CR 95-126 Amendment To Early Retirement
. July 28, ] 995 ... Report #95-]26
"~.~1
AMENDMENT TO THE EARLY RETIREMENT
INSURANCE BENEFIT POLICY
Proposed Action.
No action is necessary on this item. Council is being informed of this action as per Section 315.03 of the
Hopkins City Code. This item is being presented for the Council's review and possible discussion.
Overview.
The City of Hopkins instituted a program in 1985 that allowed employees to retire early and still receive
single health benefit:-. until they reached the age of 65. A number of employees have taken advantage of
this program since then.
I am expanding the program for a six month period as a cost saving measure. Employees who have
e reached the top of their pay range will be replaced by employees at the beginning of the pay range.
I am confident that the City will experience considerable savings in expenditures by temporarily
expanding this program.
Primary Issues to Consider.
. What is the authorization for this change?
. How will the program be changed?
. Why should this change be made?
Supportin2 Information.
. Examination of the issues.
. Section 8.13 of the Personnel Policy
~~_. ~
," " ~-~~~ ~--==-
Steven C. Mielke
City Manager
.
. Council Report #95-126
Page Two
Primary Issues to Consider.
. What is the authorization for this change?
This program was originally established by Council action. It has since been made part of the
Personnel Policy. Section 315 of the City Code allows the City Manager to amend the Personnel
Policy.
. How will the program be changed?
From August 1, 1995 to January 31, 1996 the age of eligibility will be lowered by five years. This
will be age 50 for police officers and age 55 for the other employees. As of February 1, 1996 the
ages will return to 55 and 60.
. Why should this change be made?
The City Council has indicated a desire to reduce expenditures for 1996. By offering this
retirement incentive in 1995, employees who have been with the City for many years and have
e reached the top of their pay range can retire early and be replaced by new employees who will be
paid at the beginning of the pay range. This pay differential will exceed the added cost of the
retirees. health benefits, and therefore lower expenditures in 1996.
The actual amount saved depends on how many employees take advantage of the program and
when they retire. Staff expects the savings to range from $20,000 to $30,000.
There will be some loss of productivity as inexperienced employees replace experienced
employees. This disadvantage will disappear over time, as the new employees gain experience,
while the savings will continue for a number of years.
The following is the text of Section 8.13 of the Personnel Policy, the current early retirement policy:
8.13 EARLY RETIREMENT
An employee who has been with the City for at least ten years and is:
1. age 60 years or older, or
2. eligible for full PERA retirement benefits
may retire and receive full single health coverage until eligible for Medicare or age 65 whichever comes
first. Employees can choose to continue family heath coverage by paying for the difference between the
cost of single health coverage and family coverage.
Retired employees may have the City reimburse them for health coverage that they obtain. The
reimbursement rate will be equivalent to the lowest cost single rate offered by the City's carriers. The
e reimbursement will be made on a quarterly basis. This decision is permanent. Retirees who choose this
option will not be able to return to any of the City's health plans.
This early retirement program is not available for any employee hired after July 1, 1993.