HomeMy WebLinkAbout11/16/1999, 2 - AMENDMENT OF CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) CONTRACT TO PROVIDE 2% AT 55 RETIREMENT FORMULA FOR MISCELLANEOUS MEMBERS council °°°;,_i6_y
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C I T Y OF SAN LUIS O B I S P O
FROM: Ann Slate,Director of Human Resource
Prepared By: Karen Jenny, Risk Manager j N
SUBJECT: AMENDMENT OF CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM(PERS) CONTRACT TO PROVIDE 2%AT 55
RETIREMENT FORMULA FOR MISCELLANEOUS MEMBERS
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 the 2%at 55 retirement formula for miscellaneous members.
DISCUSSION
The 1999-2000 Memorandum of Agreement with the San Luis Obispo City Employees'
Association, which was adopted by the Council on November 17, 1998, included a provision to
amend the City's contract with PERS to provide the 2% at 55 retirement formula for
miscellaneous employees. The current benefit is 2% of pay at age 60 for each year of service.
Section 21354 of the California Government Code allows an agency to provide retirement
benefits for non-safety employees based on 2%of pay at age 55 for each year of service.
The inclusion of the provision for the increased retirement benefit included a requirement that it
be at no cost to the City. The most recent estimate of the City's assets and liabilities in the
retirement system indicate that no employer contributions will be required for 84 years, due in
large part to the phenomenal investment returns of the PERS retirement system over the last
several years. We can add this benefit with no employer cost for an estimated 17 years. Because
it was intended to be cost neutral to the City, agreements have been structured with the various
employee groups that provide for employee pick-up of the cost of 2% at 55 at such time that it
begins to affect the employer rate.
Since this change will apply to all non-safety PERS members, discussions have been held with
the management and confidential employee groups as well as representatives of the San Luis
Obispo Police Officers' Association and International Association of Firefighters' Local 3523,
which also have miscellaneous,non-safety members in their bargaining groups. All concur with
the actions recommended. The Police Officers' Association and the Fire Union have signed
supplemental Memoranda of Agreement.
2-1
Council Agenda Report Amendment of PERS Contract to Provide 2%at 55 Retirement
Formula for Miscellaneous Members Page 2
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.
CONCURRENCES
San Luis Obispo Police Officers' Association, International Association of Firefighters' Local
3523, Management and Confidential groups.
FISCAL Il"ACT
The annual cost to provide the 2% at 55 retirement formula for approximately 250 non-safety
employees is estimated to be 1.719% of payroll, or approximately $200,000. The actuarial
valuation from PERS has indicated that surplus funds in that account will pay the costs for at
least 17 years. It is likely that the surplus will fund those costs for several years beyond what is
estimated at this time.
ALTERNATIVES
Since this change was approved as part of the 1999-2000 MOA, failure to pass this resolution
and ordinance would place the City in breach of contract with the San Luis Obispo City
Employees' Association.
ATTACENIENTS
Resolution of Intention
Ordinance
Proposed amended contract
Certification of Compliance with Government Code Section 7507
2-2
RESOLUTIONNO. (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
WIMREAS, 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 21354 2% at 55 retirement formula for
local miscellaneous 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 71999.
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
2-3
Resolution No (1999 Series) Page 2
APPROVED AS TO FORM:
WGorgj'-
OAttorney
14
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:
2-5
Ordinance No. ,(1999 Series)
Page 2 —
Mayor Allem Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORK
Jeffrey G. Jorgensen, City Attorney
2=6
Ca1PERS 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, 19781
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.
2-7
M !,►'1T ur-yW1170T nrlly"
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 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 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).
2-8
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.
. 2-9
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
byBoard 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 ' 19
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENYSTEM CITY OF SANLUIS OBISPO
Q.
BY _s`�� BY
KENNETH W. MARZION, F PRESIDING OFFICER
ACTUARIAL & EMPLO SERVICES DIVISION
.PUBLIC EMPLOYEETIREMENT SYSTEM`
VWitness Date
Attest:
.•.Clerk
AMENDMENT
PERS-CON-702A(Rev.8M)
2-10
MEELN..d AUL�C�
Replacement pcges ' DATE
for Item #2
Ca1PERS ... .Pages 740-' .
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 and November 5, 1999 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 November 5, 1999, 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 55 for local miscellaneous members and age 50 for local safety
members.
MtOUDIR
RECEIVED FOM
8'FNOrCDDDIR
AFIRE CHIEF
NOV 9 1999 B'PWDIR
ETPOLICE CHF 2-7
ErREC DIR
SLO CITY CLERK LDIR
L7 PERS DIR
pl no NOT SIGN"EXHIBIT ONtY�
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 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 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).
2-8
PL.,..ASF DQ NioT S,'GN "EXHIBIT Cft `
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 20042 (One-
Year Final Compensation) is not applicable to local fire members
entering membership after July 1, 1986 and to local police
members entering membership after July 23, 1987.
g. Section 20903 (Two Years Additional Service Credit), Statutes of
1979 for local miscellaneous members only. Legislation repealed
said Section effective January 1, 1999.
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.
2-9
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
BOARD OF ADMINISTW.ION CITY COUNCIL
PUBLIC EMPLOYEES' J!�TIREMENT SYSTEM CITY OF SAN LUIS O SPO
a
BY BY
KENNETH W. MA N, CHIEF PRESIDING OFFI&R
ACTUARIAL & EMP YER SERVICES DIVISION
PUBLIC EMPLOYS' RETIREMENT SYSTEM
co.
Witness Date
4_. Attest:
Clerk
AMENDMENT
PERS-CON-70M(Rev.8196)
2-10