COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Human Resources Department

 

DATE:

October 3, 2010

BOARD MEETING DATE:

October 19, 2010

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

Donna Vaillancourt, Human Resources Director

Peter Bassett, Benefits Manager

   

SUBJECT:

Actuarial Valuation of Retiree Health Benefit Changes

 

RECOMMENDATION:

Accept actuarial valuation of cost savings to change retiree health benefits for certain employee groups

 

BACKGROUND:

On August 30, 2010, the County reached a Tentative Agreement with AFSCME for a new two-year contract through October 13, 2012. The Agreement changes retiree health benefits for new hires with AFSCME as well as for new hires who are unrepresented (Management, Confidential, and Attorneys).

Government Code Section 7507 (b)(2) requires that the Board when considering changes in retirement benefits or other postemployment benefits, 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.

DISCUSSION:

In November, the Tentative Agreement with AFSCME and the Resolutions for unrepresented management and confidential employees and attorneys will be presented to the Board of Supervisors. One of the terms includes changing retiree health benefits for new hires as of January 1, 2011. Employees hired on or after January 1, 2011, who retire concurrently with separation from County service, for every 8 hours of unused sick leave, the County will pay $400 toward the premium for one month of the retiree health plan. Additional sick leave hours are credited based on years of service at retirement.

While the above described proposed changes to the retiree health benefits constitute reductions in benefits, they are, nevertheless, a change in benefits triggering the requirement for an actuarial impact statement. The actuarial impact of these retiree health changes are a cost savings of $371,000 over the two-year term of the Agreements/Resolutions.

Pursuant to Government Code 7507, the actuarial certification of the cost savings to change retiree health benefits is being presented for your acceptance at least two weeks prior to the Board’s consideration of the agreement with AFSCME and the resolution setting for the benefits for the unrepresented management and confidential employees, and the unrepresented attorneys.

 

FISCAL IMPACT:

There is no fiscal impact in accepting this report. County savings from this benefit change will be realized only upon Board approval of the AFSCME agreement and Resolutions for unrepresented management and confidential employees and attorneys in November.