HomeMy WebLinkAboutItem 2b: Amendment to Contract with City Manager for Reimbursement of Life Insurance Purchased on a One-time BasisDATE: October 5, 2010
TO: Mayor and City Council
SUMMARY
DISCUSSION
STAFF REPORT
Administrative Services Department
FROM: Hue C. Quach, Administrative Services Director
Michael A. Casalou, Human Resources Administrator /14t..
SUBJECT: APPROVE AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN
THE CITY OF ARCADIA AND CITY MANAGER TO ADD A REVISED
SUB - SECTION ENTITLED LIFE INSURANCE REIMBURSEMENT ON A
ONE TIME BASIS FOR DOCUMENTED PURCHASE OF SUCH POLICY
Recommendation: Approve
It is recommended that the City Council approve an amendment to the employment
agreement between the City of Arcadia and City Manager to add a revised sub - section
entitled Life Insurance Reimbursement wherein the City will reimburse an amount not to
exceed Forty One Hundred Dollars ($4,100.00), on a one time basis, for the City
Manager's documented purchase of a personal term life insurance policy.
The current employment agreement between the City of Arcadia and City Manager
Donald Penman automatically renews effective January 1, 2011. While Mr. Penman is
currently eligible to retire, he has expressed an interest in remaining as City Manager,
and the City Council has apparently indicated a desire for him to remain as well.
Under the City's current retirement system, the California Public Employees Retirement
System (CaIPERS), if an employee who is eligible to retire (minimum age of 50 and at
least 5 years of service in a PERS agency) but does not, and passes away without
having the opportunity to retire, their surviving spouse would only receive one half of
what the retirement benefit would be otherwise. Considering this risk, Mr. Penman has
requested the City Council consider a contract amendment to reimburse him for the cost
not to exceed $4,100.00 for his documented purchase of term life insurance on a one-
time basis. This policy would essentially cover the difference in what his retirement
benefit could be as opposed to what it would be if he were to pass away without retiring.
Mayor and City Council
October 5, 2010
Page 2 of 2
If the City Council approved Mr. Penman's request, it would be taxable to Mr. Penman
but would not be included in income used to calculate any future retirement amount; in
other words, it would not increase his future pension.
In response to his request, the City Council appointed an ad hoc committee comprised
of Council members Harbicht and Segal to meet with the City Manager to discuss his
request and prepare a recommendation for City Council consideration. The Committee
finds the insurance policy request to be reasonable as the risk is significant for Mr.
Penman. Additionally, the Committee would also like to note that Mr. Penman, in
recognition of the overall economic situation, voluntarily returned to the City 3% of his
scheduled 5% raise he was entitled to by contract back in January 2010, representing
$6,115.00. After thoughtful consideration to the amendment and the benefit of retaining
our current City Manager, the Committee is recommending the City Council approve the
attached contract amendment providing the City Manager with a one -time
reimbursement for his purchase of a personal term life insurance policy.
FISCAL IMPACT
If approved, the total cost of this amendment is $4,100.00. Sufficient funds are
available in the FY 2010 -11 Operating Budget.
RECOMMENDATION
It is recommended that the City Council approve the attached amendment to the
Employment Agreement between the City of Arcadia and Donald Penman to add a
revised sub - section entitled Life Insurance Reimbursement, on a one time basis,
for documented purchase of such policy and authorize the Mayor to sign.
Attachment
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN
THE CITY OF ARCADIA
AND THE CITY MANAGER
This AMENDMENT (hereinafter referred to as "First Amendment ") is made and entered
into between Donald E. Penman (hereinafter referred to as "Manager ") and the CITY
OF ARCADIA (hereinafter referred to as "City "), in order to amend, in writing, the terms
and conditions of employment for the City Manager of the City.
WHEREAS, effective January 1, 2008, City and Manager entered into an Employment
Agreement (hereinafter referred to as "Agreement "); and
WHEREAS, City and Manager wish to amend said Agreement to provide for a one time
reimbursement for Manager's purchase of a term life insurance policy.
NOW, THEREFORE, the parties hereto agree as follows:
1. Except as modified by this First Amendment, all provisions of the Agreement
shall remain in full force and effect for the term hereof. In case of any conflict,
the terms of the Agreement shall prevail over the provisions of the First
Amendment.
2. Section 4. of the Agreement, entitled BENEFITS, shall be amended to add a
revised Sub - section (e), entitled Life Insurance Reimbursement, to read as
follows:
"Manager shall be reimbursed for the premium expense, in an amount not
to exceed Forty One Hundred Dollars ($4,100.00), on a one time basis, for
his documented purchase of a personal term life insurance policy."
3. Section 4. (e) of the Agreement, currently entitled Supplemental Benefits, shall
be labeled Section 4. (f).
IN WITNESS WHEREOF, the parties have executed this Agreement on the day of
, 2010.
CITY OF ARCADIA MANAGER
Peter Amundson, Mayor Donald E. Penman