05-23-2018 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Keis and Members of City Council FROM: Joel Hanson, City Administrator Sharon Provos, Finance Director Heidi Heller, City Clerk DATE: May 17, 2018 RE: Proposed Personnel Policy Amendments: Short Term Disability, PTO Maximum Accrual, PTO Conversion Policy & Miscellaneous Short Term Disability Plan Amendments Currently the City provides Short Term Disability (STD) and Long Term Disability (LTD) coverage to all regular full-time and part-time employees who accrue benefits as a supplement to the PTO program. These plans went into effect in 2014 when the City switched from sick & vacation time to Personal Time Off (PTO). Both plans are paid for by the employees. The intent of STD is to bridge the gap between banked PTO or deferred sick time, and the 90th day when an employee may qualify for LTD. The STD benefit is provided through a self-funded City account and the cost to full-time employees is $10 per month (post-tax dollars) with that cost pro-rated for eligible part-time employees. The STD benefits currently begin on day 15 of continuous disability, and employees are paid 2/3 of their base salary. This benefit is paid on a post-tax basis since the employee is paying the premium with post-tax dollars. The STD benefits run from the 15th calendar day through the 89th calendar day of absence. Our LTD plan from Unum then begins on day 90. The STD plan has been used more than was anticipated, and the fund balance has gone negative more than once. The personnel policy was amended in 2016 to state that if the STD balance was depleted, the City would contribute funds to bring the balance back to $0.00. The balance has been depleted more than once, but to date, the City has not contributed any funds to the STD account. Due to the time and difficulties that we have had with Administering our current STD plan, staff is proposing to change the self-funded STD policy to a City paid STD policy from Unum. The proposal is for a City paid plan since an employee paid STD plan is almost twice the cost due to insurance underwriting policies. The cost of the plan increases substantially from a benefit start day 30 ($1,583.96/year) to a benefit start day 15 ($2,892.46/year), so the recommendation is for a benefit start day 30. Having an outside plan administrator (Unum) also means that City Staff would no longer have to decipher medical records and determine when and for how long an employee qualifies for STD. There are no changes proposed to the Long Term Disability plan which is currently through Unum and employee paid. Once an employee begins on LTD, the City no longer contributes towards health insurance or pay opt-out, and there is no PTO accrual or holiday pay.