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8. Resolution 5543 - Sick Leave Incentive PlanCharles A. Harball Office of City Attorney City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 f 101101DINW, ! Mayor Tammi Fisher and Kalispell City Council Charles Harball, City Attorney Jane Howington, City Manager Tel 406.758.7709 Fax 406.758.7771 charball@kalispell.com Resolution No. 5543 — a Resolution Establishing an Incentive Program to Encourage the Preservation of Sick Leave December 19, 2011— Regular Council Meeting BACKGROUND: The City Manager formed a study group to look into the issue of sick time use by city employees. Based upon the results of that study and pursuant to the authorization provided by Section 501(c)(9) of the Internal Revenue Code, the Kalispell City Council, by Resolution No. 5539, created a Voluntary Employees' Beneficiary Association [VEBA] which is a tax-exempt health and welfare trust. Such trust is authorized to provide benefits to members including a self -insured medical reimbursement plan as authorized in Internal Revenue Section 105. Because of the structure of state law, an employee of the City receives 25% of the total unused and accrued sick leave earned during the term of employment upon leaving the employment of the City. It is the experience of the City that this statutory structure tends to encourage the liberal use of sick leave by its employees. Although the employees of the City may now elect and receive the tax benefits of a VEBA upon leaving the employment of the City and are thereby encouraged to preserve their sick leave benefits, the benefit to the employee and the City may be greatly enhanced through an additional matching contribution by the City. The City benefits as an employer whenever the rate of absenteeism of the employees is reduced and dollars spent are tax free. REC® ATION: That City Council give consideration to and pass Resolution No. 5543. FISCAL IMPACTS: Based upon anticipated salary savings, tax savings and decreased absenteeism, the city staff is anticipating some cost savings to the city to be realized from this action. Respectfully submitted, E46 r Charles Harball, City Attorney Oane Howington, City Man.-+er A RESOLUTION ESTABLISHING AN INCENTIVE PROGRAM FOR EMPLOYEES OF THE CITY OF KALISPELL TO ENCOURAGE EMPLOYEES TO PRESERVE THEIR STATE MANDATED SICK TIME BENEFITS THROUGH OF EMPLOYER CONTRIBUTION TO THE EMPLOYEE'S UNUSED AND ACCRUED SICK LEAVE BENEFITS THAT ARE DIRECTED i A VOLUNTARY► iBENEFICIARY ASSOCIATION WHEREAS, pursuant to the authorization provided by Section 501(c)(9) of the Internal Revenue Code and by Resolution No. 5539 the Kalispell City Council on December 5, 2011, created a Voluntary Employees' Beneficiary Association [VEBA] which is a tax-exempt health and welfare trust and such trust is authorized to provide benefits to members including a self -insured medical reimbursement plan as authorized in Internal Revenue Section 105; and WHEREAS, pursuant to state law, an employee of the City receives 25% of the total unused and accrued sick leave earned during the term of employment upon leaving the employment of the City; and WHEREAS, it is the experience of the City that this statutory structure of sick leave benefit tends to encourage the liberal use of sick leave by its employees; and WHEREAS, although the employees of the City may now elect and receive the tax benefits of a VEBA upon leaving the employment of the City, thereby encouraging the employees to preserve their sick leave benefits, the benefit may be greatly enhanced through an additional matching contribution to the VEBA by the City; and WHEREAS, the City benefits as an employer whenever the rate of absenteeism of the employees is reduced and dollars spent are tax free. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS FOLLOWS: SECTION I. Effective January 1, 2012, the City of Kalispell, Montana shall pay to its employees, upon voluntary termination, an amount that is equal to the statutory amount otherwise received by the employee as earned and accrued sick leave with the following conditions: a) The employee must have a minimum of ten years of service with the City of Kalispell as of the date of termination from service; and b) The employee must provide the Department of Human Resources for the City of Kalispell six months advance notice prior to termination; and c) The Department of Finance for the City of Kalispell must be notified of the employee's election to have the City's matching contribution also placed into the VEBA account. SECTION 11. The proper officers of the City of Kalispell, Montana are authorized and directed to take such actions as are necessary to effectuate this resolution. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 19TH DAY OF DECEMBER, 2011. Tammi Fisher Mayor Theresa White City Clerk