HomeMy WebLinkAboutAgenda Bill 3.B 03/21/20112 �LU�
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DATE:
TO:
FROM:
A gendcv Ite+w # 3.3
March 21, 2011
Honorable Mayor and Members of the City Council through City Manager
John C. Brown, City Manager
SUBJECT: Resolution to Grant Another Designated Period for Two Years Additional Service
Credit, and Authorize the Mayor to Execute a Certificate of Compliance with
Government Code Section 20903.
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution to Grant Another
Designated Period for Two Years Additional Service Credit, and authorize the Mayor to execute
the attached Certificate of Compliance with Government Code Section 20903.
BACKGROUND
The adoption of the Resolution to Grant Another Designated Period for Two Years Additional
Service Credit and adoption of the Certification of Compliance with Government Code Section
20903 are required steps for the City to offer two years additional service credit in PERS to
eligible employees. The Resolution formally designates the period during which the employees
may retire, which staff recommends be the period from March 23, 2011 through June 30, 2011.
DISCUSSION
The City of Petaluma continues to face financial shortfalls and impending layoffs. To reduce the
projected gap between revenue and expense, and to mitigate potential layoffs, the Council
directed staff on March 7, 2011 to take the necessary steps to enable it to offer two years of
additional service credit in PERS to all eligible employees.
The costs to provide this benefit were made public at the City Council meeting on March 7,
2011. This information is required to be made public at least two weeks prior to the adoption of
the Resolution to Grant Another Designated Period for Two Years Additional Service Credit.
Eligible employees electing to participate will receive an additional two years of service credit,
which will increase their retirement annuity. Eligible employees must have at least five years of
service credit in PERS and be age fifty or older. The offering of this benefit will reduce the need
for mandatory layoffs, transfers, or demotions.
Agenda Review:
City Attorney Finance Director City Manager
— 1-- 6—
FINANCIAL IMPACTS
The cost of the two years additional service credit will be included in the City's PERS employer
contribution rate for the fiscal year 2013/2014. 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 of additional service credit.
There are 88 employees eligible to retire and receive the two years additional service credit. The
added cost to the retirement fund if all eligible employees retire with the service credit is as
follows:
Employee Group
Safety Employees
Miscellaneous Employees
Total
# Employees Eligible
13
75
88
Present value of
$1,320,072
$2,699,676
$4,019,748
of additional employer
contributions
$4,019,748 is the estimated present value of the additional employer contributions that will be
required in the future for providing the two years service credit if all 88 employees choose to
retire within the window period (March 23, 2011 to June 30, 2011).
It is estimated that the annual employer rates would increase as follows:
Safety Employ Miscellaneous Employees Total
Employer Rate Increase .83% 1.60%
Estimated Annual Cost
of Increased Rates $99,703 $203,903 $303,606
This estimated present value of additional contribution may differ from the actual
value for two reasons:
1. Some of the employees who are eligible to retire and receive the two years service
credit (and who are included in the preceding estimate) may choose not to retire; and,
2. There may be additional cost to the City (called an "experience loss ") if the total
number of employees retiring in the fiscal year exceeds the number predicted by the
actuarial assumptions. An experience loss occurs very often when the two years
service credit is offered because some employees retire who would have otherwise
waited until later years.
M
The City informally surveyed all 88 eligible employees and asked who would be seriously
interested in the taking the service credit and retire. Eighteen (18) eligible employees currently
indicate that they would be seriously interested in taking the service credit and retiring.
The added cost to the retirement fund for only those who expressed interest in retiring with the
additional service credit is as follows:
Employee Group Safety ployees Miscellaneous Employees
Total
# Employees Interested 7 11
18
Present Value $690,965 $364,216
$1,055,181
$1,055,181 is the estimated present value of the additional employer contributions that will be
required in the future for employees interested in the two years service credit.
It is estimated that the annual employer rates would increase as follows:
Safety Employees Miscellaneous Employ
Total
Rate Increase .43% .22%
Estimated Annual Cost
of Increased Rates $52,188 $27,509
$79,696
ATTACHMENTS
1. Resolution
2. Certification of Compliance with Government Code Section 20903
NJ
Attachment1
Resolution No. 2011 -XX N.C.S.
of the City of Petaluma; California
CITY COUNCIL
OF THE
CITY OF PETALUMA
RESOLUTION
TO
GRANT ANOTHER DESIGNATED PERIOD
FOR
TWO YEARS ADDITIONAL SERVICE CREDIT
WHEREAS, the City Council of the City of Petaluma is a contracting Public Agency of
the Public Employees' Retirement System; and,
WHEREAS, said Public Agency desires to provide another designated period for Two
Years Additional Service Credit, Section 20903, based on the contract amendment included in
said contract which provided for Section 20903, Two Years Additional Service Credit, for
eligible members;
NOW, THEREFORE, BE IT RESOLVED that said City Council does seek to add
another designated period, and does hereby authorize this Resolution, indicating a desire to add a
designated period from March. 23, 2011 through June 30, 2011 for 'eligible Miscellaneous and
Safety members in the City of Petaluma.
BE IT FURTHER RESOLVED that the Mayor is authorized to execute the
Certification of Compliance with Government Code Section 20903 which is Attachment 2 to the
staff report presented herewith and incorporated herein by reference.
Adopted and approved this
Attest:
Clerk/Secretary
day of
CITY COUNCIL
OF THE
CITY OF PETALUMA
C 1
Presiding Officer
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM ATTACHMENT 2
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229 -2709
(888) CalPERS (225 -7377)
CERTIFICATION OF- COMPLIANCE WITH
. GOVERNMENT CODE SECTION 20903
In accordance with Government Code Section 20903 and the contract between the
Public Employees' Retirement System, the City Council, of the City of Petaluma hereby
certifies that:
Because of an impending curtailment of, or change in the manner of performing
service, the best interests of the agency will be served by granting such additional
service credit.
2. The added cost to the retirement fund for all eligible employees who retire during
the designated window period will be included in the contracting agency's
employer contribution rate for the fiscal year that begins two years after the end of
the designated period.
3. It has elected to become subject to Section 20903 because of impending
mandatory transfers, demotions, and layoffs that constitute at least 1 percent of
the job classification, department or organizational unit, as designated by the
governing. body, resulting from the curtailment of, or change in the manner of
performing, its services.
4. Its intention at the time Section 20903 becomes operative is to keep all vacancies
created by retirements under this section or at least one vacancy in any position in
any department or other organizationall unit permanently unfilled thereby resulting
in an overall reduction in the work force of such department or organizational unit.
THEREFORE, the City Council of the City of .Petaluma hereby elects to provide the
benefits of Government Code Section 20903 to all eligible members who retire within
the designated period, Mar 23, 2011 through 0 u;n e 30, 2 01 1
CITY COUNCIL
l OF THE
CITY OF PETALUMA
In
Presiding Officer
Attest:
Clerk/Secretary
Date
2yr certification -PA (Rev. 4104)
5