HomeMy WebLinkAbout12-04-2012 ph 12 n dreading pers 2nd tierpolice-misc urgency ordcouncil
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C I T Y O F S A N L U I S O B I S P O
FROM :
Monica Irons, Human Resources Director
Prepared By :Greg Zocher, Human Resources Manage r
SUBJECT :ADOPTION OF URGENCY ORDINANCE NO . 1585 AUTHORIZING A N
AMENDMENT TO THE CONTRACT BETWEEN THE CITY OF SAN LUI S
OBISPO AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM TO PROVIDE SECTION 2047 5
(DIFFERENT LEVEL OF BENEFITS), SECTION 21362 (2% @ 50 FUL L
FORMULA) AND SECTION 20037 (THREE-YEAR FINAL COMPENSATION )
FOR LOCAL POLICE SAFETY MEMBERS AND TO PROVIDE SECTIO N
20475 (DIFFERENT LEVEL OF BENEFITS), SECTION 21353 (2% @ 60 FUL L
FORMULA) AND SECTION 20037 (THREE-YEAR FINAL COMPENSATION )
FOR MISCELLANEOUS MEMBERS .
RECOMMENDATION
1 . Adopt Urgency Ordinance authorizing an amendment to the contract between the City
Council of the City of San Luis Obispo and the Board of Administration of the Californi a
Public Employees' Retirement System (Ca1PERS).
DISCUSSION
Backgroun d
On November 7, 2012 City Council adopted a Resolution of Intention (Resolution No . 10409 )
approving an amendment to the contract between the Board of Administration of the Californi a
Public Employees' Retirement System and the City of San Luis Obispo . City Council als o
introduced by title only Ordinance No . 1585 authorizing an amendment to the contract between th e
City of San Luis Obispo and the Board of Administration of the California Public Employees '
Retirement System regarding Section 20475 (Different Level of Benefits), Section 21362 (2% @ 5 0
Full Formula) and Section 20037 (Three-Year Final Compensation) for local Police Safet y
Members and to provide Section 20475 (Different Level of Benefits), Section 21353 (2% @ 60 Ful l
Formula) and Section 20037 (Three-Year Final Compensation) for Miscellaneous Member s
(Attachment 1). More than 20 days have passed since the Resolution of Intention was adopted an d
Ordinance No . 1585 was introduced and approved by Council on November 7, 2012, in accordanc e
with Government Code Section 20471 . In accordance with state law, PERS requirements and th e
City Charter, the urgency ordinance is now ready for adoption . As an urgency measure, th e
ordinance will become effective immediately . Upon adoption by Council, the contract wit h
CaIPERS will be amended and the second tier pension benefit will go into effect at the start of th e
first full pay period following adoption (December 6, 2012).
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FISCAL IMPAC T
According to CalPERS (Attachment 2), the employer contribution rate will be 20 .560% of
reportable earnings for police safety members entering membership for the first time in the polic e
safety classifications after the effective date of this amendment to contract . This is a reduction fro m
the current first tier rate of 39 .910% for police safety employees . Actuarial analysis estimate s
retirement costs will be reduced by approximately $404,000 in about ten years . There will be n o
change to the member contribution rate of nine percent, paid by employees .
According to Ca1PERS (Attachment 3), as Miscellaneous employees are hired into the Second Tier ,
the City will see a reduction in its employer contribution rate from the current first tier rate o f
23 .154% for Miscellaneous employees . Actuarial analysis estimates retirement costs will b e
reduced by approximately $684,000 in about ten years . The member contribution rate for the lowe r
Miscellaneous second tier will be seven percent .
ALTERNATIVE S
Do not adopt the urgency ordinance.This alternative is not recommended since this change wa s
approved as part of the 2012-2015 San Luis Obispo Police Officers' Association and the 2012-201 4
San Luis Obispo City Employee's Association Memorandum of Agreement . Failure to pass thi s
urgency ordinance would place the City in violation of its agreement with employee groups and woul d
not result in savings as described above .
ATTACHMENT S
1.Urgency Ordinance No . 158 5
2.Ca1PERS Actuarial Analysis Polic e
3.Ca1PERS Actuarial Analysis Misc .
tamuncil agenda reparts120 12(2012-11-0Neso of intention -psis 2nd Uer policxurgecy ord (irons-zocher)'potice 2% @ 50 and mist 2%@ 60 second tiers e,munul agenda report da
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ATTACHMENT 1
ORDINANCE NO . 1585 (2012 Series )
AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN TH E
CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO AND THE BOARD O F
ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES'RETIREMEN T
SYSTEM
WHEREAS, the City of San Luis Obispo has contracted with the California Publi c
Employees' Retirement System (Ca1PERS) for retirement benefits for its sworn Police Safety
employees and Miscellaneous employees since July 1, 1952 ; and
WHEREAS, over the years, the City has amended its retirement benefit structure t o
reflect changes as negotiated during the meet-and-confer process with each bargaining group ;
and
WHEREAS, the City is amending its contract with Ca1PERS to provide for the 2%@
50 Retirement Formula and three year average final compensation for its sworn Police Safet y
employees hired after this contract amendment with CaIPERS ; and
WHEREAS, the City is amending its contract with CaIPERS to provide for the 2%@
60 Retirement Formula and three year average final compensation for its Miscellaneous
employees hired after this contract amendment with CaIPERS ; and
WHEREAS, the City has reached agreement with all of its represented bargaining unit s
and has entered into memoranda of agreement with those bargaining units pursuant to which th e
parties have agreed to implement the aforementioned retirement formulas ;
WHEREAS, during the negotiation process, Public Employees Pension Reform Act wa s
passed by the Legislature and signed by the Governor to become effective January 1, 2013 ,
which will eliminate the aforementioned bargained retirement formulas, an d
WHEREAS, the City will be unable to implement the bargained for retirement formula s
and satisfy the requirements of its memoranda of agreements, unless this ordinance is adopted a s
an urgency measure to become effective prior to January 1, 2013 ; and
WHEREAS, if the City is unable to implement the bargained for retirement formulas, i t
will be substantially detrimental to the long-term financial welfare of the City ; an d
WHEREAS, in order for the City to amend its contract with CaIPERS to provide th e
bargained formulas, pursuant to Government Code Section 20471, there must be at least a 20-da y
period between the adoption of the Resolution of Intention and the adoption of the fina l
Ordinance .
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Lui s
Obispo as follows :
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Ordinance No . (2012 Series)
ATTACHMENT 1
Page 2
SECTION 1 .That an amendment to the contract between the City Council of the City o f
San Luis Obispo and the Board of Administration, California Public Employees' Retiremen t
System is hereby authorized, a copy of said amendment being attached hereto, marked "Exhibit",
and by such reference made a part hereof as though herein set out in full .
SECTION 2 . The Mayor of the City of San Luis Obispo is hereby authorized ,
empowered, and directed to execute said amendment for and on behalf of the City, to b e
effective the first full pay period following adoption of this ordinance, beginning December 6 ,
2012 .
SECTION 3 . This ordinance is an urgency ordinance and shall take effect immediatel y
upon adoption . The City Council hereby declares that the need for the adoption of this ordinanc e
as an urgency measure is to preserve the public peace, health or safety . If this ordinance is no t
adopted as an urgency measure, the City would not be able to comply with negotiated employe e
contracts for the "Miscellaneous" and "Police Safety" employee groups, which requir e
amendment to the retirement benefits prior to December 31, 2012 . Breach of terms of negotiate d
agreements undermines labor stability and, in this case, would adversely impact the City's abilit y
to achieve labor cost reductions deemed necessary by this Council to support the City's lon g
term fiscal sustainability .
SECTION 4 .A summary of this ordinance, together with the names of Counci l
members voting for and against, shall be published at least five (5) days prior to its final passage ,
in The Tribune, a newspaper published and circulated in this City . This urgency ordinance shal l
go into effect immediately upon its final passage .
INTRODUCED at a regular meeting of the City Council held on this 7ch day of
November, 2012,AND FINALLY ADOPTED by the Council of the City of San Luis Obisp o
on the 4 `h day of December 2012, on the following vote :
AYES :
NOES :
ABSENT :
Mayor Jan Mar x
ATTEST :
Maeve Kennedy Grimes
City Clerk
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Ordinance No . (2012 Series)
ATTACHMENT 1
Page 3
APPROVED AS TO FORM :
J . Christine Dietric k
City Attorne y
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S
AL
Ca1PERS
EXHIBI T
Californi a
Public Employees' Retirement Syste m
AMENDMENT TO CONTRAC T
Between th e
Board of Administratio n
California Public Employees' Retirement System
and th e
City Council
City of San Luis Obisp o
The Board of Administration, California Public Employees' Retirement System ,
hereinafter referred to as Board, and the governing body of the above public agency ,hereinafter referred to as Public Agency, having entered into a contract effective July 1 ,
1952, and witnessed June 9, 1952, and as amended effective October 1, 1962, Octobe r3, 1963, October 1, 1974, June 1, 1976,. December 1, 1976, December 20, 1978 ,
January 16, 1980, May 1, 1980, July 1, 1980, July 1, 1983, July 1, 1986, July 23, 1987 ,
November 16, 1989, August 8, 1993, November 5, 1999, January 7, 2000, July 6, 2000 ,September 21, 2001 March 28 ; 2002, July 18, 2002, January 30, 2003, February 27 ,
2003, July 14, 2005, December 29, 2005 and August 30, 2012 which provides fo rparticipation of Public Agency in said System, Board and Public Agency hereby agre eas follows :
A . Paragraphs I through 15 are hereby stricken from said contract as execute deffective August 30, 2012, and hereby replaced by the following paragraph snumbered 1 through 17 inclusive :
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1.All words and terms used herein which are defined in the Publi cEmployees' Retirement Law shall have the meaning as defined therei nunless otherwise specifically provided . "Normal retirement age" shal l
mean age 55 for local miscellaneous members entering membership i n
the miscellaneous classification on or prior to the effective date of thi s
amendment to contract and age 60 for local miscellaneous member s
entering membership for the first time in the miscellaneous classificatio n
after the effective date of this amendment to contract ; age 50 for loca lpolice members and for those local fire members entering membership i n
the fire classification on or prior to August 30, 2012 and age 55 for loca l
fire members entering membership for the first time in the fir e
classification after August 30, 2012 .
2.Public Agency shall participate in the Public Employees' Retiremen t
System from and after July 1, 1952 making its employees as hereinafte r
provided, members of said System subject to all provisions of the Publi c
Employees' Retirement Law except such as apply only on election of a
contracting agency and are not provided for herein and to all amendment s
to said Law hereafter enacted except those, which by express provision s
thereof, apply only on the election of a contracting agency .
3.Public Agency agrees to indemnify, defend and hold harmless th e
California Public Employees' Retirement System (CaIPERS) and it s
trustees, agents and employees, the CaIPERS Board of Administration ,
and the California Public Employees' Retirement Fund from any claims ,
demands, actions, losses, liabilities, damages, judgments, expenses an d
costs, including but not limited to interest, penalties and attorneys fees
that may arise as a result of any of the following :
(a)Public Agency's election to provide retirement benefits ,
provisions or formulas under this Contract that are different tha n
the retirement benefits, provisions or formulas provided unde r
the Public Agency's prior non-CaIPERS retirement program.
(b)Public Agency's election to amend this Contract to provid e
retirement benefits, provisions or formulas that are different tha n
existing retirement benefits, provisions or formulas .
(c)Public Agency's agreement with a third party other tha n
CaIPERS to provide retirement benefits, provisions, or formula sthat are different than the retirement benefits, provisions o r
formulas provided under this Contract and provided for underthe California Public Employees' Retirement Law .
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(d)Public Agency's election to file for bankruptcy under Chapter 9
(commencing with section 901) of Title 11 of the United State s
Bankruptcy Code andlor Public Agency's election to reject thi s
Contract with the CaIPERS Board of Administration pursuant to
section 365, of Title 11, of the United States Bankruptcy Cod e
or any similar provision of law .
(e)Public Agency's election to assign this Contract without the prio r
written consent of the CaIPERS' Board of Administration .
The termination of this Contract either voluntarily by request o f
Public Agency or involuntarily pursuant to the Public Employees '
Retirement Law .
Changes sponsored by Public Agency in existing retiremen t
benefits, provisions or formulas made as a result o f
amendments, additions or deletions to California statute or t o
the California Constitution .
4 .Employees of Public Agency in the following classes shall becom e
members of said Retirement System except such in each such class a s
are excluded by law or this agreement :
a.Local Fire Fighters (herein referred to as local safety members);
b.Local Police Officers (herein referred to as local safety members);
c.Employees other than local safety members (herein referred to a s
local miscellaneous members).
5 . In addition to the classes of employees excluded from membership b y
said Retirement Law, the following classes of employees shall not becom e
members of said Retirement System :
a .CROSSING GUARDS .
6 . The percentage of final compensation to be provided for each year o f
credited prior and current service as a local miscellaneous member i n
employment before and not on or after January 30, 2003 shall b e
determined in accordance with Section 21354 of said Retirement La w
(2% at age 55 Full).
(f)
(9)
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7.The percentage of final compensation to be provided for each year o f
credited prior and current service as a local miscellaneous member i n
employment on or after January 30, 2003 and not entering membershi p
for the first time in the miscellaneous classification after the effective dat e
of this amendment to contract shall be determined in accordance wit hSection 21354 .5 of said Retirement Law (2 .7% at age 55 Full).
8.The percentage of final compensation to be provided for each year o f
credited current service as a local miscellaneous member enterin g
membership for the first time in the miscellaneous classification after th e
effective date of this amendment to contract shall be determined i n
accordance with Section 21354 of said Retirement Law (2% at age 6 0Full).
9.The percentage of final compensation to be provided for each year o f
credited prior and current service as a local fire member enterin g
membership in the fire classification on or prior to August 30, 2012 and fo r
those local police members entering membership in the polic e
classification on or prior to the effective date of this amendment to contrac tshall be determined in accordance with Section 21362 .2 of saidRetirement Law (3% at age 50 Full).
10.The percentage of final compensation to be provided for each year o fcredited current service as a local fire member entering membership fo r
the first time in the fire classification after August 30, 2012 shall b e
determined in accordance with Section 21363 .1 of said Retirement La w(3% at age 55 Full).
11.The percentage of final compensation to be provided for each year o f
credited current service as a local police member entering membership fo r
the first time in the police classification after the effective date of thi s
amendment to contract shall be determined in accordance with Sectio n21362 of said Retirement Law (2% at age 50 Full).
12.Public Agency elected and elects to be subject to the following optiona lprovisions:
a.Section 21573 (Third Level of 1959 Survivor Benefits) for local fir emembers only .
b.Section 21574 (Fourth Level of 1959 Survivor Benefits) for local
miscellaneous members and local police members only .
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c.Sections 21624, 21626 and 21628 (Post-Retirement Survivo rAllowance) for local safety members only .
d.Section 20965 (Credit for Unused Sick Leave).
e.Section 20042 (One-Year Final Compensation) for local fir e
members entering membership on or prior to August 30, 2012 an d
for those local police members and local miscellaneous member s
entering membership on or prior to the effective date of thi samendment to contract.
f.Section 20903 (Two Years Additional Service Credit) for loca lmiscellaneous members only .
g.Section 21024 (Military Service Credit as Public Service).
h.Section 21548 (Pre-Retirement Option 2W Death Benefit).
Section 20475 (Different Level of Benefits). Section 21363 .1 (3 %
@ 55 Full formula) and Section 20037 (Three-Year Fina l
Compensation) are applicable to local fire members enterin g
membership for the first time in the fire classification after Augus t30, 2012 .
Section 21353 (2% @ 60 Full formula) and Section 20037 (Three -
Year Final Compensation) are applicable to local miscellaneou s
members entering membership for the first time in th e
miscellaneous classification after the effective date of thi samendment to contract.
Section 21362 (2% @ 50 Full formula) and Section 20037 (Three -
Year Final Compensation) are applicable to local police member s
entering membership for the first time in the police classificatio n
after the effective date of this amendment to contract .
13 . Public Agency, in accordance with Government Code Section 20790 ,
ceased to be an "employer" for purposes of Section 20834 effective o n
June 1, 1976 . Accumulated contributions of Public Agency shall be fixe d
and determined as provided in Government Code Section 20834, an d
accumulated contributions thereafter shall be held by the Board a s
provided in Government Code Section 20834 .
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14 . Public Agency shall contribute to said Retirement System the contribution s
determined by actuarial valuations of prior and future service liability wit h
respect to local miscellaenous members and local safety members of sai d
Retirement System .
15 .Public Agency shall also contribute to said Retirement System as follows :
a.Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21573 of said Retiremen t
Law. (Subject to annual change .) In addition, all assets an d
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of al l
local fire members .
b.Contributions required per covered member on account of the 195 9
Survivor Benefits provided under Section 21574 of said Retiremen t
Law. (Subject to annual change .) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of al l
local police members and local miscellaneous members .
c.A reasonable amount, as fixed by the Board, payable in on e
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Publi c
Agency, not including the costs of special valuations or of th e
periodic investigation and valuations required by law .
d.A reasonable amount, as fixed by the Board, payable in on e
installment as the occasions arise, to cover the costs of specia l
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law .
16 . Contributions required of Public Agency and its employees shall b e
subject to adjustment by Board on account of amendments to the Publi c
Employees' Retirement Law, and on account of the experience under th e
Retirement System as determined by the periodic investigation an d
valuation required by said Retirement Law .
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17 . Contributions required of Public Agency and its employees shall be pai d
by Public Agency to the Retirement System within fifteen days after th e
end of the period to which said contributions refer or as may be prescribe d
by Board regulation . If more or less than the correct amount o f
contributions is paid for any period, proper adjustment shall be made i n
connection with subsequent remittances . Adjustments on account of
errors in contributions required of any employee may be made by direc t
payments between the employee and the Board
. /'B .This amendment shall be effective on the day of ici!Gee%~1/
BOARD OF ADMINISTRATION CITY COUNCI L
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF SAN LUIS OBISP O
BY BY
KAREN DE FRANK, CHIEF PRESID$G OFFICE R
CUSTOMER ACCOUNT SERVICES DIVISIO N
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
c2 o/2J
Wi ess Date
AMENDMENT CaIPERS ID #757462851 5
PERS-CON-702A
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ATTACINT 2 '
California Public Employees' Retirement Systert i
Actuarial Office
P .O . Box 94270 9
Sacramento,CA 94229-2709TTY: (916)795-3240
Ca1PERS (888)225-7377 phone •(916)795-2744 fa x
www .calpers .ca.gov
June 29, 2012
CALPERS ID : 757462851 5
Employer Name : CITY OF SAN LUIS OBISP O
Rate Plan : SAFETY PLAN (Police Employees Only )
Re : New Second Tier Plan ; Section 20475 : Different Level of Benefits Provided for New Employees .
Section 21362 (2% @ 50 Full Formula) with Section 20037 (Three-Year Final Compensation )
Dear Requestor:
In the table below, we show your 2012-2013 employer contribution rates before and after opening a second tier .
Of the five rate components, the first three are specific to the pool to which the plan belongs and the last two ar e
specific to your agency . However, the Phase out of Normal Cost Difference will normally be 0% beginning wit h
rates established for 2010-2011, so it has no impact from that time on .
The Side Fund will continue to be paid off by the first tier plan since all the past service on which it is based belong s
to those current members who will continue in the first tier . The scheduled dollar amounts payable will continue a s
before . However, because newly hired members will be covered by the second tier, the number of members an d
payroll in the first tier will (after several years) gradually decline . The Amortization of Side Fund rate component i s
the dollars needed to pay off the side fund divided by the payroll . So as long as the Side Fund remains,the first
tier rate will increase as its payroll decreases .The first tier side fund is scheduled to be paid off after 2 4
years from June 30, 2012 .
Therefore, in determining the employer contributions savings, Amortization of Side Fund should be excluded . For
your agency, the ultimate annual employer savings equals the difference between the Normal Cost and Surcharges
rates times the second tier payroll . For 2012-2013 the Normal Cost and Surcharges percentage savings i s
(17.245%+2 .735%) - (14 .215%+1 .356%) = 4.409%.The ultimate employer annual dollar savings is abou t
4.4%of the second tier fiscal year payroll.
The Risk Pool's Payment on Amortization Bases is a temporary adjustment to the pool's contribution to "get the poo l
back on schedule". This temporary adjustment varies in amount and duration from pool to pool .
As of June 30, 2010 Existing Plan New Second Tier Plan
3% @ 50 w/ 1-Yea r
FAC
2% @ 50 w/ 3-Year FAC fo r
newly hired member s
2012-2013 Employer Contribution Rate :
Risk Pool's Net Employer Normal Cost 17 .245%14 .215 %
Risk Pool's Payment on Amortization Bases 6 .436%4 .989%
One-Year Final Compensation 1 .025%0 .000%
PRSA 50%1 .710%1 .356%
Phase out of Normal Cost Difference 0.051%0 .000%
Amortization of Side Fund 13 .443%0.000%
Total Employer Contribution Rate 39 .910%20 .560 %
2012-2013 Employee Contribution Rate 9 .000%9 .000%
California Public Employees'Retirement Syste m
www .calpers .ca .gov PH1-1 3
ATTACHMENT 2
SAFETY PLAN OF THE CITY OF SAN LUIS OBISPO (Police Employees Only) (CALPERS ID : 7574628515)
June 201 2
Page 2
To initiate an amendment to the contract, please follow the Contract Amendment Report process on MyCaIPER S
with our Retirement Contract Services Unit, indicating your wish to contract for Section 20475 (Different Level o f
Benefits) and identifying the group(s) to which the benefit reduction applies .
The information is based on the June 30, 2010 annual valuation and is good until June 30, 2013 . Note, however,
that your rate after June 30, 2013 could change substantially .If your agency has not taken action to amend it s
contract by June 30, 2013, you must contact the Retirement Contract Services Unit for an updated cos t
analysis .
In sections 20463 (b) and (c), the California Public Employees' Retirement Law requires the governing body of a
public agency within five days of receipt of the contract amendment cost analysis, to provide each employe e
organization with a copy of the analysis . If this cost analysis was requested by an employee organization,th e
employee organization is also required within five days of receipt of the analysis, to provide a copy of the analysis to
the public agency.
The June 30, 2010 Section 2 Risk Pool actuarial valuation report applicable to your new second tier plan can b e
viewed on the following website :
htto : //www.caloers.ca .aov/index.iso?bc=/emaloyer/actuaria I-oasb(risk-000lino/valuation-reports . xm l
If you have questions, please call (888) CaIPERS (225-7377).
1)04
BARBARA J . WARE, FSA,MW
Enrolled Actuar y
Senior Pension Actuary, CaIPERS
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ATTACHMENT 3
California Public Employees' Retirement Syste m
Actuarial Office
P .O. Box 94270 9
Sacramento, CA 95812-149 4
TTY : (877) 249-744 2
(888) 225-7377 phone • (916) 795-2744 fa x
www.calpers .ca .gov
December 30, 201 1
CALPERS ID : 757462851 5
Employer Name : CITY OF SAN LUIS OBISP O
Rate Plan : MISCELLANEOUS PLA N
Re : Section 20475 : Different Level of Benefits Provided for New Employees : Section 21353 (2% @ 60 Full Formula )
and Section 20037 (Three-Year Final Compensation )
Dear Requestor :
As requested, employer contribution rate information on your proposed second tier follows .
If you are aware of others interested in this information (i .e . payroll staff, county court employees,
port districts, etc .), please inform them .
The information is based on the most recent annual valuation and is good until the completion of the next annua l
valuation, that is, the annual valuation as of June 30, 2011 . If your agency has not taken action to amend its
contract and we have already completed the June 30, 2011 annual valuation report, you must contact th e
Retirement Contract Services Unit for an updated cost analysis .
If the employee contribution rate changes, that change would take place immediately .There will be no
immediate employer contribution rate impact from this amendment . Ultimately, though, your employer normal cos t
will decrease .If the mix of active member entry ages were the same for both the current continuing first tie r
employees and the new second tier employees, the decrease in the employer rate would be 4 .3% and the decrease
in the employee contribution rate would be 1"/o .
The employer rate reduction will occur gradually, beginning on July 1, 2014, if there are second tier employees hire d
on or before June 30, 2012. For fiscal years 2014/2015 and beyond, the projected annual amount of rate reductio n
you can expect from introducing a second tier is approximately equal to the ratio of your second tier annual payrol l
to your total plan annual payroll two and a half years earlier . For example if 1/10 of your Miscellaneous Pla n
members were in second tier on June 30, 2012 and the ultimate expected normal cost decrease was 4 .3%, th e
cumulative rate reduction you can expect by the 2014/2015 fiscal year would be 1/10 x 4 .3% = 0 .43%.
To initiate an amendment to the contract, please follow the Contract Amendment Request process on MyCaIPER S
with our Retirement Contract Services Unit, indicating your wish to contract for Section 20475 (Different Level o f
Benefits) and identifying the group(s) to which the benefit reduction applies .
In sections 20463 (b) and (c), the California Public Employees' Retirement Law requires the governing body of a
public agency within five days of receipt of the contract amendment cost analysis, to provide each employe e
organization with a copy of the analysis .If this cost analysis was requested by an employee organization, th e
employee organization is also required within five days of receipt of the analysis, to provide a copy of the analysis t o
the public agency.
If you have questions, please call (888) CaIPERS (225-7377).
BARBARA J . WARE, FSA,M W
Enrolled Actuary
Senior Pension Actuary, CaIPER S
California Public Employee's Retirement Syste m
www .calpers .ca .gov PH1-1 5
4.
Ca1PERS
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