06 Staff Report - Voluntary Employee Beneficiary Associationpow N of
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DATE: October 11, 2007
MEETING DATE: 10/15/07
ITEM NO.
COUNCIL AGENDA REPORT
TO: MAYOR AND TOWN COUNCIL
FROM: PAMELA S. JACOBS, INTERIM TOWN MANAGER
SUBJECT: ADOPT RESOLUTION TO PARTICIPATE IN THE CALIFORNIA
GOVERNMENT VOLUNTARY EMPLOYEE BENEFICIARY
ASSOCIATION (VEBA) TRUST AND AUTHORIZE THE INTERIM
TOWN MANAGER TO EXECUTE ANY DOCUMENTS NECESSARY
TO IMPLEMENT THE VEBA TRUST
RECOMMENDATION:
Adopt resolution of the Town Council for the Town of Los Gatos to participate in the California
Government VEBA Trust and authorize the Interim Town Manager to implement the plan.
DISCUSSION:
The Town has historically provided a comprehensive program of benefits that addresses many of
the health and welfare needs of the employees and their families. Periodically, additions and/or
modifications to the benefit structure are made to comply with negotiated labor agreements or to
provide an improved benefit for employees. One such amendment to the benefit structure
recommended by staff is participation in the California Government Voluntary Employees'
Beneficiary Association, a multi-employer VEBA created by the City of Foster City. Foster City
created this plan in 2003 to provide VEBA benefits to governmental entities within California.
The VEBA Trust is a tax-exempt benefit plan qualifying under Section 501(c)(9) of the Internal
Revenue Code. Upon enrollment in a VEBA, a participant is assigned an individual account
held in trust. The participant is then eligible to make voluntary contributions to their account
from their active employee salary and by converting eligible accrued leave such as sick or
vacation leave. Expenses such as unreimbursed medical premiums and expenses, co-pays,
pharmacy charges and Long Term Care are eligible expenses under a VEBA Trust. Employees
will realize a significant benefit since eligible contributions to a VEBA Trust and the reimbursed
expenses from the VEBA Trust are tax exempt.
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PREPARED BY: ARu Porti llo, kan
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Reviewed by: Interim Town Manager 41"--Town Attorney _ Clerk Administrator -ZXFinance Comm Dev
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION TO PARTICIPATE IN THE CALIFORNIA
GOVERNMENT VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION
(VEBA) TRUST AND AUTHORIZE THE INTERIM TOWN MANAGER TO
EXECUTE ANY DOCUMENTS NECESSARY TO IMPLEMENT THE VEBA
TRUST
OCTOBER 11, 2007
The VEBA Trust will provide a comprehensive approach to assisting with rising cost of health
care, one of the greatest challenges facing employers and employees. Through voluntary
contributions to the VEBA Trust, employees are able to make health care choices specific to
their needs and have more money available for health care expenses due to the tax savings
realized through the program, without added burden to the employer.
To implement the plan, it will be necessary for the Town to execute a plan agreement with a
third party administrator to implement the Trust. Thus, the attached resolution provides
authority for the Interim Town Manager to execute any necessary documents.
ENVIRONMENTAL ASSESSMENTS:
Is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
There are no costs anticipated with the implementation of this program. The VEBA Trust is
administered by an independent third party, Public Agency Finance Corporation. Their
administrative fees, including initial setup and recurring expenses, will be paid out of the
investment earnings of the Trust.
Attachment:
Resolution of the Town Council to Participate in the California Government VEBA Trust
RESOLUTION NO.
ADOPT RESOLUTION TO PARTICIPATE IN THE CALIFORNIA GOVERNMENT
VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION (VEBA) TRUST AND
AUTHORIZE THE INTERIM TOWN MANAGER TO EXECUTE ANY DOCUMENTS
NECESSARY TO IMPLEMENT THE VEBA TRUST
WHEREAS, the Town maintains a comprehensive health and welfare benefit program for its employees and
their families; and,
WHEREAS, periodic modifications and or additions are made to the benefit programs; and
WHEREAS, the rising cost of health care is one of the most important cost containment issue for employers and
employees; and
WHEREAS, the tax advantages of a Voluntary Employee Beneficiary Association Trust will provide employees
with more assets for health care and related costs; and
WHEREAS, the California Governmental Voluntary Employee Beneficiary Association is a governmental multi-
employer plan that permits employees to accumulate assets for this purpose pursuant to the provisions of Internal
Revenue code section 501 (c)(9); and
WHEREAS, the California Governmental Voluntary Employee Beneficiary Association provides for
participation pursuant to collective bargaining agreements;
WHEREAS, it is necessary to execute plan documents to implement the plan;
NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Los Gatos, County of Santa
Clara, State of California, that participation in California Govenunent Voluntary Employer Beneficiary Association is
hereby approved and the Interim Town Manager is authorized to execute any documents necessary to implement the
VEBA Trust.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on
the 15th day of October, 2007 by the following vote:
COUNCIL MEMBERS
AYES:
NOES:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR