It is recommended that the City Council take the following actions:

1. Adopt resolutions to authorize the City Manager to approve side letters with Roseville Firefighters, Local 1592, Roseville Police Association, Roseville Police Officers’ Association, International Brotherhood of Electrical Workers, Local 1245, and International Union of Operating Engineers, Stationary Engineers, Local 39, to add a $90/month Flex Credit for employees who elect the family level medical benefit to address unexpected significant premium increases; and

2. Adopt a resolution to approve the attached Terms, Conditions, and Understandings for Management and Confidential Employees to add a $90/month Flex Credit for employees who elect the family level medical benefit to address unexpected significant premium increases, to reduce the Compensatory Time Off cap for Confidential employees, and remove the paid Columbus Day holiday and add 8 hours of floating holiday.

In December 2018, CalPERS revised the regions in which member agencies are assigned, which merged the Sacramento Area employers with a much larger region including all of Northern California and the Bay Area. CalPERS had reported that this region revision would result in an average increase of $41 per month. The City concluded bargaining successor memorandum of understandings with the various bargaining groups representing City employees prior to the publication of the new CalPERS rates in June 2019 for the 2020 calendar year. CalPERS sent notifications to employees in late July that the CalPERS medical plan rates will experience an above-average increase. Below is a table reflecting the medical plan rate increases.

The current City contribution includes a Cafeteria Plan contribution of $1,347 per month and $168 per month Flex Credit, regardless of benefit needs. Employees who opt out of benefits receive $150 per month in taxable income to discourage duplicate insurance. For active employees who enroll in insurance through the City, the Flex Credit would be increased by $30 per month for 2020, which equates to a total contribution of $1,545. This one-size-fits all benefit provides more than is needed at the employee only level and insufficiently funds those with family level medical, dental, vision and long-term disability (LTD) benefits. There are 425 City employees who currently elect family level medical benefits.

Human Resources staff analyzed the impacts of the CalPERS rate increases for employees. The majority (67%) of City employees are enrolled in the Kaiser medical plan, which will have a 12% rate increase. This equates to a premium cost increase to the employee of $209 per month at the family plan level, effective January 1, 2020. The Blue Shield Access+ plan will experience a 28% increase which equals a cost increase to the employee of $641.57 per month. While a few of the plans experienced rate reductions, they are the more expensive plans which do not provide more affordable options for employees. Based on an analysis of the City contribution for the new plan year of $1,545 per month toward the most common Kaiser medical plan, dental, vision and LTD insurance plans, the City’s contribution fully covers the costs for those enrolling in the employee only plan levels, adequately funds those enrolled in the employee +1 plans (87% of the cost), but does not sufficiently contribute to the family plan level, with only 69% of the cost being covered. This means that an employee enrolled in the Kaiser family medical plan, dental, vision and LTD insurance coverage will experience an out-of-pocket cost of approximately $700 per month.

A majority of the City’s comparable agencies offer a tiered benefit that provides different amounts for employee only, employee +1, and family level coverage. Some offer this through an 80/20 benefit plan structure, where the employer pays 80% and the employee pays 20% of the premium costs, while others have a different flat dollar employer contribution amount (e.g., $1,200 employee only, $1,500 employee+1, $1,700 for family level benefits) that is increased each year based on 50% of the Kaiser rate increase, for example. 

Had the City known about the significant rate increases being implemented by CalPERS, the City would have considered this during negotiations to ensure a competitive total compensation package to support recruitment and retention. With other agencies in the City’s labor market having automatic benefit inflators based on the 80/20 formula or increases based on a set percent of the Kaiser increase, staff recommends adjusting the City benefit to remain competitive. Since the City contribution at the employee only and employee +1 benefit levels is already considered competitive, staff does not recommend a change to those benefit levels. Staff met with the various bargaining groups regarding the rate increases and tentatively proposed an additional $90 per month Flex Credit contribution for employees who elect a family level medical plan pending Council authorization. It was clarified that the additional $90 per month Flex Credit amount will be included in Total Compensation for purposes of future labor market studies. This is also beneficial to the City as it would add non-pensionable compensation. Side letters signed by all of the bargaining groups are attached pending authorization for the City Manager to approve them.

While the City is contracted with CalPERS for medical insurance plans, the City also works closely with Alliant, who is the City’s insurance broker for dental, vision and other benefits.  This year staff asked Alliant to request quotes to evaluate the Life Insurance, Accidental Death and Dismemberment and Long Term Disability plan premiums for more competitive rates.  Alliant was able to negotiate a significant rate reduction with Hartford for Life Insurance, Accidental Death and Dismemberment and Long Term Disability plans to match a quote from a competitive company that will achieve an annual savings of $123,000.00. Taking into account the Hartford savings, the revised Flex Credit benefit will result in an estimated General Fund cost of $89,941.00 for FY2019-20, which would be covered by salary savings or contingency funds, as needed. The estimated $79,059.00 cost to the City's other funds will be absorbed through salary savings or other cost savings in the FY2019-20 budget. 

Terms, Conditions, and Understandings (TCU) for Management and Confidential Employees Updates

In addition to the Flex Credit benefit update described above, staff recommends several revisions in the TCU for Management and Confidential Employees that were not included in the March 6, 2019, update approved by City Council. It was intended for these updates to be addressed through Personnel Rule revisions, however, City staff is taking a more comprehensive review of the Personnel Rules, which is taking longer than anticipated.  As such, staff is recommending several updates to the TCU for Management and Confidential Employees to establish consistency with other bargaining groups. First, a reduced Compensatory Time Off (CTO) cap for Confidential employees is needed. The CTO cap will be reduced from 240 hours maximum to 160 hours maximum. Also, a provision pertaining to holidays needs to be added to the TCU for Management and Confidential Employees to remove the paid Columbus Day holiday since many Roseville school district schedules do not have Columbus day off.  8 hours of Floating holiday will be added to be consistent with the other bargaining groups.  There is no cost to these revisions.

The Flex Credit benefit increase is estimated at $459,000 annually citywide and can be partially offset by the Hartford insurance savings estimated at $123,000 annually. This change would be effective January 1, 2020. The estimated fiscal impact of $88,941.00 to the General Fund for the FY2019-20 budget will be covered by salary savings or the contingency budget, as needed. The estimated $79,059.00 cost to the City’s other funds will be absorbed through salary savings or other cost savings in the FY2019-20 budget. A breakdown of the estimated costs by fund is as follows:

This action does not results in any new jobs.

The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or reasonably foreseeable indirect physical change in the environment, or is otherwise not considered a project as defined by CEQA Statute §21065 and CEQA State Guidelines §15060(c)(3) and §15378.  The benefit revisions meet the above criteria and is not subject to CEQA. No additional environmental review is required.

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Dominick Casey, City Manager