OLD BUSINESS  2.

COMMITTEE MEMORANDUM

HISTORY:
At the July 26, 2017 Commission meeting a referral was made to the Finance and City Wide Projects Committee (“FCWPC”) as a discussion item to consider the implementation of a student loan reduction program for City employees, to help pay off their student debt faster. At the September 20, 2017 FCWPC meeting the Human Resources Department presented other options that are currently available to employees to obtain financial assistance for college tuition and loan forgiveness. The first option is the City’s Employee Tuition Assistance Program (Administrative Procedure HR.20.01) which was recently updated in February 2017. (See Attachment No. 1) The Employee Tuition Assistance Program was updated to provide generous assistance to employees for undergraduate or graduate degrees at 60-90% of tuition fees, up to a $5,250 annual maximum reimbursement. (The annual maximum is subject to change based on updates to the federal guideline). The second option that may be available to employees who have had student loans for multiple years is the Public Service Loan Forgiveness Program (PSLF). This program forgives the remaining balance on direct loans (William D. Ford Federal Direct Loan) after 120 qualifying monthly payments under a qualifying repayment plan while working fulltime for federal, state or local government. At the direction of the FCWPC, information on the PSLF was recently published in the City’s MB newsletter to bring awareness to this federal student aid program (Attachment No. 2).

ANALYSIS:
According to a CNBC report1 this benefit is still in the early adopter stage with just 3 percent of firms offering student loan repayment assistance. The report adds that an employer contribution of $50 or $100 a month is common among the first movers, with the payment going towards principal repayment. In fact, the City of Memphis Tennessee recently began offering a $50 monthly (with no lifetime maximum) student loan reduction program to full-time employees with 1-year of service (see Attachment No. 3).

In an effort to attract and maintain a quality workforce, the City may be interested in expanding its financial well-being benefits to include a Student Loan Repayment Program (“Program”) that will provide financial assistance to eligible full-time employees with a federal or private student loan. This program does not replace the employee’s obligation or responsibility to continue their monthly minimum loan repayment plan, but it is intended to accelerate the student loan repayment. Should the City decide to implement such a Program, the administration has drafted the below terms, conditions and procedures for consideration by the FCWPC:

Policy
The City or its Authorized Program Administrator will make a monthly contribution directly to the loan servicing company for eligible full-time employees. Payments made under the Program are limited to loans which were originated for the payment of tuition fees at an accredited institution of higher learning. An accredited institution of higher learning, as defined in the Higher Education Act, is an educational institution that awards a bachelor’s degree or provides not less than a two (2) year program that is acceptable for full credit towards a degree; is legally authorized within such State to provide a program of education beyond secondary education; and is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted pre-accreditation status by such an agency or association that has been recognized by the Secretary of Education.

Employee Eligibility
Student loan repayments are available to full-time City of Miami Beach employees who have satisfied the following two requirements:
1- The employee has completed the greater of one (1) year of service or their respective probationary period. (Note: Time served in provisional/temporary status is not included when determining eligibility.)
2- The employee’s last performance evaluation must have a score of “Meets Expectations” or higher.

Reimbursement
Eligible employees will receive a monthly payment equal to the lesser of $50 or the employee’s required minimum monthly student loan payment. The lifetime benefit is limited to $5,000. Employees are responsible for income taxes and their share of the Medicare tax on the assistance which is received. In addition, payments made in accordance with the Program are not deemed as pensionable wages.

Application and Recertification Procedure
Employees wishing to participate in the Program shall submit their Student Loan Repayment Program Application to the Human Resources Department. Upon verification of outstanding loans, the employee’s loan servicing agency will begin to receive payments within 30 days of processing the approving the Program Application. Ongoing loan repayments which are made under this Program are subject to a recertification process to determine the status of the employee’s student loan. The recertification process will take place each year following the approval of the Program Application. In order to recertify an application, employees must submit a current student loan statement to the Human Resources Department or its authorized Program Administrator.

Penalty
Should an employee submit documentation which the employee knows is false or intentionally misleading in order to receive benefits to which the employee is not entitled, the employee shall be deemed ineligible to continue to participate in the Program and shall repay the City of Miami Beach for any student loan repayments received while in the City’s employ. The employee may be subject to disciplinary action, including, but not limited to, dismissal from City service.

CONCLUSION:
This administration is presenting this item for discussion and direction from the FCWPC. If the item is approved, the administration will continue to research the best option for administering the Program, and report back to the FCWPC with a recommendation. If approved, it is suggested that the Program be offered to Unclassified and Others. Contingent upon successful negotiations, the Program may also be offered to employees in classifications governed by union contracts.