HomeMy WebLinkAboutAgenda Item 25 CITY-OF PETALUMA, CALIFORNIA
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AGENDA BILI '
Agenda Title: Meeting Date:. •
1. Resolution Of Intention to Approve an Amendment to the March 5, 2001
• Contract between the Board.of Administration, California
Public Employees' Retirement System (PERS) and the
City-of Petaluma.
2. ' Introduction of Ordinance to approve the Amendment to
the Contract between the Board of Administration,
California Public Employees' Retirement System.(PERS)
and the City of Petaluma
Department: Director: Contact Person: Phone Number:
Finance William J. Thomas William J. Thomas 778-4352
Cost of Proposal: Additional cost will be borne beginning in Account Number:
Fiscal Year 2002 N/A
Amount Budgeted: N/A .Name;otFund:
WA
Attachments to.Agenda Packet Item:'
1. Resolution of Intention to Approve an Amendment to Existing PERS contract
2. Ordinance to Approve Amendment to'Existing PERS contract
Summary Statement:
As the result of contract negotiations with Unit 7 Fire, Unit 6-Police and Unit 10 Public Safety Mid-
•Management the City agreed to provide an enhanced retirement program to members of those bargaining
units. This program is commonly referredto;as "3% @50" for local safety members. Management has
received the actuarial study back from PERS and intends to budget the-cost of this program into the FY
2002 budget. In addition to this change; management has requested that our contract with PERS be
modified to include Section 21023.5 which provides credit for.Peace Corps or AmeriCorps: VISTA
service.
Council Priority: THIS AGENDA.ITEM,IS CONSIDERED To BE PARTOF, OR NECESSARY TO, ONE OR
MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY COUNCIL ON JANUARY 30, 1.999
AND MARCH 18, 2000
Priority'(s)` N/A
Recommended.City Council Action/Suggested Motion:
Adopt Resolution of Intention to Approve an Amendment,to:the existing PERS contract.
Adopt Ordinance on first reading to Amend the existing PERS contract.
Reviewed by Finance Director: Reviewed.b City Attorney: A. ,rovedlb City Manager:
Vv S Data DateJr
�Today's Da:e: • Revision # s la • • evised: File`Code:
7-8.2001 # S./agenda/PERSstaff report&resolution
• CITY OF PETALUMA, CALIFORNIA
DATE March 5; 2001
• AGENDA`.REPORT
FOR.
AMENDMENTSTO THE EXISTING PERS CONTRACT
1. EXECUTIVE SUMMARY:.
As the result of contract negotiations with Unit 7 Fire, Unit 6 Police and Unit 10 Public Safety
Mid-Management the City agreed to provide an enhanced retirement program to members of
those bargaining units..This program is commonly referred as"3% @50" for local safety
members. Management has received the:actuarial study back from PERS and intends to budget
the cost of this program into the FY 2002 budget. In addition to this change, management has
requested that our contract with PERS be modified to include4Section 21023.5 which provides
credit for Peace Corps or AmeriCorps:;VISTA service.
2. BACKGROUND:
Existing Memorandums of Understanding (MOU) with the,various public safety bargaining units
requires that the City provide their.members`with the 3% at 50 PERS retirement plan.
Management has been working with:PERS.to have an actuarial study done as the first step in the
process of providing this benefit. PERS has,provided us with these calculations and the next step
is to notify PERS of our intention to modify the existing contract to provide this benefit to the
affected employees. Both a resolution of intention to approve an amendment to the existing
• contract and an Ordinance that provides for the amendment need to be acted upon by Council to
effect this change: The Resolution of Intention and the introduction of the Ordinance that
amends the current contract can be acted on at the same meeting. TheiOrdinance will be brought
back to Council for final approval,;at the'April 2, 2001 meeting. Besides?providing this
retirement benefit, it is also proposed that the City amend its`current,contract to include the
ability of employees to receive,PERS credit for serving in the Peace&Corps or AmeriCorps. This
benefit would be for all members.
PERS requires that a public hearing be held to provide information concerning the cost of this
change in the contract. This information was provided to the City by PERS and is summarized
as follows:
Change in the Present Value of Benefits $ 8,005,549
Change in the Unfunded Accrued Liability $ 4,154,957
Change in the Employer;Rate 9.671%
The "Present Value of Benefits represents the total dollars that are needed today to fund all
future benefits for current.members of the plan. The difference between this amount and current
plan assets must be paid by future employee and employer contributions. As such, the change in
• the present value of benefits due to the plan amendment represents the "cost" of the plan
amendment. PERS valued the plan's assets on the date of the actuarial study-at`$2,388,347.
Therefore the present value of future employer and employee contributions total $5,617,202.
2
Currently the City's PERS plan for safety employees is considered to be one with assets in excess
of the plan's accrued liability. Therefore, the City's current employer contribution rate is less
than what would,be considered normal cost. The difference is being made up from the excess
assets. With the adoption of this amendment,the change in the present value of benefits is added •
to the existing liability to create the new liability. Currently we have a positive liability of
$4,042,366. With the addition of$8,005,549 the liability reverts to an unfunded status of
$4,154,957. -PERS allows.cities to amortize this unfunded liability over 20 years. A summary of
how the PERS rate is calculated is as follows:
• Changes.Due to Post
Pre-Amendment Plan Amendment&
Amendment-and Post Method
Method Change Change.
Normal Cost 12.690%0 4.662% 17,352%
Unfunded/ExcessAssetCost -5.673% '5.009%0 -0.664%a.
Total Employer Rate 7.0.17% 9.671% 16.688%.
Based onthe,proposed,amendments to the existing+RERS contract, the employer rate for public
safety members will increase from its current 7.017% to16.688%u. This rate change will be
effective on Sune30,',2001.
3. ALTERNATIVES:
Do not approve amendments-to the PERS contract as provided for in the existingMOU's
4. FINANCIAL IMPACTS: •
By approving the amendment for 3%at 50 Full Formula, the cost to the City for fiscal year 2002
is approximately $871,000:. During the negotiations'with public'safety,.,the City engaged Oliver
and:Associates who reviewed the PERS estimates. At that time the cost was estimated:to Abe
approximately-$84Z000. Thus the actual is within 3% of the estimates that were developed_
during negotiations. The cost,for the additional service credit for Peace Corp has not been given •
to us by is considered to be insignificant.
5. CONCLUSION:
The current MOU for the various public safety groups contain a requirement that,the City provide
Section 21362.2—'3%u at 50 frill formula retirementb"enefit. In order to provide this benefit, the
Cit-Council'.must adopt a Resolution ofIntention,and an.Ordinance that provides for the
amendment to the existing retirement plan with PERS.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL
INDENTIFY SUCCESS=OR COMPLETION:
Finalization of the amended contract with PERS.
7. RECOMMENDATION:
Adopt the Resolution of Intent and Introduce Ordinance to Amend on first reading-to amend
contract with PERS. .
s:/agenda/PERS staff report&,resolution - ••
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•
Resolution No. N.C.S.
2 of the City of Petaluma, California
3
TO.APPROVE AN AMENDMENT TO'CONTRACT
BETWEEN THE
6 BOARD OF ADMINISTRATION
7 CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
8 AND THE
9 CITY COUNCIL
10 CITY OF PETALUMA
11
l2
13' WHEREAS, the Public Employees'"Retirement Law permits the participation of public
14 agencies and their employees in the Public Employees"Retirement System by the execution of a
15 contract, and sets forth the procedure by which said public agencies may elect to subject themselves
16 and their employees to amendments to said LAW; and
17
18 WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the
19 governing body of the public agency ofa-resolution giving notice;of its intention to approve,an
20 amendment to said contract, which resolution shall contain a summaryof the change proposed in
21 said contract; and
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23 WHEREAS, the following is a statement of the proposed.-change:
24 •
To provide Section 21 362.2 (3% at 50 Full formula) for,local safety members and
Section 21023.5 (Public Service:Credit for Peace Corps;or AmeriCorps: VISTA
27 Service) for local miscellaneous members and local safetymembers.
28
29 NOW, THEREFORE, BE IT RESOLVED, that the governing body of the above.agency does
30 hereby give notice of intention to approve an amendment to the contract.between said public agency
31 and the Board of Administration of the Public Employees'Retirement System, a copy of said
32 amendment being attached hereto, as an"Exhibit A" and by this reference made a part hereof.
33
34
35
36
37
38 Under the power and authority conferred upon this Council by.the Charter of said City.
39 REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted.bythe
40 Council of the City of Petaluma at a Regular meetingkon 2000 Approved as to
41 by the following vote: form:
42
43
44 City Attorney
45 AYES:
46 NOES:
4 ABSENT:
4111"
49 ATTEST:
50 City Clerk Mayor
51
52 Resolution No. NCS (�
ORDINANCE NO. .. N.C.S. •.
Introduced Seconded
ByCouncilmeniber
AN. ORDIANANCE AUTHORIZING AN AMENDMENT TO THE
CONTRACT BETWEEN THE CITY OF PETALUMA AND;BOARD
OF ADMINISTRATION OF THE CALIFORNIA
• PUBLIC EMPLOYEES' RETIREMENT SYSTEM:
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PETALUMA
FOLLOWS:
Section 1. That an amendment to the contract between the City Petaluma
and the Board of Administration, California Public Employees' Retirement System
is hereby authorized, a copy of said amendment being attached hereto, marked
Exhibit A, and by such reference made a part hereof as though herein set out in •'
full.
Section 2. The Mayor of the City Council is hereby authorized, empowered,.
and directed to execute said amendment fix-and on behalf of said Agency.
Section 3. This Ordinance shall take effect thirty days after the date of its
adoption and prior to the expiration of thirty days from passage shall be published
at least twice in the Petaluma Argus Courier, a newspaper of general,circulation,
published and circulated in the City of Petaluma and thenceforth and thereafter the
same shall be in full force and effect.
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•
I%
Ca1PERS
EXHIBIT A
California
Public Employees' Retirement System.
AMENDMENT TO CONTRACT
JBetween•tFe .
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
effective January 1, 1950, and witnessed October 18, 1949, and as amended effective
November 1 , 1 959, 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 and April 5, 1999
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 April 5, 1999, 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,,
•
f Z4 OT sl - r f
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). The required member contribution rate is '9% of
reportable compensation.
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% to 7% Increase; For Local
Miscellaneous Members Who Retired or Died Prior to.July 1, 1974).
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•
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 2157.4. (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 21023:5 (Public Service Credit for Peace Corps or
AmeriCorps: VISTA Service).
• 8. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" far 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 Section21574 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.
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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 emp"loyee?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
KENNETH W MARZION, CHIEF PRESIDING OFFICER
ACTUARIAL &,.EMPLOYER SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Witness Date'
Attest.
Clerk
AMENDMENT
P E R S-EON-702A(Rev:8\96)
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