TO:
Honorable Mayor and Members of the City Council
THROUGH:
David N. Carmany, City Manager
FROM:
Cathy A. Hanson, Human Resources Director
SUBJECT:Title
Report on 960-hour Policy Governing Part-time Employees and Benefits
RECEIVE AND FILE
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council receive and file this report.
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FISCAL IMPLICATIONS:
The fiscal impact will vary depending on the number and level of part-time non-safety employees enrolled into the statewide Public Employees Retirement System (PERS). The City’s cost will be 9.680% for new members (those who have never been in PERS) and 11.014% for part-time employees who have been in PERS in the past.
BACKGROUND:
The City maintains part-time positions in almost every department throughout the City. The Parks and Recreations Department historically employs the most part-time employees.
In an effort to manage retirement costs as well as ensure part-time positions are being utilized for part-time work, departments have been asked to limit the number of hours of individual part-time staff to no more than 960 hours per fiscal year (July 1 to June 30).
Part-time individuals who work over 1000 hours in a fiscal year are automatically enrolled in the PERS retirement system. The part-time employees who work less than 960 hours per fiscal year are enrolled in a Public Agency Retirement Services (PARS) plan, which is an alternative retirement benefit plan. Part-time employees enrolled in PERS pay an employee contribution portion and the City pays an employer contribution portion. Part-time employees enrolled in PARS pay the entire contribution rate. As of January 1, 2013, non-safety employees pay a 6.25% contribution and the City currently pays 9.680% for a total PERS contribution of 15.93%. Employees who have previously been members of PERS pay a 7% contribution rate and the City pays 11.014% for a total PERS contribution of 18.014%. Part-time employees enrolled in PARS pay the entire 7.5% contribution rate.
During the summer of 2011, Human Resources staff began meeting with various departments regarding the implementation of the 960 hour cap. It was determined at that time that employees who were currently enrolled in PERS would remain in PERS but would be limited to working 32 hours per week. Those not currently enrolled in PERS are limited to the 960 hours per fiscal year (equivalent to approximately 18 hours per week). Upon departure of a part-time employee who was previously enrolled in PERS, they are replaced by a part-time employee(s) working under the 960 hour limitation.
The departments began implementing the 960 hour cap in 2012.
DISCUSSION:
After operating with the 960 cap for a little over a year, the departments were asked to provide feedback on any issues, concerns or business impacts attributed to this schedule. Below is a summary list of feedback received:
1. Reduced quality of customer service.
2. Reduced quality of applicant pool.
3. Higher turnover of part-time staff.
4. Higher training time and costs.
5. Less commitment to clients and partners.
6. Less continuity of staff and more difficult communications.
7. More difficulty covering shifts (people working 2 jobs).
8. Lower morale and in some cases motivation.
9. Less opportunity to cross train.
10. Increased recruitment costs and time.
11. Less experienced people working independently also leading to safety concerns.
12. Reduction in revenue.
While it does not make sense to enroll every part-time employee into PERS, there are a select number of positions whereby the cost to the City of enrolling them into PERS (once they reach 1000 hours in a fiscal year) is less than the cost of recruitment, training, and the other qualitative issues listed above.
Healthcare Reform (HCR)
In March 2010, the President signed two Acts (Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act) that will change the future of healthcare. These acts establish parameters and benchmarks for employer-sponsored health insurance and have specific requirements that take effect between 2014 and 2018. The HCR Acts represent the most significant government expansion and regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965.
In April, Wells Fargo Insurance Services (the City’s insurance broker) presented an analysis of the potential broad impacts of healthcare reform. Staff is working with Wells Fargo to analyze additional information specific to the City to understand the specific impacts of healthcare reform to our organization. Attached is a presentation from Wells Fargo explaining the broad impacts of healthcare reform.
CONCLUSION:
Staff recommends that the City Council receive and file this report.
Attachment:
1. Wells Fargo Health Care Reform 2013 Presentation