Agenda Item # 3 SUBJECT:
PREPAREDBY:



### ITEMDESCRIPTION: 

## FOR BOARD ACTION Meeting Date: 

### Retirement 

### IResignationIncentive Program PowerResources Divisionat SilverLake Plant WalterD. Schlink Director ofPowerResources and CustomerRelations 5/14/13



### Atthe August 7, 2012 RPU Board meeting, the Board directed staffto develop, implement and execute a plan to decommission the Silver Lake Power Plant by December 31, 2015 or sooner. The direction was based onthe 2012 Infrastructure Plan Update that had beenpresented to the Board. Decommissioning in this instanceisthe cessation ofelectricpowerproduction. RPUhas committedto beingfair, compassionate andrespectfulthroughoutthe decommissioningprocess. At the December 18, 2012 RPU Board meeting, staffreported progress on a number oftopics including staffinglevels andpersonnel. A significant amount ofthe potential savings thatwillberealizedbythe SLP decommissioninghas beenidentified as dueto reduced staffing levels at SLP. In addition to the attrition program that has been in place prior to the Board's August 7, 2012 decision, staffis recommending a program for Board approval that would reduce staffby 34 full time employees. Up to 19 ofthe reductions wouldbe through aprogram ofincentives for employees that will reach PERA eligibilitybyDecember 31, 2015. The average years ofserviceto the City ofthe PERA eligible employee group exceeds 30 years ofservice. The program developed by the Staff includes a schedule of reorganization and staff reductions to be implemented over the 2013

- 2015 period. The schedule proposed will allow the City to realize the fmancial benefit ofreduced salaries and benefits through incremental implementation. The program will conclude with the staffing level being appropriate to operate and maintain the remaining generation fleet and steam supply system ona 24hour, 7dayperweekbasis. Attachedyouwill fmdtwo documents.
• City of Rochester and Rochester Public Utilities 2013-15 Early Retirement 

### I Resignation Incentive Programfor RetirementEligibleEmployees atthe SilverLake Plant
• City of Rochester and Rochester Public Utilities 2013-15 Early Retirement 

### I Resignation Incentive ProgramParticipationAgreement and General Release Form These documents provide the details related to eligibility and the terms & 

### conditions ofthe program as well as the agreementthatwillbe executedbetweenthe employee andthe' City. 

# at 1(4**~alManager** ROCHESTERPUBLICUTILITIES ' I

### Date

## FOR BOARD ACTION Agenda Item # 3 Meeting Date: 5/14/13 

### Ifall19 eligible employees would decide to participate inthe programthere will be an associated expense of $847,691 which is offset by an avoided unemployment obligation of $463,000 for a net expense of $384,091. Annual savings in salaries and benefits estimated byreducing staffwill be $614,000 in 2013; $2,452,000 in 2014 and $2,659,000 

### in 2015. These benefits are directly tied to the program of incremental staff reduction over the 2012-15 decommissioning period and are in addition to the saving presented in the 2012 Infrastructure PlanUpdate estimates. This program also provides an important operational benefitto the utility and the City byhelping control the rate at which staffmay separate and provides some level ofinformation on which positions may be available inoureffortstoretainqualified staff. Theprogramproposedby staff is supportedby senior Citymanagement andhas beenreviewedbyoutside council as well as the CityAttorney. FORCAPITALPURCHASES/BIDS/MAJORPROJECTS: Thisprogramis notabudgeteditem. It

### is proposedto be funded by drawdownofthe appropriate financial reserves inaccordancewithutilitypolicy. The expenses incurred by implementation ofthe incentive program are offset by significant savings as previouslydescribed.
UTILITYBOARDACTIONREQUESTED: Staffrecommends that the Board approve the Retirement 

### I Resignation Incentive Program as described 

### in the attachments as well as approve funding throughRPUreserves. Staffrequests RPUBoardrecommendationfor approval to the Council.

General Manager Date 

### ROCHESTERPUBLIC UTILITIES

# I CITY OF ROCHESTER AND ROCHESTER PUBLIC UTILITIES 2013-15 EARLY RETIREMENT/RESIGNATION INCENTIVE PROGRAM FOR RETIREMENT ELIGIBLE EMPLOYEES AT THE SILVER LAKE PLANT

The Early Retirement/Resignation Incentive Program is a one-time offer being made available to employees in the Power Resources Division at the Silver Lake Plant who meet specific eligibility requirements. Participation in the program is voluntary. EMPLOYEE ELIGIBILITY
• Must currently be assigned as a regular, full-time employee working in the Power Resource Division of Rochester Public Utilities atthe Silver Lake Plant who have not yet submitted written notification oftheir intentto separate employmentwith the City/RPU. • Must satisfy the eligibility requirements to receive a retirement annuity from the Public Employees Retirement Association (PERA) of Minnesota (age 55 for most) by December 31, 2015. • Must sign a Participation Agreement and General Release Form and submit itto Linda Hillenbrand, Human Resources Department between July 15, 2013 and September 4, 2013. Participating employees will be required to continue to comply with City and Rochester Public Utilities policies and procedures until time oftheir employment separation. Under federal law, where an employer is excluding individuals in certain locations and/orjob titles from an incentive program, the employer must provide the ages and job titles ofthe persons who were excluded, as well as the ages and job titles of employees who were included. The federal government requires this so that employees will be in a position to evaluate whether or notto sign a release of federal age discrimination claims. A list is available by contacting the Human Resource Department. EARLY RETIREMENT/RESIGNATION INCENTIVE PROVISIONS Incentive Payment The Employer will pay a lump-sum amount equal to one week of base wages (calculated at the rate of pay in effect at time of separation) for each full year of employment (rounded up to the nearestwhole number) with the City of Rochester to each participating employee. Discussions will occur with bargaining unit representatives which may designate incentive funds to be deposited into the Minnesota State Retirement System (MSRS) Health Care Savings Plan for active employees. Separation Benefits Participating employees shall receive all separation benefits for which they are otherwise eligible underthe applicable collective bargaining agreement. Important Dates
• The retirement/resignation declaration period will run from July 15, 2013 to September 4, 2013.• Participating employees shall submit the Participation Agreement and General Release Form to Human Resources no laterthan September 4, 2013. • Participating employees who meet the Rule of 90 criteria (in effect on the date the employee signs the Participation Agreement) in 2013, must retire and/or resign between September 5, 2013 and December 31, 2013. • Participating employees who meet the Rule of 90 criteria (in effect on the date the employee signs the Participation Agreement) between January 1, 2014 and December 31, 2015, must retire and/or resign on or before the end ofthe month in which they are retirement eligible. • Participating employees who are PERA eligible but do not meetthe Rule of 90 criteria (in effect on the date the employee signs the Participation Agreement), must retire and/or resign between September 5, 2013 and December 31, 2015. • The lump-sum incentive payment is made in the pay period during, or directly following, the last day ofemployment. Eligible employees are encouraged to talk with theirfamily, legal advisor, financial advisor, and/or other relevant parties to make an informed decision relative to participation in the program. Rescission Period Once the employee signs the Participation Agreement and General Release Form and submits itto the Human Resources office, the employee will have fifteen (15) calendar days from the date the form is submitted to Human Resources to rescind the election. To rescind the election to participate, an employee must provide written notice to Linda Hillenbrand, Human Resources Director, no laterthan 4:30 p.m. on the last day ofthe rescission period. Other Resources
• For assistance with City benefit options, Human Resource Department: Christine Soltau 507.328.2564 or Connie Fox 507.328.2560 • Social Security Administration: 800.772.1213 or www.ssa.gov • Public Employees Retirement Association (PERA): 800.652.9026 or www.mnpera.org. PERA Retirement Options Video http://www.screencast.com/t/10iPsCPQ3 • Nationwide Deferred Compensation Plan: Thomas S. Jones, Jr. (Group Number 2304), 877.677.3678 or www.nrsforu.com Jonest4@nationwide.com • ICMA Deferred Compensation Plan: Sasha Segalchik (Plan Number 300464), 800.669.7400 or 866.731.1053, ssegalchik@icma.org • Minnesota State Retirement System: 651.296.27621 or www.msrs.state.mn.us •

**Bene~yst** Flexible SpendingAccount: Questions regarding the provisions of this early retirement incentive program may be directed to Linda Hillenbrand, Human Resource Director at 507.328.2561, lhillenbrand@rochestermn.gov or to Wally Schlink, Director of Power Resources, 507.280.1650, wschlink@rou.org.



### 2CITY OF ROCHESTER AND ROCHESTER PUBLIC UTILITIES 2013-15 EARLY RETIREMENT/RESIGNATION INCENTIVE PROGRAM PARTICIPATION AGREEMENT AND GENERAL RELEASE FORM
I, (Employee: print or type your name)

_____________, the undersigned Employee, voluntarily agree to resign or retire under the 2013-15 Early Retirement/Resignation Incentive Program for Retirement Eligible Employees in the Power Resources Division at the Silver Lake Plant ("Incentive Program") offered by the City of Rochester and Rochester Public Utilities and to execute this General Release of all Claims (the "Release"). For purposes ofthis Participation Agreement and General Release, the term "Employer" refers to the City of Rochester and Rochester Public Utilities and includes their past, present and future officers, officials, employees, volunteers, and agents, insurers, representatives, counsel, administrators, or any ofthem, in both their individual and official capacities. A. Resignation or Retirement. By signing this Participation Agreement and General Release, I will voluntarily separate from employment with the Employer and will either resign or retire on or before (Employee: insert date)

_____, 20
__ in exchange for the payments and benefits provided under the Incentive Program. I understand that by participating in the Incentive Program and signing this Participation Agreement and General Release, I may not return to employment in any permanent position with the Rochester Public Utilities. I further understand that if I accept another position with the Employer prior to my separation date, regardless ofthe starting date ofthe position, Iwill not be eligible for and will not receive any incentive payment under this Incentive Program. My estimated date of resignation or retirement is: (Employee: insert date)

________ _ B. Benefits Paid Underthe Incentive Program I understand that the following benefits will be paid to me after I sign this Participation Agreement and General Release, do not rescind it, resign or retire on or before (Employee: insert 

### 3date)

______, 20
__, and do not accrpt another position with the Employer prior to my separation date. (1) Payment by the Employer of a lump-sum amount equal to one week of base wages (calculated at my rate of pay in effect at the time of separation) for each full year of my employment (rounded up to the nearestwhole number) with the City of Rochester. (2) Payment by the Employer, to me, of any separation benefits to which I am otherwise entitled underthe collective bargaining agreement applicable to me. 

### C. MyAcknowledgment ofthe Consideration and Purpose ofthe General Release I received the Incentive Program materials authorized by the City of Rochester and Rochester Public Utilities on _______ and reviewed them. These materials include descriptions of who is eligible for the Incentive Program and the time limitations under the Incentive Program. The Employer encouraged me to seek counsel from a financial advisor and lawyer before signingthis Participation Agreement and General Release. I have at least forty-five (45) calendar days to consider whether to sign this Participation Agreement and General Release. I understand that I may knowingly and voluntarily agree to waive the forty-five (45) calendar day consideration period by electing to sign the Participation Agreement and General Release before the forty-five (45) calendar days have passed. The Employer encouraged me to take my time and carefully evaluate my circumstances before deciding if signingthis Participation Agreement and General Release is the right thingfor me to do. 

### D. What Iam Releasing In consideration for the payments and benefits under the Incentive Program, Ifully release and discharge the Employer from any and all claims, charges, complaints, and liabilities of any kind, known or unknown (each a "Claim"). I understand that by releasing the Employer from each and every Claim, I am releasing all of my rights to bring any Claim against the Employer based on any action, decision, or event occurring prior to my signing this Participation Agreement and General Release, including without limitation, the terms and conditions of my employment with the 

### 4Employer and the ending of my employment. Except as permitted by law, I will not commence any proceeding relating to any Claim, and if the law permits me to commence such a proceeding, I agree that I may not seek or recover any monetary damages or other relief as a result of any such proceeding. My release incudes any Claim based upon THE AGE DISCRIMINATION IN EMPLOYMENT ACT, 29 U.S.C. § 621, et seq.; federal, state, or local employment discrimination laws, regulations,
or requirements, including, but not limited to, Title VII of the Civil Rights Act, as amended, 42 U.S.C. 

### § 2000e, et seq.; the Americans with Disabilities Act, 42 U.S.C. 

### § 12101, et seq.; and the Minnesota Human Rights Act, Minn. Stat. Ch. 363A; any other statute, ordinance, or regulation; any contract, quasi-contract, or promissory estoppel; any tort, including wrongful discharge, misrepresentation, fraud, infliction of emotional distress, or defamation; or any other legal or equitable theory. I also release and waive any rights and claims I may have under the Veterans Preference Act, Minn. Stat. § 197.46; the Employer's policies and procedures; and the collective bargaining agreement applicableto me, ifany. E. What I am Not Releasing I am not releasing any claims for post-termination benefits, such as retirement benefits, under the provisions of any applicable policy or collective bargaining agreement. I also am not waiving any rights I have with regard to events that occur after the date I sign this Participation Agreement and General Release. F. If IWantto Rescind this Participation Agreement and General Release I understand that I have fifteen (15) calendar days from the day I sign this Participation Agreement and General Release in which to change my mind and rescind it. In order for this rescission to be effective, it must be in writing and delivered to Linda Hillenbrand, Director of Human Resources, within fifteen (15) calendar days from the date I sign this agreement. I understand that my delivery ofa written rescission can be either by hand by 4:30 p.m. on the last day of 5my rescission period or by certified mail return receipt requested, postmarked by the last day of my rescission period and properly addressed to Linda Hillenbrand, Director of Human Resources, City of Rochester, 201 Fourth Street SE, Rochester, MN 55904.
Employee's Signature

Witness
STATE OF MINNESOTA) 

# )ss COUNTY OF OLMSTED) Date Signed

Subscribed and sworn before me this
__dayof
_________, 2013.

NOTARY PUBLIC

EMPLOYEE: Afteryou sign and datethe Participation Agreement and General Release Form:
• Make TWO COPIES ofthis original form. • Keep one copy foryour records. • Give one copyto your supervisor. • Submitthe original copyto: Linda Hillenbrand Director of Human Resources City of Rochester 201 Fourth Street SE Rochester, MN 55904



### 6

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## RESOLUTION

BEITRESOLVEDbythe PublicUtilityBoardofthe CityofRochester, Minnesota,thatthe CommonCouncil ofthe said Cityisrequestedto authorizethe SilverLakePlant Retirement/ResignationIncentive Program as describedinthe following documents:

• City of Rochester and Rochester Public Utilities 2013-15 Early Retirement 

### I Resignation Incentive Program for Retirement Eligible Employees at the Silver Lake Plant • City of Rochester and Rochester Public Utilities 2013-15 Early Retirement 

### I ResignationIncentive ProgramParticipationAgreement and General Release Form BEITFURTHERRESOLVEDbythe PublicUtilityBoardto fundthe SilverLakePlant Retirement/ResignationIncentive Programthroughappropriate RPUreserves inaccordance with utilitypolicy. PassedbythePublicUtilityBoardofthe CityofRochester, Minnesota,this 14th day ofMay, 2013.

President
Secretary