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HomeMy WebLinkAboutAgenda - 10-05-2010 - 4iORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 5, 2010 Action Agenda Item No. ~- ~ I SUBJECT: Second Reading: Amendment to the Orange County Personnel Ordinance Article IV, Section 9.4 Supplemental Retirement [401(k)] Employer's Contribution DEPARTMENT: Human Resources PUBLIC HEARING: (YIN) No ATTACHMENT(S): Attachment 1. Change to the Orange County Personnel Ordinance effective with the FY 2010-11 Budget: Article IV, Section 9.4 Supplemental Retirement [401(k) Plan] Employer's Contribution INFORMATION CONTACT: Michael McGinnis, Human Resources Director, 245-2552 Clarence Grier, Financial Services Director, 245-2453 Annette Moore, Staff Attorney, 245-2317 Diane Shepherd, Benefits Manager, 245-2558 PURPOSE: To consider and approve on second reading an amendment to the Orange County Personnel Ordinance Article IV, Section 9.4 Supplemental Retirement [401(k)] Employer's Contribution BACKGROUND: Prior to FY 2009-10, Orange County contributed a flat dollar amount of $715 per year, or $27.50 per pay period, to the 401 (k) accounts for general employees, regardless of an employee's contribution. Law enforcement officers received the mandated 5% of salary contribution to their 401(k) accounts. In June 2009, the Board approved a resolution "Resolution Determining a Significant Financial Crisis Exists Which Will Result in a Decrease of Revenue to the County and Temporary Cost Saving Measures are Necessary to Balance the County's Budget for the FY 2009-2010." The Resolution authorized temporary changes in the Orange County Personnel Ordinance as a cost saving alternatives to consolidating, reorganizing or abolishing programs or departmental units which could have resulted in the loss of one or more non-vacant permanent or provisional positions. The cost saving alternatives were: suspension of the Supplemental Retirement [401(k) Plan] Employer Contribution provided in Article IV, Section 9.4 for non-law enforcement officer (LEO) employees; and the continuation of a Voluntary Furlough Plan, as provided in Article IV, Section 24.0. These measures were proposed to end June 30, 2010. However, on June 15, 2010, the Board of County Commissioners approved the extension of the resolution until June 30, 2011. 2 Due to recently implemented cost reduction measures, additional funds have become available which make it possible to re-instate the Employer Contribution of $27.50/pay period ($715/year per employee to the traditional (pre-tax) 401(k) Supplemental Retirement Plan for all eligible employees effective January 1, 2011. Staff recommends that the County reinstate the $27.50 per pay period ($715 per year) contribution for general employees. The Orange County contribution of 5% of salary for Law Enforcement Officers is not affected. The Board approved this amendment on first reading at its September 21, 2010 regular meeting. Since the change was only approved by majority vote and not unanimously, approval by the Board on second reading is required for amendment approval. FINANCIAL IMPACT: The cost of reinstating the $27.50 per pay period Employer contribution to the 401(k) plan is estimated to be $270,000 for 760 general full time equivalents (FTEs) for the remainder of FY 2010-11 (January-June 2011). The annual cost is estimated to be $543,000. RECOMMENDATION(S): The Manager recommends the Board amend the Orange County Personnel Ordinance Article IV, Section 9.4 as provided in Attachment 1, which reinstates the County contribution to employee 401(k) accounts effective January 1, 2011. o~Zp- anl~-~8~ Current Article IV, Section 9.4 Supplemental Retirement [401 (k) Plan) Employer's Contribution This Employer's Contribution to the 401(k) Plan, effective July 1, 2009, is suspended until June 30, 2011. Proposed: Amend Article IY, Section 9.4 Supplemental Retirement [401 (k) Plan) Employee's Contribution Effective 9.4 Supplemental Retirement [401(k) Plan] Contribution O1/O1/11 9.4.1 Effective January 1, 2011 Orange County makes a Supplemental Retirement [401(k) Plan] contribution of $27.50 per pay period for each eligible employee for the remainder of the fiscal year, and thereafter as the Board of County Commissioners provides in the annual budget. 9.4.2 For this purpose, eligible employees are County employees both full time and part time (regularly scheduled at least 20 hours each workweek) appointed to permanent positions who are members of the N. C. Local Government Employees' Retirement System and who are not sworn law enforcement officers. See Section 9.5 for additional retirement benefits for Law Enforcement Officers. 9.4.3 To participate an eligible employee completes the appropriate enrollment form. 9.4.4 Coverage is effective with the date of appointment to the permanent position and enrollment in the retirement system. Contributions are suspended for any pay period in which the employee is in leave without pay status for that pay period. At termination, the County's 401(k) contribution ends.