HomeMy WebLinkAboutResolutions - 2014.01.22 - 21157MISCELLANEOUS RESOLUTION #14005 January 22, 2014
BY: HUMAN RESOURCES COMMITTEE, JOHN A. SCOTT, CHAIRPERSON
IN RE: HUMAN RESOURCES DEPARTMENT — REDUCE VESTING PERIOD REQUIREMENT FOR
RETIREMENT HEALTH SAVINGS PLAN PARTICIPANTS AND OFFER VOLUNTARY OPTION FOR
EMPLOYEES TO SWITCH TO RETIREMENT HEALTH SAVINGS PLAN FROM VOLUNTARY
EMPLOYEES' BENEFIT ASSOCIATION PLAN
To the Oakland County Board of Commissioners, Chairperson, Ladies, and Gentlemen:
WHEREAS Miscellaneous Resolution #05258 established a Retirement Health Savings (RHS)
Plan for full-time eligible employees hired on or after January 1, 2006; and
WHEREAS the RHS Plan is now the only retiree health, dental, and vision plan available for
newly hired employees and is a defined contribution type of retiree health care plan; and
WHEREAS there is a graduated vesting schedule for all employees who are eligible for the RHS
Plan with 60% of the employee's benefit vested after 15 years of service, accruing an additional 4%
vesting increment for each subsequent year of service until eventually becoming fully vested after 25
years of service; and
WHEREAS workforce statistics indicate median tenure for employees currently entering the
workforce is dramatically lower than the traditional length of service in the past; and
WHEREAS the existing 15 -25 year graduated vesting schedule for the RHS Plan provides
limited recruitment and retention value to this important labor sector that we need to fill County jobs in the
future, and
WHEREAS it is recommended that the vesting period for all RE-IS Plan participants be revised as
follows:
Years of Service Completed
Less than 6
6
7
8
9
10
% Vested
0
60
70
80
90
100
WHEREAS the only retiree health care plan available currently to full-time eligible employees
hired prior to January 1, 2006, is the Voluntary Employees' Benefit Association (VEBA) Plan which is now
a fully closed plan and no longer available to newly hired employees; and
WHEREAS the VEBA Plan is a defined benefit type of retiree health care plan; and
WHEREAS the Federal Patient Protection and Affordable Care Act (PPACA) was signed into law
on March 23, 2010, which provides for a federally-approved health care exchange to be operational on
January 1, 2014, where individuals can purchase private health care insurance; and
WHEREAS this new federal program may appeal to some employees who may desire to
purchase insurance through the federal health care exchange in their early retirement years or
supplement their Medicare coverage when they become eligible for that program; and
WHEREAS such employees may desire to convert from the VEBA Plan to the RHS Plan to
provide more flexibility in their health care choices during retirement; and
WHEREAS if employees chose to voluntarily convert from the VEBA Plan to the RHS Plan, such
action would supersede and supplant the County's obligation to provide future retirement health care
benefits to those employees; and
WHEREAS it is recommended that a limited window of opportunity should be provided to VEBA-
eligible employees to allow them to voluntarily and irrevocably convert to the RHS; and
WHEREAS it is recommended that for employees who voluntarily and irrevocably convert from
the VEBA Plan to the RHS Plan, an initial lump sum amount will be placed into their RHS account which
will equal $2,000 for each full year of eligible service with the County as of April 1, 2014. Thereafter, the
County will contribute the same biweekly amount provided to current RHS-eligible employees which will
be dependent upon bargaining union agreements or provisions for non-represented employees.
NOW THEREFOR BE IT RESOLVED that effective as of April 1, 2014, the vesting schedule for
all RHS Plan participants be revised as follows:
Years of Service Completed % Vested
Less than 6 0
6 60
7 70
8 80
9 90
10 100
BE IT FURTHER RESOLVED that employees who leave county employment with a RHS account
that are not 100% vested at the time of separation, and return to full-time eligible county employment
have their forfeited amount restored.
BE IT FURTHER RESOLVED during the period of June 1,2014, through June 28, 2014, that the
Oakland County Board of Commissioners authorize a one-time voluntary opportunity for VEBA-eligible
employees to convert from the County's VEBA Plan to the County's RHS Plan for all non-represented
employees and represented employees whose collective bargaining agreement provides for a "me too"
for fringe benefits.
BE IT FURTHER RESOLVED that employees who voluntarily convert from the VEBA Plan to the
RHS Plan shall acknowledge by a signed statement that the decision to convert shall be irrevocable.
BE IT FURTHER RESOLVED that the County shall deposit an initial lump sum amount for
employees who convert from the VEBA Plan to the RHS Plan, into an RHS account which will equal
$2,000 for each full year of eligible service with the County prior to April 1, 2014. Thereafter, the County
will contribute the same biweekly amount provided to current RHS-eligible employees which will be
dependent upon bargaining union agreements or as provided for non-represented employees, whichever
is applicable to the individual employee at the time of conversion.
Chairperson, on behalf of the Human Resources Committee, I move the adoption of the
foregoing resolution.
HUMAN RESOURCES COMMITTEE
FISCAL NOTE (MISC. #14005) January 22, 2014
BY: Finance Committee, Tom Middleton, Chairperson
IN RE: HUMAN RESOURCES DEPARTMENT — REDUCE VESTING PERIOD REQUIREMENT FOR
RETIREMENT HEALTH SAVINGS PLAN PARTICIPANTS AND OFFER VOLUNTARY OPTION FOR
EMPLOYEES TO SWITCH TO RETIREMENT HEALTH SAVINGS PLAN FROM VOLUNTARY
EMPLOYEES BENEFIT ASSOCIATION PLAN
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
Pursuant to Rule XII-C of this Board, the Finance Committee has reviewed the above referenced
resolution and finds:
1 Miscellaneous Resolution #05258 established a Retirement Health Savings (RHS) Plan
(defined contribution type of retiree health care plan) for full-time eligible employees hired on
or after January 1, 2006 which is now the only retiree health, dental, and vision plan available
for newly hired employees.
2. There is a graduated vesting schedule for all employees who are eligible for the RHS Plan
with 60% of the employee's benefit vested after 15 years of service, accruing an additional
4% vesting increment for each subsequent year of service until eventually becoming fully
vested after 25 years of service.
3. This schedule provides limited recruitment and retention value to this important labor sector
that we need to fill County jobs in the future,
4. It is recommended that effective April 1, 2014 the vesting schedule for all RHS Plan
participants be revised as follows:
Years of Service Completed % Vested
Less than 6 0
6 60
7 70
8 80
9 90
10 100
5. The only retiree health care plan available currently to full-time eligible employees hired prior
to January 1, 2006, is the Voluntary Employees' Benefit Association (VEBA) Plan (defined
benefit type of retiree health care plan) which is now a fully closed plan and no longer
available to newly hired employees.
6. The Federal Patient Protection and Affordable Care Act (PPACA) provides for a federally-
approved health care exchange where individuals can purchase private health care
insurance.
7. The new federal program may appeal to some employees who wish to purchase insurance
through the federal health care exchange in their early retirement years or supplement their
Medicare coverage when they become eligible for that program and such employees may
desire to convert from the VEBA Plan to the RHS Plan to provide more flexibility in their
health care choices during retirement.
8. If employees chose to voluntarily convert from the VEBA Plan to the RHS Plan, such action would
supersede and supplant the County's obligation to provide future retirement health care benefits to
those employees.
9. Employees who leave county employment with a RHS account that are not 100% vested at the
time of separation, and return to full-time eligible county employment have their forfeited amount
restored.
10. It is recommended during the period of June 1, 2014, through June 28, 2014 that the Oakland
County Board of Commissioners authorize a one-time voluntary opportunity for VEBA-eligible
employees to convert from the County's VEBA Plan to the County's RHS Plan for all non-
represented employees and represented employees whose collective bargaining agreement
provides for a "me too" for fringe benefits.
FINANCE COMMITTEE VOTE:
Motion carried unanimously on a roll call vote with Crawford absent.
11. For the employees who choose to convert from the County's VEBA Plan to the County's RHS Plan
the County shall deposit an initial lump sum amount into an RHS account which will equal $2,000
for each full year of eligible service with the County prior to April 1, 2014 and, thereafter, the
County will contribute the same biweekly amount provided to current RI-IS-eligible employees
which will be dependent upon bargaining union agreements or as provided for non-represented
employees, whichever is applicable to the individual employee at the time of conversion.
12. Employees who voluntarily convert from the VEBA Plan to the RI-IS Plan shall acknowledge by a
signed statement that the decision to convert shall be irrevocable.
13. While the change in the vesting period may reduce the amount of forfeited funds returned to the
County, it will not have any budgetary impact as the forfeited funds related to employees who
leave County employment before being fully vested are not budgeted.
14. It is estimated that ratio of savings is approximately 5:1; meaning for every $1 provided for the
one-time voluntarily conversion, $5 savings is anticipated in present value liabilities.
15. Based on a preliminary analysis, the high-end estimate for the one-time voluntarily conversion cost
is $10.5 million with the potential reduction of the VEBA liability of $52.5 million.
16. Funding is available for the voluntarily conversion cost from the Fringe Benefit Fund.
17. A budget amendment will be included with the FY 2014 Third Quarter Forecast Resolution based
on the actual number of employees who voluntarily elect to irrevocably convert from the VEBA
Plan to the RHS Plan.
FINANCE COMMITTEE
Resolution #14005 January 22, 2014
Moved by Spisz supported by Hatchett the resolutions (with fiscal notes attached) on the amended
Consent Agenda be adopted.
AYES: Gershenson, Gosselin, Hatchett, Hoffman, Jackson, Long, Matis, Middleton, Quarles,
Runestad, Scott, Spisz, Taub, Weipert, Woodward, Zack, Bosnic, Crawford, Dwyer. (19)
NAYS: None. (0)
A sufficient majority having voted in favor, the resolutions (with fiscal notes attached) on the amended
Consent Agenda were adopted,
y
P HEREBY APPROVE THIS RESOLUTION
CHIEF DEPUTY COUNTY EXECUTIVE
ACTING PURSUANT TO MCL 45.559A (7)
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and
accurate copy of a resolution adopted by the Oakland County Board of Commissioners on January 22,
2014, with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at
Pontiac, Michigan this 22 nd day of January 2014,
Lisa Brown, Oakland County