HomeMy WebLinkAboutAgenda Report - January 13, 1986OUNCIL COAIMUNICAT� N1
TO THE CITY COUNCIL DATE NO.
FROM: THE CITY MANAGER'S OFFICE January 13, 1986
SUBJECT: Resolution providing for the cost of benefit reimbursement method for funding
the City's liability for UnemploN-,ent Insurance.
In January 1978, California law required local public entities
to provide Unemployment insurance Coverage to their employees.
Resolution-No..78-24 was adopted on February 15, 1978 by the
City Council to provide for the funding of the City's
liability for unemployment insurance through the Local Public
Entity Employees' Fund (LPEEF).
Recent legislation (AB 1575) amended the California Un-mployment
Insurance Code to reveal the LPEEF effective January 1, 1986 as
a result of the Sacramento_ decision handed down by the
California Sun_reme Court. Under this decision, state mandated
costs such as Unemployment Insurance are now reimbursable by
the State.
With the dissolution of the Fund, cities will have two opt -ons
for an employer classification under the unemployment insurance
program to be selected by Januar 31:
1. Pa-ment of contributions by the Regular Contribution. Date
("'ax) Method
2. Pro -rated cost of benefits r_,aid. This is the classification
of "reimbursing employer.,"
R
As a tax rated employer the City will be required to pay 3.40
percent of total payroll to the Employment DevelopMent Department.
City now in the 'Local Public Entity Fund automatically
Eecomes a -tax rated
i.reirbur^ing doing nothin
employers pay to the Employment_Development>Department an amount
equal to the benefits paid out for unemployment insurance clair_is.
In other words, the. City reimburses EDD on a dollar -for -dollar
basis for claims paid out.
a good number of cities which where not in the Local Pualic
Entity Fund now '_:ave the'status of "reimbursing,emplover;
this includesmost of `he larger cities in.the state. I is =:
the recommendation of the League of CaLfornia Cities that c_t es
choose to become a.reimbur-sing employer. Given the sta.bilitw
of City work forces, in 990 of the cases, ;t- will cost
the city less when choosing to be a reimbursing employer
than. allowing EDD to classify the Cite as.a tax rated employe
P. 'CO.24ENDATION: It is the recommendation of staff that the
City Council adopt resolution providing for the Cost Reimburser.ent
Method for Funding -the City's Unemployment Insurance Liability.