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Home My WebLink About12/07/1999, C10 - CONVERSION OF THE REPORTING OF EMPLOYEES' SHARE OF RETIREMENT CONTRIBUTIONS FOR POLICE OFFICER ASSOCIATION EMPLOYEES, CONFIDENTIAL AND GENERAL EMPLOYEES, AND APPOINTED OFFICIALS council j acEnaa wpout bio CITY OF SAN LUIS O B I S P O FROM: Ann Slate,Director of Human Resources Prepared By: Karen Jenny,Risk Manager,` SUBJECT: CONVERSION OF THE REPORTING OF EMPLOYEES' SHARE OF RETIREMENT CONTRIBUTIONS FOR POLICE OFFICER ASSOCIATION EMPLOYEES, CONFIDENTIAL AND GENERAL EMPLOYEES,AND APPOINTED OFFICIALS CAO RECOMMENDATION 1. Adopt a resolution approving the reporting of the value of Employer Paid Member Contributions as additional compensation for the San Luis Obispo City Employees' Association(SLOCEA) and for confidential employees. 2. Adopt a resolution approving the conversion of PERS Employer Paid Member Contributions to compensation for the San Luis Obispo Police Officers' Association (SLOPOA) and for appointed officials pursuant to Section 414 (h) (2) of the Internal Revenue Code. DISCUSSION The City currently pays the employee's contribution to the California Public Employees' Retirement System (PERS) for employees represented by the San Luis Obispo Police Officers' Association (SLOPOA) and the San Luis Obispo City Employees' Association (SLOCEA), as well as for appointed officials and confidential employees. Over the last few years, all other employee groups have negotiated the conversion of Employer Paid Member Contributions to salary in one of two predominate ways authorized by PERS. These resolutions will accomplish that conversion for the remainder of City employees. The City agreed in the 1998-2000 Memorandum of Agreement with SLOPOA to convert Employer Paid Member Contributions to salary effective January 6, 2000. The employees will then have their own contribution deducted from each paycheck on a pre-tax basis as allowed by Section 414 (h) (2) of the Internal Revenue Code. This same provision was included in the employment'contracts for the City's appointed officials, i.e., the City Administrative Officer and City Attorney. Government Code § 20636 (c) (4) allows an employer to report the value of Employer Paid Member Contributions (EPMC) to PERS as compensation, provided that there is a written labor policy or agreement acknowledging the fact that the employer is paying and reporting the value C10-1 Council Agenda Report—Conversion of the Reporting of Employees' Share of Retirement Contributions to PERS for Police Officer Association Employees, General and Confidential Employees, and'.Appointed Officials Page 2 of EPMC for every one in that'group or class. The 1999-2000 Memorandum of Agreement with SLOCEA included this .provision, which was to be implemented concurrent with the implementation of the 2% at 55 retirement formula. The. final reading of the ordinance authorizing the amendment to the City's PERS contract to include the 2016 at 55 retirement formula for miscellaneous members is scheduled to occur at the same meeting as the resolution to report EPMC as compensation. The effective date for both actions will be January 6; 2000. The City's confidential employees are not represented by a collective .bargaining unit mi accordance with the Government Code and therefore.do not formally negotiate with the City in regards to their .compensation and terms and conditions of employment. Due to the clerical nature of their classifications and the similarity of theirr positions to those represented by SLOCEA, staff recommends extending to the confidential employees the same reporting of EPMC as additional compensation. These proposed changes in.the way the employee's contributions to PERS are reported will have the effect of increasing final compensation for the purpose of calculating retirement. Since final compensation is one of the three factors used to calculate an employee's retirement, this change will.result in slightly higher retirement amounts for these employees. FISCAL IMPACT Funds for this increased cost were approved when the MOA's with SLOPOA and SLOCEA and the appointed officials' employment contracts were approved and, thus are a component of their negotiated economic packages. The cost to include the four confidential employees in the reporting of EPMC as compensation in the same manner as those similarly-situated general employees is approximately$800 per year. ALTERNATIVES Since this change was approved as part of negotiated MOA% and employment agreements, failure to pass this resolution and ordinance would place the City in violation of the contracts with SLOPOA, SLOCEA and the appointed officials. ATTACHMENTS Resolutions Ci®i-2 RESOLUTION NO. (1999 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO IMPLEMENTING THE REPORTING OF EMPLOYER PAID MEMBER CONTRIBUTIONS AS ADDITIONAL COMPENSATION FOR THE SAN LUIS OBISPO CITY EMPLOYEES' ASSOCIATION AND CONFIDENTIAL EMPLOYEES WHEREAS, the City of San Luis Obispo has the authority to implement Government Code Section 20636 (c)(4)pursuant to Section 20691; and WHEREAS, the City of San Luis Obispo has a written labor policy or agreement which specifically provides for the inclusion of normal member contributions paid by the employer on behalf of the members as additional compensation; and WHEREAS, one of the steps in the procedures to implement this section is the adoption by the governing body of the City of San Luis Obispo of a resolution giving notice of its intention to commence reporting the value of employer paid member. contributions (EPMC) as compensation for all members of a group or class; and WHEREAS, the following is a statement of the proposed changes in reporting compensation to PERS: The City of San Luis Obispo elects to pay 7% of employees' compensation earnable as Employer Paid Member Contributions and report the same percent (value) of compensation earnable {excluding Government Code Section 20636 (c) (4)) as additional compensation. This benefit shall apply to all employees of the San Luis Obispo Employees' Association and all confidential employees of the City of San Luis Obispo. The effective date of this resolution shall be January 6,2000. BE IT RESOLVED by the Council of the City of San Luis Obispo that Government Code Section 20636 (c) (4) shall be implemented pursuant to Section 20691 by paying and reporting the value of Employer Paid Member Contributions for all employees of the San Luis Obispo City Employees' Association and for confidential employees of the City of San Luis Obispo as indicated above. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: C10-3 Resolution No. Page 2 the foregoing resolution was adopted this _ _ day of _ 1999. Mayor Allen.Settle ATTEST: Lee Price, City Clerk APPROVED AS TO FORM:. a e- y G. Jorgensen, City Attddey C10-4 RESOLUTION NO. (1999 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO IMPLEMENTING THE PROVISIONS OF SECTION 414(h) (2) OF THE INTERNAL REVENUE CODE RELATIVE TO THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) CONTRIBUTIONS OF THE SAN LUIS OBISPO POLICE OFFICERS ASSOCIATION AND APPOINTED OFFICIALS WHEREAS,the City of San Luis Obispo has the authority to implement the provisions of Section 414 (h)(2)of the Internal Revenue Code(IRC); and WHEREAS,the Board of Administration of the California Public Employees' Retirement System (PERS)adopted its resolution regarding Section 414(h) (2)IRC on September 18, 1985; and WHEREAS,the Internal Revenue Service has stated in December 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 provision 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 employees of the San Luis Obispo Police Officers' Association and to appointed officials of the City of San Luis Obispo; NOW, THEREFORE,BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Effective January 6, 2000,the City of San Luis Obispo will implement the provisions of Section 414(h) (2) IRC by malting employee contributions pursuant to California Government Code Section 20691 to PERS on behalf of employees of the San Luis Obispo Police Officers' Association and on behalf of appointed officials of the City of San Luis Obispo. "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 20691. 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 employees of the San Luis Obispo Police Officers' Association and appointed officials of the City of San Luis Obispo. 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. C10-5 Resolution No. (1999 Series) Page 2 SECTION 5. The amount of contributions designated as employee contributions and paid by the City of San Luis Obispo to PERS on behalf of employees of the San Luis Obispo Police Officers' Association and appointed officials of the City of San Luis Obispo 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 all purposes, other than taxation, in the same way that member contributions are treated by PERS. 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 APPROVED AS TO FORM: r Jeffrey G. Jorgensen, Attorney C10-6