Title
Adoption of Resolution Amending the International Association of Fire Fighters (IAFF) Supplemental Retirement and Health Plan (Plan) and Trust Agreement for IAFF Employees Hired After June 7, 2011 to Include Alameda Fire Chief’s Association (AFCA), Alameda Police Officers’ Association (APOA), and Alameda Police Management Association (APMA) Employees Hired After June 7, 2011 as Provided in the Memoranda of Understanding (MOUs) Between the City and AFCA, the City and APOA, and the City and APMA Approved on April 29, 2015; and
Authorize the Interim City Manager to Appoint the President of Alameda Fire Chief’s Association (AFCA), President of Alameda Police Officers’ Association (APOA), and President of Alameda Police Management Association (APMA) Employees as Additional Trustees as Required by the Trust Agreement; and
Authorize the Interim City Manager to Execute Plan and Trust Documents. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Interim City Manager
Re: Adopt a Resolution Amending the International Association of Fire Fighters (IAFF) Supplemental Retirement and Health Plan (Plan) and Trust Agreement for IAFF Employees Hired After June 7, 2011 to Include Alameda Fire Chiefs Association (AFCA), Alameda Police Officer’s Association (APOA), and Alameda Police Management Association (APMA) Employees Hired After June 7, 2011 as Provided in the Memoranda of Understanding (MOUs) Between the City and AFCA, the City and APOA, and the City and APMA Approved on April 29, 2015; and
Authorize the City Manager to Appoint the President of Alameda Fire Chiefs Association (AFCA), President of Alameda Police Officer’s Association (APOA), and President of Alameda Police Management Association (APMA) as Additional Trustees as Required by the Trust Agreement; and
Authorize the City Manager to Execute Plan and Trust Documents
BACKGROUND
In May 2014, the City Council adopted a resolution establishing the City of Alameda International Association of Fire Fighters (IAFF) Supplemental Retirement Plan and Trust Agreement for IAFF Employees Hired After June 7, 2011 as was provided in the Memorandum of Understanding (MOU) between the City and IAFF in effect at the time.
In April 2015, the City Council approved and the City entered into a Memorandum of Understanding (MOU) with the AFCA, APOA, and APMA. Section 14.4 (b) of the AFCA MOU Retiree Health and Dental Benefit - Employees Hired After June 7, 2011, Section 14.4 (b) of the APMA MOU Retiree Health Benefit - Employees Hired After June 7, 2011, and Section 14.3 (b) of the APOA MOU Retiree Health Benefit - Employees Hired After June 7, 2011, state that employees hired after June 7, 2011 shall receive City paid employee-only health care in retirement. The City used to offer City paid coverage to both the employee and his/her spouse. To provide employees with a mechanism to fund health care cost in retirement for his/her spouse, the City agreed to allow AFCA, APOA and APMA employees hired after June 7, 2011 utilize a supplemental retirement plan (Plan) (Exhibit 1) paid for by Plan participants (employees).
The purpose of the Plan is to outline which employees are eligible, how contributions are made, any limitations to those contributions, how the Plan is administered on a day to day basis and by whom, how benefits and earnings will be disbursed, and a process for resolving disputes. Currently, the Plan requires any IAFF employee hired after June 7, 2011 to contribute 3% of their base salary to the Plan, 75% of which would go to a supplemental retirement account and 25% to a retiree health account. All funds deposited into the account would be paid by the employee and disbursed upon separation from employment with the City according to the Plan provisions.
DISCUSSION
To eliminate the burden of creating a new retirement Trust under each MOU, the City asked the Presidents of AFCA, APOA and APMA if their members would agree to participate in the existing IAFF Supplemental Retirement and Health Trust. The City also asked IAFF President if the IAFF members would agree to allow other safety members to participate in the Trust. Both sides agreed to use one Trust for its members. As a result, the Trust and the Plan documents have to be amended to allow participation of all safety bargaining groups in the Plan. The changes to the Trust and Plan document are included in Exhibit 1 and 2.
With the inclusion of the AFCA, APOA and APMA, it is proposed that the President of each bargaining group be appointed as an additional Trustee. With this change, the Trust will have a total of six Trustees: City of Alameda Finance Director, the Human Resources Director (previously the Administrative Services Director), the President of IAFF, the President of AFCA, the President of APOA and the President of APMA.
Under the original provisions of the Plan, IAFF members participating in the Plan were contributing 3% of their regular base salary. As revised, and in accordance with the current MOUs, the Plan requires all safety employee hired after June 7, 2011 to contribute 2% of their base salary to the Plan, 75% of which would go to a supplemental retirement account and 25% to a retiree health account. All funds deposited into the account would be paid by the employee and disbursed upon separation from employment with the City according to the Plan provisions.
The City must also appoint a Plan Administrator (Administrator), also referred to as a Retirement Committee. The Administrator is responsible for overseeing the general operation of the Plan, including determining eligibility; ensuring appropriate deductions to pay are made; resolving disputes and conflicts; and interpreting the Plan as necessary. The City of Alameda Finance Director and Human Resources Director (previously Administrative Services Director) will continue to serve as the Plan Administrator. Peery & Associates, current third party Plan administrator, will continue to assist with day to day activities regarding the Plan. This is explicitly stated in all four MOUs.
When the original Trust and the Plan were established, the City submitted documents approved by the City Council, to the IRS for a determination letter regarding the qualified status of the Plan and Trust under Code sections 401 (a) and 501 (a). As of the publishing date of this staff report, the City has not received an IRS determination. Mandatory employee contributions will be made beginning the first full pay period after January 1, 2016, for those AFCA, APOA and APMA employees hired after June 7, 2011.
FINANCIAL IMPACT
There is no financial impact from adopting the Trust and Plan with the exception of staff time to implement the Plan. All other costs are paid for by the Plan participants.
ENVIRONMENTAL REVIEW
Adopting this resolution to establish a supplemental retirement and health plan and trust agreement is not a project under CEQA as it is a continuing administrative activity, such as general policy and procedure making.
RECOMMENDATION
Adopt a resolution amending the International Association of Fire Fighters (IAFF) Supplemental Retirement and Health Plan (Plan) and Trust Agreement for IAFF Employees Hired After June 7, 2011 to include Alameda Fire Chiefs Association (AFCA), Alameda Police Officer’s Association (APOA), and Alameda Police Management Association (APMA) employees hired after June 7, 2011 as provided in the Memoranda of Understanding (MOUs) between the City and AFCA, the City and APOA, and the City and APMA approved on April 29, 2015;
Authorize the City Manager to appoint the President of Alameda Fire Chiefs Association (AFCA), President of Alameda Police Officer’s Association (APOA), and President of Alameda Police Management Association (APMA) as Additional Trustees as required by the Trust Agreement; and
Authorize the City Manager to execute Plan and Trust Documents.
Respectfully submitted,
Elena Adair, Finance Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Supplemental Retirement Plan Trust Agreement As Amended (red-line version)
2. Supplemental Retirement Plan Trust Agreement As Amended (final)
3. Supplemental Retirement Plan As Amended (red-line version)
4. Supplemental Retirement Plan As Amended (final)