HomeMy WebLinkAbout20101101 - VI-05
City Council Memorandum
To: Mayor Hicks & City Councilmembers
From: David M. Osberg, City Administrator
Date: October 28, 2010
Item: Early Retirement Incentive
Council Action Requested:
It is the recommendation of the Finance Committee and City Staff that the full City Council take
action approving an early retirement incentive for IT Director Stephanie Nornes which will
include the previously approved $10,000 payment and an additional contribution of $11,190,
which corresponds to a one year payment the City might otherwise make, due to the health
insurance benefit that IT Director Stephanie Nornes would otherwise be entititled to, as a result of
the current health insurance program for pre-1993 employees. Approval of a retirement date of
February 1, 2010 is recommended.
Background Information:
At its meeting on Wednesday October 27, 2010 the members of the Finance Committee discussed
the current status of the proposed 2011 Budget. In addition, Staff presented information that had
most recently developed on Tuesday October 26, 2010 relating to an early retirement option
under consideration for IT Director Stephanie Nornes. Stephanie has stated that she would be
willing to accept the early retirement incentive previously approved by the City Council, which is
$10,000, and also a one time payment of $11,190, which is the incremental amount of difference
the City would be responsible for making payment, due to cost difference between single
coverage and family coverage for a one year period. Stephanie Nornes does not need the family
coverage that should be entitled to as a pre-1993 employee, and thus she would achieve a benefit
of an additional payment by the City, and the City would achieve a benefit, as there would be one
less person in the IT Department, and the City would only make the one year payment of, not
additional payments over a period of an addional seven years, at the potential rate of $17,472 (in
today's dollars) for family coverage health insurance. The concept results in positive benefit for
both Stephanie Nornes and the City of Hastings.
Financial Impact:
The City will make a payment of both $10,000 under the early retirement program incentive and
an additional $11,190. Savings of approximately $99,000 will be achieved in 2011, thus a net
savings to be achieved in the 2011 Budget of approximately $77,000.
Advisory Commission Discussion:
None
Council Committee Discussion:
Discussed and concept accepted at the meeting of the Finance Committee on Wednesday October
27,2010.
Attachments: