HomeMy WebLinkAbout11/15/1994, C-7 - CONVERSION OF PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) EMPLOYER PAID MEMBER CONTRIBUTIONS TO COMPENSATION FOR THE FIRE BATTALION CHIEFS' ASSOCIATION AND IMPLEMENTING PROVISIONS OF SECTION 414(B)(2) OF THE INTERNAL REVENUE CODE 4Q1$j$P_11j111 city of San LUIS OBISPO ME117 55
COUNCIL AGENDA REPORT fTE1MlNUMBER: 6
7
FROM: Wendy George, Personnel Analyst
Ken Hampian, Assistant City Administrator
SUBJECT: Conversion of Public Employees' Retirement System (PERS) Employer
Paid Member Contributions to compensation for the Fire Battalion Chiefs'
Association and implementing provisions of Section 414(b)(2) of the
Internal Revenue Code
CAO RECOMMENDATION:
Adopt resolution approving the conversion of PERS Employer Paid
Member Contribution to compensation for the Fire Battalion Chiefs'
Association pursuant to Section 414(b)(2) of the Internal Revenue Code
DISCUSSION:
The City currently pays the employee's contribution to PERS for all its employees, as well as
making it own employer's contribution. The recently approved Memorandum of Agreement
with the Fire Battalion Chiefs'Association included an agreement to convert the PERS Employer
Paid Member Contributions to compensation. The employees will then have their own
contribution deducted from each paycheck on a pre-tax basis as allowed by the Internal Revenue
Code, Section 414(h)(2).
This practice will have the effect of increasing final compensation for the purpose of calculating
retirement and is allowed by PERS upon the passage of a resolution by Council. Since final
compensation is one of the three factors used to calculate an employees' retirement, this change
will result in slightly higher retirement amounts for members of the Association.
FISCAL IMPACT:
Funds for this increased cost were approved when the 1994-96 Memorandum of Agreement with
the Fire Battalion Chiefs was approved and, thus, are a component of their total two-year
negotiated package.
ALTERNATIVES:
Since this change was approved as part of the 1994-96 Memorandum of Agreement with the Fire
Battalion Chiefs, failure to pass this resolution would place the City in breech of contract with
the Association.
Attachment: Resolution
RESOLUTION NO. (1994 SERIFS)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
IMPLEMENTING THE PROVISIONS OF SECTION 414(b)(2) OF THE INTERNAL
REVENUE CODE RELATIVE TO THE PUBLIC EMPLOYEES' RETIREMENT
SYSTEM (PERS) CONTRIBUTIONS OF THE FIRE BATTALION CHIEFS'
ASSOCIATION
WHEREAS, the City of San Luis Obispo has the authority to implement the provisions
of Section 414(h)(2) of the Internal Revenue Code; and
WHEREAS, the Board of Administration of the Public Employees' Retirement System
adopted its resolution regarding Section 414(h)(2) IRC in September, 1985; and
WHEREAS, the Internal Revenue Service has stated on December 6, 1985, that the
implementation of the provisions of Section 414(h)(2) IRC pursuant to the Resolution of the
Board of Administration would satisfy the legal requirements of Section 414(h)(2) IRC; and
WHEREAS, The City of San Luis Obispo has determined that even though the
implementation of the provisions of Section 414(h)(2)IRC is not required by law, the tax benefit
offered by Section 414(h)(2) IRC should be provided to members of the Fire Battalion Chiefs'
Association;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
Section 1. The City of San Luis Obispo will implement the provisions of Section
414(h)(2) Internal Revenue Code by making employee contributions pursuant to California
Government Code Section 20615 to PERS on behalf of the members of the Fire Battalion Chiefs'
Association. 'Employee contributions" shall mean those contributions to PERS which are
deducted from the salary of employees and credited to individual employees' accounts pursuant
a
a
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Resolution No. (1994 Series)
Page 2
to California Government Code Section 20615.
Section 2. The contributions made by the City of San Luis Obispo to PERS although
designated as employee contributions are being paid by the City of San Luis Obispo in lieu of
contributions by the members of the Fire Battalion Chiefs' Association.
Section 3. Employees will not have the option of choosing to receive the contributed
amounts directly instead of having them paid by the City of San Luis Obispo to PERS.
Section 4. The City of San Luis Obispo shall pay to PERS the contributions designated
as employee contributions from the same source of funds as used in paying salary.
Section 5. The amount of the contributions designated as employee contributions and
paid by the City of San Luis Obispo to PERS on behalf of the members of the Fire Battalion
Chiefs' Association shall be the entire contribution required of the employee by the Public
Employee' Retirement Law (California Government Code Sections 20000, et seq.).
Section 6. The contributions designated as employee contributions made by the City of
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San Luis Obispo shall be treated for all purposes, other than taxation, in the same way that
member contributions are treated by PERS.
On motion of , seconded by ,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
67-3
Resolution.No. (1994 Series)
Page 3
the.foregoing Resolution was.passedand adopted this day of November; 1994.
MAYOR PEG PINARD
ATTEST:
DIANE GLADWELL,, CITY CLERK
APPROVED AS TO FORM:
JUFWWG-.. WGfSENnITY ATTORNEY
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