer Approval:
Mark Scott (by M. Noller) (03/03/10)
City Manager Approval:
Mark Scott (03/03/10)
RECOMMENDATION:
Staff recommends that the City Council adopt a Resolution to establish a Retiree
Health Savings Plan.
BACKGROUND:
On March 1, 2010, the City Council adopted a memorandum of understanding
(MOU) with the Culver City Police Officers Association (CCPOA). The MOU provides
for a two-tier retiree medical program in which new employees receive a lower
retiree medical benefit from the City.
Establishment of a Retiree Health Savings Plan (Plan) will enable the City to retain
the benefit levels of existing retirees and current active employees; and also allow
new employees the opportunity to pre-fund their retiree medical expenses on a pre-
tax basis. In addition, the Plan will enable the City to reduce its Other Post
Employment Benefits (OPEB) liability under Government Accounting Standards
Board Statement 45 (GASB 45) by facilitating a two-tier system.
DISCUSSION:
The VantageCare Retirement Health Savings Plan is a product offered by the
International City Management Association Retirement Corporation (ICMA-RC). This
employer sponsored Plan allows employees to accumulate assets to pay for
qualified medical expenses (e.g. health insurance premiums, co-pays, prescriptions,
etc.) at retirement or upon separation from the City. ICMA-RC administers the City’s
457 deferred compensation plan and is currently the only vendor that provides
reimbursement for CalPERS retirees for other member agencies. City of Culver City, California
Agenda Item Report
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In addition, the Plan will enable current employees to set aside dollars for future
healthcare costs in an individual retirement account on a pre-tax basis. Withdrawals
from the trust are also tax-free when used for the participants’ and their eligible
dependents qualified medical expenses. The Plan is portable should the employee
separate from the City and can also be transferred to a surviving spouse and/or
dependent for their own medical expenses upon the death of the participant.
As has been discussed with the City’s other Bargaining Groups, it is the City’s
intention to negotiate Memoranda of Understanding with the other Bargaining
Groups that will contain similar provisions to the CCPOA MOU that would make
those employees eligible to participate in the Plan.
FISCAL ANALYSIS:
The current cost associated with the administration of the Retiree Health Savings
Plan is $26 per retiree per year. Based upon the existing retiree population within the
CCPOA, the cost is approximately $1,700. This is substantially less than the
amount that is currently realized in staff time to administer the retiree medical
program internally. This amount can be absorbed within current 09-10 budget
appropriations, and will be included in the 2010-11 budget.
ATTACHMENTS:
1. Resolution
MOTION:
That the City Council:
1. Adopt the Resolution to establish a Retiree Health Savings Plan; and
2. Authorize the City Attorney to review/prepare the necessary documents; and,
3. Authorize the City Manager to execute such documents on behalf of the City.
MEETING DATE: 3/08/10
AGENDA ITEM: Adoption of a Resolution to establish a Retiree Health
Savings Plan
ATTACHMENTS
Pages
1. Resolution 1 - 2RESOLUTION NO. 2010-R A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CULVER CITY, CALIFORNIA, ADOPTING THE
VANTAGECARE RETIREMENT HEALTH SAVINGS PLAN
WHEREAS, the City of Culver City (hereinafter"Employer") has employees
rendering valuable services; and,
WHEREAS, the establishment of a retiree health savings plan for such
employees service the interests of the Employer by enabling it to provide reasonable security
regarding such employees' health needs during retirement by providing increased flexibility in
its personnel management system and by assisting in the attraction and retention of
competent personnel; and,
WHEREAS, the Employer has determined that the establishment of the retiree
health savings plan (the "Han") serves the above objectives.
NOW, THEREFORE, the City Council of the City of Culver City, California,
DOES RESOLVE as follows:
1. The City Council hereby adopts the Plan in the form of the ICMA
Retirement Corporation; and,
2. The assets of the Plan shall be held in trust With 'Ihe City of Culver City,
acting by and through its City Manager, servin g as Trustee, for the exclusive benefit of Plan
participants and their survivors, and the assets of the Plan shall not be diverted to any other
purpose prior to the satisfaction of all liabilities of the Plan; and,
3. The City Manager is hereby authorized to execute the Declaration of
Trust of the City of Culver City Integral Part Trust in the form of the model trust made
available by the ICIVIA Retirement Corporation; and|101010101010101010 10
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APPROVED and ADOPTED this
ANDREW WEISSMAN!, MAYOR
City of Culver City, California
ATTEST: APPROVED AS TO FORM:
MARTIN R. COLE,
City Clerk
A10-00074
4. The Director of Human Resources shall be the coordinator and contact
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t
Viii,
/„L.Ainku
C I_ A. SCHWAB,
City Attorney