HomeMy WebLinkAboutStaff Report 4.A 04/16/2018DATE: April 16, 2018
Agenda Item #4.A
TO:Honorable Mayor and Members of the City Council through City Manager
FROM: Amy Reeve, Director of Human Resources
SUBJECT: 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 Petaluma; and Introduction (First Reading) of
An Ordinance Authorizing an Amendment to the Contract Between the City
Council of Petaluma and the Board of Administration of the California Public
Employees' Retirement System
RECOMMENDATION
It is recommended that the City Council adopt the attached 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 Petaluma; and, Introduce an
Ordinance Authorizing an Amendment to the Contract Between the City Council of Petaluma
and the Board of Administration of the California Public Employees' Retirement System,
BACKGROUND
During prior negotiations for successor Memoranda of Understanding, the American Federation
of State, County and Municipal Employees (AFSCME) and the Petaluma Professional and Mid -
Management Association (PPMMA) negotiated changes to the City's contract with Ca1PERS.
Employees represented by AFSCME and PPMMA approved a contract amendment which
authorized an additional 3% contribution towards the employer contribution to CalPERS, which
was negotiated in 2016 and finalized by contract amendment in May of 2017.
An additional I% employee contribution was negotiated in the respective MOU's with an
anticipated implementation date of July 1, 2018, for a total employee contribution of 4%. The
resolution, and ordinance are required to amend the City's contract with Ca1PERS to implement
the 1% employee cost share of the PERS Employer Contribution for local miscellaneous
members of the AFSCME (Unitl Confidential, Unit 2 Maintenance and Unit 3 Clerical and
Technical) and PPMMA (Unit 4 Professional, Unit 9 Mid Managers and Unit 11 Confidential)
bargaining units. In exchange for the 1 % additional employee cost share, members will receive a
0.75% salary adjustment, effective the first pay period following the amendment of the City's
contract with Ca1PERS.
Page 1
To permit an Amendment to the Contract and classify employee contributions appropriately, the
Ordinance may be adopted on or after May 7, 2018. There must be a 20 day period between the
Adoption of the Resolution of Intention and the Adoption of the Ordinance pursuant to
Government Code Section 20471.
DISCUSSION
As the Council is aware, in recent years, the City has requested that the amount of contribution
by individual employees to the PERS Employer Contribution increase to combat rising
retirement costs. As noted previously, AFSCME and PPMMA bargaining units contribute 3% to
the Employer Contribution, on top of the amount contributed toward the Employee Contribution,
for a total employee contribution of 10% for Classic employees and 9.25% for PEPRA
employees.
The additional 1% contribution will bring employee contributions up to 4% of the Employer
Contribution, for a total employee contribution of 11% for Classic employees and 10.25% for
PEPRA employees.
FINANCIAL IMPACTS
The 0.75% salary offset in exchange for the 1% employee pick-up to PERS will be cost neutral,
however the PERS amendment will bring a degree of permanence to the cost sharing agreement
and will help to control costs in the long-term.
ATTACHMENTS
1. Resolution of Intention
2. Ordinance Authorizing an Amendment to Contract with Ca1PERS
3. Amendment to Contract with Ca1PERS
Page 2
Attachment 1
Resolution No. 2018- N.C.S.
of the City of Petaluma, California
RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO THE
CONTRACT BETWEEN THE BOARD OFADMINISTRATION OF THE CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE
CITY OF PETALUMA
WHEREAS, the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the Public Employees' Retirement System (PERS) by the
execution of a contract, and sets forth the procedure by which public agencies may elect to
subject themselves and their employees to amendments to said Law; and
WHEREAS, the City of Petaluma, by action of the City Council in accordance with the
Public Employee's Retirement Law, has entered into a contract with PERS effective January 1,
1950, and subsequently amended, with the most recent amendment occurring May 7, 2017, the
PERS contract provides for participation of the City and its employees in PERS; and
WHEREAS, one of the steps in the procedures to amend a public agency contract with
PERS is the public agency governing body's adoption of a resolution giving notice of its
intention to approve a contract amendment, which resolution shall contain a summary of the
proposed change; and
WHEREAS, following is a summary of a proposed change the City intends to implement
to the City's PERS contract, in accordance with agreements reached with City bargaining units
regarding such change and the Public Employees' Retirement Law, to provide for contributions
of specified unit members to the City's cost of participating in the City's PERS agreement:
To become subject, from and after the effective date of the amendment, to Section 20516
of the Public Employees' Retirement Law (Employees Sharing Additional Cost) to
provide for employee cost sharing of I% for local miscellaneous members in the
American Federation of State, County and Municipal Employees Unit 1 Confidential,
American Federation of State, County and Municipal Employees Unit 2 Maintenance,
American Federation of State, County and Municipal Employees Unit 3 Clerical and
Technical, Petaluma Professional and Mid -Managers Association Unit 4 Professional,
Petaluma Professional and Mid -Managers Association Unit 9 Mid Managers and
Petaluma Professional and Mid -Managers Association Unit 11 Confidential;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Petaluma hereby gives notice, in accordance with Section 20471 and other applicable sections of
the Public Employees' Retirement Law, of the City's intention to approve an amendment to the
contract between the City and the Board of Administration of the Public Employees' Retirement
System, a copy of said amendment being attached hereto, as "Exhibit A" and by reference made
a part hereof.
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EFFECTIVE DATE
OF ORDINANCE
Introduced by
ORDINANCE NO. N.C.S.
Seconded by
Attachment 2
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PETALUMA
AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY
COUNCIL OF THE CITY OF PETALUMA AND THE BOARD OF ADMINISTRATION
OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
12 WHEREAS, the Public Employees' Retirement Law permits the participation of
13 public agencies and their employees in the Public Employees' Retirement System
14 (PERS) by the execution of a contract, and sets forth the procedure by which public
15 agencies may elect to subject themselves and their employees to amendments to said
16 Law; and
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18 WHEREAS, the City of Petaluma, by action of the City Council in accordance
19 with the Public Employee's Retirement Law, has entered into a contract with PERS
20 effective January 1, 1950, and subsequently amended, with the most recent amendment
21 occurring May 17, 2017, the PERS contract provides .for participation of the City and its
22 employees in PERS; and
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24 WHEREAS, one of the steps in the procedures to amend a public agency contract
25 with PERS is the public agency governing body's adoption of a resolution giving notice
26 of its intention to approve a contract amendment, which resolution shall contain a
27 summary of the proposed contract change; and
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29 WHEREAS, on April 18, 2018, the Petaluma City Council adopted Resolution
30 no. giving the following summary of a proposed change to the City's PERS contract
31 in accordance with agreements reached with City bargaining units regarding such change
32 and the Public Employees' Retirement Law to provide for contributions of specified unit
33 members to the City's cost of participating in the City's PERS agreement:
34
35 To become subject, from and after the effective date of the amendment, to Section
36 20516 of the Public Employees' Retirement Law (Employees Sharing Additional
37 Cost) to provide for employee cost sharing of 3% for local miscellaneous
38 members in the American Federation of State, County and Municipal Employees
39 Unit 1 Confidential, American Federation of State, County and Municipal
40 Employees Unit 2 Maintenance, American Federation of State, County and
41 Municipal, Employees Unit 3 Clerical and Technical, Petaluma Professional and
N
Attachment 2
1 Mid -Managers Association Unit 4 Professional, Petaluma Professional and Mid -
2 Managers Association Unit 9 Mid Managers and Petaluma Professional and Mid -
3 Managers Association Unit 11 Confidential; and
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5 WHEREAS, in accordance with Sections 20471 and 20474 of the Public
6 Employees' Retirement Law, adoption of Resolution no. Igiving notice of a
7 proposed amendment to the City's PERS contract must occur not less than 20 days prior
8 to the date at which this ordinance is adopted; and
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10 WHEREAS, in accordance with Section 20474 of the PERS Law, an election of
11 the employees affected by the proposed amendment to the City's PERS contract will be
12 conducted and canvassed, and this ordinance may only be adopted if a majority of the
13 affected employees do not vote to disapprove of the proposed amendment;
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15 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
16 PETALUMA AS FOLLOWS:
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18 Section 1: An amendment of the contract between the City Council of the City of
19 Petaluma and the Board of Administration, California Public Employees' Retirement System is
20 hereby authorized, a copy of said amendment being attached hereto, marked "Exhibit A", and by
21 such reference made a part hereof as though herein set out in full.
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23 Section 2: The Mayor is hereby authorized, empowered, and directed to execute said
24 amendment for and on behalf of the City.
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26 Section 3: In accordance with Section 20474 of the Public Employees' Retirement Law,
27 the City and its affected employees shall become subject to the amendment attached as Exhibit A
28 beginning the first day of the first pay period following the effective date of this ordinance.
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30 Section 4: This Ordinance shall take effect thirty (30) days after the date of its adoption.
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32 Section 5: If any section, subsection, sentence, clause, phrase or word of this ordinance
33 is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of
34 competent jurisdiction or preempted by state legislation, such decision or legislation shall not
35 affect the validity of the remaining portions of this ordinance. The City Council of the City of
36 Petaluma hereby declares that it would have passed and adopted this ordinance and each and all
37 provisions thereof irrespective of the fact that any one or more of said provisions be declared
38 unconstitutional, unlawful or otherwise invalid.
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40 Section 6: The City Clerk is hereby directed to publish or post this ordinance or a
41 synopsis for the period and in the manner provided by the City Charter and other applicable law.
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43 INTRODUCED, and ordered posted/published, this 16"' day of May, 2018.
44 ADOPTED this day of , 2018, by the following vote:
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Ayes:
Noes:
Abstain:
Absent:
David Glass, Mayor
ATTEST: APPROVED AS TO FORM:
Claire Cooper, City Clerk
Eric W. Danly, City Attorney
Attachment 2
19
California
Public Employees' Retirement System
40 -
AMENDMENT
. •; CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
CouncilCity
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, January 16, 2003, October 7, 2008, November
15, 2012, December 28, 2012, June 19, 2017 and February 26, 2018 which provides for
participation of Public Agency in said System, Board and Public Agency hereby agree as
follows:
A. Paragraphs 1 through 17 are hereby stricken from said contract as executed effective
February 26, 2018, and hereby replaced by the following paragraphs numbered 1
through 17 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 classic local
miscellaneous members entering membership in the miscellaneous classification
on or prior to December 28, 2012, age 60 for classic local miscellaneous members
entering membership for the first time in the miscellaneous classification after
December 28, 2012, age 62 for new local miscellaneous members, age 50 for
classic local safety members entering membership in the safety classification on or
prior to November 15, 2012, age 55 for classic local safety members entering
membership for the first time in the safety classification after November 15, 2012
and age 57 for new local safety members.
i1 1
. 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. Public Agency agrees to indemnify, defend and hold harmless the California Public
Employees' Retirement System (CaiPERS) and its trustees, agents and
employees, the CalPERS Board of Administration, and the California Public
Employees' Retirement Fund from any claims, demands, actions, losses, liabilities,
damages, judgments, expenses and costs, including but not limited to interest,
penalties and attorney fees that may arise as a result of any of the following:
(a) Public Agency's election to provide retirement benefits, provisions or
formulas under this Contract that are different than the retirement
benefits, provisions or formulas provided under the Public Agency's prior
non-CalPERS retirement program.
(b) Any dispute, disagreement, claim, or proceeding (including without
limitation arbitration, administrative hearing, or litigation) between Public
Agency and its employees (or their representatives) which relates to
Public Agency's election to amend this Contract to provide retirement
benefits, provisions or formulas that are different than such employees'
existing retirement benefits, provisions or formulas.
(c) Public Agency's agreement with a third party other than CalPERS to
provide retirement benefits, provisions, or formulas that are different
than the retirement benefits, provisions or formulas provided under this
Contract and provided for under the California Public Employees'
Retirement Law.
4, 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).
PLEASE n0 NOT SIGN "EXHIBIT ONLY„
5. 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:
6. The percentage of final compensation to be provided for each year of credited
prior and current service as a classic local miscellaneous member entering
membership in the miscellaneous classification on or prior to December 28, 2012
shall be determined in accordance with Section 21354 of said Retirement Law (2%
at age 55 Full),
7. The percentage of final compensation to be provided for each year of credited
current service as a classic local miscellaneous member entering membership for
the first time with this agency in the miscellaneous classification after December
28, 2012 shall be determined in accordance with Section 21353 of said Retirement
Law (2% at age 60 Full).
8. The percentage of final compensation to be provided for each year of credited
prior and current service as a new local miscellaneous member shall be
determined in accordance with Section 7522.20 of said Retirement Law (2% at
age 62 Full).
9. The percentage of final compensation to be provided for each year of credited
prior and current service as a classic local safety member entering membership in
the safety classification on or prior to November 15, 2012 shall be determined in
accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full).
10. The percentage of final compensation to be provided for each year of credited
current service as a classic local safety member entering membership for the first
time with this agency in the safety classification after November 15, 2012 shall be
determined in accordance with Section 21363.1 of said Retirement Law (3% at
age 55 Full).
11. The percentage of final compensation to be provided for each year of credited
prior and current service as a new local safety member shall be determined in
accordance with Section 7522.25(d) of said Retirement Law (2.7% at age 57 Full).
12. 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) for classic local safety
members entering membership on or prior to November 15, 2012 and
classic local miscellaneous members entering membership on or prior to
December 28, 2012.
PLEASE DO NOT SIGN "EXHIBIT ONVY
C. Section 20965 (Credit for Unused Sick Leave).
d. Section 21326 (One -Time 1 oto 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.
i. 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).
k. Section 20475 (Different Level of Benefits). Section 21363.1 (3% @ 55 Full
formula) and Section 20037 (Three -Year Final Compensation) are
applicable to classic local safety members entering membership for the first
time with this agency in the safety classification after November 15, 2012.
Section 21353 (2% @ 60 Full formula) and Section 20037 (Three -Year
Final Compensation) are applicable to classic local miscellaneous members
entering membership for the first time with this agency in the miscellaneous
classification after December 28, 2012,
1. Section 20516 (Employees Sharing Additional Cost):
From and after June 19, 2017 and until the effective date of this
amendment to contract, 3% for local miscellaneous members in the
American Federation of State, County and Municipal Employees Unit 1
Confidential, American Federation of State, County and Municipal
Employees Unit 2 Maintenance, American Federation of State, County and
Municipal Employees Unit 3 Clerical and Technical, Petaluma Professional
and Mid -Managers Association Unit 4 Professional, Petaluma Professional
and Mid -Managers Association Unit 9 Mid Managers, and Petaluma
Professional and Mid -Managers Association Unit 11 Confidential.
PLEASL DO NOT SIGN "EXHIBIT ONLY"
From and after February 26, 2018, 3% for local miscellaneous members in
the Unrepresented Executive Management group, Department Heads Unit
8 and Public Safety Mid -Management Association Unit 10.
From and after February 26, 2018, 3% for local safety members in the
Department Heads Unit 8 and Public Safety Mid -Management Association
Unit 10.
From and after the effective of this amendment to contract, 4% for local
miscellaneous members in the American Federation of State, County and
Municipal Employees Unit 1 Confidential, American Federation of State,
County and Municipal Employees Unit 2 Maintenance, American
Federation of State, County and Municipal Employees Unit 3 Clerical and
Technical, Petaluma Professional and Mid -Managers Association Unit 4
Professional, Petaluma Professional and Mid -Managers Association Unit 9
Mid Managers, and Petaluma Professional and Mid -Managers Association
Unit 11 Confidential.
The portion of the employer's contribution that the member agrees to
contribute from his or her compensation, over and above the member's
normal contribution ("Cost Sharing Percentage"), shall not exceed the
Employer Normal Cost Rate, as that rate is defined in the CalPERS
Actuarial Valuation for the relevant fiscal year. If the Cost Sharing
Percentage will exceed the relevant Employer Normal Cost Rate, the Cost
Sharing Percentage shall automatically be reduced to an amount equal to,
and not to exceed, the Employer Normal Cost Rate for the relevant fiscal
year.
13. 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.
14. 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.
15. 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.
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.
16. 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.
17. 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 ADMINISTRATIa
PUBLIC EMPLOYEES' REZ(HtEMENT SYSTEM
BY .�
ARNITA PAIGE, CHI
PENSION CONTR `�M
�S AND PREFUNDING
PROGRAMS DIV N
PUBLIC EMPLO S' RETIREMENT SYSTEM
AMENDMENT CaIPERS 10 #5476407288 PERS-CON-702A
day of E_ .
CITY COUNCIL �
CITY OF PETALUMA
BY
PRESIDING OFFIR
Witness
Attesi.�
4`v
Clerk