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HomeMy WebLinkAboutStaff Report 4.E 09/15/2008Im-� CITY OF PETALUMA, CALIFORNIA —re 1 AGENDA BILL September 15, 2001 Agenda Title: Resolution of Intention to Approve an Amendment to the Meetint Date: Contract Between the City of Petaluma and the Board of Administration of September 15, 2008 the California Employees' Retirement System Allowing the City to Offer Two Additional Years of Service Credit to Miscellaneous, Police, and Fire Meeting Time: ® 3:00 PM Employees ❑ 7:00 PM Category: ❑ Presentation ❑ Consent Calendar ❑ Public Hearing ❑ Unfinished Business ® New Business Department: Director: Contact Person: Phone Number: Human Resources John Brown Pamala Robbins 778 -4343 Cost of Proposal: N/A Name of Fund: Amount Budgeted: N/A Account Number: Recommendation: It is recommended that the City Council take the following action: Adopt the attached Resolution of Intention to Approve an Amendment to the Contract Between the City of Petaluma and the Board of Administration of the California Employees' Retirement System Allowing the City to Offer Two Additional Years of Service Credit to Miscellaneous, Police, and Fire Employees. Summary Statement: Like many agencies in California, the City of Petaluma is facing financial shortfalls. City staff have been exploring many avenues and approaches to mitigate projected gaps between revenue and expenditures. One tool currently being considered to manage employment costs is early retirement for employees. In order for the City to consider malting such a program available to employees, it must have a provision in the Contract with PERS. Currently the City does not have such a provision with PERS. Amendments to the City's contract with PERS are governed by state law and require as a first step the adoption of a resolution of intention to amend the contract. Amendments must then be separately adopted by ordinance, no sooner than 20 days after adoption of the resolution of intent. Once this provision is added to the City of Petaluma's Contract, the City will have the option of offering it to all classifications or to specific job classifications within specific organizational units (departments /divisions). Final implementation will require Council approval. However, adding this provision does not mandate its use. There is no obligation to ever implement this provision. Attgehments to Agenda Packet Item: 1. Resolution of Intention to Approve an Amendment to the Contract Between the City of Petaluma and the Board of Administration of the California Employees' Retirement System Allowing the City to Offer Two Additional Years of Service Credit to Miscellaneous, Police, and Fire Employees. 2. Exhibit A— Amendment to Contract Between the City of Petaluma and the Board of Administration of the California Public Employees' Retirement System for Miscellaneous, Police, and Fire to Allow the City to Offer Two Years of Additional Service Credit to Miscellaneous, Police, and Fire Employees. Reviewed bv Admin. Svcs. Dir: Reviewed ftyQtv Attorney: Approved b-v-- City Manager: ` Date: _ Gad Date: Date_- Rev. # Date Last Revised: File: Cl�` CITY OF PETALUMA, CALIFORNIA SEPTEMBER 15, 2008 AGENDA REPORT FOR RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY OF PETALUMA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA EMPLOYEES' RETIREMENT SYSTEM ALLOWING THE CITY TO OFFER TWO ADDITIONAL YEARS OF SERVICE CREDIT TO MISCELLANEOUS, POLICE, AND FIRE EMPLOYEES RECOMMENDATION: Adopt Resolution of Intention. If the attached Resolution of Intention is approved, it is firrther recommended that the Council proceed to consideration of the separate agenda bill presented for this meeting and introduce and conduct the first reading of an ordinance to amend the PERS Contract pursuant to the Resolution of Intention. 2. BACKGROUND: Pursuant to Government Code sections 20471- 20472, the earliest the Council could adopt an ordinance amending the contract would be October 6, 2008, 21 days after any Council action at this meeting to adopt the resolution of intention. The effective date of the ordinance would be 30 days from October 6, 2008, if it is adopted on that date. The effective date of the PERS Contract Amendment would be the day following the effective date of the ordinance. If approved, this contract amendment would allow the City to offer additional service credit, but would not require the City to do so. The City plans to evaluate whether or not offering additional service credit is beneficial to the City at this time. The evaluation process will include many factors. Prior to implementing the offering of additional service credit to employees, the City is required to calculate the cost or "additional employer contributions," and disclose that information to the public. Following that disclosure, staff would then bring back to Council an enabling Resolution to implement the provisions of the Contract Amendment. 3. DISCUSSION: In order for PERS members to be eligible to receive a regular retirement payout, they must be at least 50 years of age and must have a minimum of five years of service credit in the PERS system. The amount of the payout is then determined by a combination of age, length, service, and salary. Offering eligible employees additional service credit can benefit both the City and the employees. Eligible employees electing to participate will receive an additional two years of service credit, which will increase their retirement annuity. The offering of this benefit will reduce the need for mandatory layoffs, transfers or demotions if enacted. 4. FINANCIAL IMPACTS: There is no cost to either the City of the employees to amend the PERS Contract to add this provision. Costs associated with implementing the provisions of the Amendment are based on which classifications are offered and who takes advantage of the benefits and will be addressed when or if the item is brought back before Council for implementation. 1144212.1 If the City decides to implement the provisions of the Amendment it is required to calculate the "additional employer contributions" based upon an estimate of the present value of additional employer contributions which will be required in the future for providing the two years service credit. The cost of the two years additional service credit will be included in the City's employei contribution rate for the fiscal year starting two years after the end of the designated period. The increase in the employer contribution rate may continue for as long as 20 years. The annual valuation report for the fiscal year that begins two years after the end of the designated period will show the amount of the increase in the employer contribution rate resulting from the two years service credit. RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL CITY OF PETALUMA 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 20903 (Two Years Additional Service Credit) for local miscellaneous members and- local safety 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. By: Presiding Officer Title Date adopted and approved (Amendment) CON -302 (Rev. 4/96) Ca1PF,RS California Public Employees' Retirement System EXHIBIT AMENDMENT TO CONTRACT Between the Board of Administration California Public Employees' Retirement System and the City Council City of Petaluma 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 January 1, 1950, and witnessed October 18, 1949, and as amended effective August 1, 1959, November 1, 1959, March 1, 1965, June 1, 1965, April 1, 1969, January 1, 1974, November 1, 1980, November 1, 1981, July 1, 1982, January 1, 1987, December 28, 1987, January 1, 1992, January 4, 1996, June 30, 1996, May 4, 1998, April 5, 1999, June 30, 2001 and January 16, 2003 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1 through 12 are hereby stricken from said contract as executed effective January 16, 2003, and hereby replaced by the following paragraphs numbered 1 through 12 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 50 for local safety members. 0 2. Public Agency shall participate in the Public Employees' Retirement System from and after January 1, 1950 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: NO ADDITIONAL EXCLUSIONS 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 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 safety member shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). 7. Public Agency elected and elects to be subject to the following optional provisions: a. Section 21222.1 (One -Time 5% Increase - 1970). Legislation repealed said Section effective January 1, 1980. b. Section 20042 (One -Year Final Compensation). C. Section 20965 (Credit for Unused Sick Leave). d. Section 21326 (One -Time 1% to 7% Increase For Local Miscellaneous Members Who Retired or Died Prior to July 1, 1974). Legislation repealed said Section effective January 1, 2002. e. Sections 21624, 21626 and 21628 (Post- Retirement Survivor Allowance) for local fire members only. f. Section 21024 (Military Service Credit as Public Service). g. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local safety members only. h. Section 21573 (Third Level of 1959 Survivor Benefits) for local miscellaneous members only. Section 20434 ( "Local Fire Fighter" shall include any officer or employee of a fire department employed to perform firefighting, fire prevention, fire training, hazardous materials, emergency medical services, or fire or arson investigation services as described in Government Code Section 20434). j. Section 20903 (Two Years Additional Service Credit). 8. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on November 1, 1980. 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. 9. 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. 10. 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 miscellaneous 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 safety members. 7 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. 11. 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. 12. 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 required of any employee may be made by direct payments between the employee and the Board. B. This amendment shall be effective on the day of , BOARD OF ADMINISTRATION CITY COUNCIL PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF PETALUMA BY BY LORI MCGARTLAND, CHIEF PRESIDING OFFICER EMPLOYER SERVICES DIVISION PUBLIC EMPLOYEES' RETIREMENT SYSTEM Witness Date Attest: Clerk AMENDMENT ER# 0293 PERS- CON -702A (Rev. 10 \05) e