Laguna Woods modifies employee benefits, talks pesticides

LAGUNA WOODS — The City Council on Wednesday, Sept. 26, unanimously approved two resolutions that would modify the compensation schedule and employee benefits plan for city employees.

Both a “prudent business practice” as well as federal-law compliance necessitated the changes, City Manager Chris Macon said. Other modifications were made for clarity as well as a general update to benefit offerings.

“There will be some negative consequences to some employees, nobody is pretending otherwise,” City Attorney David Cosgrove said. “We’ve made it as fair as we think the city’s budgetary position will tolerate.”

The Flexible Benefits Plan will remain to be a “cafeteria plan,” one that allows full-time employees to receive elect benefits on a pre-tax basis.

A staff report indicated that the maximum allowance — $1,000 per month — available to full-time employees to allocate to their benefits plans would not change — only the manner in which allocations may be used.

The proposed changes will discontinue the ability for full-time employees to contribute a portion of their monthly benefit allowances to deferred compensation plans — though contributions through salary reductions will remain an option, according to a staff report.

Additionally, full-time employees will no longer be able to purchase up to 40 hours of additional paid time off per calendar year. Instead, two floating holidays (16 hours) per calendar year have been made an option.

Outside of health care, other benefits that allowances may be used for dental, vision, spending account benefits and cash payments up to $500 per month.

“Although employees can’t prospectively use pre-tax dollars to buy time off … (or) fund their retirement, they can at least pull that money back if they can’t productively use it for any of the eligible expenses up to half (the amount),” Cosgrove said. “Each employee is going to have to make the personal calculus as to whether they get more economic benefit of applying that pre-tax money to eligible benefits or whether, given their personal circumstances, it makes more sense to pull it out.”

Both resolutions passed and will take effect on Jan. 1.

Pesticides

City Council unanimously voted to take action against a bill in motion that would inhibit local control or local authorities related to pesticide regulation.

The Agriculture Improvement Act of 2018, commonly referred to as the farm bill of 2018, seeks to change language within the document that may preempt a city’s ability to exercise discretion regarding the type of pesticides that it allows to use on its own property.

“The fear here is that the federal government may be trying to take away our ability to (choose what pesticides we want on city property via an integrated pest management plan)” Macon said.

Precarious language changes from “a state may” to “a state, but not a political subdivision of a state, may” struck Mayor Carol Moore as red flags.

As the law stands, the city cannot prohibit federally legal pesticides but may choose what pesticides are allowed to be used on city-owned property by public right-of-way, Macon said.

The bill passed the U.S. House of Representatives on Wednesday, June 6 and the U.S. Senate on Friday, June 28. At this time, it remains in discussion before advancing for presidential approval.

Council unanimously agreed to authorize Moore to prepare and submit correspondence opposing any provision that could preempt local control or authorities related to pesticide regulation.

Chinese American Club recognized

Council commended the Chinese American Club for its 20-year anniversary.

Beginning with just 47 members in its first year, the group estimated that there are about 500 members to date.

Among his peers, club member Edward Tao spoke of the overall mission as a group.

“Our purpose is to enhance the community’s welfare as well as happiness factors so we are going to do more in the coming months and years to try to harness the energy of everyone of every different culture,” Tao said. “The heart of the American is the variety of people in this country, and many of us bring a lot of great experience. We want to harness that toward the progress of the entire community and hopefully (it will) spread out to the rest of the world.”

Unfunded retirement liability

Council unanimously passed a resolution that increases fiscal year 2018-19 appropriations for the general fund to $137,455 — drawn from the unassigned general fund balance — in order to pay off the city’s California Public Employees’ Retirement System, or CalPERS, unfunded accrued liability.

According to a staff report, the CalPERS Board of Administration voted in December 2016 to lower its assumed rate of return on pooled investments from 7.5 to 7 percent, over a three-year period, beginning in fiscal year 2017-18. Because of this, CalPERS advised that cities should anticipate increases of up to 3 percent in annual required contributions over that three-year period, as well as increases of up to 40 percent in unfunded accrued liability.

On May 17, 2017, the City Council approved lump sum payments of $483,218 to pay off the incurrent projected total unfunded accrued liability.

By June 2018, CalPERS projected the city’s total unfunded accrued liability at $144,692.

Over a 30-year schedule, total unfunded accrued liability is projected to exceed $460,000.

City Council unanimously passed the resolution, which takes immediate effect. The approval fully funds the city’s pension plans, according to current projections provided in the staff report.

Staff expects to see a savings of at least $320,000 over the next 30 years, noting sufficient funds — roughly $6 million — are available in the city’s unassigned general fund balance to cover the projections outlined in the Fiscal Years 2017-19 budget.