COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Human Resources Department

DATE:

May 23, 2011

BOARD MEETING DATE:

June 7, 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 Law Enforcement Unit (LEU) and Union of American Physicians and Dentists (UAPD).

BACKGROUND:

The County recently reached a Tentative Agreement with LEU and UAPD for new contracts. The agreements change retiree health benefits for new hires with LEU effective July 10, 2011 and for existing UAPD members.

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 June 2011, the Tentative Agreements with LEU and UAPD will be presented to the Board of Supervisors. One of the terms includes changing retiree health benefits. For LEU employees hired on or after July 10, 2011 and for existing UAPD employees, 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.

The cost savings of these retiree health changes is noted below:

Y1 Savings: $4,000

Y5 Cumulative Savings: $36,000

Y10 Cumulative Savings: $115,000

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 UAPD and LEU.

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 as noted above will be realized only upon Board approval of the UAPD and LEU agreements.