BOARD MEETING DATE: April 6, 2007
AGENDA NO. 7

PROPOSAL:

Adopt Resolution to Implement Voluntary Employee Medicare Participation

SYNOPSIS:

On May 5, 2006, the Board approved a resolution requesting that California Public Employees Retirement System (CALPERS) conduct an election to allow AQMD employees who do not currently pay Medicare taxes to elect to do so.  That election resulted in 39 employees electing to pay Medicare taxes.  This action is to adopt the CALPERS-required resolution to implement Medicare participation for these 39 employees.  AQMD’s current annual cost to pay its share of Medicare taxes for these 39 employees is approximately $46,055.

COMMITTEE:

Administrative, March 9, 2007, Recommended for Approval

RECOMMENDED ACTION:

Adopt the attached CALPERS-provided Resolution requesting CALPERS implement Medicare election results and authorize Human Resources Manager Ronald Portnoy, as AQMD’s authorized agent, to sign the required Application and Agreement (attached) to implement Medicare coverage, effective April 9, 2007, for the 39 employees who elected coverage.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In January 2006, the Board approved three-year labor contracts that included a provision to recommend the Board adopt a resolution that would allow full-time, regular employees currently not paying Medicare taxes to elect, on a voluntary basis, to pay such taxes, and to earn Medicare credits.  This election has now been held and 39 employees elected Medicare coverage.

Proposal

Staff recommends the Board adopt the attached Resolution and authorize signing the attached Application and Agreement authorizing CALPERS to implement Medicare coverage for the 39 employees who elected to begin paying Medicare taxes.

Resource Impacts

Current rates require participating employees and employers each to pay 1.45% of salary in Medicare taxes.  Based on the number of employees who elected Medicare coverage, AQMD’s current annual cost will be approximately $46,055.  CALPERS has indicated it will waive any additional costs associated with the election and implementation.

Attachments

A)   Resolution
B)   Application and Agreement

ATTACHMENT A

RESOLUTION NO. 07-

            A Resolution of the South Coast Air Quality Management District Board to implement employee Medicare election results effective April 9, 2007.

            WHEREAS, the Governing Board of the South Coast Air Quality Management District, State of California, in regular session assembled on April 6, 2007, wishes to implement employee Medicare election results effective April 9, 2007; and

            WHEREAS, a division of the San Bernardino County Employees’ Retirement Association with respect to eligible employees of the South Coast Air Quality Management District, hereinafter referred to as “Public Agency,” who are members of and in positions covered by said retirement system, has been conducted in accordance with Federal and State Laws and State regulations for the purposes of coverage under the insurance system established by the Federal Social Security Act and a deemed retirement system, hereinafter referred to as Group B of the San Bernardino County Employees’ Retirement Association, has been established thereby as provided in Section 218(d)(6) of the Federal Social Security Act, composed of positions of members of such retirement system who desire coverage under the Health Insurance system established by the Federal Social Security Act; and

            WHEREAS, the Public Agency desires to file an application with the State and to enter into an agreement with the State to extend coverage under the said insurance system on behalf of the Public Agency to services performed by individuals as employees of the Public Agency as members of a coverage group, as defined in Section 218(d)(4) of the Federal Social Security Act, of the said Group B of the San Bernardino County Employees’ Retirement Association; and

            WHEREAS, official form “Application and Agreement, PERS-MED-32D” containing the terms and conditions under which the State will effect such inclusion has been examined by this body;

            NOW, THEREFORE, BE IT RESOLVED, that said Application and Agreement on said official form be executed on behalf of the Public Agency and submitted to the State to provide coverage under the California State Social Security Agreement of March 9, 1951, of all services performed by individuals as employees of the Public Agency as members of a coverage group (as defined in Section 218(d)(4) of the Social Security Act) of said Group B of the San Bernardino County Employees’ Retirement Association, except the following:

1. All services excluded from coverage under the agreement by Section 218 of the Social Security Act; and
    
2. Services excluded by option of the Applicant as indicated in Resolution No. 06-11 adopted at a meeting of the Governing Board the 5^th day of May, 2006;

Effective date of coverage of services under said agreement to be April 9, 2007; and

            BE IT FURTHER RESOLVED, that Ronald Portnoy, Human Resources Manager, 21865 Copley Drive, Diamond Bar, CA  91765-4182, is hereby authorized and directed to execute said Application and Agreement on behalf of and as Authorized Agent of the Public Agency and to forward same to the State for acceptance and further action; and

            BE IT FURTHER RESOLVED, that authority hereafter to act as Authorized Agent, and so to conduct all negotiations, conclude all arrangements, submit all reports, and sign all agreements and instruments which may be necessary to carry out the letter and intent of the aforesaid application and agreement, in conformity with all applicable Federal and State laws, rules and regulations, is vested in the position of Human Resources Manager.

___________________________              _____________________________ 
Date                                                     Clerk of the Boards
                                                            South Coast Air Quality Management District

___________________________              _____________________________ 
Date                                                     Governing Board Chair
                                                            South Coast Air Quality Management District

ATTACHMENT B

APPLICATION AND AGREEMENT

            For the purposes of this application and agreement, any reference made herein to any State or Federal statute or statutes, or regulations, or part thereof, applies to all amendments thereto now or hereafter made.

            For the purposes of this application and agreement, “Federal System” means Old-Age, Survivors, and Disability and Health Insurance system established by the Federal Social Security Act, “Federal agency” means the Commissioner of Social Security, or successor in function to such officer, “Board” means the Board of Administration of the California Public Employees’ Retirement System, acting on behalf of the State of California.

            The South Coast Air Quality Management District, a public agency as defined in Section 22009 of the Government Code* hereinafter called Applicant, hereby makes application to the Board to execute a modification to the California State Social Security Agreement extending thereunder the “Medicare Only” coverage in conformity with Section 218(n) of the Social Security Act; to all services performed by individuals as employees of the Applicant in a coverage group (as defined in Section 218(d)(4) of the Social Security Act*) of Group B, San Bernardino County Employees’ Retirement Association, a deemed retirement system established by division of a retirement system pursuant to Section 218(d)(6) of the Social Security Act, composed of positions of members desiring coverage under said insurance system, except the following:

1. Those services mandatorily excluded from said agreement by Section 218 of the Social Security Act*.
    
2. The following services excluded by option of the Applicant pursuant to Resolution No. 06-11 adopted on May 5, 2006:

                  NONE

* See Attachment

            In order to carry into effect the common governmental duties under such statutes and in consideration of the mutual promises hereinafter made, the Applicant and the Board agree as follows:

1. The Board will execute a modification to the California State Social Security Agreement to extend thereunder the “Medicare Only” coverage the services of the employees of Applicant as hereinbefore applied for.
    
2. Applicant will comply promptly and completely, throughout the term of this application and agreement, with the letter and intent of all statutes of the State of California, and Section 218 of the Federal Social Security Act, and applicable Federal and State regulations adopted pursuant thereto.
    
3. Applicant will pay as the State regulation may prescribe, amounts equivalent to the sum of taxes (employer-employee contributions) which would be imposed under the Federal Insurance Contributions Act if the services of employees covered by the application and agreement constituted employment as defined in such Act.  Applicant shall keep or cause to be kept accurate records of all remuneration for such services, said records to be maintained as required by Federal or State regulations, and said records shall be available for inspection or audit by the Board or its designated representative.
    
4. Applicant will prepare and submit such wage and other reports as may be required.
    
5. Applicant will pay and reimburse the State at such times as may be determined by the State:

1. Any sums of money that the State may be obligated to pay or forfeit to the Federal Government by reason of any failure of the Applicant, for any cause or reason, to pay the contributions, penalties, or interest required by the agreement between the Federal agency and the State at such time or in such amounts as required by the said agreement and any State or Federal regulations adopted pursuant thereto.
    
2. In such amounts as may be determined by the State, its proportionate share of any and all costs incurred by the State in the administration of the Federal System as it affects the Applicant and its employees.
    
3. In such amounts as may be determined by the State, the cost of any and all work and services relating to any division for the purposes of coverage under the Federal System held with respect to the coverage group for which coverage is requested herein.
    
4. In such amounts as may be determined by the State, the costs of any audits of the books and records of the Applicant made by the State or its designated representatives pursuant to Section 22559 of the Government Code.

6. The coverage herein provided for shall be effective April 9, 2007.
    
7. That, subject to the aforesaid provisions and applicable law, this application and agreement may be amended by the mutual consent of the parties in writing.
    
8. After the filing of this application and agreement, its acceptance and execution by the Sate shall constitute it a binding agreement between the Applicant and the State of California with respect to the matters herein set forth.

                                                           South Coast Air Quality Management District
                                                          
                                                           Signed by

                                                           ______________________________________
                                                           Authorized Agent

                                                           And by

                                                           ______________________________________
                                                           (Witness)

                                                            ______________________________________
                                                            (Title)

                                                             _____________________________________          
                                                             (Date)
 

ACCEPTED: ___________________________

STATE OF CALIFORNIA
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

BY _____________________________________
    S. Dawn Evans, Manager
    Employer Contracts and Compensation Review
    Actuarial and Employer Services Branch

ATTACHMENT

Section 22009, Government Code:

“Public Agency” means the State, any city, county, city and county, district, municipal or public corporation or any instrumentality thereof, or boards and committees established under Chapter 10 of Division 6 of the Agricultural Code, Chapter 754 of Statutes of 1933, as amended, or Chapter 307 of the Statutes of 1935, as amended, the employees of which constitute one or more coverage groups or retirement system coverage groups.

Section 218(d)(4):

For the purposes of subsection (c) of this section, the following employees shall be deemed to be a separate coverage group:

1. all employees in positions which were covered by the same retirement system on the date the agreement was made applicable to such system (other than employees to whose services the agreement already applied on such date);
    
2. all employees in positions which became covered by such system at any time after such date; and
    
3. all employees in positions which were covered by such system at any time before such date and to whose services the insurance system established by this title has not been extended before such date because the positions were covered by such retirement system – including employees to whose services the agreement was not applicable on such date because such services were excluded pursuant to subsection (c)(3)(B).

The following services are mandatorily excluded:

1. service performed in a policeman’s or fireman’s position, covered by a retirement system at the time coverage is extended to the Public Agency;
    
2. service performed by an individual who is employed to relieve him from unemployment;
    
3. service performed in a hospital, home, or other institution by a patient or inmate thereof;
    
4. covered transportation service (as defined in Section 210(k) of the Social Security Act, as amended);
    
5. service (other than agricultural labor or service performed by a student) which is excluded from employment by any provision of Section 210(a) of the Social Security Act, other than paragraph 7 of such section, or service the remuneration for which is excluded from wages by paragraph (2) of Section 209(h);
    
6. service performed by an individual as an employee on a temporary basis in case of fire, storm, snow, earthquake, or similar emergency;
    
7. services performed by election officials or election workers for each calendar year in which the remuneration paid for such service is less than the threshold amount mandated by law.  (The threshold amount as of January 1, 2002 was $1,200.)