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
Resolution Approving Changes to Article 16.2 of the Successor Memorandum of Understanding between the County of Sonoma and International Union of Operating Engineers - Local 39
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Recommended Action:
Recommended action
Adopt a Concurrent Resolution approving changes to Article 16.2.2 (Medical Benefits for Future Retirees) that were negotiated as part of the 2023/2026 Successor Memorandum of Understanding between the County of Sonoma and the International Union of Operating Engineers - Local 39, to be effective August 1, 2023 through July 1, 2026.
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Executive Summary:
Representatives of the County and the International Union of Operating Engineers - Local 39 (Local 39) 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). Your Board approved the Tentative Agreement on July 11, 2023 (Resolution No. 23-0352) effective July 11, 2023 through July 1, 2026.
On July 11, 2023, your Board also received and reviewed the actuarial valuation related to negotiated changes to Article 16.2- Medical Benefits for Future Retirees, as outlined in Attachment A. This information included the financial impact on the County’s liability for Other Post-Employment Benefits (OPEB) and future costs, as outlined below and in Attachment B, pursuant to Cal Gov’t Code §7507 and §31515.5. In accordance with Government code section 7507, the County was required to make this information public at least two weeks before the Board acts on the change. Thus, today’s recommended Board action is to approve the changes to Article 16.2 of the Successor MOU, to be effective August 1, 2023, through July 1, 2026.
Discussion:
Representatives of the County and Local 39 met and conferred and reached a Tentative Agreement regarding the terms and conditions of employment for a successor MOU for a three-year term, effective July 11, 2023 through July 1, 2026.
Part of the negotiated changes included revisions to Article 16.2 - Medical Benefits for Future Retirees, to allow portability of retiree medical contributions to pre-2009 hired employees who retire on or after July 11, 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 your Board’s approval today, this benefit option will be available to bargaining unit members who were hired before January 1, 2009 and retire on or after August 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 §31516.2).
Segal Valuation Analysis of Changes to Retiree Medical
Based upon the actuarial analysis by Segal Consulting, this change results in a slight increase to the OPEB liability for Local 39 by 0.46% or $10,820, as illustrated below.
|
Local 39 OPEB Liabilities as of June 30, 2022 |
Pre-2009 LOCAL 39 Current Benefit |
Proposed $500/Mo HRA |
$ Impact |
% Impact |
|
Implicit Subsidy |
$672,600 |
$647,378 |
($25,222) |
(3.75%) |
|
Medicare Part B |
$222,178 |
$214,147 |
($8,031) |
(3.61%) |
|
Cash Subsidy |
$1,464,764 |
$1,508,837 |
$44,073 |
3.01% |
|
Total OPEB Liability |
$2,359,542 |
$2,370,362 |
$10,820 |
0.46% |
The County Administrator has reviewed and acknowledges her understanding of the current and future financial impacts of the negotiated changes to other post-employment benefits (retiree medical), as required by Cal Gov’t Code §7507 (Attachment C).
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:
July 11, 2023: Approved Local 39 Successor MOU, Concurrent Reso. #23-0352
July 30, 2019: Approved Local 39 Successor MOU, Concurrent Reso. #19-0312
October 9, 2018: Add’l Provisions to Local 39 MOU Ext, Concurrent Reso. #18-0412
June 5, 2018: Approved Local 39 MOU Extension, Concurrent Reso. #18-0242
March 20, 2018: Approved Side Letter for Vacation Purchase Plan, Concurrent Reso. #18-0100
July 19, 2016.2 Approved Local 39 MOU, Concurrent Reso. #16.2-0275
Fiscal Summary
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Narrative Explanation of Fiscal Impacts:
The change to total OPEB liability associated with the changes included in this item are minimal and will not have a significant impact on payments by the county, which are calculated annually based on actuarial assessments. Fiscal impacts associated with other negotiated changes in the MOU with Local 39 were included in the report that went to the Board on July 11, 2023.
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Narrative Explanation of Staffing Impacts (If Required):
Not applicable
Attachments:
1. Resolution
2. Attachment A - Tentative Agreement Article 16.2 - Retiree Medical
3. Attachment B - Actuarial Analysis Letter from Segal dated May 24, 2023 per GC §7507
4. Attachment C - Memorandum from County Administrator pursuant to GC §7507
Related Items “On File” with the Clerk of the Board:
None.