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HomeMy WebLinkAbout06/26/2002, 1 - RESOLUTION OF INTENTION TO MODIFY THE RETIREMENT FORMULA FOR MISCELLANEOUS EMPLOYEES r r council M6-2 6-26-02 j acEnoa Repout Im.N C I T Y OF SAN LUI S OBISPO FROM: Ann Slate, Director of Human Resources Prepared By: Karen Jenny,Risk ManagerA SUBJECT: RESOLUTION OF INTENTION TO MODIFY THE RETIREMENT FORMULA FOR MISCELLANEOUS EMPLOYEES CAO RECOMMENDATION Adopt a resolution of intention to modify the retirement formula for miscellaneous, non-safety employees through an amendment of the contract between the City of San Luis Obispo and the California Public Employees' Retirement System (PERS),prior to the PERS deadline of June 30, 2002. DISCUSSION This brief special meeting of the Council has been called in order to meet a PERS deadline of June 30, 2002, for adopting a resolution of intention to modify the retirement plan for miscellaneous employees. PERS has indicated that this deadline will not be extended, and it is important to preserve the flexibility of the City to select the funding alternative that will best fit within the our financial abilities, should the Council elect to continue with the modification process. By way of background, the 2001-02 Memorandum of Agreement with the San Luis Obispo City Employees' Association (SLOCEA), which was adopted by the Council on February 6, 2001, included a provision to re-open discussions regarding retirement enhancements for miscellaneous employees that were being considered by the State legislature. Optional retirement formulas, other than the current benefit of 2% of pay at age 55 for each year of service, were approved by the legislature and signed by the Governor subsequent to the conclusion of contract negotiations with SLOCEA. Section 21354.5 of the California Government Code now allows an agency to provide retirement benefits for non-safety employees based on 2.7% of pay at age 55 for each year of service. The City Council authorized staff to enter into negotiations with the employee groups on May 2, 2002. Since this change will apply to all non-safety PERS members, discussions have been held and are being scheduled with the management and confidential employee groups as well as representatives of the San Luis Obispo Police Officers' Association, San Luis.Obispo Police Staff Officers' Association and International Association of Firefighters' Local 3523, which also have miscellaneous,non-safety members in their bargaining groups. 1-1 Council Agenda Report—Amendment of PERS Contract to Provide 2.7%at SS Retirement Formula for Miscellaneous Members page 2 The inclusion of the provision for the increased retirement benefit included a requirement that it be at no cost to the City. The adoption of the resolution of intention at this time, prior to concluding negotiations with all employee groups, will preserve the funding alternatives that are available. Once all employee groups have agreed to the benefit for their members, staff will bring the actual ordinance before the Council for adoption. At that time the cost of the benefit and the means to fund it will be identified at a public hearing, as required by PERS law. FISCAL IMPACT There is no cost to the City to adopt the resolution of intention at this time. The cost to provide the 2.7% at 55 retirement formula for approximately 250 non-safety employees will depend upon the funding alternative chosen and the negotiations with employee groups regarding their level of participation in paying for this benefit. Once negotiations with all affected bargaining units have been successfully concluded, the costs will be made public during the public hearing for the first reading of the required ordinance to amend the contract with PERS. ALTERNATIVES One alternative is to wait until negotiations have been concluded with all employee groups before adopting the resolution of intention. This is not recommended because a delay in adopting the resolution of intention will eliminate some of the funding alternatives that effect how PERS will calculate the post-amendment employer rate. If we are unable to come to agreement with employee groups on this benefit, the resolution can be rescinded and the City is not obligated by PERS to continue the process. ATTACHMENTS Resolution of Intention 1-2 ATTACHMENT RESOLUTION NO. (2002 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 21354.5 2.7% 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 1"and by this reference made apart hereof. Upon motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of , 2002. Mayor Allen Settle ATTEST: Lee Price, City Clerk APPROVED AS TO FORM: 1-3 ATTACHMENT Ordinance No. (1999 Series) Page 2 J Jo a n, Q y Attorney 1 I Ca�PERS EXHIBIT 1 California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Administration Calaforrda Public Employees' Retirement System and the City Council City of San Luis Obispo 4010. 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 31 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 and July 18, 2002 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A_ Paragraphs 1 through 13 are hereby stricken from said contract as executed effective July 28, 2002, 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, age 55 for local fire members, and age 50 for local police members. 1-4 MIBIT 1 PLEASE DO NOT SiA "EXHIBIT ONLY 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 21354.5 of said Retirement Law (2.7% at age 55 Full). [Note that a future legislative proposal is being considered which could amend Government Code Section 21354.5 to make the 2.7% at 55 benefit formula applicable to both active members and inactive members who have not yet retired_ if enacted, this amendment could have an effect on your agency's actuarial valuation and employer contribution rates in future years.] 6. The percentage of final compensation to be provided for each year of credited prior and current service as a local police member shall be determined in accordance with Section 21362 of said Retirement Law (2% at age 50 Full). 7. The percentage of final compensation to be provided for each year of credited prior and current service as a local fire member shall be determined in accordance with Section 21363.1 of said Retirement Law (3% at age 55 Full)- 1-5 E MBIT I PLEASE DO NOT *N "EXHIBIT ONLY 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. 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-Yeas Final Compensation) for local miscellaneous members and local police members, and for those local fire members entering membership on or prior to July 1, 1986. f. Section 20475 (Different Level of Benefits Provided for New Employees). Section 20042 (One-Year Final Compensation) is not applicable to local fire members entering membership after July 1, 1986. g. Section 20903 (Two Years Additional Service Credit) for local miscellaneous members only. h. Section 21024 (Military Service Credit as Public Service), Statutes of 1976. 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. 1-6 KBIT 1 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 bylaw. 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 Lade in connectio ith subsequent remittances. Adjustments on unt of errors in otributions required of any employee may be ma y direct payment-43�etween the employee and the Board. B. This amendm tshall be effective on the day of BOARD OF ADMINSRATION CITY COUNCIL •� PUBLIC EMPLOYE' RETIREMENT SYSTEM CITY OF SAN LUIckrBISPO BY BY KENNETH W. M ION, CHIEF PRESIDING 0 CER & ACTUARIAL LOYER SERVICES DIVISION PUBLIC EMPLWEES' RETIREMENT SYSTEM oO cw Witness to Attest: Q.,, Clerk AMENDMENT Q PFRSZON-7024(Rev MS) 1-7