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The Placer County Board of Supervisors and the Placer Public Employees Organization (PPEO) have signed a four-year memorandum of understanding that provides pay increases for employees and greater cost sharing of county-provided health care benefits for employees.

The Board also made similar adjustments to the benefits and compensation of confidential staff and managers, who are unrepresented, and elected officials other than the Board of Supervisors.

The new compensation agreements call for employees to pay 10 percent of the cost of county-provided health care benefits beginning in 2008, a new requirement, while salaries will increase with raises retroactive to July of 2006 to allow employees to plan for the costs.

This new health insurance cost sharing agreement marks a significant change from past practice.  It helps the county reduce its current obligation and makes available dollars that can then be set aside to cover future expenses for retiree benefit obligations, strengthening the county’s financial position.  ‘The new agreements will provide a strong foundation for recruiting and retaining employees in what has become a very competitive labor market,’ declared Thomas Miller, County Executive Officer.

In a closely related action with far-reaching benefits, the Board approved an ‘Other Post Employment Benefits Policy’ (OPEB) to implement their plan to pay for the future costs of retiree benefits. “Post-retirement benefit packages are designed to attract and retain qualified personnel,’ said CEO Miller.  ‘However, both the private and the public sector have faced the challenge of paying for future benefits, particularly as retirees live longer and retire younger. 

“Our Board of Supervisors has taken an aggressive step to promote and protect the economic health of the county by funding such benefits in advance, though it’s not required by accounting standards.  This will promote good financial management of the county and also provide greater security for the benefits that have been promised.’

Most public agencies have used a pay-as-you-go method for retiree health benefits.  Under the new Government Accounting Standards Board (GASB) Statement 45, public agencies will report the value of employee benefits that will be paid at some future date in financial reports beginning in the 2007-2008 budget year.

This new health insurance cost sharing agreement marks a significant change from past practice.  It helps the county reduce its current obligation and makes available dollars that can then be set aside to cover future expenses for retiree benefit obligations, strengthening the county’s financial position.

The County’s newly-approved OPEB policy will incorporate many elements to fund the OPEB obligation. Twenty million dollars has been placed into an interest-bearing trust account over the last two years. The County plans to establish an irrevocable trust fund for all OPEB plan assets. 

 Beginning last July, county departments began paying a percent of every dollar of salary paid into the OPEB trust fund. This charge will increase every year until the annual required contribution is fully funded. The county will also require departments that seek to add new positions to advance-fund the anticipated OPEB costs, less projected payroll contributions.

A major step has been employee cost-sharing.  The county’s offer was approved by a vote of nearly 9-1 of PPEO members.
 Miller cited several advantages to funding retirement benefits in advance. “This OPEB plan will help promote financial stability and protect the county’s excellent credit rating,” he said. ‘Building an asset base from which to pay the costs will allow a larger share of the revenues will come from investment income.”

Under the ordinances approved Tuesday, staff will receive a 4 percent salary increase retroactive to June 24, 2006, a 3 percent salary increase effective January 6, 2007 and a 5 percent increase effective November 10, 2007, with subsequent raises in 2008 and 2009 to be based upon the California consumer price index (CPI). Cost sharing on health benefits will begin in 2008. The salary increases and health care cost sharing are equitable among PPEO-represented groups, confidential, management and elected officials other than the board of supervisors. Compensation for the board of supervisors has been established in the county charter and does not include salary increases or benefit compensation except as approved by the voters.

The agreement with PPEO also calls for the establishment of an advisory committee to explore health insurance options.  People who retire before the end of 2006 will not pay the 10 percent of health care costs during the length of this contract.

Increased or expanded special pay includes incentives for work in the jail, snow removal and building inspector certification, uniform allowances, and additional benefits and reimbursements to cover the costs of working in Tahoe.

Today’s actions do not apply to the Deputy Sheriff’s Association, which has begun but not completed negotiations with the county.