HomeMy WebLinkAbout11/12/2002, PH1 - RESOLUTION OF INTENTION AND INTRODUCTION OF ORDINANCE TO PROVIDE 3% @ 50 RETIREMENT FORMULA FOR POL 11councit M° Elm „_,2.02
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CITY OF SAN LUIS OBISPO
FROM: Ann Slate, Director of Human ResourceauA
Prepared By: Karen Jenny, Risk Manager O
SUBJECT: RESOLUTION OF INTENTION AND INTRODUCTION OF
ORDINANCE TO PROVIDE 3% @ 50 RETIREMENT FORMULA FOR
POLICE SAFETY EMPLOYEES
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 3% @ 50 retirement formula for police safety employees.
DISCUSSION
The 2000-2004 Memorandum of Agreement (MOA) with the San Luis Obispo Police Officers'
Association (POA), which was adopted by the Council on February 19, 2002, included a
provision to amend the City's contract with PERS to provide the 3% @ 50 retirement formula to
police safety employees. The recently adopted MOA with the San Luis Obispo Police Staff
Officers' Association (SLOPSOA), whose members are included in the PERS contract for police
safety employees, includes a similar provision.
Government Code Section 21363.2 allows a contracting agency to provide retirement benefits for
police safety employees based on 3% of salary at age 50 for each year of service. In March of
this year the 3% @ 55 retirement formula was adopted for fire safety employees, and they are
scheduled to go to the 3% @ 50 formula the end of December in 2005, according to their current
MOA.
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 a form provided by PERS.
FISCAL IMPACT
During negotiations with the POA, City negotiators were working with the valuation provided by
PERS based on the assets and liabilities in the safety retirement plan as of June 30, 2000. That
valuation, which is a snapshot of the funding status of the plan as of the date of the valuation,
indicated that the employer's contribution for this increased retirement benefit would increase by
7.619%. An agreement was struck with the POA that provided some cost sharing of the
increased benefit.
The most recent annual valuation based on the June 30, 2001, data, which is the basis for
employer rates for the 2003-04 fiscal year, indicates that the increase to the employer's rate due
to the 3% @ 50 formula will be 7.762%, very close to the original estimate. This will be added
Council Agenda Report—Amendment of(PERS) Contract to Provide the 3% @ 50 Retirement
Formula for Police Safety Members Page 2
to what the rate was expected to be prior to the amendment for the improved formula which was
8.5% for a total employer rate of 16.262%. Although the increased benefit costs are substantial,
it is the significant losses in PERS' investment portfolio due to the downturn in the stock market
that account for most of the rate increase.
Fiscal Year 2003-04 Percent Dollar
Employer Rate for Safety Retirement Plan prior to benefit 8.500% $ 508,140
improvements as advised by PERS on 10/08/02
Employer Rate for Safety Retirement Plan with implementation of 16.262% $972,159
3% @ 50 for Police safety members
Additional Cost 7.762% $464,019
These costs will be incorporated into the financial plan for Fiscal Year 2003-04 and 2004-2005,
although rates are expected to continue to rise in 2004-2005 due to the recent losses in PERS
investments that will be reflected in future rates. The 3% @ 50 formula scheduled to be
implemented for firefighters at the end of December 2005 will have an impact on rates as well.
In the shorter term, the implementation of 3% at 50 for Police in March will increase the current
employer safety rate of 3.846% to 11.608%. Although the 3% @50 retirement formula will be
implemented only for police personnel at this time, police and fire employees participate in a
combined safety retirement plan. The change to the employer rate will apply to both police and
fire payrolls. This amounts to approximately $147,000 for the remainder of Fiscal Year 2002-03.
This will be accounted for in the mid-year budget review scheduled for February 18, 2003.
ALTERNATIVES
Since this change was approved as part of the 2001-2005 MOA, failure to pass this resolution
and ordinance would place the City in violation of its agreement with the POA and SLOPSOA.
ATTACHMENTS
1. Resolution of Intention
2. Ordinance
G:\agenda reports\POA 3% at 50.doc
GAAeenda Ren( is\PnA 3%At 50.Dnc I
1TTACHMENT 1
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 21363.2 (3% @ 50 Full formula) for
local Police members.
NOW, THEREFORE, 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 12'day of November 2002.
ATTACHMENT 1
Resolution No (2002 Series) Page 2
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
Xey G org , eVfity Attorney
G:\agenda reports\POA 3% at 50.doc
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, 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, July 18, 2002, and January 30, 2003 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 January 30, 2003, and hereby replaced by the following paragraphs
numbered 1 through 14 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 55 for local fire
members, and age 50 for local police members.
PLEASE DO NOT SIGN "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 in
employment before and not on or after January 30, 2003 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 miscellaneous member in
employment on or after January 30, 2003 shall be determined in
accordance with Section 21354.5 of said Retirement Law (2,7% at age 55
Full).
7. 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 21362.2 of said Retirement Law
(3% at age 50 Full).
8. 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).
9. 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.
10. 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.
11. 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.
12. 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.
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.
13. 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.
14. 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*�fequired of any employee may be made by direct
payments between �!d employee and the Board.
� V
B. This amendment shall b� ffective on the day of ,
BOARD OF ADMINISTRAT CITY COUNCIL
PUBLIC EMPLOYEES' RE, EMENT SYSTEM CITY OF SAN LUIS CSPO
BY _C= BY
KENNETH W. MARZICHIEF PRESIDING OF ER
ACTUARIAL & EMP ER SERVICES DIVISION \�
PUBLIC EMPLOYE RETIREMENT SYSTEM
�0 �0
Witnes F4Vte
Attest,_
�v C14
AMENDMENT ER#319 nV
PERS-CON-702A(Rev.8\02) �C
f 0
ATTACHMENT 2
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.
NOW, THEREFORE, 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 12' day of November 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:
ATTACHMENT 2
Ordinance No. (2002 Series)
Page 2
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
4Q orel�;��
PAW.Ygel, C' Attorney
Wagenda reports\POA 3%at 50.doc
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, 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, July 18, 2002, and January 30, 2003 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 January 30, 2003, and hereby replaced by the following paragraphs
numbered 1 through 14 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 55 for local fire
members, and age 50 for local police members.
I - II
PLEASE DO NOT c N "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 in
employment before and not on or after January 30, 2003 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 miscellaneous member in
employment on or after January 30, 2003 shall be determined in
accordance with Section 21354.5 of said Retirement Law (2.7% at age 55
Full).
7. 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 21362.2 of said Retirement Law
(3% at age 50 Full).
8. 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).
f - Ia
PLEASE DO NOT SIC `EXHIBIT ONLY"
9. 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.
10. 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.
11. 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.
12. 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.
- 13
i
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.
13. 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.
14. 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 subsequ t remittances. Adjustments on account of
errors in contributions reXed of any employee may be made by direct
payments between theployee and the Board. v
B. This amendment shall be efive on the day of
BOARD OF ADMINISTRATIO * CITY COUNCIL
PUBLIC EMPLOYEES' RETIRENT SYSTEM CITY OF SAN LUIS OBISPO �-
BY BY
KENNETH W. MARZION,4HIEF PRESIDING OFFICER C�r
ACTUARIAL & EMPLOYIO SERVICES DIVISION
PUBLIC EMPLOYEESTIREMENT SYSTEM
Q O�
Witness Date
Attest:
Clerk
AMENDMENT EFW 319
PERS-CON-702A(Rev.8\02)
1 - 14