To: Sonoma County Board of Supervisors
Department or Agency Name(s): Human Resources Department
Staff Name and Phone Number: Jeremia Mills, 707-565-3228
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Government Code Section 7507 Disclosure For Successor Memorandum of Understanding between the County of Sonoma and the Western Council of Engineers
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Recommended Action:
Recommended action
A) Receive and review the actuarial valuation of the impact of proposed changes to Article 19 (Medical Benefits for Future Retirees) of the Successor Memorandum of Understanding between the County of Sonoma and Western Council of Engineers.
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Executive Summary:
Representatives of the County and the Western Council of Engineers (WCE) met and conferred and reached a Tentative Agreement regarding negotiated changes to the terms and conditions of employment for a successor Memorandum of Understanding (MOU) including certain changes to retiree medical benefits for WCE members, as specified in Article 19 of the Tentative Agreement for the Successor MOU (Attachment A).
An actuarial valuation of the impact of negotiated changes to retiree medical benefits in Article 19 on the County’s liability for Other Post-Employment Benefits (OPEB) and future costs, are outlined below and in Attachment B (Cal Gov’t Code §7507 and §31515.5). In accordance with Government code section 7507, the County is required to make this information public at least two weeks before the Board acts on the change. Thus, the recommended Board action today is to receive and review this information and staff will return at a later date with the recommendation to adopt all negotiated changes in the Tentative Agreement.
Discussion:
Representatives of the County and WCE met and conferred and reached a Tentative Agreement regarding the terms and conditions of employment for a successor MOU for a three-year term, through June 1, 2026.
Part of the negotiated changes includes revisions to Article 19 - Medical Benefits for Future Retirees, to allow portability of retiree medical contributions to pre-2009 hired employees who retire on or after July 1, 2023 and reside or move out of a County offered medical plan service area, the option to place the current monthly retiree medical contribution into the Retiree Health Reimbursement Account (HRA). At present, a retiree must be enrolled in a County sponsored medical plan to receive the monthly retiree medical contribution. Any future retiree opting for a contribution into the HRA will be responsible for all premium costs, including Medicare Part B. Providing this option allows future retirees who live or move out of a service area the opportunity to access this benefit, thus participation may increase slightly. Upon Board approval at a later date, this benefit option will be available to bargaining unit members who were hired before 1/1/2009 and retire on or after 7/1/2023.
Government Code Compliance Requirements:
Various provisions of the California Government Code require certain disclosures before the Board can adopt changes in salaries or benefits, with additional disclosures required for changes in pension and other post-employment benefits. Any changes in salaries and benefits must be adopted at a public meeting of the Board (Cal Gov’t Code §23026). Notice of the consideration of such increases must be provided prior to the meeting and shall include “an explanation of the financial impact that the proposed benefit change or salary increase will have on the funding status of the county employees' retirement system.” (Cal Gov’t Code §31515.5).
In addition, when considering changes in retiree medical or other postemployment benefits, the Board “shall secure the services of an actuary to provide a statement of the actuarial impact upon future annual costs, including normal cost and any additional accrued liability, before authorizing changes in public retirement plan benefits or other postemployment benefits.” (Cal Gov’t Code §7507). When there are changes in retirement benefits or other postemployment benefits, the statement of actuarial impacts shall be provided by an enrolled actuary and shall be made public at a meeting at least two weeks before the adoption of the increase in benefits. (Cal Gov’t Code §31516).
Segal Valuation Analysis of Changes to Retiree Medical
Based upon the actuarial analysis by Segal Consulting, this change results in a slight decrease to the OPEB liability for WCE by (0.01%) or ($154), as illustrated below.
|
WCE OPEB Liabilities as of June 30, 2022 |
Pre-2009 WCE Current Benefit |
Proposed $500/Mo HRA |
$ Impact |
% Impact |
|
Implicit Subsidy |
$376,017 |
$361,917 |
($14,100) |
(3.75%) |
|
Medicare Part B |
$86,717 |
$83,583 |
($3,134) |
(3.61%) |
|
Cash Subsidy |
$627,740 |
$644,820 |
$17,080 |
2.72% |
|
Total OPEB Liability |
$1,090,474 |
$1,090,320 |
($154) |
(0.01%) |
In accordance with Government code section 7507, it is recommended your Board receive and review this information. Upon ratification by the bargaining unit members, staff will return at a later date with a recommendation to adopt all negotiated changes in the Tentative Agreement.
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with all the pillars, goals, and objectives.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
December 12, 2019: Approved WCE Successor MOU, Concurrent Resolution #19-0520
October 23, 2018: Adopted WCE MOU Extension, Concurrent Resolution #18-0444
July 19, 2016: Adopted Successor WCE MOU, Concurrent Resolution #16-0247
July 30, 2013: Adopted WCE MOU, Concurrent Resolution, #13-0296
Fiscal Summary
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Expenditures |
FY 22-23 Adopted |
FY23-24 Projected |
FY 24-25 Projected |
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Narrative Explanation of Fiscal Impacts:
Fiscal impacts associated with all negotiated changes will be included in a future Board report.
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
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Narrative Explanation of Staffing Impacts (If Required):
Not applicable
Attachments:
1. Attachment A - Tentative Agreement Article 19 - Retiree Medical
2. Attachment B - Actuarial Analysis Letter from Segal dated May 24, 2023 per GC §7507
Related Items “On File” with the Clerk of the Board:
None.