HomeMy WebLinkAboutE-11. APMA Unfunded Leave Bank Reduction ProgramCONSENT ITEM
E-11
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER
FROM: AMELIA AYALA, DIRECTOR OF HUMAN RESOURCES & RISK MANAGEMENT
DATE: SEPTEMBER 19, 2016
SUBJECT: ADOPT RESOLUTION 2016-C59 APPROVING THE CITY OF AZUSA UNFUNDED
LEAVE BANK REDUCTION PROGRAM FOR AZUSA POLICE MANAGEMENT
ASSOCIATION (APMA) MEMBERS
SUMMARY:
The term compensated absences commonly describes paid time off made available to employees in
connection with vacation leave, sick leave, and comparable types of compensated absences (such as
personal leave, holiday leave). Under Government Accounting Standards Board (GASB) Statement No.
16, the City is required to report annually the value of all compensated absences for employees in its
Comprehensive Annual Financial Report (CAFR). Currently, the total value of compensated absences
for all employees is $4.6 Million as of Fiscal Year 2013-2014. The City has not set aside any funds to
cover compensated absences and generally pays employees for their compensated absences as they leave
service. This practice can lead to cash flow issues especially if more than one person leaves service
within the same fiscal year. In order to reduce the cash flow burden of having to pay out compensated
absences when an employee separates from service and to give the City time to fund its compensated
absences, Staff has explored several program options. Mid America Administrative and Retirement
Solutions, Inc., offers a program known as a Special Pay Plan that will help reduce the City’s liability of
accrued leave bank hours. The Special Pay Plan is an approved 401(a) plan by the Internal Revenue
Service. This action adopts Resolution No. 2016-C59 enabling the Azusa Police Management
Association (APMA) Members to participate in the Special Pay Program offered by Mid America
Administrative and Retirement Solutions.
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1) Adopt Resolution No. 2016-C59 approving the City of Azusa Compensated Absences Reduction
Program for Azusa Police Management Association (APMA) Members.
DISCUSSION:
Approved
Council Meeting
9/19/2016
Compensated Absences Reduction Program
September 12. 2016
Page 2
As the City continues to explore progressive and innovative means to help reduce its unfunded liabilities
such as compensated absences, Staff is presenting for Council consideration a Compensated Absences
Reduction Program (“Program”). This Program allows employees to contribute unused bank hours into
a retirement savings plan. During labor negotiations, the City’s negotiating team presented the proposed
Program to the Azusa Police Management Association (APMA). The APMA agreed to work with the
City to implement the program. As proposed, the entire membership (14 employees) of the APMA will
contribute:
Annually 100% of all accrued unused sick, compensation time, and/or vacation leave bank in
excess of caps to the Program.
The Special Pay Plan is available only through Envoy Plan Services which serves school districts and
municipalities. The City Council previously approved this program for department heads and the City
Manager. The fund, which is managed by Mid America Administrative and Retirement Solutions, Inc.
has a guaranteed interest rate and will never to fall below the standard National Association of Insurance
Commissioners (NAIC) rate. The interest guarantees are based on the claims paying ability of AUL,
rated A (Excellent).
FISCAL IMPACT:
The recommended action will lower the City’s long-term financial liability for compensated absences,
and will reduce the annual cash flow burden on the General Fund by enabling the City to fund an
employee’s bank of compensated absences over time. In addition, the City’s administrative costs for the
Program will be $20.00 dollars per participant per year or $280.00 dollars annually for all the current
fourteen participants. The $20.00 dollar administrative cost will be waived upon employee separation,
and as such, the administrative cost is fiscally neutral to the City.
At this time, all members of the APMA have agreed to participate in the Program. Additional gr oups
may be added in the future through negotiations and City Council approval.
Prepared by: Fiscal Impact Reviewed by:
Amelia Ayala Talika M. Johnson
Director of Human Resources & Risk Management Director of Finance
Reviewed and Approved: Reviewed and Approved:
Louie F. Lacasella Troy L. Butzlaff, ICMA-CM
Management Analyst City Manager
Attachment:
1) Resolution No. 2016-C59
RESOLUTION NO. 2016-C59
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA FOR
LEAVE BANK REDUCTION PROGRAM FOR AZUSA POLICE
MANAGEMENT ASSOCIATION (APMA) MEMBERS
WHEREAS, employees of the City of Azusa are paid leave banks to include sick and vacation
leave hours accrued and not used, including at the time of retirement or resignation; and
WHEREAS, such payments are subject to Social Security taxes and Federal and State taxes at
the supplemental rate; and
WHEREAS, these leave bank payments can be deposited in an IRC Section 401(a) Special Pay
Plan (the Plan) as an employer contribution; and
WHEREAS, the Azusa Police Management Association (APMA) employee group has agreed to
participate in this plan will do so effective on or after October 1, 2016, and
WHEREAS, the employee groups not participating as of October 1, 2016, may elect, at a later
date, to participate in the plan; and
NOW, THEREFORE, BE IT RESOLVED that the City Council adopts the establishment of
the 401(a) Special Pay Plan through Envoy Plan Services, Inc., with plan administration provided by
Mid America Administrative and Retirement Plan Solutions, Inc.
RESOLVED FURTHER that a copy of this Resolution shall be provided to Envoy Plan Services.
PASSED, APPROVED and ADOPTED this 19th day of September, 2016. ___________________________________ Joseph Romero Rocha Mayor ATTEST: ___________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2016-C59 was duly adopted by the
City Council of the City of Azusa at a regular meeting thereof, held on the 19th day of September, 2016,
by the following vote of Council:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
___________________________________
Jeffrey Lawrence Cornejo, Jr.,
City Clerk
APPROVED AS TO FORM: ___________________________________ Best Best & Krieger, LLP City Attorney