HomeMy WebLinkAbout#14 Post Retirement Benifits AGENDA ITEM #14
Public Utility District m
MEETING DATE: June 5, 2024
TO: Board of Directors
FROM: Jillian Steward, Human Resources Director
Brian Wright, General Manager
SUBJECT: District Code Title 4, Post Retirement Benefits
APPROVED BY:
Brian C. Wright, General Manager
RECOMMENDATION:
A.) Direct Staff to draft a resolution approving a revision to District Code, Title 4
Personnel, as proposed on March 6, 2024, to limit the eligibility of newly negotiated
employee group benefit adjustments made effective January 1, 2024 to current regular
employees and those who have retired after January 1, 2024;
or
B) Direct Staff to draft a resolution approving revision to District Code, Title 4
Personnel to make current regular employees and all retired employees not
represented by an MOU eligible for negotiated employee group benefit adjustments
made effective January 1, 2024; and authorize the General Manager to negotiate
equivalent terms with IBEW Local 1245 for previously retired employees represented by
an MOU in the form of a Letter of Agreement
BACKGROUND:
District Code, Title 4 Personnel codifies group benefits for all regular employees who
are not represented by a Union Memorandum of Understanding (MOU), as well as
other personnel policies. As part of the unrepresented employees group compensation
negotiations, certain benefit changes are proposed from year to year.
At the Board's regularly scheduled meeting held on March 6, 2024, staff presented for
Board consideration Item #14, Consideration of Approval of Employee Benefits
Changes. Employee benefits for District employees are outlined in District Code, Title
4. The proposed changes to the benefits outlined in Title 4 included:
1. 4.07.020.3 Changing the vision plan benefit from $400 to $500 per covered
employee or dependent;
2. 4.07.050, for retiree's vision benefit, specifying the increase to $500 is for
retirees with retirements effective 1/1/2024 or later;
Page 1 of 4
Page 43 of 449
3. 4.07.010.1, for paid sick leave cash-out, reducing the minimum accrued sick
hours from 600 to 500 hours;
4. 4.07.035, adding documentation of the 457B District match and increasing the
match by 2.0% compared to the current level;
5. 4.07.090, changing the administrative leave benefit from 9 days to 10 days;
6. 4.07.020.6, adding a new Wellness benefit program, a FY24 budgeted benefit
addition
At the March 6, 2024 Board Meeting, the Board evaluated each of the modifications to
employee benefits, approving all as proposed except for modification #2 related to post-
retirement benefits and the application of increased benefits to employees who have
retired prior to January 1, 2024. The Board provided feedback to staff, requesting
additional information and an opportunity to review at a future Board Meeting.
During the Board's discussion and review of the proposed changes on March 6, 2024, it
was acknowledged that the Board had previously reviewed the same subject matter at
a meeting held on May 20, 2020, during the review and determination in response to a
Letter of Referral (grievance) submitted by the International Brotherhood of Electrical
Workers (IBEW), Local 1245, disputing the District's interpretation of post retirement
benefits outlined in the recently approved 2020-2024 Memorandum of Understanding
(MOU) with IBEW. As indicated in the approved Board Minutes from the May 20, 2020
meeting (Attachment 1), the Board made a motion and approved staff's
recommendation to reject the grievance submitted by IBEW Local 1245. Additionally,
reflected in the minutes of the May 20, 2020 meeting, the Board provided feedback that
staff's interpretation of the MOU and District Code Title 4 was correct, and that
negotiated increases in employee benefits were applicable to current employees, future
retirees, and not previously retired employees.
ANALYSIS AND BODY:
As indicated previously in this staff report, at the March 6, 2024 Board Meeting, the
Board requested that staff bring the item back for further consideration at a future
meeting date, providing the opportunity to more fully review the issue, past discussion,
and the financial impacts.
One of the key points of discussion on March 6th was the fact that while the Board
made a determination at the May 20, 2020, meeting to reject the grievance submitted
by IBEW 1245 and uphold staff's interpretation of both District Code Title 4 and the
MOU as it pertains to employee benefits, District Code Title 4 was not revised in any
manner to reflect this determination. Staff's recommendation with this item is for the
Board to make a determination as to the application of recently negotiated increases in
group benefits of previously employed retirees.
In response to the Board of Director's request for additional information and for
Page 2 of 4
Page 44 of 449
consideration, the following items have been included as attachments to the May 1,
2024 staff report:
1. Staff Report for the March 6, 2024 Agenda, Item #14;
2. Staff Report for the May 20, 2020 Agenda, Item #12;
3. Board approved minutes for the May 20, 2020 Meeting
Following discussions at the May 1, 2024 Board Meeting, staff has provided revised
recommended modifications to District Code Title 4, Personnel to reflect the Board's
request to consider including the eligibility of previously retired employees for not only
the adjustments to annual vision benefits, but previously increased annual post-
retirement medical benefits. Attachment 4 illustrates revisions to District Code Title 4,
Personnel reflective of staff recommendation (A). Attachment #5 illustrates revisions to
District Code Title 4, Personnel reflective of staff recommendation (B).
Following consideration and direction from the Board of Directors, staff will be required
to draft a formal resolution to execute the proposed revision to Distrcit Code Title 4.
GOALS AND OBJECTIVES:
District Code 1 .05.020 Objectives:
1. Responsibly serve the public.
2. Provide a healthy and safe work environment for all District employees.
3. Provide reliable and high quality water supply and distribution system to meet
current and future needs.
4. Provide reliable and high quality electric supply and distribution system to meet
current and future needs.
5. Manage the District in an environmentally sound manner.
6. Manage the District in an effective, efficient and fiscally responsible manner.
District Code 1 .05.030 Goals:
1. Manage for Financial Stability and Resiliency
2. Environmental Stewardship: Create a sustainable resilient environment for all our
communities.
3. Engage with our customers and communities in a welcoming and transparent way to
identify opportunities.
4. Take the best of private sector thinking to modernize the utility and add value to our
communities.
5. Developing an inclusive culture drives organizational integration and success.
FISCAL IMPACT:
The application of recently negotiated changes to employee group benefits was not
included in the District's FY2024-2025 Board approved budget.
As of January 1, 2024 there are 48 retired former District employees actively receiving
Page 3 of 4
Page 45 of 449
post-retirement benefits. Including retired employee's qualifying spouse and
dependents, there are 88 participants in the District's post-retirement benefit program.
The District's total cost of active participants in post-retirement benefits are as follows:
• Medical Benefits
o $378,803 (Total annual cost of current participants prior to application of
an approved increase)
o $460,267 (Estimated total annual cost of current participants including
application of approved benefits increase)
o $81,464 (Equivalent to a 22% increase in the District's total annual cost of
post-retirement medical benefits)
• Vision Benefits
o $12,243 (2023 total post-retirement vision care payment)
o $16,943 (Estimated total cost in annual post-retirement vision care
benefits
o $4,700 (Equivalent to a 38% increase in the District's total annual post-
retirement vision care benefits)
The application of recently negotiated increases in group benefits (Medical and Vision)
would result in an increase of the District's total estimated post-retirement benefit cost
of approximately $86,164.
NOTE: This change would have a material impact on the District's OPEB net liability
valuation which as of 12/31/2023 was $5.97M. An increase in the liability would be a
non-cash expense charge and result in a corresponding decrease in, the Net Position
of the District.
ATTACHMENTS:
1. Attachment #1, March 6, 2024 Staff Report, Item #14
2. Attachement #2, Staff Report May 20, 2020 Item #12
3. Attachment #3, May 20, 2020 Board Minutes
4. Attachment #4 Title 4 Personnel - (Recommendation A)
5. Attachment #5 - Title 4 Personnel - (Recommendation B)
Page 4 of 4
Page 46 of 449