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Employee Compensation - Present and Future Costs

Below are facts and figures regarding costs of City salaries and benefits:

Below are details about the City’s progress in reducing long-term employee costs:

  • The City cut employee health benefits for all employees by introducing a “cafeteria plan.”  This plan provides the employee a fixed amount that can be used to purchase health, dental and vision care from a fixed group of providers.  If an employee wishes additional coverage he or she must cover the cost.  
  • The City reduced retiree medical costs through Alternative Retiree Medical Plan (ARMP), which bought out employees from the existing defined benefit program. Eligible employees hired before Jan. 1, 2010 were offered the value of their current retiree benefit in exchange for giving up their defined benefits when they retired.  Fifty eight percent of the eligible participants (178 employees) took advantage of this program. 
  • The City capped costs for retiree medical coverage for employees hired after Jan. 1, 2010 by offering defined contributions to a retirement health plan, rather than defined benefits.  A defined contribution deposits a set amount of money into a Retiree Health Plan (RHP) for the employee.  When the employee leaves the City, they take whatever has been contributed with them.
  • The City has negotiated a two-tiered benefit system for Police, Police Management and Fire bargaining units by increasing retirement age from 50 to 55.  Savings from the two-tier PERS plan will gradually increase over time as new employees replace existing employees.  
  • Beginning July 1, 2013 for Fire safety employees, and January 1, 2014 for Police and Police Management safety employees, began paying a portion of their PERS costs. And beginning in June of 2014, all non-safety employees began paying their portion of the PERS pension rate. 
  • In addition to the City’s efforts to reduce employee costs, state requirements that went into effect Jan. 1, 2013 will further reduce the City’s long-term costs, or unfunded liabilities. These requirements include increasing the retirement age for new employees; calculating pension payments based on an average of three-year’s salary, rather than the single highest year; and caps on pensionable salaries.

Information on CalPERS financial performance can be found in CalPERS Facts.

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