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HomeMy WebLinkAboutAgenda - 10-20-2009 - 4fORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 20, 2009 Action Agenda Item No. 4 ---F SUBJECT: Resolution Providing for Active Service in the Retirement System During a Furlough Period DEPARTMENT: Human Resources PUBLIC HEARING: (Y/N) No ATTACHMENT(S): 1. Resolution 2. Senate Bill 658 INFORMATION CONTACT: Michael McGinnis, 245-2552 Annette Moore, 245-2317 PURPOSE: To consider approving a resolution providing that the furlough of an Orange County employee who is a member of the local governmental Employees' Retirement System shall not diminish the employee's status in the retirement system in accordance with Senate Bill 658, which was approved by the NC General Assembly on July 31, 2009. BACKGROUND: On June 16, 2009, the Board of County Commissioners approved the addition of Article IV, Section 20.4, Furlough Leave to the Orange County Personnel Ordinance, effective July 1, 2009. To carry out the provisions of this Section, the County Manager provided Furlough Rules and Regulations effective July 1, 2009. Following this action, the Voluntary Furlough Program was implemented effective July 1, 2009 through June 30, 2010. The Voluntary Furlough Program was developed and included in the Manager's Recommended Budget with the goal of reducing costs for the County while simultaneously offering employees a new option for taking leave. The cost savings for FY 2009-10 were estimated at $50,000. Department Directors are responsible for approving or denying requests for voluntary furlough. To date, 10 employees have been approved for voluntary furloughs totaling 576 hours for a total savings of approximately $12,000 (salary, federal and state income taxes and employer retirement contribution). Three employee requests have been denied based on the inability of the employee's Department to accommodate the request with current staffing and workload levels. The Board may make cone-time irrevocable election to opt in for the provision included in Senate Bill 658, which the North Carolina General Assembly accepted subsequent to the County's implementation of the Voluntary Furlough Program. The provision, which the State enacted for furloughed State employees in March 2009, enables a furloughed County employee who is a member of the Local Governmental Employees' Retirement System to be considered in active service during the furlough period. 2 Under the provision, the furloughed employee is entitled to all of the same benefits to which he or she was entitled on the workday immediately preceding the furlough. The employee will suffer no diminution of retirement average final compensation based on furlough, and the retirement average final compensation will be calculated based on the undiminished compensation. During a furlough period, the County will pay both employee and employer contributions to the Retirement System on behalf of the furloughed employee as though the employee were in active service. Any compensation and contributions lost due to voluntary furlough prior to the approval of the resolution will be reported to the Retirement System. Employees contribute 6.00% of annual salary to the Retirement System. The County contributes 4.88% of annual salary for non-law enforcement employees and 4.86% of annual salary for law enforcement employees. Therefore, the County will be responsible for paying up to 10.88% of the personnel savings generated by the voluntary furlough program to the Retirement System so employees will be considered in active service during the furlough period. This payment totals approximately $1,160 for the employees who have participated in the program to date. The Board's approval of the attached resolution will allow additional employees who previously declined to participate in the program due to the impact on their retirement earnings to benefit from this new leave option and contribute to the savings generated by this program. Staff continues to anticipate that cost savings attributed to the voluntary furlough program will yield approximately $50,000 in FY 2009-10. This original estimate included approximately $44,400 in salary savings, $3,400 in federal and state income tax savings and $2,200 in savings from employer contributions to the Retirement System. FINANCIAL IMPACT: To achieve the projected cost savings for FY 2009-10, the total salary savings from employees participating in the voluntary furlough program must increase from approximately $44,400 to $51,600. The salary savings combined with savings from federal and state income taxes on this amount (approximately $4,000) would result in a total personnel services cost savings of $50,000 after the County pays the employee and employer contributions to the Retirement System (approximately $5,600) for each furloughed employee. RECOMMENDATION(S): The Manager recommends the Board adopt "A Resolution To Elect To Provide Furloughed Employees Who Are Members Of The Local Governmental Employees Retirement System Undiminished Retirement Benefits"; and authorize the Chair to sign the resolution. ~~S - aoo~l- 0~3 3 ORANGE COUNTY BOARD OF COMMISSIONERS A RESOLUTION TO ELECT TO PROVIDE FURLOUGHED EMPLOYEES WHO ARE MEMBERS OF THE LOCAL GOVERNMENTAL EMPLOYEES RETIREMENT SYSTEM UNDIMINISHED RETIREMENT BENEFITS WHEREAS, on June 16, 2009 the Orange County Board of Commissioners approved an amendment to the Orange County Personnel Ordinance, Article IV, Section 24.0, providing for Furlough Leave, whereby an employee takes either voluntary or involuntary unpaid leave; and WHEREAS, in the Personnel Ordinance the Orange County Board of Commissioners safeguarded employee benefits who take a furlough by providing that the employee retains seniority, the County continues paying employer paid benefits and the employee continues to earn and retain all leave at the same rate as if they had not taken a furlough; and WHEREAS, the Local Governmental Employees' Retirement System (LGERS), which Orange County employees are members thereof, is governed by state law and individual local government employers cannot make any changes to the formula governing their contributions to LGERS; and WHEREAS, because Orange County could not make any changes to the formula without a change in the law, the County could not safeguard its employee contributions made to the Local Governmental Employees Retirement System which in effect diminished an employee on furlough's retirement benefits; and WHEREAS, on July 31, 2009 Session Law 2009-378 (Senate Bill 658) was enacted, which provides that if a member of the Local Governmental Employees' Retirement System took a furlough on or after January 1, 2009 and before July 1, 2010, it would not diminish the employee's status in the retirement system where the local government employer has made cone-time irrevocable election; and WHEREAS, Session Law 2009-378 also provides that once an election is made, a public employee who is member of the Local Government Employees' Retirement System shall be considered in active service during any period of furlough and shall be entitled to all of the same benefits to which the employee was entitled on the workday immediately preceding the furlough; and WHEREAS, Session Law 2009-378 further provides that once the election is made a public employee would suffer no diminution of retirement average final compensation based on being on furlough, and the retirement average final compensation shall be calculated based on the undiminished compensation; and WHEREAS, Session Law 2009-378 further provides upon election the employer shall pay both employee and employer contribution to the Retirement Systems Division on behalf of the furloughed employee as though the employee were in active service; and WHEREAS, any employer who elects to cover its furloughed employees in accordance with Session Law 2009-378 shall include earnings lost due to furloughs taken after January 1, 2009 and before July 1, 2009 in the reported compensation and contributions for either July or August 2009; and WHEREAS, any contributions lost due to furloughs must be reported to the Retirement System Division within 90 days of the beginning of the period in which the compensation and contributions will be included. NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners in accordance with Session Law 2009-378 the following: To make a one time irrevocable election that will allow an Orange County employee on a furlough who is a member of the Local Governmental Employees' Retirement System administered by the Retirement Systems Division of the Department of State Treasurer to be considered in active service during any period of furlough and entitled to all of the same benefits to which the employee was entitled on the work day immediately preceding the furlough; 2. That upon this election an Orange County employee who is a member of the Local Governmental Employees' Retirement System will be considered in active service during any period of furlough and shall be entitled to all of the same benefits to which the employee was entitled on the workday immediately preceding the furlough; 3. That upon this election an Orange County employee who is member of the Local Governmental Employees' Retirement System would suffer no diminution of retirement average final compensation based on being on furlough, and the retirement average final compensation shall be calculated based on the undiminished compensation; 4. To pay both employee and employer contribution to the Retirement Systems Division on behalf of the furloughed employee who is member of the Local Governmental Employees' Retirement System as though the employee were in active service. 5. To direct staff to include earnings lost due to furloughs taken after January 1, 2009, and before July 1, 2009, for employees who are members of the Local Governmental Employees' Retirement System, in the reported compensation and contributions for either July or August 2009. 6. To further direct staff to report any contributions lost due to furloughs of employees who are member of the Local Governmental Employees' Retirement System to the Retirement System Division within 90 days of the beginning of the period in which the compensation and contributions will be included. This the day of October, 2009. Valerie P. Foushee, Chair Orange County Board of Commissioners ATTEST: Donna Baker, Clerk to the Board of County Commissioners 5 ORANGE COUNTY BOARD OF COMMISSIONERS A RESOLUTION TO ELECT TO PROVIDE FURLOUGHED EMPLOYEES WHO ARE MEMBERS OF THE LOCAL GOVERNMENTAL EMPLOYEES RETIREMENT SYSTEM UNDIMINISHED RETIREMENT BENEFITS WHEREAS, on June 16, 2009 the Orange County Board of Commissioners approved an amendment to the Orange County Personnel Ordinance, Article IV, Section 24.0, providing for Furlough Leave, whereby an employee takes either voluntary or involuntary unpaid leave; and WHEREAS, in the Personnel Ordinance the Orange County Board of Commissioners safeguarded employee benefits who take a furlough by providing that the employee retains seniority, the County continues paying employer paid benefits and the employee continues to earn and retain all leave at the same rate as if they had not taken a furlough; and WHEREAS, the Local Governmental Employees' Retirement System (LGERS), which Orange County employees are members thereof, is governed by state law and individual local government employers cannot make any changes to the formula governing their contributions to LGERS; and WHEREAS, because Orange County could not make any changes to the formula without a change in the law, the County could not safeguard its employee contributions made to the Local Governmental Employees Retirement System which in effect diminished an employee on furlough's retirement benefits; and WHEREAS, on July 31, 2009 Session Law 2009-378 (Senate Bill 658) was enacted, which provides that if a member of the Local Governmental Employees' Retirement System took a furlough on or after January 1, 2009 and before July 1, 2010, it would not diminish the employee's status in the retirement system where the local government employer has made aone-time irrevocable election; and WHEREAS, Session Law 2009-378 also provides that once an election is made, a public employee who is member of the Local Government Employees' Retirement System shall be considered in active service during any period of furlough and shall be entitled to all of the same benefits to which the employee was entitled on the workday immediately preceding the furlough; and WHEREAS, Session Law 2009-378 further provides that once the election is made a public employee would suffer no diminution of retirement average final compensation based on being on furlough, and the retirement average final compensation shall be calculated based on the undiminished compensation; and WHEREAS, Session Law 2009-378 further provides upon election the employer shall pay both employee and employer contribution to the Retirement Systems Division on behalf of the furloughed employee as though the employee were in active service; and WHEREAS, any employer who elects to cover its furloughed employees in accordance with Session Law 2009-378 shall include earnings lost due to furloughs taken after January 1, 2009 and before July 1, 2009 in the reported compensation and contributions for either July or August 2009; and WHEREAS, any contributions lost due to furloughs must be reported to the Retirement System Division within 90 days of the beginning of the period in which the compensation and contributions will be included. NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners in accordance with Session Law 2009-378 the following: 1. To make a one time irrevocable election that will allow an Orange County employee on a furlough who is a member of the Local Governmental Employees' Retirement System administered by the Retirement Systems Division of the Department of State Treasurer to be considered in active service during any period of furlough and entitled to all of the same benefits to which the employee was entitled on the work day immediately preceding the furlough; 2. That upon this election an Orange County employee who is a member of the Local Governmental Employees' Retirement System will be considered in active service during any period of furlough and shall be entitled to all of the same benefits to which the employee was entitled on the workday immediately preceding the furlough; 3. That upon this election an Orange County employee who is member of the Local Governmental Employees' .Retirement System would suffer no diminution of retirement average final compensation based on being on furlough, and the retirement average final compensation shall be calculated based on the undiminished compensation; 4. To pay both employee and employer contribution to the Retirement Systems Division on behalf of the furloughed employee who is member of the Local Governmental Employees' Retirement System as though the employee were in active service. 5. To direct staff to include earnings lost due to furloughs taken after January 1, 2009, and before July 1, 2009, for employees who are members of the Local Governmental Employees' Retirement System, in the reported compensation and contributions for either July or August 2009. 6. To further direct staff to report any contributions lost due to furloughs of employees who are member of the Local Governmental Employees' Retirement System to the Retirement System Division within 90 days of the beginning of the period in which the compensation and contributions will be included. This the day of October, 2009. Valerie P. Foushee, Chair Orange County Board of Commissioners ATTEST: Donna Baker, Clerk to the Board of County Commissioners GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2009 SESSION LAW 2009-378 SENATE BILL 658 AN ACT TO MODIFY THE MEMBERSHIP OF THE SUPPLEMENTAL RETIREMENT BOARD OF TRUSTEES AND TO PROVIDE THAT THE FURLOUGH OF A MEMBER OF THE LOCAL GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM SHALL NOT DIMINISH THE EMPLOYEE'S STATUS IN THE RETIREMENT SYSTEM. The General Assembly of North Carolina enacts: SECTION 1. G.S. 135-96 reads as rewritten: "§ 135-96. Supplemental Retirement Board of Trustees. (a) The Supplemental Retirement Board of Trustees is established to administer the Supplemental Retirement Income Plan established under the provisions of this Article and the North Carolina Public Employee Deferred Compensation Plan established under G.S. 143B-426.24. (b) The Board consists of nine voting members, as follows: (1) Six persons appointed by the Governor who have experience in finance and investments, one of whom shall be a State en~leyee; employee, and one of whom shall be a retired State or local governmental employee; (2) One person appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives; (3) One person appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate; and (4) The State Treasurer, ex officio, who shall be the Chair. (c) The initial appointments by the General Assembly and two of the Governor's initial appointments shall be for one-year terms. The remainder of the initial appointments shall be for two-year terms. At the expiration of these initial terms, appointments shall be for two years and shall be made by the appointing authorities designated in subsection (b) of this section. A member shall continue to serve until the member's successor is duly appointed, but a holdover under this provision does not affect the expiration date of the succeeding term. No member of the Board may serve more than three consecutive two-year terms. (d) Other than ex officio members, members appointed by the Governor shall serve at the Governor's pleasure. An ex officio member may designate in writing, filed with the Board, any employee of the member's department to act at any meeting of the Board from which the member is absent, to the same extent that the member could act if present in person at such meeting." SECTION 2. Notwithstanding any other provision of law and upon the one-time irrevocable election of the employer as defined in G.S. 128-21(11), a public employee on a furlough who is a member of the Local Governmental Employees' Retirement System administered by the Retirement Systems Division of the Department of State Treasurer shall be considered in active service during any period of furlough and shall be entitled to all of the same benefits to which the employee was entitled on the workday immediately preceding the furlough. The member shall suffer no diminution of retirement average final compensation based on being on furlough, and the retirement average final compensation shall be calculated based on the undiminished compensation. During a furlough period, the employer who opts for this provision shall pay both employee and employer contributions to the Retirement Systems Division on behalf of the furloughed employee as though the employee were in active service. Notwithstanding the definition of "compensation" in G.S. 128-21(7a), any employer who elects to cover its furloughed employees through this provision shall be entitled to include earnings lost due to furloughs taken after January 1, 2009, and before July 1, 2009, in the reported compensation and contributions for either July or August, 2009. Any compensation and ~mnnai 8 contributions lost due to furloughs must be reported to the Retirement Systems Division within 90 days of the beginning of the period in which the compensation and contributions will be included. SECTION 3. Section 2 of this act is effective when it becomes law and applies to local government furloughs on and after January 1, 2009, and before July 1, 2010. The remainder of this act becomes effective July 1, 2009. In the General Assembly read three times and ratified this the 23`a day of July, 2009. s/ Walter H. Dalton President of the Senate s/ William L. Wainwright Speaker Pro Tempore of the House of Representatives s/ Beverly E. Perdue Governor Approved 12:07 p.m. this 31S` day of July, 2009 Page 2 Session Law 2009-378 SL2009-0378