Each year, at about this same time, those words come right out of my mouth: “It’s really hot!” So hot that birds are using oven mitts to pull worms out of the ground. Welcome to the triple-digit temps in the North Valley.
Speaking of hot, I want to share with you about the current growth in the PORAC Retiree Medical Trust. If you read last month’s article, you know that Sacramento POA just joined. Now we have added another association, this time from SoCal. We would like to welcome the El Cajon Police Officers’ Association. They will be checking in with around 120 members. I would like to give a shout-out to their Vice President Patrick Gomes. Patrick did all of the heavy lifting in order to make their participation possible. The POA and their labor representative did a really good job of crafting their MOU language to address their joining the RMT. For the record, it does not always happen quite that way. Great job, Patrick!
I thought I would take just a minute to highlight the process of joining and participating in the RMT.
Our trust is unique. We operate under the rules of ERISA. We are considered a VEBA trust designed to provide reimbursement benefits for medical premiums and expenses once you are retired and age-eligible. The trust has to remain compliant with all of the rules and regulations set forth by the Internal Revenue Service (IRS) and the Department of Labor (DOL). The payoff for proper compliance is the hugely popular triple tax-free benefit (almost as sweet as apple pie and vanilla ice cream).
In order to make things work properly, there are two documents we have to address.
First, let’s talk about the joinder agreement. This document outlines what level your contributions will be set at. It lets us know if you will be opting for the transfer of sick leave and/or vacation leave. It provides the name and contact information for someone in your city or county when we need to make contact for a variety of reasons. There is information on how contributions and detail reports are handled and exactly what the RMT needs in order to keep good solid records. And then, of course, there is a bit of legalese involved, along with signatories from both the employer and the association. It’s a very important document.
The second important document is your labor contract, most commonly referred to as an MOU. The federal rules require that, in order for your association to participate with us, there must be a solid reference and explanation about the trust in your MOU. Our legal counsel reviews the language prior to an association joining. One major reason for that is to be certain that the MOU language doesn’t bind the RMT to anything we don’t do, or something we cannot comply with.
Between the joinder agreement and the MOU, we can make sure that everything is on solid legal ground.
Unfortunately, sometimes the orderly process of joining gets out of order. When it does, fixing it can be problematic. And it’s not because of the POA or the DSA. Actually, it centers upon how cooperative (or not) the city or county is. As you know, employers come in all different levels of helpfulness.
So, what really works best is to run your MOU language by us ahead of time. I want to say that again: Most important is that you let us see it before you sign a deal on a contract. It’s a really easy pitfall to avoid.
The good news is that we have sample MOU language prepared by our attorneys. You don’t have to use it verbatim, but it is a great launching point. Start with it, massage it and twist it up a bit to your own liking. Then let us take a look at it. Typically, it works out pretty well.
Give us a call and we will show up in person or on a Zoom call, or maybe we’ll get together at the annual Conference of Members in Palm Desert. There are lots of options to choose from.
And finally, I’ve included a snapshot of our portfolio balances as of July 1. The total fund is hovering around $132.5 million.
