ITEM: 12.1 ADMINISTRATION- Terry Dussault, Human Resources Director
Title
AUTHORIZING THE CITY MANAGER TO RE-OFFER A VOLUNTARY SEPARATION INCENTIVE PROGRAM, APPROVE PARTICIPATION IN THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF MINNESOTA PHASED RETIREMENT OPTION, AND AUTHORIZE A VOLUNTARY REDUCTION IN WORK SCHEDULE PROGRAM
Background
The City of Blaine lost a significant amount of State aid since the 2009 budget year. Additionally growth revenues have not rebounded during the current economic crisis. In an effort to manage expenses for the duration of the financial crisis the City offered an early separation incentive to many of their employees in 2009, 2010, and 2011. The intent of that program was is to entice employees to consider early separation at a cost similar to a non-voluntary separation. This program has allowed the City to reduce staffing in departments where the current economy makes those changes possible and reorganized workloads where practical in order to minimize reductions in service to residents. We are asking for Council to re-offer the Voluntary Separation Incentive Program once again.
In 2009 legislation was passed allowing Coordinated and Basic Members of the Public Employees Retirement Association (PERA) in Minnesota to participate in a Phased Retirement Option (PRO) if both the employer and the employee agree and the employee meets the criteria. This was originally proposed to help employer's transition through the retirement of long-term employee's who have unique skills and knowledge to pass on to their successors. In the current economic climate, it also promised a way to lower the economic impact of employee's as they approach retirement.
To qualify for the PRO, an employee must:
- Meet all of the requirements of a pension from PERA;
- Be at least 62 years of age;
- Have worked a minimum of 1,044 hours in each of the five (5) years immediately prior to beginning phased retirement; and,
- Not be eligible for the State Employee Post Retirement Option Plan.
In addition, the member must also agree to a reduction of hours of at least twenty-five percent (25%), not to exceed 1,044 hours per year (essentially half time or less). Once the employee resumes work for the employer at a reduced number of hours, they will receive their pension and be exempt from PERAs earning limits that apply prior to full Social Security retirement age. Neither the member nor the employer are required to continue contributions to PERA. The employer has sole authority to determine whether to offer a PRO to an employee. The PRO agreement is one (1) year in length and can be renewed for up to a total of five (5) years. Renewal is at the option of the employer. Legislation for this program sunsets June 30, 2014.
Voluntary Reduction in Work Schedule Program: A number of City employees have chosen to do this in 2012. City Staff is proposing this option again for the 2013 Budget.
· Staff members would have to agree to maintain the reduced schedule for a full year.
· The City's contribution to the employee benefits would not drop.
· The decision on whether an employee will be allowed this option lies with City Management.
· Scheduling reductions will be made with customer service as a priority.
Recommendation
By motion, approve the Resolution
Body
WHEREAS, the City of Blaine has had their Market Value Homestead Credit essentially discontinued; and
WHEREAS, the current economic crisis offers few opportunities to recoup these losses through other sources; and
WHEREAS, Blaine has always endeavored to keep the size and scope of the various programs at levels that just meets the needs of the citizens and other taxpayers; and
WHEREAS, the Voluntary Separation Incentive Program, the Phased Retirement Option, and Voluntary Reduction in Schedule Program avoid costs of layoffs such as payment of unemployment compensation; and
WHEREAS, the Voluntary Separation Incentive Program, the Phased Retirement Option, and Voluntary Reduction in Schedule Program have the potential to restructure programs to maintain as much of the benefits to constituents as possible; and
WHEREAS, the Voluntary Separation Incentive Program, the Phased Retirement Option, and Voluntary Reduction in Schedule Program will help maintain employee morale during difficult economic times.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Blaine that the City Manager Re-Offer the Voluntary Separation Incentive Program, Approve Participation in the Public Employees Retirement Association of Minnesota Phased Retirement Option, and Authorize a Voluntary Reduction in work Schedule Program
PASSED by the City Council of the City of Blaine this 12th day of July, 2012.