Title
Employee Small Loan Program (Ordinance S-45017)
Description
This report requests City Council approval to enter into a contract with TrueConnect, a company that offers employees a resource to secure safe, affordable, small-dollar loans (up to $3,000) to avert financial emergencies and ease financial stress. Further request authorization for the City Controller to disburse funds necessary for this item. There is no impact to the General Fund; the costs for these services are paid by monthly payroll deductions from participants in the loan program.
Report
Summary
TrueConnect/Sunrise Banks, N.A. offers an employee loan program which can provide City employees with a resource to secure safe, affordable, small-dollar loans (up to $3,000) to avert financial emergencies and ease financial stress. Loan payments are deducted from each paycheck over 12 months. Loans are made by an FDIC-insured lender with a reasonable interest rate of 24.9 percent and offer an alternative to title loans and payday loans which typically carry extremely high interest rates. There are no origination fees or other fees assessed on the loan. Loan eligibility is not dependent upon personal credit score and a borrower's personal credit score is improved upon complete loan repayment. This vendor’s plan is supported by a comprehensive employee financial wellness program which can help employees get out of the cycle of debt. This program is provided at no cost or liability to the City.
Procurement Information
In accordance with Administrative Regulation 3.10, a Determination Memo was approved. Sourcewell (formerly the National Joint Powers Alliance) serves as a cooperative purchasing agency for government, education and non-profit organizations with more than 50,000 members, including the City of Phoenix. Using this cooperative agreement from Sourcewell, which has already conducted a competitive procurement process, allows the Benefits Division to announce this program during Open Enrollment which occurs from October 22 through November 9. Open Enrollment is the traditional time employees expect to learn about new and improved benefits. It also saves the City significant money in the form of the staff time and marketing efforts.
Contract Term
The contract term will be one year beginning Jan. 1, 2019, with three one-year extensions to be exercised at the City’s discretion, providing maximum flexibility for the City as it offers this new benefit program. The maximum four year contract length aligns with the cooperative agreement contract term.
Financial Impact
This program is provided at no cost or liability to the City, and there is no impact to the General Fund. The costs for these services are paid by monthly payroll deductions from participants in the loan program.
Department
Responsible Department
This item is submitted by Acting Deputy City Manager Toni Maccarone and the Human Resources Department.