HomeMy WebLinkAbout07/02/1996, C-8 - CONVERSION OF PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) EMPLOYER PAID MEMBER CONTRIBUTIONS TO COMPENSATION FOR THE POLICE STAFF OFFICERS' ASSOCIATION AND IMPLEMENTING PROVISIONS OF SECTION 414(B)(2) OF THE INTERNAL REVENUE CODE council 07/02/96
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C I T Y OF SAN LUIS O B I S P O
FROM: Ann Slate, Personnel Director
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SUBJECT: Conversion of Public Employees'Retirement System(PERS)Employer
Paid Member Contributions to compensation for the Police Staff
Officers' 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 San Luis Obispo Police
Staff Officers' Association (SLOPSOA) 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 except the
Fire Battalion Chiefs, as well as making its own employer's contribution. The City agreed in
the 1994-96 Memorandum of Agreement with the Police Staff Officers' Association to convert
the PERS Employer Paid Member Contributions to compensation effective July 1, 1996. 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
SLOPSOA was approved and, thus, are a component of their total two-year negotiated package.
They have been included in the current two year financial plan.-
ALTERNATIVES
lan:ALTERNATIVES
Since this change was approved as part of the 1994-96 Memorandum of Agreement with
SLOPSOA, failure to pass this resolution would place the City in violation of the contract with
the Association.
Attachments Resolution
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RESOLUTION NO. (1996 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 POLICE STAFF OFFICERS'
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) LRC pursuant to the Resolution of the
Board of Administration would satisfy the legal requirements of Section 414(h)(2) LRC; 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 Police Staff Officers'
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 Police Staff Officers'
Association. "Employee contributions" shall mean those contributions to PERS which are
deducted from the salary of employees and credited to individual employees' accounts pursuant
to California Government Code Section 20615.
Resolution No. (1996 Series)
Page 2
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 Police Staff Officers' 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 Police Staff
Officers' Association shall be the entire contribution required of the employee by the Public
Employees' Retirement Law (California Government Code Sections 20000, et seq.).
Section 6. The contributions designated as employee contributions made by the City of
San Luis Obispo shall be treated for alI 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:
Resolution No. (1996 Series)
Page 3
the foregoing Resolution was passed and adopted this day of July, 1996.
MAYOR ALLEN SETTLE
ATTEST:
KIM CONDON, ACTING CITY CLERK
APPROVED AS TO FORM:
Y IiO S , CITY ATTORNEY