HomeMy WebLinkAbout08/20/2002, PH 1 - INTRODUCTION OF ORDINANCE TO PROVIDE 2.7% @55 RETIREMENT FORMULA FOR MISCELLANEOUS MEMBERS OF PERS r . .
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j acEnba REpoRt �N
C I T Y OF SAN LUI S O B I S P 0
FROM: Ann Slate,Director of Human Resources
Prepared By: Karen Jenny,Risk Manager vv��
SUBJECT: INTRODUCTION OF ORDINANCE TO PROVIDE 2.7% @ 55
RETIREMENT FORMULA FOR MISCELLANEOUS MEMBERS OF
PERS
CAO RECOMMENDATION
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 2.7% @ SS retirement
formula for miscellaneous members of the retirement system.
DISCUSSION
Resolutions also presented for Council approval on the August 20, 2002, consent calendar
included provisions to provide the 2.7% at 55 retirement formula to miscellaneous members of
the PERS retirement system.
Government Code Section 21354.5 allows a contracting agency to provide retirement benefits for
miscellaneous employees based on 2.7%of salary at age 55 for each year of service. The current
wording in Section 21354.5, as approved by the state legislature in 2001 (AB 616), states that the
benefit formula will apply only to active members in the plan. This means that employees who
have left City service prior to the implementation of the new formula will not be eligible for this
benefit. They will continue to be covered under the current 2% at 55 formula.
Government Code Section 20474 requires a secret ballot election by the employees affected
whenever the PERS retirement contract is amended to provide a benefit which changes the
employees' rate of contribution. Upon implementation of the 2.7% at 55 retirement formula; the
employees' contribution rate will change from 7% to 8%. The voting period closed on August
16, and the results of the secret ballot will be announced at the August 20 Council meeting. The
City Clerk will certify compliance with the election requirements on a form provided by PERS.
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 with this requirement on another form
provided by PERS.
Although the ordinance authorizing the amendment to the contract will go into effect thirty days
following its final passage; the contract amendment for the 2.7% at 55 retirement formula will
not be effective until January 30, 2003, which is the first day of the pay period closest to
February 1.
Council Agenda Report—Amendment of PERS Contract to Provide the 2.7% @ 55 retirement
Formula for Miscellaneous Members
Page 2
FISCAL IMPACT
Upon implementation of the improved retirement formula on January 30, 2003, the City's
contribution rate for the miscellaneous retirement plan will go to 4.982% plus the increase in the
employees' rate of 1% for those groups where the City has agreed to continue to make the
employees' contribution. This will result in a cost to the City of$322,000 in fiscal year 2002-03
and $772,000 on an ongoing annual basis. Salary and benefit concessions in 2002 and 2003 meet
the requirement that the enhanced retirement benefit be cost neutral within the parameters provided
by the Council.
ALTERNATIVES
Do not approve the ordinance and direct staff to negotiate a different economic package in
exchange for the 2.7% at 55 retirement formula. This alternative is not recommended, as the
agreements are consistent with the Council's previous direction and the City's employer-employee
relations policies.
ATTACHMENTS
Ordinance
G:\agenda reports\2.7%at 55 Ordinance Report
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ORDINANCE NO. (2002 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 I", 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 2002,
AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the day
of 2002, on the following roll call vote:
AYES:
NOES:
ABSENT:
Ordinance No. (2002 Series)
Page 2
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
0G. rg se ity Attorney
�y
Ca1PERS
EXHIBIT1
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 Luaus 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, 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.
�S
PLEASE DO NG 1 SIGN "EXHIBIT O
NLY"
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).
l-�
7 SIGN "EXHIBIT ONLY"
PEASE DO
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-Year 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.
/-7
• • 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 by law.
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.
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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 made in
connection with subsequent remittances. Adjustments on account of
errors in contritkions required of any employee may be made by direct
payments betwTn the employee and the Board'
v
B. This amendment shA a effective on the 30thday of Januar = , 2003
BOARD OFADMINISTR ON CITY COUNCIL
PUBLIC EMPLOYEES' TIREMENT SYSTEM CITY OF SAN LUIS O O
BY BY
KENNETH W. MARZ�I, CHIEF PRESIDING OFFIGR
ACTUARIAL & EMPO)YER SERVICES DIVISION
PUBLIC EMPLOYE. ' RETIREMENT SYSTEM
QWitness Date
14
J Attest:GO
Q
Clerk IT
AMENDMENT v 4/
PERS-CON-702A(Rev.8\96) �'V