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HomeMy WebLinkAbout09/20/2005, PH1 - RESOLUTION OF INTENTION AND INTRODUCTION OF ORDINANCE TO IMPLEMENT RETIREMENT AMENDMENTS AND PRE-RE i council acEnda Repoizt -N- CITY OF SAN LUIS OBISPO FROM: Monica Irons, Director of Human Resources Prepared By: Karen Jenny, Risk Manager SUBJECT: RESOLUTION OF INTENTION AND INTRODUCTION OF ORDINANCE TO IMPLEMENT RETIREMENT AMENDMENTS AND PRE-RETIREMENT OPTIONAL SETTLEMENT 2 DEATH BENEFIT FOR FIRE SAFETY EMPLOYEES CAO RECOMMENDATION Adopt a resolution of intention and introduce an ordinance to print approving an amendment to the contract between the Board of Administration of PERS and the City of San Luis Obispo to provide retirement benefits and Pre-Retirement Optional Settlement 2 Death Benefit for fire safety employees, as negotiated and agreed upon in July 2001. DISCUSSION The 2000-2005 Memorandum of Agreement (MOA) with the San Luis Obispo City Fire Fighters, Local 3523, which was adopted by the Council on July 17, 2001, included a provision to amend the City's contract with the California Public Employees' Retirement System (PERS) to provide the 3% at 50 retirement formula and one=year final compensation to be effective at the end of the four and one-half year contract,. to be effective by December 31, 2005. This program was negotiated "pre-9/11" when PERS estimated that sufficient assets existed to avoid added employer contribution to supportthe program. PERS investment losses "post 9/11"changed this projection and costs are outlined under the Fiscal Impact section of this report. The Pre-Retirement Optional Settlement 2 Death Benefit was approved for miscellaneous employees and Police Safety employees effective July 14, 2005, and the Fire Union was notified of the intent to provide this benefit to Fire Safety employees concurrent with the other retirement benefit changes. Government Code Section 21362.2 allows a contracting agency to provide retirement benefits for fire safety employees based on 3% of salary at age 50 for each year of service. This benefit level was previously negotiated by the San Luis Obispo Police Officers' Association for police safety members and is the standard benefit level for safety employees throughout California. Government Code Section 20042 allows the period for determining the average monthly pay rate when calculating retirement benefits to be the twelve highest paid consecutive months, rather than 36 months. Since one of the factors in determining the amount of an employee's pension is based on salary prior to retirement, this provides a higher level of benefit to the employee at retirement. Fire safety employees hired prior to July 1, 1986, all miscellaneous employees, and ��I I Council Agenda Report=Retirement Benefit Changes for Fire Safety Employees Page 2__ . all police safety employees also have the "single-highest year"benefit. This change to include all fire safety employees was also negotiated as part of the 2000-2005 MOA with the Fire Union. Using the highest twelve months' compensation as the basis for retirement benefits is the standard among PERS agencies. Government Code Section 21548 allows a contracting agency to provide the Pre-Retirement Optional Settlement 2 Death Benefit for employees. This change will allow the spouse of a deceased employee, who was eligible to retire from service at the time of death (i.e., age 50 and at least five years of service), to select a monthly retreinent allowance instead of the lump sum death benefits currently payable. Government Code Section 7507 requires that the annual costs for the change in benefits of the proposed contract amendment be made public at a public meeting,at least two weeks prior to the adoption of the final ordinance. The City Clerk will certify compliance on a form provided by PERS. FISCAL IMPACT PERS recommends the disclosure of the cost to the City's safety plan for this amendment as follows: 1) Change in the Present Value of Benefits $2,207,142 2) Change in the Accrued Liability $1,834,393 3) Change in the Total Employer Rate 3.359% The increase of 3.359% of payroll for the City's safety plan will result in an annual cost increase of$276,100. Although these changes will be implemented.only for fire safety personnel at this time, police and fire employees participate in a combined safety retirement plan. The change to the employer rate will apply to both police and fire payrolls. These costs have been incorporated into the 2005-07 financial plan. ALTERNATIVES Since this change was approved as part of the 2000-2005 MOA with the Fire Union, no alternatives are presented at this time. ATTACBMENTS 1. Resolution of Intention 2. Ordinance k GAAgenda ReportsTFA PERS Amendments.Doc RESOLUTION NO. (2005 Series) RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL CITY OF SAN LUIS OBISPO WHEREAS, the Public Employees' Retirement Law permits the participation of public agencies and their employees in the Public Employees' Retirement System by the execution of a contract, and sets -forth the procedure by which said public agencies may elect to subject themselves and their employees to amendments to said Law; and - WHEREAS, one of the steps in the procedures to amend this contract it the adoption by the governing body of the public agency of a resolution giving notice of its intention to approve an amendment to said contract, Which. resolution shall contain a summary of the change proposed in said contract; and WHEREAS, the following is a statement of the proposed change: To provide Section, 21362.2 (3% @ 50 Full formula); Section 20042 (One-Year Final Compensation) and Section 21548 (Pre-Retirement Optional Settlement 2 Death Benefit) for local fire members. NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency does hereby give notice of intention to approve an amendment to the contract between said public agency and the Board of Administration, of the Public Employees' Retirement I rement System, A copy of said amendment being attached hereto, As an "Exhibit" and by this reference made a part hereof. Upon motion of seconded by and on t-he follo' wAn g- roll call vote: AYES: NOES: ABSENT: (Amendment) CON-302(Rev.4/96) 1 �3 Resolution No (2005 Series) Page 2 The foregoing resolution was adopted this day of -, 2005. Mayor David F. Romero ATTEST: Audrey Hooper City Clerk APPROVED AS TO FORM: J an P. Lowell City Attomey j Ca EXHIBIT California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Administration California Public Employees' Retirement System and the City Council City of San Luis Obispo 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; October 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 and July 14, 2005 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1. through 14 are hereby stricken from said contract as executed effective July 14, 2005, and hereby replaced by the following paragraphs numbered 1 through 13 inclusive. 1. All "words and terms used herein which are defined in the Public Employees' Retirement Law shall have the meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 55 for local miscellaneous members and age 50 for local safety members. J -5 PLEASE DO NOT SIGN "EXIH[bi i Us` 11 2. Public Agency shall participate in the Public Employees' Retirement System from and after July 1., 1952 making its employees as hereinafter provided, members of said System subject to all provisions of the Public Employees' Retirement Law except such as apply only on election of a contracting agency and are not provided for herein and to all amendments to said Law hereafter enacted except those, WHO by express provisions thereof, apply only on the election of a contracting agency. 3. Employees of Public Agency in the following classes shall become members of said Retirement System except such in each such class as 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 as local miscellaneous members). 4. In addition to the classes of employees excluded from membership by said Retirement Law, the following classes of employees shall not become members of said Retirement System: a. CROSSING GUARDS. 5. The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member in employment before and not on or after January 30, 2003 shall be determined in accordance with Section 21354 of said Retirement Law (2% at age 55 Full). 6. The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member in employment on or after January 30, 2003 shall be determined in accordance with Section 21354.5 of said Retirement Law (2.7% at age 55 Full). 7 The percentage of final compensation to be provided for each year of credited prior and current service as a local safety member shall be determinedin accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). 8. Public Agency elected and elects to be subject to the following optional provisions: a: Section 21573 (Third Level of 1959 Survivor Benefits) for local fire members only. l- � P' SASE DO NOT SIGN `'EMI: b. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local miscellaneous members and local police members only. C. Sections 21624, 21626 and 21628 (Post-Retirement Survivor Allowance) for local safety members only. d. Section 20965 (Credit for Unused Sick Leave). e. Section 20042 (One-Year Final Compensation). f. Section 20903 (Two Years Additional Service Credit) for local miscellaneous members only. g. Section 21024 (Military Service Credit as Public Service). h. Section 21548 (Pre-Retirement Optional Settlement 2 Death Benefit). 9. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on June 1, 1976. Accumulated contributions of Public Agency shall be fixed and determined as provided in Government Code Section 20834, and accumulated contributions thereafter shall be held by the Board as provided in Government Code Section 20834. 10. Public Agency shall contribute to said Retirement System the contributions determined by actuarial valuations of prior and future service liability with .respect to local miscellaneous members and local safety members of said Retirement System. 11. 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 Retirement 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 all local fire members. b. Contributions requiredper covered member on account of the 1959 Survivor Benefits provided under Section 21574 of said Retirement 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 all local police members and local miscellaneous members. 1 '� I C. A reasonable amount, as fixed by the Board_, payable in one installment within 60 days of date of contract to cover the costs of administering said System as it affects the employees of Public Agency, not including the costs of special valuations or of the periodic investigation and valuations required by law. d. A reasonable amount, as fixed by the Board, payable in one installment as the occasions arise, tocover the costs of special valuations on account of employees of Public Agency, and costs of the periodic investigation and valuations required by law. 12. Contributions required of Public Agency and its employees shall be subject to adjustment by Board on account of amendments to the Public Employees' Retirement Law, and on account of the experience under the Retirement System as determined by the periodic investigation and valuation required by said Retirement Law. 13. Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System within fifteen days after the end of the period to which said contributions refer or as may be prescribed by 'Board regulation. If more or less than the correct amount of contributions is paid for any period, proper adjustment shall be made in connection with subsequent remittances. Adjustments on account of errors in contributions required of any employee may be made by direct payments between the employee and the Board. B. This amendment shall be effedtive on the day of BOARD OF ADMINISTRATIOCITY COUNCIL PUBLIC EMPLOYEES' REENT SYSTEM CITY OF SAN LUIS OBISPO t� `tX BY __. �C, BY , LORI MCGARTLA W , ACTING CHIEF PRESIDING OFFICW ACTUARIAL & ,*LOYER.SERVICES BRANCH YEES' RETIREMENT SYSTEM PUBLIC E Mf � Witness�D to Attest. Clerk AMENDMENT ER#0319 PERS-CON-702A(Rev.8105) _J I � S ORDINANCE NO. (2005 Series) AN ORDINANCE OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM WHEREAS, the Public Employees' Retirement Law permits the participation of public agencies and their employees in the Public Employees' Retirement System by the execution of a contract, and sets forth the procedure by which said public agencies may elect to subject themselves and their employees to amendments to said Law;and WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the governing body of the public agency of an ordinance authorizing the amendment and directing the Mayor to execute said amendment. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. That an amendment to the contract between the Council of the City of San Luis Obispo and the Board of Administration, California Public Employees' Retirement 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 is hereby authorized, empowered and directed to execute said amendment for and on behalf of the City of San Luis Obispo. SECTION 3. A summary of this ordinance, approved by the City Attorney, together with the names of the Council members voting for and against it, shall be published at least five days prior to its final passage in the Tribune, a newspaper published and circulated in this City. This ordinance will go into effect at the expiration of thirty (30) days after its final passage. INTRODUCED on the day of 2005, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the day of 2005, on the following roll call vote:. AYES: NOES: ABSENT: I ' Ordinance No. (2005 Series) Page 2 Mayor David F.Romero ATTEST: Audrey Hooper- ----- --- — ---- - City Clerk APPROVED AS TO FORM: JAatht,di P: Lowell City Attorney Ie—IO Ga1PERS EXHIBIT California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Administration California Public Employees' Retirement System and the City Council City of San Luis Obispo 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, October 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 and July 14, 2005 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1. through 14 :are hereby stricken from said contract as executed effective July 14, 2005, and hereby replaced by the following paragraphs numbered 1 through 13 inclusive: 1. All words and terms used herein which are defined in the Public Employees' Retirement Law shall havethe meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 55 for local miscellaneous members and age 50 for local safety members. PLF4SE DO NOT SIGN " XNibi i 2. Public Agency shall participate in the Public Employees' Retirement. System from and after July 1, 1952 making its employees as hereinafter provided, members of said System subject to all provisions of the Public Employees' Retirement Law except such as apply only on election of a contracting agency and are not provided for herein and to.all amendments to said Law hereafter enacted except those, which by express provisions thereof, apply only on the election of a contracting agency. 3. Employees of Public Agency in the following classes shall become. members of said Retirement System except such in,each such class as 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 as local miscellaneous members). 4. In addition to the classes of employees excluded from membership by said Retirement Law, the following classes of employees shall not become members of said Retirement System: a. CROSSING GUARDS. 5. The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member in employment before and not on or after January 30, 2003 shall be determined in accordance with Section. 21354 of said Retirement Law (2% at age 55 Full). 6. The percentage of final compensation to be provided for each ,year of credited prior and current service as a local miscellaneous member in employment on or after January 30,, 2003 shall be determined in accordance with Section 21354.5 of said Retirement Law (2.7% at age 55 Full). 7. The percentage of final compensation to be provided for each year of credited. prior and current service as a local safety member shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). 8. Public Agency elected and elects .to be subject to the following optional provisions: a. Section 21573 (Third Level of 1959 Survivor Benefits) for local fire members only. P' rASE DO NOT SIGN " ; ►� '�:: _ b. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local miscellaneous members and:local police members only. C. Sections 21624, 21626 and 21628 (Post-Retirement Survivor Allowance) for local safety members only. d. Section 20965 (Credit for Unused Sick Leave). e. Section 20042 (One-Year Final Compensation). f. Section 20903 .(Two Years Additional Service Credit) for local miscellaneous members only. g. Section 21024 (Military Service Credit as Public Service). h. Section 21548 (Pre-Retirement Optional Settlement 2 Death Benefit). 9. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on June 1, 1976. Accumulated contributions of Public Agency shall be fixed and determined as provided in Government Code Section 20834, and accumulated contributions thereafter shall be held by the. Board as provided in Government.Code Section 20834. 10. Public Agency shall contribute to.said Retirement System thecontributions determined by actuarial valuations of prior and future service liability with respect to local miscellaneous members and local safety members of said Retirement System. 11. Public Agency shall also contribute to said Retirement System as follows: a. Contributions required per covered member on a..ccount of the 1959 Survivor Benefits provided under Section 21573 of said Retirement 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 all local fire members. b. Contributions required per covered member on account of the 1959 Survivor Benefits provided under Section 21574 of said Retirement 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 all local police members and local miscellaneous members. C. A reasonable amount-, as fixed by the Board, payable in one installment within 60 days of date of contract to cover the costs of administering said System as it affects the employees of Public Agency, not including the costs of special valuations or of the periodic investigation and valuations required by law. d. A reasonable amount, as fixed by the Board, payable in one 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. 12. Contributions required of Public Agency and its employees shall be subject to adjustment by Board on account of amendments to the Public Employees' Retirement Law, and on account of the experience under the Retirement System as determined by the periodic investigation and valuation required by said Retirement Law. 13. Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System within fifteen days after the end of the period to which said contributions refer or as may be prescribed by Board regulation. If more or less than the correct amount of contributions is paid for any period, proper adjustment shall be made in connection with subsequent remittances. Adjustments on account of errors in contributions required of any employee may be made by direct payments between the employee and the Board. B. This amendment shall be effective on the day of BOARD COUNCIL IC EMPLOYEES' RET 3%E ENT SYSTEM CITY OF SANLUIS OBISPO OB PUUBLJ BY BY , LORI MCGARTLAI�, ACTING CHIEF PRESIDING OFFICW ACTUARIAL & E PPLOYER SERVICES BRANCH PUBLIC EM,I &EES' RETIREMENT SYSTEM \ , a Witness, to Attest: Clerk AMENDMENT ER#0319 PERS-CONJUA(Rev.8105)