HomeMy WebLinkAbout09/07/1999, 3 - AMENDMENT OF CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) CONTRACT TO PROVIDE INCREASED SURVIVOR BENEFITS AND MILITARY SERVICE CREDIT AS PUBLIC SERVICE FOR POLICE SAFETY MEMBERS councit Mtn D=
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C I T Y OF SAN L U I S O B I S P O
FROM: Ann Slate, Director of Human Resources
Prepared By: Karen Jenny, Risk Manager
SUBJECT: AMENDMENT OF CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM(PERS) CONTRACT TO PROVIDE
INCREASED SURVIVOR BENEFITS AND MILITARY SERVICE
CREDIT AS PUBLIC SERVICE FOR POLICE SAFETY MEMBERS
CAO RECOMMENDATION
1. 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 the fourth level of the 1959 Survivor Benefits and military service credit as
public service for Police safety members.
2. Approve an agreement between the Board of Administration of PERS and the City of San
Luis Obispo to pool 1959 Survivor Benefits assets and liabilities.
DISCUSSION
The 1998-2000 Memorandum of Agreement with the San Luis Obispo Police Officers'
Association (SLOPOA), which was adopted by the Council on June 1; 1999, included provisions
to amend the City's contract with PERS to provide the fourth level of 1959 Survivor Benefits
and to allow military service to be considered public service for retirement purposes for safety
members. The MOA with the Police Staff Officers (SLOPSOA), approved on November 10,
1998, contained similar language.
Government Code Section 21574 allows a contracting agency to provide the fourth level of 1959
Survivor Benefits. The 1959 Survivor Benefit is available to PERS members who are not
covered by Social Security to provide a monthly benefit to an employee's family, in addition to
the standard death benefit, if the employee dies prior to retirement. The monthly benefit amount
has not been indexed to rise with inflation, and so, over the years PERS has added additional
levels to this benefit. Contracting agencies have the option of amending their contracts to
provide the increased benefit levels. The City amended its contract to provide the third level to
all employees in 1989. Following is a chart outlining the increase of benefits:
Monthly Benefit
(Current) (Proposed)
Survivor Group Third Level Fourth Level
Spouse age 62 or older, or one child alone 350 950
Spouse with one child, or two children alone 700 1,900
Spouse with two or more children, or three children alone 840 8
Council Agenda Report—Amendment of(PERS)Contract to Provide Increased Survivor
Benefits and Military Service Credit as Public Service for Police Members
Page 2
The employer cost for the Fourth Level of 1959 Survivor Benefits is $3.20 per month per
employee. The actuarial valuation prepared by PERS indicates that there is currently enough in
the City's 1959 Survivor Benefit account to pay the employer's cost for at least the next three
years. If we continue with our past experience of no claims for this benefit, the surplus in the
account could last for several years, even indefinitely. In order to implement this contract
amendment, PERS requires the City to agree to pool all assets and liabilities in the account,
whether attributable to the employer or employees. The employees will continue to pay the
required employees' cost of$2.00 per month through payroll deduction as they have since the
inception of the Survivor Benefit Program.
Government.Code Section 21024 allows a contracting agency to consider military service credit
as public service for retirement purposes. This provision would allow employees to purchase up
to four years of service credit for any continuous active military or merchant marine service prior
to employment with the City. The employee is responsible for paying both the employee and
employer share of such military service, as well as interest from the employee's date of
employment with the City. Since it is not uncommon for the cost to the employee to exceed
$5,000 for each year of military service, it is not likely that many employees will take advantage
of this benefit.
Government Code Section 7507 requires that 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 the form provided by PERS.
FISCAL IMPACT
The annual cost to provide the fourth level 1959 Survivor Benefit to 44 members Of SLOPOA
and 14 members of SLOPSOA is estimated to be $2,200. The actuarial valuation from PERS has
indicated that surplus funds in that account will pay the costs for at least three years. It is likely
that the surplus will fund those costs for several years. There is no cost to the City to implement
the Military Service Credit as Public Service. Future employer rates may be increased as a result
of the additional service credit, but it is not anticipated to be significant.
ALTERNATIVES
Since this change was approved as part of the 1998-2000 MOA, failure to pass this resolution
and ordinance would place the City in breech of contract with the SLOPOA and the SLOPSOA.
ATTACHMENTS
Resolution of Intention
Ordinance
Proposed amended contract
Agreement to Pool 1959 Survivor Benefits Assets and Liabilities
Certification of Compliance with Government Code Section 7507 3-2
RESOLUTION NO. (1999 Series)
RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT
TO THE CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND
THE CITY COUNCIL OF THE 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 is 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 21574 (Fourth Level of 1959 Survivor
Benefits) and Section 21024 (Military Service Credit as
Public Service) for local police members.
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 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 the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this day of ' 1999.
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Resolution No (1999 Series) Page 2
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
J J gens Cit Attorney
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ORDINANCE NO. (1999 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.
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 1999 AND
FINALLY ADOPTED by the Council of the City of San Luis Obispo on the day of
1999, on the following roll call vote:
AYES:
NOES:
ABSENT:
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Ordinance No. (1999 Series)
Page t
Mayor Al1en,Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
f J rge n, Attomey
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Ca1PERS
EXHIBIT
California
Public Employees' Retirement System
AMENDMENT ENT 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 and August 8, 1993 which provides for participation of Public
Agency in said System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 12 are hereby stricken from said contract as executed
effective August 8, 1993, and hereby replaced by the following paragraphs
numbered 1 through 12 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 60 for local miscellaneous members and age 50 for local safety
members.
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J� �' �� tiF DO ilf
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 shall
be determined in accordance with Section 21353 of said Retirement Law
(2% at age 60 Full).
6. 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 of said Retirement Law (2%
at age 50 Full).
7. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 21573 (Third Level of 1959 Survivor Benefits) for local
miscellaneous members and local fire members only.
b. Section 21574 (Fourth Level of 1959 Survivor Benefits) for 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).
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SIGN
e. Section 20042 (One-Year Final Compensation) for local
miscellaneous members; for those local fire members entering
membership on or prior to July 1, 1986; and for those local police
members entering membership on or prior to July 23, 1987.
f. Section 20475 (Different Level of Benefits). Section 20024.2 (One-
Year Final Compensation) is not applicable to local fire members
entering membership after July1, 1986 and to local police members
entering membership after July 23, 1987.
g. Section 20903 (Two Years Additional Service Credit), Statutes of
1979. Legislation repealed said Section effective January 1, 1999
for local miscellaneous members only.
8. 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.
9. 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.
10. 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 miscellaneous members and 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.
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.
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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.
11. 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.
12. 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 119
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF SANLUIS OBISPO
BY BY <.
KENNETH W. MARZION, CHIEF PRESIDING OFFICER
ACTUARIAL & EMPLOYER SERVICES DIVISION 4
PUBLIC EMPLOYEES' RETIFZE{VIENT SYSTEM N
Witness Date
Attest: OC
Q�
Clerk
AMENDMENT 3-10
PERS-CON-702A(Rev.8196)
AGREEMENT
TO POOL
1959 SURVIVOR BENEFITS ASSETS AND LIABILITIES
BETWEEN THE
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
CITY OF SAN LUIS OBISPO
WHEREAS, Government Code Section 21574'provides for a single employer rate to be
established to provide benefits under said Section on account of members
employed by contracting agencies electing to include the provision of said
Section in their contracts; and
WHEREAS, Government Code Section 21574, requires pooling of all assets and
liabilities of all contracting agencies subject to said Section;
NOW, THEREFORE BE IT AGREED, that assets and liabilities of the City of San Luis
Obispo and its covered employees shall be pooled pursuant to the
provisions of Government Code Section 21574.
BOARD OF ADMINISTRATION CITY COUNCIL .
PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF THE
CITY OF SAN LUIS OBISPO
BY BY
KENNETH W. MARZION, CHIEF PRESIDING OFFICER
ACTUARIAL & EMPLOYER SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Date
PERS-CON-59(Rev.7/96) 3-11
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Division
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(916) 326-3420
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 7507
1 hereby certify that in accordance with Section 7507 of the Government Code
the future annual costs as determined by the System Actuary and/or the increase
in retirement benefit(s) have been made public at a public meeting of the
City Council ofthe
(governing body)
ri t-4 of San T.ni c nhi ci n
(public agency)
on September 7, 1999 which is at least two weeks prior to the adoption of the
(date)
Resolution / Ordinance.
Clerk/Secretary
Title
Date
3-12
PERS-CON-12A(rev. 1/96)