HomeMy WebLinkAbout11-07-2012 ph1 resoofint-pers 2nd tier poliece_mis urgency ord 1 streadcounci ll acenba Repor t
C I T Y O F S A N L U I S O B I S P O
FROM :
Monica Irons, Human Resources Directo r
Prepared By :Greg Zocher, Human Resources Manage r
SUBJECT :RESOLUTION OF INTENTION AND AN URGENCY ORDINANC E
AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN TH E
CITY OF SAN LUIS OBISPO AND THE BOARD OF ADMINISTRATION O F
THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM T O
PROVIDE SECTION 20475 (DIFFERENT LEVEL OF BENEFITS), SECTIO N
21362 (2% @ 50 FULL FORMULA) AND SECTION 20037 (THREE-YEA R
FINAL COMPENSATION) FOR LOCAL POLICE SAFETY MEMBERS AND T O
PROVIDE SECTION 20475 (DIFFERENT LEVEL OF BENEFITS), SECTIO N
21353 (2% @ 60 FULL FORMULA) AND SECTION 20037 (THREE-YEA R
FINAL COMPENSATION) FOR MISCELLANEOUS MEMBERS .
RECOMMENDATIO N
1.Adopt a resolution of intention approving an amendment to the contract between the Boar d
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of Administration of the California Public Employees' Retirement System (CaIPERS) an d
the City Council of the City of San Luis Obispo ; and
2.Introduce by title only an Urgency Ordinance authorizing an amendment to the contrac t
between the City Council of the City of San Luis Obispo and the Board of Administration o f
the California Public Employees' Retirement System, and authorize staff to bring back th e
Urgency Ordinance for adoption to become effective immediately on December 4, 2012 .
DISCUSSION
Backgroun d
Following adoption of the 2011-13 Financial Plan in June 2011, Council adopted labor relation s
objectives including pension reform . The City has one contract with Ca1PERS that is broken int o
three groups : Miscellaneous Members (approximately 254 employees), Police Safety
(approximately 59 employees) and Fire Safety (approximately 44 employees). The City of San Lui s
Obispo completed the contract amendment for a second tier retirement formula for Fire Safet y
employees on August 30, 2012 . On October 16, 2012 City Council approved the 2012-201 5
Memorandum of Agreement (MOA) with the San Luis Obispo Police Officers' Association . Sinc e
agreements have been reached with all affected employee groups, CalPERS will allow the City t o
amend the contract for Miscellaneous Members and Police Safety Members hired after the effectiv e
date of the amended contract . The agreed contract amendment for the second tier would provide th e
2% @ 50 retirement formula to Police Safety employees and calculate final compensation on a n
average of the three highest years and the 2% @ 60 retirement formula to Miscellaneous member s
and calculate final compensation on an average of the three highest years . Existing Police Safet y
employees would remain under the established 3% @ 50 single highest year retirement formula an d
Meeting Date
11/07/201 2
emNumber PHI
PHI-1
Resolution of Intention –Police Safety and Miscellaneous Second Tier Retirement Page 2
•existing Miscellaneous employees would remain under the 2 .7% @ 55 single highest yea r
retirement formula .
The new proposed 2% @ 50 retirement benefit for Police Safety provides a monthly retiremen t
allowance that is determined by a formula and takes into consideration an employee's age a t
retirement, years of service credit and final compensation . The new basic benefit provides for 2
percent service credit for each year of service upon retirement at age 50 and compensation is base d
on the average monthly pay rate for thirty-six consecutive months of employment . The percentag e
increases incrementally from 2% @ age 50 to a maximum percentage of 2 .7% at age 55 or older .
The new proposed 2% @ 60 retirement benefit for Miscellaneous employees provides a monthl y
retirement allowance that is determined by a similar formula and takes into consideration an
employee's age at retirement, years of service credit and final compensation . The new basic benefi t
provides for 2 percent service credit for each year of service upon retirement at age 60 an d
compensation is based on the average monthly pay rate for thirty-six consecutive months o f
employment . The percentage increases incrementally from 2% @ age 60 to a maximum percentag e
of 2 .418% at age 63 or older . If retirement is earlier than age 60, the percentage of fina l
compensation decreases proportionally .
In September 2012, Governor Brown signed into law AB 340, which eliminates existing second tie r
retirement formula options after December 31, 2012 . Because the City's negotiated agreement s
provide for implementation of currently existing tiers, failure to amend the contract with Ca1PER S
prior to December 31, 2012 would result in a breach of contracts with employee groups . The only
way to meet contractual obligations with our employee groups, comply with AB 340, and achiev e
the savings associated with the adoption of the second tier within PERS timelines is to pas s
emergency legislation (an urgency ordinance), as authorized by Charter Section 605, allowing th e
City to meet the December 31, 2012 deadline . Normally, an urgency ordinance would be introduce d
and adopted at the same meeting, if passed by at least four affirmative votes, and would becom e
effective immediately upon adoption . However, in this case, PERS process requires the City t o
submit a copy of the ordinance introduced to PERS, along with the Resolution of Intention, prior t o
proceeding to final adoption of the ordinance . PERS regulations require that final adoption of th e
ordinance may proceed no earlier than 20 days after the adoption of the Resolution of Intention .
Thus, Council is being asked to introduce the urgency ordinance at the same time it adopts th e
Resolution of Intention ; the ordinance will then be returned to Council at its regular meeting o f
December 4, 2012 for adoption, to become effective immediately upon its adoption . Th e
Resolution and Ordinance attached to this agenda report provide the mechanism for the City t o
implement this new second tier retirement plan for Police Safety Employees and Miscellaneou s
Employees pursuant to CaIPERS guidelines .
A Resolution of Intention (Attachment 1) prepared by Ca1PERS and an Urgency Ordinance, whic h
amends the contract between Ca1PERS and the City (Attachment 2 & Exhibit) addresses the benefi t
changes . Government Code Section 7507 requires the future costs of changes in retirement benefit s
as determined by an actuary, shall be made public at a public meeting at least two weeks prior to th e
adoption of any changes in public retirement plan benefits . The City requested and received a
contract amendment cost analysis, conducted by the Ca1PERS Actuarial and Employer Service s
Division on this plan amendment (Attachments 3 and 4).
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PH1-2
Resolution of Intention —Police Safety and Miscellaneous Second Tier Retirement Page 3
FISCAL IMPAC T
According to Ca1PERS, the employer contribution rate will be 20 .560% of reportable earnings fo r
police safety members entering membership for the first time in the police safety classification s
after the effective date of this amendment to contract . This is a reduction from the current first tie r
rate of 39 .910% for police safety employees . Actuarial analysis estimates retirement costs will b e
reduced by approximately $404,000 in about ten years . There will be no change to the membe r
contribution rate of nine percent, paid by employees .
According to Ca1PERS, as Miscellaneous employees are hired into the Second Tier, the City wil l
see a reduction in its employer contribution rate from the current first tier rate of 23 .154% fo r
Miscellaneous employees . Actuarial analysis estimates retirement costs will be reduced b y
approximately $684,000 in about ten years . The member contribution rate for the lower
Miscellaneous second tier will be seven percent .
ALTERNATIVES
Do not approve the resolution and ordinance .This alternative is not recommended since this chang e
was approved as part of the 2012-2015 San Luis Obispo Police Officers' Association and the 2012 -
2014 San Luis Obispo City Employee's Association Memorandum of Agreement . Failure to pass thi s
resolution and ordinance would place the City in violation of its agreement with employee groups an d
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would not result in savings as described above .
ATTACHMENT S
1.Resolution of Intention and Exhibi t
2.Urgency Ordinance amending contract with CalPER S
2 .1 Urgency Ordinance amending contract with Ca1PERS Exhibi t
3.Ca1PERS Actuarial Analysis Polic e
4.Ca1PERS Actuarial Analysis Miscellaneou s
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urt \council agenda reports \201212012-11-0Neso of intention -pars 2ntl Ea pdice-urt,7eq ortl (irons-zocher)\police 2% @ @ 50 and rrusc 2°/a @ 00 second tiers ecountll agenda
PH1-3
ATTACHMENT 1
RESOLUTION OF INTENTIO N
TO APPROVE AN AMENDMENT TO CONTRAC T
BETWEEN TH E
BOARD OF ADMINISTRATIO N
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTE M
AND TH E
CITY COUNCI L
CITY OF SAN LUIS OBISP O
WHEREAS, the Public Employees' Retirement Law permits the participation of publi c
agencies and their employees in the Public Employees' Retirement Syste m
by the execution of a contract, and sets forth the procedure by which sai d
public agencies may elect to subject themselves and their employees t o
amendments to said Law ; and
WHEREAS, one of the steps in the procedures to amend this contract is the adoption b y
the governing body of the public agency of a resolution giving notice of it s
intention to approve an amendment to said contract, which resolution shal l
contain a summary of the change proposed in said contract ; an d
WHEREAS, the following is a statement of the proposed change :
To provide Section 20475 (Different Level of Benefits). Section 21353 (2 %
@ 60 Full formula) and Section 20037 (Three-Year Final Compensation )
are applicable to local miscellaneous members entering membership fo r
the first time in the miscellaneous classification after the effective date o f
this amendment to contract, an d
Section 20475 (Different Level of Benefits). Section 21362 (2% @ 50 Ful l
formula) and Section 20037 (Three-Year Final Compensation) ar e
applicable to local police members entering membership for the first time i n
the police classification after the effective date of this amendment t o
contract .
NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agenc y
does hereby give notice of intention to approve an amendment to th e
contract between said public agency and the Board of Administration of th e
Public Employees' Retirement System, a copy of said amendment bein g
attached hereto, as an "Exhibit" and by this reference made a part hereof .
By :
Presiding Office r
Titl e
Date adopted and approve d
(Amendment)CON-302 (Rev. 4/96)
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PH1-4
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ATTACHMENT 1
A
Ca1PERS EXHIBI T
California
Public Employees' Retirement Syste m
AMENDMENT TO CONTRAC T
Between th e
Board of Administratio n
California Public Employees' Retirement Syste m
and the
City Counci l
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 r
3, 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 r
participation of Public Agency in said System, Board and Public Agency hereby agre e
as follows :
A . Paragraphs 1 through 15 are hereby stricken from said contract as execute deffective August 30, 2012, and hereby replaced by the following paragraph s
numbered 1 through 17 inclusive :
PH1-5
ATTACHMENT 1
1.All words and terms used herein which are defined in the Publi c
Employees' Retirement Law shall have the meaning as defined therei n
unless 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 this
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 l
police 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 fee s
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 s
that are different than the retirement benefits, provisions o r
formulas provided under this Contract and provided for unde r
the California Public Employees' Retirement Law .
PH1-6
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ATTACHMENT 1
(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 and/or Public Agency's election to reject thi s
Contract with the CaIPERS Board of Administration pursuant t o
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 )
(g )
-PH1-7
ATTACHMENT 1
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 h
Section 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 0
Full).
9.The percentage of final compensation to be provided for each year o f
credited prior and current service as a local fire member entering
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 t
shall be determined in accordance with Section 21362 .2 of sai d
Retirement Law (3% at age 50 Full).
10.The percentage of final compensation to be provided for each year o f
credited 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 n
21362 of said Retirement Law (2% at age 50 Full).
12.Public Agency elected and elects to be subject to the following optiona l
provisions :
a.Section 21573 (Third Level of 1959 Survivor Benefits) for local fir e
members only .
b.Section 21574 (Fourth Level of 1959 Survivor Benefits) for loca l
miscellaneous members and local police members only .
PH1-8
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ATTACHMENT 1
c.Sections 21624, 21626 and 21628 (Post-Retirement Survivo r
Allowance) 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 members
entering membership on or prior to the effective date of thi s
amendment to contract .
f.Section 20903 (Two Years Additional Service Credit) for loca l
miscellaneous 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 entering
membership for the first time in the fire classification after Augus t
30, 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 s
amendment to contract .
Section 21362 (2% @ 50 Full formula) and Section 20037 (Three -
Year Final Compensation) are applicable to local police members
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 nJune 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 .
PH1-9-
ATTACHMENT 1
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 195 9
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 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 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 o f
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 special
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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PH1-10
ATTACHMENT 1
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17 . Contributions required of Public Agency and its employees shall be paid
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 o f
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 o f
BOARD OF ADMINISTRATION CITY COUNCI L
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF SAN LUIS OBISP O
BY BY
KAREN DE FRANK, CHIEF PRESIDING OFFICE R
CUSTOMER ACCOUNT SERVICES DIVISIO N
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Witness Date
Attest:
Clerk
AMENDMENT CaIPERS ID #757462851 5
PERS-CON-702A
PHI-11
ATTACHMENT 2
ORDINANCE NO . (2012 Series)
AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUI S
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 Safet y
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 Ca1PERS ; and
WHEREAS,the City is amending its contract with Ca1PERS to provide for the 2%@
60 Retirement Formula and three year average final compensation for its Miscellaneou s
employees hired after this contract amendment with Ca1PERS ; 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 formulas
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 ; an d
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 ; and
WHEREAS,in order for the City to amend its contract with CalPERS 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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PH1-12
Ordinance No . (2012 Series)
ATTACHMENT 2
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 7 th day o f
November, 2012,AND FINALLY ADOPTED by the Council of the City of San Luis Obisp o
on the 4th day of December 2012, on the following vote :
AYES :
NOES :
ABSENT :
Mayor Jan Mar x
ATTEST :
Maeve Kennedy Grimes
City Clerk
PH1-1 3
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Ordinance No . (2012 Series)
ATTACHMENT 2
Page 3
APPROVED AS TO FORM :
J . Christine Dietric k
City Attorney
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PH1-14
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ATTACHMENT 2 .1
A LCal PERS EXHIBI T
Californi a
Public Employees' Retirement Syste m
AMENDMENT TO CONTRAC T
Between th e
Board of Administratio n
California Public Employees' Retirement Syste m
and the
City Counci l
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 r
3, 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 r
participation of Public Agency in said System, Board and Public Agency hereby agre eas follows :
A . Paragraphs 1 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 :
PH1-15
ATTACHMENT 2 .1
1.All words and terms used herein which are defined in the Publi c
Employees' Retirement Law shall have the meaning as defined therei n
unless 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 this
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 l
police 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 fee s
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 s
that are different than the retirement benefits, provisions o r
formulas provided under this Contract and provided for unde r
the California Public Employees' Retirement Law .
PH1-16
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ATTACHMENT 2 .1
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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 and/or Public Agency's election to reject thi s
Contract with the CaIPERS Board of Administration pursuant t o
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 Law
(2% at age 55 Full).
PH1-1 7
(f)
(g )
ATTACHMENT 2 .1
7.The percentage of final compensation to be provided for each year of
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 h
Section 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 0
Full).
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 t
shall be determined in accordance with Section 21362 .2 of said
Retirement Law (3% at age 50 Full).
10.The percentage of final compensation to be provided for each year o f
credited 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 Law
(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 for
the first time in the police classification after the effective date of thi s
amendment to contract shall be determined in accordance with Sectio n
21362 of said Retirement Law (2% at age 50 Full).
12.Public Agency elected and elects to be subject to the following optiona l
provisions :
a.Section 21573 (Third Level of 1959 Survivor Benefits) for local fir e
members only .
b.Section 21574 (Fourth Level of 1959 Survivor Benefits) for loca l
miscellaneous members and local police members only .
PH1-18
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ATTACHMENT 2 .1
c.Sections 21624, 21626 and 21628 (Post-Retirement Survivo r
Allowance) 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 s
amendment to contract .
f.Section 20903 (Two Years Additional Service Credit) for loca l
miscellaneous 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 t
30, 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 s
amendment 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 nJune 1, 1976 . Accumulated contributions of Public Agency shall be fixed
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 .
-PH1-19
ATTACHMENT 2 .1
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 195 9
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 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 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 o f
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 o f
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 .
PH 1-20
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ATTACHMENT 2 .1
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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 o f
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
BOARD OF ADMINISTRATION CITY COUNCI L
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF SAN LUIS OBISP O
BY
KAREN DE FRANK, CHIE F
CUSTOMER ACCOUNT SERVICES DIVISIO N
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Witness Dat e
Attest :
Clerk
BY
PRESIDING OFFICE R
AMENDMENT CaPPERS ID #757462851 5
PERS-CON-702A
PH1-21
California Public Employees' Retirement System ATTACHMENT 3
Actuarial Office
P .O Box 94270 9
Sacramento, CA 94229-270 9
TTY : (916) 795-324 0Ca1PERS(888) 225-7377 phone • (916) 795-2744 fa x
www .calpers .ca .go v
June 29, 201 2
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 Surcharge s
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 Pla n
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 PH1-22
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ATTACHMENT 3
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 fBenefits) 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 cost
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 t o
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 :
http : //www .cal pers . ca .gov/index . isp?bc=/em plover/actuaria I-gasb/risk-pool ina/valuation-reoorts .xmI
If you have questions, please call (888) CaIPERS (225-7377).
BARBARA J . WARE, FSA, MAA A
Enrolled Actuary
Senior Pension Actuary, CaIPERS
-PH1-2 3
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ATTACHMENT 4
California Public Employees' Retirement Syste m
Actuarial Offic e
P .O . Box 94270 9
Sacramento, CA 95812-149 4
TTY : (877) 249-744 2CaIPERS(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 PLAN
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 it s
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 n o
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 decreas e
in the employee contribution rate would be 1%.
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, MAA A
Enrolled Actuar y
Senior Pension Actuary, CaIPERS
California Public Employee's Retirement Syste m
www .calpers .ca .gov PH 1-24
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