Loading...
HomeMy WebLinkAbout16 - Non-Safety Employee Associations MOUCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 16 December 13, 2005 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Sharon Wood, Assistant City Manager 949 - 644 -3222, swood @city.newpoit - beach.ca.us SUBJECT: Supplemental Memoranda of Understanding with Non - Safety Employee Associations to Implement Retiree Medical Program and Establish Bi- Lingual Pay ISSUE: Implementation of new retiree medical program and establishment of bi- lingual pay for non - safety employees. RECOMMENDATION: Approve Supplemental Memoranda of Understanding (SMOUs) with the following employee associations: • City Employees Association • Employees League • Professional and Technical Employees Association DISCUSSION: In recent Memoranda of Understanding (MOUs) with Police and Fire employee associations, the City Council has approved a new retiree medical program for those employees. MOUs with the three non - safety employee associations also have been approved recently, but those association members had not had sufficient time to study and understand the new program. All three of the non - safety associations have now agreed to the program, and the attached SMOUs include the same retiree medical provisions as the safety MOUs. The MOUs for the City Employees and Professional and Technical Employees Associations include a provision that the City and the Associations will study the issue of bi- lingual pay. That study has been concluded, with the following findings: • Employees in the departments represented by these two associations do use their language skills when serving the public on a regular basis. Supplemental MOUs with Non - Safety Employee Associations December 13, 2005 Page 2 • Many Orange County cities compensate their employees for bi- lingual skills. • The amount of bi- lingual compensation ranges in other cities, and the rate of $150 per month that Newport Beach pays to Police and Fire employees is within that range. With these findings, the SMOUs for these two associations also include the provision that compensation of $150 per month will be provided for bi- lingual skills, with the same testing requirements as for Police and Fire. One additional provision is recommended for the Professional and Technical Employees Association, and that is special compensation for acting in the capacity of Zoning Administrator. When the City amended the Zoning Code to give responsibility for Modification Permits and other Planning staff approvals to one staff member designated as the Zoning Administrator, instead of three staff members serving as the Modifications Committee, staff recognized that this responsibility warranted special compensation. After conducting a study of the Senior Planner position, with the special responsibilities of Zoning Administrator, the Human Resources and Planning Directors concluded that the compensation should be 7.5% of base salary. This approach was chosen over creating a new job class to provide the Planning Director with flexibility on making the Zoning Administrator assignment, and to provide the same compensation to a staff member who is given the assignment temporarily to provide coverage for vacations and illness. This provision has been implemented administratively, and is included in the SMOU to formalize it and treat it in the same manner as other special compensations. Funding Availability: The provisions in these SMOUs were anticipated when the 2005 -06 budget was prepared, and the cost of implementing the retiree medical program for these employee groups was included in the cost estimate for the program previously provided to the City Council. Submitted by: Sharon Wood Assistant City Manager Attachments: 1 SMOU between the City of Newport Beach and the Newport Beach City Employees Association 2. SMOU between the City of Newport Beach and the Newport Beach Employees League 3. SMOU between the City of Newport Beach and the Newport Beach Professional and Technical Employees Association SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach (City) and the Newport Beach City Employees Association (Association) for the term commencing July 1, 2005 and concluding June 30, 2007. SECTION 1. — RETIREE HEALTH BENEFITS The City and Association have agreed on a revised Retiree Health Benefits Program, and Section 4F of the MOU is revised as follows: 1. Prior to December 24, 2005 The retiree health benefits program shall be as set forth in the MOU between the City and Association. 2. Effective December 24. 200 The retiree health benefits program shall be as follows. a. Overview A new Defined Contribution Plan will be established to set aside funds for employee medical expenses during retirement. This plan will replace the existing Defined Benefit Plan ( "old plan "), which will be phased out. The plan will be a Medical Expense Reimbursement Plan ( "MERP ") funded through an Integral Part Trust (IPT). b. Structure Each employee will have an individual MERP account for bookkeeping purposes, called his or her "Employee Account." This account will accumulate contributions to be used for health care expense after retirement. All contributions to the plan are either mandatory employee contributions or City paid employer contributions, so they are not taxable to employees at the time of deposit. Earnings from investment of funds in the account are not taxable when posted to the account. Benefit payments are not taxable when withdrawn, because the plan requires that all distributions be spent for specified health care purposes. 5 Contributions will be in three parts- i. Part A contributions (mandatory employee): 1% of Salary. ii. Part B contributions (employer for employees fully converting to new plan): $1.50 per month for each year of service plus year of age (updated every January 151 based on status as of December 315` of the prior year). iii. Part C contributions (leave settlement as determined by Association): The Association has determined that the level of contribution for all employees it represents will be 50% of sick and flex leave. Any future changes are subject to the following constraints. All employees within the Association must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the Association decides to participate in Part C contributions, at any level, its members will not have the right to voluntarily convert leave to cash for one full year prior to retirement, other than "spillover" of amounts above the maximum accumulation balance. However, taking leave for time off purposes would not be constrained. Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "cashed out," based on time of service. The 2 U manual also caps the number of hours that can be "cashed out' at 800, and specifies that sick leave hours are "cashed out" on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation /flex leave participation, and thresholds must be separately identified by the Association. Part A contributions may be included in PERS compensation. Part B and Part C contributions will not be included in PERS compensation. Part A contributions begin upon enrollment in the program and are credited to each MERP Employee Account each pay period. Eligibility for Part B contributions is set at five years of City employment. At that time, the City will credit the first five years worth of Part B contributions into the Employee Account (interest does not accrue during that period). Thereafter, contributions are made monthly. Part C deposits, if any, will be made at the time of employment termination. Each Employee has a right to reimbursement of medical expenses (as defined below) from the Plan until the Employee Account balance is zero. This right is triggered upon retirement. If an employee leaves the City prior to five years employment, only the Part A contributions and Part C leave settlement contributions, if any, will be in the MERP Employee Account. An employee who leaves City employment within the first five years will not be entitled to any Part B contributions. Distributions from MERP Employee Accounts are restricted to use for health insurance and medical care expenses after retirement, as defined by the Internal Revenue Code Section 213(d) (as explained in IRS Publication 502), and specified in the Plan Document. In accordance with current IRS regulations and practices, this generally includes premiums for medical insurance, dental insurance, vision insurance, supplemental medical insurance, long term care insurance, and miscellaneous medical expenses not covered by insurance for the employee and his or her spouse and legal dependents — again only as permitted by IRS Publication 502. Qualification for dependency status will be determined by guidelines in IRC 152. If used for these purposes, distributions from the MERP accounts will not be taxable. Cash withdrawal for any other purpose is prohibited. Under recent IRS Revenue Ruling 2005 -24, any balance remaining in the Employee Account after the death of the employee and his or her spouse and /or other authorized dependents (if any) must be forfeited. That particular 3 r MERP Account will be closed, and any remaining funds will become general assets of the plan. The parties agree that the City's Part B contributions during active employment constitute the minimum CalPERS participating employer's contribution towards medical insurance after retirement. The parties also agree that, for retirees selecting a CalPERS medical plan, or any other plan with a similar employer contribution requirement, the required City contribution will be withdrawn from the retiree's MERP account. C. Employee Participation New Employees Participation in the new plan is mandatory from the onset of employment. New employees will make no contributions to the old plan. ii. Conversion Threshold for Current Employees Members whose age plus years of service equal 49 or less at the time of implementation must convert to the new plan. Those with age plus years of service of 50 or more have the option of fully converting or remaining in the old plan with modified participation in the new plan. iii. Current Employees Fully Converting to New Plan In addition to the new plan contributions listed above, current employees who fully convert to the new plan will also receive a one -time City contribution to their individual IPT accounts that equates to $100 per month for every month they contributed to the current plan, to a maximum of 15 years (180 months). This contribution will be made at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. Employees in this category will make no further contributions to the existing plan, and will no longer participate in it. The parties agree that this one time payment by the City satisfies the requirement in paragraph F.4.b. of Section 4 (Fringe Benefits) of the previous MOUs regarding an accounting and potential distribution of contributions upon discontinuation of the previous version of the Retiree Medical Program- 4 iv. Current Employees Continuing to Participate in Some Elements of Old Plan Employees in this category will contribute a flat $100 per month to the old plan for the duration of their employment. The maximum benefit provided by the old plan at retirement is $4800.00 per year, accruing at the current rate of $400.00 per month. City share of each retiree's cost may be used for anything authorized for the IPT program, rather than just for Insurance Premiums for one of the City plans. There is no cash out option for these funds. Employees remaining on the old plan will also participate in the IPT program, with Part A contributions being mandatory; no Part B contributions; and Part C contributions if applicable. Employees in this category will also receive an additional one- time City contribution of $75 per month for every month they contributed to the old plan prior to the date of implementation of the new program, up to a maximum of 15 years (180 months). This contribution will be made to the IPT account at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. d. Retroactivity Limited retroactivity is provided for employees who retired from the City during the period covered by the contract in which this new program is implemented, but before the program is implemented_ For those employees who retired under the old program during this period, the provision for increased flexibility in the use of the $4800.00 maximum (accruing at $400 per month) benefit will apply. In addition, a MERP account will be opened for each employee in this category, and a contribution of $75 per month for each month of prior contribution to the old plan will be deposited by the City. No other provisions of the new program are applicable to employees in this category, and no provisions of the program are applicable to any other existing retirees. e. Administration A vendor will be selected by the City to administer the MERP. The contract expense for program -wide administration by the vendor will be paid by the City. However, specific vendor charges for individual account transactions that vary according to the 5 investment actions taken by each employee, such as fees or commissions for trades, will be paid by each employee. The City's Deferred Compensation Committee will have the authority to determine investment options that will be available through the plan. f. Value of Benefit For all purposes, the MERP shall be valued at 1% of salary on which PERS retirement is based (Part A), plus .25% of other compensation (Part B). SECTION 2. — BI- LINGUAL PAY The City and Association have agreed on Bi- Lingual Pay, and Section 5.J is amended to read as follows: Upon determination of the Department Director that an employee's ability to speak, read and/ or write in Spanish contributes to the Department providing better service to the public, the employee shall be eligible to receive One Hundred Fifty ($150.00) Dollars per month in bilingual pay. The certification process will confirm that the employee is fluent at the street conversational level in speaking, reading and /or writing Spanish. Employees certified shall receive bi- lingual pay the first full pay period following certification. Additional languages may be certified for compensation pursuant to this section by the Department Director. Except as modified by this SMOU, the MOD between the City and Association remains in full force and effect. Signatures are on the next page. 6 Executed this day of CITY OF NEWPORT BEACH Mayor ATTEST: La Vonne Harkless, City Clerk APPROVED AS TO FORM: Robin Clauson, City Attorney NEWPORT BEACH CITY EMPLOYEES ASSOCIATION By: Teresa L. Craig, President V/ SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach (City) and the Newport Beach Employees League (League) for the term commencing July 1, 2005 and concluding June 30, 2007, The City and League have agreed on a revised Retiree Health Benefist Program, and Section 4.E. of the MOU is revised as follows: 1. Prior to December 24, 2005 The retiree medical program shall be as set forth in the MOU between the City and League. 2. Effective December 24, 2005 The retiree health benefits program shall be as follows. a. Overview A new Defined Contribution Plan will be established to set aside funds for employee medical expenses during retirement. This plan will replace the existing Defined Benefit Plan ( "old plan "), which will be phased out. The plan will be a Medical Expense Reimbursement Plan ( "MERP ") funded through an Integral Part Trust (IPT). b. Structure Each employee will have an individual MERP account for bookkeeping purposes, called his or her "Employee Account." This account will accumulate contributions to be used for health care expense after retirement. All contributions to the plan are either mandatory employee contributions or City paid employer contributions, so they are not taxable to employees at the time of deposit. Earnings from investment of funds in the account are not taxable when posted to the account. Benefit payments are not taxable when withdrawn, because the plan requires that all distributions be spent for specified health care purposes. Contributions will be in three parts. Part A contributions (mandatory employee): 1 % of Salary. i. Part B contributions (employer for employees fully converting to new plan): $1.50 per month for each year of service plus year of age (updated every January 1" based on status as of December 31St of the prior year). i. Part C contributions (leave settlement as determined by League): The League has determined that the level of contribution for all employees it represents will be 0% of sick and flex leave. Any future changes are subject to the following constraints. All employees within the League must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the League wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. If the League decides to participate in Part C contributions, at any level, its members will not have the right to voluntarily convert leave to cash for one full year prior to retirement, other than "spillover" of amounts above the maximum accumulation balance. However, taking leave for time off purposes would not be constrained. Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and specifies that sick leave hours are "cashed out" on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a 1) separate item from vacation /flex leave participation, and thresholds must be separately identified by the League. Part A contributions may be included in PERS compensation. Part B and Part C contributions will not be included in PERS compensation. Part A contributions begin upon enrollment in the program and are credited to each MERP Employee Account each pay period. Eligibility for Part B contributions is set at five years of City employment. At that time, the City will credit the first five years worth of Part B contributions into the Employee Account (interest does not accrue during that period). Thereafter, contributions are made monthly. Part C deposits, if any, will be made at the time of employment termination. Each Employee has a right to reimbursement of medical expenses (as defined below) from the Plan until the Employee Account balance is zero. This right is triggered upon retirement. If an employee leaves the City prior to five years employment, only the Part A contributions and Part C leave settlement contributions, if any, will be in the MERP Employee Account. An employee who leaves City employment within the first five years will not be entitled to any Part B contributions. Distributions from MERP Employee Accounts are restricted to use for health insurance and medical care expenses after retirement, as defined by the Internal Revenue Code Section 213(d) (as explained in IRS Publication 502), and specified in the Plan Document. In accordance with current IRS regulations and practices, this generally includes premiums for medical insurance, dental insurance, vision insurance, supplemental medical insurance, long term care insurance, and miscellaneous medical expenses not covered by insurance for the employee and his or her spouse and legal dependents — again only as permitted by IRS Publication 502. Qualification for dependency status will be determined by guidelines in IRC 152. If used for these purposes, distributions from the MERP accounts will not be taxable. Cash withdrawal for any other purpose is prohibited. Under recent IRS Revenue Ruling 2005 -24, any balance remaining in the Employee Account after the death of the employee and his or her spouse and /or other authorized dependents (if any) must be forfeited. That particular MERP Account will be closed, and any remaining funds will become general assets of the plan. 3 The parties agree that the City's Part B contributions during active employment constitute the minimum CalPERS participating employer's contribution towards medical insurance after retirement. The parties also agree that, for retirees selecting a CalPERS medical plan, or any other plan with a similar employer contribution requirement, the required City contribution will be withdrawn from the retiree's MERP account. C. Employee Participation New Employees Participation In the new plan Is mandatory from the onset of employment. New employees will make no contributions to the old plan. ii. Conversion Threshold for Current Employees Members whose age plus years of service equal 49 or less at the time of implementation must convert to the new plan. Those with age plus years of service of 50 or more have the option of fully converting or remaining in the old plan with modified participation in the new plan. iii. Current Employees Fully Converting to New Plan In addition to the new plan contributions listed above, current employees who fully convert to the new plan will also receive a one -time City contribution to their individual IPT accounts that equates to $100 per month for every month they contributed to the current plan, to a maximum of 15 years (180 months). This contribution will be made at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. Employees in this category will make no further contributions to the existing plan, and will no longer participate in it. The parties agree that this one time payment by the City satisfies the requirement in paragraph E.4.b. of Section 4 (Fringe Benefits) of the previous MOUs regarding an accounting and potential distribution of contributions upon discontinuation of the previous version of the Retiree Medical Program. 4 IS iv. Current Employees Continuing to Participate in Some Elements of Old Plan Employees in this category will contribute a flat $100 per month to the old plan for the duration of their employment. The maximum benefit provided by the old plan at retirement is $4800.00 per year, accruing at the current rate of $400.00 per month. City share of each retiree's cost may be used for anything authorized for the IPT program, rather than just for Insurance Premiums for one of the City plans. There is no cash out option for these funds. Employees remaining on the old plan will also participate in the IPT program, with Part A contributions being mandatory, no Part B contributions; and Part C contributions if applicable. Employees in this category will also receive an additional one- time City contribution of $75 per month for every month they contributed to the old plan prior to the date of implementation of the new program, up to a maximum of 15 years (180 months). This contribution will be made to the IPT account at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. d. Retroactivity Limited retroactivity is provided for employees who retired from the City during the period covered by the contract in which this new program is implemented, but before the program is implemented. For those employees who retired under the old program during this period, the provision for increased flexibility in the use of the $4800.00 maximum (accruing at $400 per month) benefit will apply. In addition, a MERP account will be opened for each employee in this category, and a contribution of $75 per month for each month of prior contribution to the old plan will be deposited by the City. No other provisions of the new program are applicable to employees in this category, and no provisions of the program are applicable to any other existing retirees. e. Administration A vendor will be selected by the City to administer the MERP. The contract expense for program -wide administration by the vendor will be paid by the City. However, specific vendor charges for individual account transactions that vary according to the I14 investment actions taken by each employee, such as fees or commissions for trades, will be paid by each employee. The City's Deferred Compensation Committee will have the authority to determine investment options that will be available through the plan. f. Value of Benefit For all purposes, the MERP shall be valued at 1% of salary on which PERS retirement is based (Part A); plus .25% of other compensation (Part B). Except as modified by this SMOU, the MOU between the City and League remains in full force and effect. Executed this day of CITY OF NEWPORT BEACH in Mayor ATTEST: La Vonne Harkless, City Clerk APPROVED AS TO FORM: Robin Clauson, City Attorney NEWPORT BEACH EMPLOYEES LEAGUE 6 James Randal. President SUPPLEMENTAL MEMORANDUM OF UNDERSTANDING This Supplemental Memorandum of Understanding (SMOU) modifies the Memorandum of Understanding (MOU) between the City of Newport Beach (City) and the Newport Beach Professional and Technical Employees Association (Association) for the term commencing July 1, 2005 and concluding June 30, 2007. SECTION 1. - COMPENSATION The City and Association have agreed on compensation for employees who serve in the capacity of Zoning Administrator. Subsection L, reading as follows, is added to Section 2. — Compensation. L. Zoninq Administrator An employee appointed by the Planning Director to perform the duties of the Zoning Administrator as set forth in the Zoning Code shall be provided temporary assignment pay at five percent (5 %) above the employee's base pay, to be paid on an hourly basis. This assignment pay is temporary and will cease once the employee is no longer performing the duties of the Zoning Administrator. SECTION 2. — RETIREE HEALTH BENEFITS The City and Association have agreed on a revised Retiree Health Benefits Program, and Section 4.F is revised as follows. 1. Prior to December 24, 2005 The retiree health benefits program shall be as set forth in the MOU between the City and Association. 2. Effective December 24 2005 The retiree health benefits program shall be as follows a. Overview A new Defined Contribution Plan will be established to set aside funds for employee medical expenses during retirement. This plan will replace the existing Defined Benefit Plan ( "old plan "), which will be phased out. The plan will be a Medical Expense Reimbursement Plan ( "MERP ") funded through an Integral Part Trust (IPT). 1�r b. Structure Each employee will have an individual MERP account for bookkeeping purposes, called his or her "Employee Account." This account will accumulate contributions to be used for health care expense after retirement. All contributions to the plan are either mandatory employee contributions or City paid employer contributions, so they are not taxable to employees at the time of deposit. Earnings from investment of funds in the account are not taxable when posted to the account. Benefit payments are not taxable when withdrawn, because the plan requires that all distributions be spent for specified health care purposes. Contributions will be in three parts. Part A contributions (mandatory employee): 1% of Salary. ii. Part B contributions (employer for employees fully converting to new plan): $1.50 per month for each year of service plus year of age (updated every January 1" based on status as of December 31St of the prior year). iii. Part C contributions (leave settlement as determined by Association): The Association has determined that the level of contribution for all employees it represents will be 50% of sick and flex leave. Any future changes are subject to the following constraints. All employees within the Association must participate at the same level. The participation level should be specified as a percentage of the leave balance on hand in each employee's leave bank at the time of separation from the City. The computation of the cash equivalent for leave hours to be included in the MERP will be the same as the computation used when leave is "cashed out" for other reasons. However, individual employees must not have the option of receiving compensation for the value of the same leave hours in the form of cash. For example, if the Association wishes to specify 50% of the leave balance as the participation level, then each member leaving the City would have the cash equivalent of 50% of whatever balance is in his or her leave account added to the MERP, on a pre -tax basis. The remaining 50% would be paid in cash as taxable income. Again, individual employees would not have the option to deviate from this breakout. 2 If the Association decides to participate in Part C contributions, at any level, its members will not have the right to voluntarily convert leave to cash for one full year prior to retirement, other than "spillover" of amounts above the maximum accumulation balance. However, taking leave for time off purposes would not be constrained. Sick leave balances may also be included in the MERP, but only to the extent and within all the numeric parameters specified in the Employee Policy Manual. Section 11.21 of the Manual contains a schedule which specifies the amount of sick leave that can be "cashed out," based on time of service. The manual also caps the number of hours that can be "cashed out" at 800, and specifies that sick leave hours are "cashed out' on a 2 for 1 basis (800 hours of sick leave are converted to 400 hours for cash purposes). Sick leave participation is a separate item from vacation /flex leave participation, and thresholds must be separately identified by the Association. Part A contributions may be included in PERS compensation. Part B and Part C contributions will not be included in PERS compensation. Part A contributions begin upon enrollment in the program and are credited to each MERP Employee Account each pay period. Eligibility for Part B contributions is set at five years of City employment. At that time, the City will credit the first five years worth of Part B contributions into the Employee Account (interest does not accrue during that period). Thereafter, contributions are made monthly. Part C deposits, if any, will be made at the time of employment termination. Each Employee has a right to reimbursement of medical expenses (as defined below) from the Plan until the Employee Account balance is zero. This right is triggered upon retirement. If an employee leaves the City prior to five years employment, only the Part A contributions and Part C leave settlement contributions, if any, will be in the MERP Employee Account. An employee who leaves City employment within the first five years will not be entitled to any Part B contributions. Distributions from MERP Employee Accounts are restricted to use for health insurance and medical care expenses after retirement, as defined by the Internal Revenue Code Section 213(d) (as explained in IRS Publication 502), and specified in the Plan Document. In 3 4 accordance with current IRS regulations and practices, this generally includes premiums for medical insurance, dental insurance, vision insurance, supplemental medical insurance, long term care insurance, and miscellaneous medical expenses not covered by insurance for the employee and his or her spouse and legal dependents — again only as permitted by IRS Publication 502. Qualification for dependency status will be determined by guidelines in IRC 152. If used for these purposes, distributions from the MERP accounts will not be taxable. Cash withdrawal for any other purpose is prohibited. Under recent IRS Revenue Ruling 2005 -24, any balance remaining in the Employee Account after the death of the employee and his or her spouse and /or other authorized dependents (if any) must be forfeited. That particular MERP Account will be closed, and any remaining funds will become general assets of the plan. The parties agree that the City's Part B contributions during active employment constitute the minimum CalPERS participating employer's contribution towards medical insurance after retirement. The parties also agree that, for retirees selecting a CalPERS medical plan, or any other plan with a similar employer contribution requirement, the required City contribution will be withdrawn from the retiree's MERP account. C. Employee Participation New Employees Participation in the new plan is mandatory from the onset of employment. New employees will make no contributions to the old plan. il. Conversion Threshold for Current Employees Members whose age plus years of service equal 49 or less at the time of implementation must convert to the new plan. Those with age plus years of service of 50 or more have the option of fully converting or remaining in the old plan with modified participation in the new plan. iii. Current Emplovees Fully Converting to New Plan In addition to the new plan contributions listed above, current employees who fully convert to the new plan will also receive a one -time City contribution to their individual IPT accounts that equates to $100 per month for every month they contributed to J the current plan, to a maximum of 15 years (180 months). This contribution will be made at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. Employees in this category will make no further contributions to the existing plan, and will no longer participate in it. The parties agree that this one time payment by the City satisfies the requirement in paragraph F.4.b. of Section 4 (Fringe Benefits) of the previous MOUs regarding an accounting and potential distribution of contributions upon discontinuation of the previous version of the Retiree Medical Program. iv. Current Employees Continuing to Participate in Some Elements of Old Plan Employees in this category will contribute a flat $100 per month to the old plan for the duration of their employment. The maximum benefit provided by the old plan at retirement is $4800.00 per year, accruing at the current rate of $400.00 per month. City share of each retiree's cost may be used for anything authorized for the IPT program, rather than just for Insurance Premiums for one of the City plans. There is no cash out option for these funds. Employees remaining on the old plan will also participate in the IPT program, with Part A contributions being mandatory; no Part B contributions, and Part C contributions if applicable. Employees in this category will also receive an additional one- time City contribution of $75 per month for every month they contributed to the old plan prior to the date of implementation of the new program, up to a maximum of 15 years (180 months). This contribution will be made to the IPT account at the time of retirement, and only if the employee retires from the City. No interest will be earned in the interim. d. Retroactivity Limited retroactivity is provided for employees who retired from the City during the period covered by the contract in which this new program is implemented, but before the program is implemented. For those employees who retired under the old program during this period, the provision for increased flexibility in the use of the $4800.00 maximum (accruing at $400 per month) benefit will apply. In addition, a MERP account will be opened for each employee in 5 this category, and a contribution of $75 per month for each month of prior contribution to the old plan will be deposited by the City. No other provisions of the new program are applicable to employees in this category, and no provisions of the program are applicable to any other existing retirees. e. Administration A vendor will be selected by the City to administer the MERP. The contract expense for program -wide administration by the vendor will be paid by the City. However, specific vendor charges for individual account transactions that vary according to the investment actions taken by each employee, such as fees or commissions for trades, will be paid by each employee. The City's Deferred Compensation Committee will have the authority to determine investment options that will be available through the plan. f. Value of Benefit For all purposes, the MERP shall be valued at 1% of salary on which PERS retirement is based (Part A); plus .25% of other compensation (Part B). SECTION 3. — BI- LINGUAL PAY The City and Association have agreed on Bi- Lingual Pay, and Section 5.J is amended to read as follows: Upon determination of the Department Director that an employee's ability to speak, read and/ or write in Spanish contributes to the Department providing better service to the public, the employee shall be eligible to receive One Hundred Fifty ($150.00) Dollars per month in bilingual pay. The certification process will confirm that the employee is fluent at the street conversational level in speaking, reading and /or writing Spanish. Employees certified shall receive bi- lingual pay the first full pay period following certification. Additional languages may be certified for compensation pursuant to this section by the Department Director. Except as modified by this SMOU, the MOU between the City and Association remains in full force and effect. Signatures are on the next page. 6 Executed this _ _day of NEWPORT BEACH PROFESSIONAL AND TECHNICAL EMPLOYEES ASSOCIATION I CITY OF NEWPORT BEACH By: Mayor ATTEST: La Vonne Harkless, City Clerk APPROVED AS TO FORM: Robin Clauson, City Attorney Micheal Wojciechowski, President 7 ial«io� -�r6 LANGUAGE TO BE ADDED TO SUPPLEMENTAL MOUs CITY EMPLOYEES ASSOCIATION EMPLOYEES LEAGUE PROFESSIONAL AND TECHNICAL EMPLOYEES ASSOCIATION The following language shall be added to Section 2.A — Salary: Effective the pay period beginning December 24, 2005 (concurrent with the implementation of the revised retiree medical benefit), salaries shall be increased by 1%.