HomeMy WebLinkAbout06/26/2002, 1 - RESOLUTION OF INTENTION TO MODIFY THE RETIREMENT FORMULA FOR MISCELLANEOUS EMPLOYEES r
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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.
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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
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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:
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ATTACHMENT
Ordinance No. (1999 Series)
Page 2
J Jo a n, Q y Attorney
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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.
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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)-
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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.
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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)
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