COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Human Resources Department

DATE:

March 14, 2011

BOARD MEETING DATE:

March 29, 2011

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 Change

RECOMMENDATION:

Accept actuarial valuation of cost savings to change retiree health benefits for Deputy Sheriff’s Association (DSA) and Probation and Detention Association (PDA).

BACKGROUND:

In February 2011, the County reached a Tentative Agreement with PDA and DSA for new five-year contracts. The agreements change retiree health benefits for new hires with PDA and DSA effective January 1, 2011.

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 April 2011, the Tentative Agreements with PDA and DSA 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. For 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 approximately $214,000 over the five-year term of the Agreements.

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 agreements with PDA and DSA.

Accepting this report contributes to Shared Vision 2025 of a Prosperous Community by helping to meet current budget challenges.

FISCAL IMPACT:

There is no fiscal impact in accepting this report. County savings of $214,000 from this benefit change will be realized only upon Board approval of the PDA and DSA agreements in April.