HomeMy WebLinkAboutStaff Report 02 02/01/1999FEB 1 1999 s
CITY OF PETALUMA, CALIFORNIA
AGENDA BILL
Agenda Subiect Title: Meeting Date:
A) .Resolution of Intent to Amend Contract between the Public Employees February 1, 1999
Retirement System and the City of Petaluma to provide the 1959 Survivors
Benefit (Level 3) for Miscellaneous Employees.
B) Resolution Agreeing to Pool 1959 Survivors Benefit Assets and
Liabilities between the Board of Administration of the Public Employees'
Retirement System and the City Council of the City of Petaluma.
C) Introduction of Ordinance modifying the Contract between PERS and
the City of Petaluma to implement the 1959 Survivors Benefits for
Miscellaneous Members Level 3 effective Aril 5 1999.
Department:
Director:
I
Contact Person:
I
Phone Number:
1
Personnel
M.Acorn
M. Acorn
778 -4341
Cost of Proposal: Amount Budgeted: $0.00
First Year Normal Cost: $0,000.00 Account Number: Non Departmental
Unfunded Liability Payment: $5,782.00. 80% General Fund / 20% Other
Attachments to Agenda Packet Item:
1) Agenda Report (pg 1 -4)
2) PERS Actuarial Study (pg 5)
3) Resolution of Intention to Approve Ammendment Modifying Contract
4) Resolution for Agreement to Pool 1959 Survivor Benefit Assets and Liabilities
5 Introduction of Ordinance modifying the Contract effective April 5 1999.
Summary Statement: This past summer the City agreed, through the negotiation process, with Unit 6
Police and Unit 10 Public Safety Midmanagement that Level 3 Benefits would be provided
Miscellaneous Employees pending agreement by all Miscellaneous Employee Units and completion of an
Actuarial Study. The actuarial has been performed and the total cost for the City is $5,782 for the
unfunded liability amortized over 5 years and a zero ($0.00) cost as the first year normal cost. PERS no
longer provides Level 1 or Level 2 Survivor Benefits as a contract amendment. Petaluma's current level
of benefit is considered insufficient and no longer offered by PERS. Upon approval of the attached
Resolutions and introduction of the Ordinance amending the City's contract, the Ordinance will be
scheduled for Adoption on the Consent Calendar on March 1, 1999 with an effective date of April 5,
1999.
1) Approval of the Resolution of Intent and Agreement to Pool Survivor Benefits and Liabilities to
provide Third Level of 1959 Survivor Benefits for Local Miscellaneous Members.
2) Approval of Agreement to Pool 1959 Survivor Benefit Assets and Liabilities between the Board of
Administration of the Public Employees' Retirement System and the City Council of the City of
Petaluma.
3) Approval of the Introduction of an Ordinance to provide Third Level of 1959 Survivor Benefits for
Local Miscellaneous Members.
Submitted to Finance Director:
, V�4
,/ , / 5'i
CITY OF PETALUMA� CALIFORNIA
FEBRUARY 1, 1998
AGENDA REPORT
FOR
1959 Survivors Benefit (Miscellaneous Employees)
EXECUTIVE SUMMARY:
This past summer the City agreed, through the negotiation process, with Unit 6 Police and
Unit 10 Public Safety Midmanagement that Level 3 Benefits would be provided
Miscellaneous Employees pending agreement by all Miscellaneous Employee Units and
completion of an Actuarial Study. The actuarial has been performed and the total cost for
the City is $5,782 for the unfunded liability amortized over 5 years and a zero ($0.00) cost
as the first year normal cost. PERS no longer provides Level 1 or Level 2 Survivor
Benefits as a contract amendment. Petaluma's current level of benefit is considered
insufficient and no longer offered by PERS. There is no additional cost to the employee.
Upon approval of the attached Resolutions and introduction of the Ordinance amending
the City's contract, the Ordinance will be scheduled for Adoption on the Consent Calendar
on March 1, 1999 with an effective date of April 5, 1999,
I) 1959 SURVIVORS BENEFIT (LEVEL 3) MISCELLANEOUS EMPLOYEE
1. BACKGROUND:
The 1959 Survivors Benefit is provided by the Public Employee Retirement System as the
alternate to Social Security Survivor Benefits. Two years ago, the Public Employee
Retirement system notified the City that the 1959 Survivor Level One Benefits for the City
of Petaluma was being discontinued for future contracts. However, the City could remain
at Level One until such time as the Contract was amended to provide a higher level of
coverage.
The following table shows the Monthly Benefit Levels between the current Level 1 and
the proposed Level 3 contract amendment.
14
MONTHLY BENEFIT LEVELS
Benefit Level
One Survivor
Two Survivors
Three or More
Survivors
Level 1
$180 per month
$360 per month
$430 per month
Level 3
$950 per month
$700 per month
$840 per month
The actuarial from PERS indicated that the Employer cost is zero but that there is an
unfunded liability of $5,782. This can amortize over 5 years as a separate billing.
Negotiations with the Unit 6 (Police) and Unit 10 (Public Safety Midmanagement)
contained a condition requiring provision of this benefit for their miscellaneous members.
The other miscellaneous employee units have agreed to this modification.
2. ALTERNATIVES:
A) No action.
This would be in violation to two Memoranda of Understanding between the Employee
Unions and the City.
B) Delay Implementation
This would be in violation to two Memoranda of Understanding between the Employee
Unions and the City.
C) Proceed with the Contract Amendment
This would meet the City obligations under the Memoranda of Understanding between the
City and Unit 6 (Police) and Unit 10 (Public Safety Midmanagement).
3. FINANCIAL IMPACT
The actuarial has been performed and the total cost is $5,782 amortized over 5 years for
the unfunded liability in the City of Petaluma account with PERS. The normal cost is
expected to remain at $0.00 for the next three to four years.
IMPACT ON CURRENT PROJECTS
Impact on Current Projects
;Contract Modification and Benefit 8 Hours
Dissemination
4. CONCLUSION
This is a required implementation of a term and condition under the City's Memoranda of
Understanding. It will also provide an increased benefit for the survivor of a deceased
employee and assist in the financial adjustments during a period of transition by the
surviving spouse.
5. RECOMMENDATION
1) Adoption of the Resolution of Intention to provide Third Level of 1959 Survivor
Benefits for Local Miscellaneous Members; and
2) Adoption of the Introduction of Ordinance modifying the Contract between PERS and
the City of Petaluma to implement the 1959 Survivors Level.
M
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ACTUARIAL AND EMPLOYER SERVICES DIVISION
CONTRACT AMENDMENT COST ANALYSIS
Valuation Basis: June 30, 1997
Date: November 25, 1998 Member Category: MISCELLANEOUS PLAN
Employer #: 293 Coverage Groups: 70001
Employer Name: CITY OF PETALUMA
Section 21573 - Third Level of 1959 Survivor Benefits for Local MISCELLANEOUS PLAN Members
The Third 1959 Survivor Benefit is administered by pooling the assets and liabilities of many public agencies that
have already contracted for this benefit. There are two components that constitute the total cost to join the pool. The
normal cost is an annual cost that is required to fund the benefit for current (active) members for the coming year. In
addition, an unfunded liability may be created due to the immediate increased benefits that current survivors would
receive. Current CalPERS policy requires payment of the agency's first year normal cost and the total unfunded
liability incurred at the higher level. Agencies will be allowed to amortize this unfunded liability over a period of 5
years. Further, it is CalPERS' policy to allow agencies migrating to a higher level to use as much of their own
surplus as necessary to pay the unfunded liability (if any) and their first year's normal cost. In years 2 through 5,
migrating agencies will be required to make annual amortization payments (if any) on the unfunded liability, yet will
be considered apart of the pool for normal cost purposes and will be able to share in the pool's surplus to pay their
annual normal costs. Be aware that the pool's surplus may not be used to pay for any of the unfunded liability
alluded to earlier.
Based on current experience, CalPERS expects that surplus assets in the Third Level pool will pay employer normal
costs for approximately the next 3 years. These annual normal costs are based on the experience of the pool and are
subject to change from year to year. Due to this uncertainty, it is impossible to predict precisely how long these
surplus assets will last or what the eventual annual costs would be when the surplus is exhausted.
Below we have provided a breakdown of the two components of your employer cost should you choose to join the
pool. If your agency has enough assets to offset the increase in liability (if any) and the first year's normal cost at the
higher level, this will be reflected as a negative unfunded liability payment below. And, if your agency has enough
assets to offset the increase in liability, yet not enough to pay the entire first -year normal cost, the required first year
normal cost payment will be pro -rated accordingly. For the fiscal year 1998 -99 the CalPERS Board of
Administration approved employer normal cost rates of $0.00 per active member, per month.
As of June 30, 1997 this member group is estimated to have an unfunded liability for the Third Level of the 1959
Survivor Benefit amounting to $23,863.11 and an active member count of 167. Costs displayed below are good until
normal cost rates for the next fiscal year are approved by the Board (generally around mid - August).
FIRST YEAR EMPLOYER COST
$0 First Year Normal Cost (Normal Cost x active member count x 12)
$5,782 Unfunded Liability Payment
$5,782 Total First Year Cost
EMPLOYEE MONTHLY COST
$2.00 per month ($0.93 bi- weekly)
If you are currently a 1St or 2nd level 1959 Survivor Agency, the resulting portion of your current
employer rate attributable to the 1959 Survivor Benefit will be 0.000 %.
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%
AND THE
CITE' COUNCIL
OF THE
CITE' OF PETALUMA
The Board of Administration, Public Employees' Retirement System, hereinafter referred to as Beard, and
the governing body of 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 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 and May
4, 1998 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 ffom said contract as executed effective May 4, 1998,
and hereby replaced by the following paragraphs numbered 1 through 12 inclusive:
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,
2. Public Agency shall participate in the Public l,.mployees' 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 these, which by express provisions thereof, apply only on
the election of a contracting agency_
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
TEL:
Dec 21'98 13:46 No . 008 P.03
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 (20X0 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 of said Retirement Law (2% at age 50 Full).
7. Public Agency elected and elects to be subject to the following optional provisions:
a. Section 21222.1 (Special 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 (Special 1%-7% Increase) for or on behalf of those local miscellaneous
members who retired or died prior to July 1, 1974-
e. Sections 21624, 21626 and 21628 (Post- Retirement Survivor Allowance) for local fire
members only.
f. Section 21024 (Military Service Credit as Public Service), Statutes of 1976.
g_ Section 21574 (Fourth Level of 1959 Survivor Benefits) for local safety members
only.
h. Section 2157 3) (Third Level of 1959 Survivor Benefits) for local miscellaneous
members.
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 Govemment
Code Section 20834, and accumulated contributions thereafter shall be held by the Board as
provided in Government Code Section 208:34.
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 2157? 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 terra insurance rates, for survivors of all local
miscellaneous members.
TEL: Dec 21'98 13:46 No.008 P.04
' - 1F It
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.
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
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMEW- SYSTEM
F! ,
r
i
BY
KENNETH W. MAMONXHLEF
ACTUARIAL & EMPJ:bYER SERVICES DIVISION
PUBLIC FMPLOYa -$, RETIREMENT SYSTEM
r�
AMENDMENT
PERS- CON -702A (Rev. 8196)
day of µ '19
CITY COUNCIL
OF 'ME
CITY OF PETALUMA
41
BY �
PRFSTDING OFFICER � �}
e
Witness Date
Attest:
Clerk