REPORT TO COUNCIL
SUBJECT
Title
Adopt Resolutions Amending the City’s Contribution for CalPERS Medical Insurance for Management, Sunnyvale Employees’ Association/International Federation of Professional and Technical Engineers Local 21 (SEA/IFPTE Local 21), Confidential, and Service Employees International Union (SEIU) Employees and Annuitants (Retirees)
Report
BACKGROUND
The City’s healthcare benefits are administered through the California Public Employee Retirement System (CalPERS). CalPERS healthcare is regulated by the Public Employees’ Medical and Hospital Care Act (PEMHCA), which requires participating agencies to adopt a resolution stating the employer contribution amount toward the employees’ and retirees’ medical plans. Two resolutions are adopted at least annually, or when needed (e.g. changes in a bargaining unit agreement affecting medical insurance contribution amounts paid by the City). PEMHCA regulations further require that medical insurance contributions for retired annuitants paid for by a contracting agency be equal to the medical insurance contributions paid for its active employees.
EXISTING POLICY
In accordance with Article 8 of PEMHCA, the City’s contract with CalPERS provides that the City’s contribution towards medical insurance (and the effective date of said contribution) be the same for active employees and retirees.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
DISCUSSION
As established during negotiations with SEA/IFPTE Local 21 and SEIU, the existing Memoranda of Understanding for these respective bargaining units provide for annual increases in the City’s contribution toward medical coverage for active employees. The total City medical and cafeteria contribution for SEA/IFPTE Local 21 is 85% (54% for SEIU) of the average of the family level monthly premium of the Blue Shield Access+ HMO and Kaiser medical plans. This amount is then allocated 49% to the City medical contribution and 51% to the cafeteria contribution. However, any increase in the City
medical contribution shall not exceed 5% from the prior year. Based on the changes for the 2025 CalPERS health plan rates, an increase is needed for the PEHMCA rate for City employees and retirees.
Additionally, Article 5.505 of the Salary Resolution provides that effective January 1 of each year, the City’s contribution for medical coverage for active management employees shall be no less than the highest City contribution for any of the represented employee groups. As a result of these provisions and to meet the CalPERS requirement that the City’s medical contribution be the same amount for employees and retirees, the City’s contribution to CalPERS for retiree medical coverage shall be increased appropriately.
Effective January 1, 2025, the City’s PEMHCA monthly contribution for medical coverage for active employees and retirees in SEA/IFPTE Local 21, Confidential, and Management will be $1,163.42, an increase of $55.40 per retiree per month. The City’s monthly contribution for medical coverage for active employees and retirees in SEIU will be $646.78, an increase of $30.80 per retiree per month.
FISCAL IMPACT
The current year increase is within the assumption of 9% used in the FY 2024/25 Adopted Budget with future year impacts incorporated into the 20-year long term financial plan.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
STAFF RECOMMENDATION
Recommendation
Adopt two resolutions: (1) Setting the employer’s contribution under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for 2025, and (2) Amending the City’s Salary Resolution to modify the City’s contribution for medical insurance for Management, SEA/IFPTE Local 21, Confidential, and SEIU Employees and Annuitants (Retirees).
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
A check or “Y” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract
_x_ Labor or personal employment contract
___ General policy and legislative actions
Staff
Prepared by: Kristin Armbruster, Human Resources Manager
Reviewed by: Tina Murphy, Director, Human Resources
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Resolution Setting Employer’s 2025 Contribution under PEMHCA
2. Resolution Amending the Salary Resolution