Exhibit "A"

MEMORANDUM OF AGREEMENT

Amendment to the Labor Agreement between the City of Portland (City) and AFSCME Local 189 for the Period July 1, 2000 through June 30, 2003

1.  In October of 2001, the City of Portland and the DCTU reached a Tentative Agreement on a new Labor Agreement for the period of July 1, 2001 through June 30, 2004.

2.  Article 16 of the new DCTU agreement authorized the City to implement a new self-insured core medical plan projected to reduce the July 1, 2001 self-insured plan costs by at least 19%. In addition to implementing a new self-insured core plan, the agreement authorizes the City to implement new medical and dental insured plans projected to reduce the July 1, 2001 costs by at least 9.1%.

3.  The agreement also established a joint collective bargaining process on the subject of health benefits between the City and the DCTU and any other collective bargaining units willing to engage in joint bargaining on benefits. The goal of the joint bargaining process was to achieve projected savings of as much as 25% on the self-insured core medical plan to be implemented July 1, 2002.

4.  On January 29, 2002 the DCTU, Recreation, and BOEC (AFSCME, Local 189) bargaining units reached a tentative agreement in joint bargaining whereby the parties agreed to achieve the stated goal of 25% projected savings on the self-insured core medical plan to be implemented July 1, 2002.

5.  The City and AFSCME have agreed to the attached amendment to Article 12, Health and Life Insurance, of the current Labor Agreement.

6.  The amended contract language has already been ratified by the AFSCME membership and is subject to ratification by the Portland City Council on behalf of the City.

For the City of Portland:

David G. Shaff, Employee Relations Manager        June 12, 2002

For AFSCME, Local 189:

Susan Skites, Council Representative          June 9, 2002

12.  HEALTH AND LIFE INSURANCE .  HEALTH AND LIFE INSURANCE

A.  Labor/Management Benefits Committee.

1.  The parties agree to the continuation of the city-wide Labor/Management Benefits committee. The committee will consist of 14 members. One member shall be appointed from each of the following labor organizations: the District Council of Trade Unions (DCTU), the Portland Police Association (PPA), the Portland Fire Fighters' Association (PFFA), the City of Portland Professional Employees Association (COPPEA), AFSCME, Local 189 representing Emergency Communications Operators (BOEC), Municipal Employees, Local 483 representing Recreation Instructors (Recreation) and the Portland Police Commanding Officers Association (PPCOA). The remaining seven members shall be appointed by the city.

2.  A quorum of twelve voting members is required for the committee to take action. An absent committee member may designate a substitute with full voting authority. Any committee member may invite one or more visitors to attend committee meetings.

3.  The committee shall select its chairperson, who shall serve at the will of the committee.

4.  In order to make a recommendation to the City Council, at least 12 committee members must vote in favor of the recommendation. The committee shall be responsible for establishing internal committee voting and decision-making processes.

5.  Members of the committee shall be allowed to attend committee meetings on on-duty time. In the event meetings are scheduled outside the regular shift hours of a committee member, the city shall make every effort to adjust the shift of the member to allow the member to attend while on duty.

6.  The committee shall meet at least quarterly, and shall make written recommendations regarding plan design changes in the employee benefits program to the City Council no later than April 1st of each year.

7.  The City Council shall retain the discretion to implement or reject any of the committee's recommendations. In the event the committee makes a recommendation that is consistent with the committee's authority, is actuarially sound and meets all the requirements of federal, state and local laws, and Council rejects the recommendation, any reductions in plan costs that may have occurred due to the change in plan design, will be treated as having occurred for the purposes of calculating the maximum city contribution under this agreement. These costs will be calculated by evaluating the premiums and/or rates as if the changes had occurred, the rates and/or premiums absent the changes, and the number of participants under the plan(s) involved. (For example, if the self-insured plan two party rate would be $298 per employee per month with the addition of a benefit design change "X", but Council rejects the design change and therefore the two party rate is $350 per month per employee, the city contribution will be increased $52 per month per employee on the self-insured plan to give credit for the change.)

B.  Benefits Eligibility

1.  Permanent full-time employees shall be eligible for medical, dental, vision and life insurance coverage the first of the month following thirty (30) days of eligible service. Medical, dental, vision and life insurance benefits will be paid at 100% of the city contribution for those employees who have a Standard Hours designation of at least seventy-two hours in a pay period in a benefits eligible, budgeted position.

2.  Permanent part-time employees will be eligible for medical, dental, vision and life insurance coverage as follows:

The percentage of benefits shall be based on the employee’s standard hour designation for the period of part-time (or job-share) work under the program.

3. Medical, dental, vision and life insurance benefits may be denied to employees who are in a pay status for less than seventy-six (76) hours during a calendar month by the withholding of city-paid premiums for the subsequent month.

C.  City Contributions

1.  For the plan year commencing July 1, 2000, the city shall make contributions to the Health Fund for each self-insured medical plan participant in the amounts set forth below:

Medical  One Party  $218.16 per month  

Two Party  $430.02 per month

Family    $579.24 per month

Dental    One Party  $ 44.21 per month

Two Party  $ 76.10 per month

Family    $128.89 per month

Vision  One Party  $ 4.81 per month

Two Party  $ 8.68 per month

Family    $ 11.68 per month

Total    One Party  $267.18 per month

Two Party  $514.81 per month

Family    $719.79 per month

2.  For the plan year commencing July 1, 2001, the city shall make contributions to the Health Fund for each self-insured medical plan participant in the amounts set forth in paragraph 1 above, increased by the annual percentage increase in the Portland CPI-W (as measured by the index for January 2001and 2nd Half 2000. However, in no event shall the contribution increase be less than two percent (2%) or greater than four and one-half percent (4.5%).

3.  For the plan year commencing July 1, 2002, the city shall make contributions to the Health Fund for each self-insured medical plan participant in the amounts for the plan year commencing July 1, 2001 set forth in paragraph 2 above, increased by the annual percentage increase in the Portland CPI-W (as measured by the index for January 2002 and 2nd Half 2001). However, in no event shall the contribution increase be less than two percent (2%) or greater than four and one-half percent (4.5%). Effective July 1, 2002, the City contribution rate shall be adjusted by 10.5%. Therefore, the City shall make contributions to the Health Fund for each self-insured medical plan participant in the amounts set forth below:

4.  Effective July 1, 2002 the City shall implement a new self-insured core plan that reduces the July 1, 2001 self-insured plan cost projections by at least 25%. In addition to implementing a new self-insured core plan, the City shall implement new insured (Kaiser and ODS Dental) plans that reduce the July 1, 2001 cost projections by at least 9.1%.

5.  For the Plan Year effective July 1, 2002 a benefits eligible employee who has alternate group medical coverage may choose to opt out of City provided medical coverage. A full-time employee who chooses to opt out shall receive a cash payment every payday (except for the third payday in a month) as follows:

Employees may elect to receive the cash payment as cash (subject to withholding) or as a pre-tax contribution into a Flexible Spending Account (MERP or DCAP). In addition to the cash payment to the employee, the City shall contribute for each full-time employee who opts out of medical coverage an additional amount to the Health Fund as follows:

6.  The City shall pro-rate the cash payment and City contribution in paragraph 5 above for part-time benefits eligible employees based on the standard hours schedule. (See Article 12, B, 2.)

7.  The Ccity's total contribution for insured plan participants shall be limited to the actual insured plan premium rate, not to exceed the amounts set forth above. Should the insured plan premiums exceed the cost of the City’s self-insured core plan, the parties agree that the Benefits Manager and the Labor/Management Committee will use their best efforts to control the cost of the insured plans, including consideration of replacement of the current insured plan with other insured plans, or with new self-insured plans. If the Ccity's contribution is less than the self-insured or insured plan costs, the difference shall be paid by employees through a monthly pre-tax payroll deduction each payday (except for the third payday of the month). In the alternative, if the Ccity's contribution is less than the self-insured core plan or insured plan costs, the Ccommittee may recommend to require elect to have the difference be paid from any available excess reserves in the Health Fund. For purposes of these calculations, "plan costs" for the self-insured and insured plans shall be defined to include domestic partners insurance, and insured and self-insured medical, dental, vision and prescription drug benefit plans.

8.  Effective July 1, 1994, b Benefit coverage for domestic partners will continue become available. Availability of domestic partner benefit is subject to continuing availability from the Ccity's benefit employee benefit insurance carriers. The Ccommittee will recommend eligibility rules governing domestic partner benefit coverage to the City Council.

9.  The amount the city shall contribute to the Health Fund for each self-insured medical plan participant shall be established annually and will be documented in the form of a Memorandum of Agreement.

D.  Health Fund Reserves

1.  The Health Fund shall be maintained with adequate reserves to meet fund obligations, which include claims, Incurred But Not Reported Claims Reserves, and Large Claim Reserves. The committee shall make recommendations to the city Council on creating other reserves as appropriate.

2.  The term “excess reserves,” as used in this agreement, shall be defined as the monies in the Health Fund which are not needed to meet fund obligations. Excess reserves shall remain in the Health Fund, but shall be subject to separate reporting to the committee.

3.  The Health Fund and all reserves associated with the Fund must be maintained in an interest bearing account. Fund reserves shall be pooled, and shall not be allocated on an individual employee or employee group basis.

E.  Retiree and Survivor Benefits

1.  The city shall make available to a retired employee, spouse and children, or to the surviving spouse and children, or to a surviving spouse, the same medical, dental, and vision benefits offered to active employees. The cost of the plans shall be borne by the retiree or his/her spouse. Such coverage shall be made available through the city until both the retiree and spouse reach age 65.

2.  The city shall provide to the spouse and dependent children of an employee who is killed on the job, the same medical, dental and vision benefit plans available to active employees. The city agrees to continue the city contribution for the spouse and dependent children until the spouse reaches age sixty-five or remarries and for each dependent child to the age which meets the eligibility requirements of the health plan in which they are enrolled.

3.  The promise of the city to provide insured plans is dependent upon the continuing availability of such plans from an insurance carrier and the qualification by the retired employee with the plan while the retiree was employed with the city. Should an insurance carrier terminate the plan, the city shall attempt to replace it.

F.  Life Insurance

1.  The city shall provide each employee with a life insurance policy; said policy shall be secured and maintained in accordance with the city's existing practices.

2.  The value of the policy shall be no less than $10,000 and if greater, shall be such amount as established by the City Council upon the recommendation of the Labor/Management Benefits Committee.

3.  The city shall make available supplemental life coverage on a voluntary, employee paid basis.

G.  Deferred Compensation

The city shall allow employees under this contract to participate in the Deferred Compensation Program that is currently available to employees. However, if the program is determined not to be allowable as a tax deferral under the Internal Revenue Code, the participating employee shall hold the city and the union harmless against any and all claims, demands, or other forms of liability arising as a result of any invalidation of the terms and conditions of the Program.

H.  Federal Health Legislation

If the Federal Government enacts Federal Health Legislation, or if any taxing authority taxes or otherwise limits or restricts health care benefits paid by the city, the city and the union will immediately negotiate on the effect of that legislation as it pertains to this Article.

I.  Disability Insurance

The city shall modify the benefits plan to include the addition of disability insurance for employees as recommended by the Labor/Management Benefits Committee and approved by the Portland City Council.