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
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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