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This is just an example, and no specific plan design has been discussed with City <br />employees. Please note, however, that this account is available for people to draw on <br />once they leave the employ of the City and is not dependent on a retirement from the <br />City. <br />As mentioned above, the funds put into this plan are not taxed as they go into the plan, <br />nor are they taxed when a person begins to draw from their account. This account also <br />becomes a part of a person's estate and is not taxed if inherited by a spouse or a qualified <br />dependent. The funds are only taxed when withdrawn from the account if inherited by a <br />beneficiary that is not a dependent. <br />Another funding source for this plan is severance pay (payout of unused sick leave), <br />which leads to the next benefit topic.... <br />Unused Sick Leave Balances <br />Little Canada's Personnel Policy currently provides a sick leave benefit for City <br />employees. As you are aware, the sick leave policy allows for the accumulation of sick <br />leave to a maximum of 960 hours (120 days). If an employee leaves the employment of <br />the City through resignation or retirement, there is no compensation for unused sick leave <br />balances. <br />The issue of whether or not to provide for a sick leave pay out at the time of severance or <br />retirement has been discussed by the Council in the past. The Council's position has <br />been to not provide this benefit, but the indication was that it may be willing to consider a <br />conversion of the current vacation and sick leave benefits to a "paid time -off policy ". <br />However, before exploring a PTO policy, we would like to revisit the severance pay issue <br />given Little Canada's history of providing comparable benefits to those offered by other <br />cities from the perspective of maintaining a competitive and comprehensive benefit <br />package. Attached for the Council's review are survey results of several cities as well as <br />the Stanton Benefits Report addressing the severance pay issue. You will note that this <br />has been a standard benefit for virtually all cities, including all of them in Ramsey <br />County. <br />Options: <br />Make no change; <br />Convert a portion of accumulated sick leave to a Post Employment Health Care <br />Savings Account upon severance or retirement; <br />Pay out a portion of accumulated sick leave upon severance or retirement; <br />Convert current vacation and sick leave benefits to a paid time off benefit. <br />Another option which we have discussed is the fact that the City caps the accumulation of <br />sick leave at 960 hours. There are currently three employees at this cap. If the decision <br />