HomeMy WebLinkAboutAgenda Bill 04/16/2001 (17) 1
- `. ' CITY OF PETALUMA, CALIFORNIA
° AGENDA BILL i 4
Agenda Title: Meeting Date:
O 1. Resolution of Intention to,Approve:an Amendment to the April 16, 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. Tho as 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 of Fund:
N/A
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-
anagement the City agreed to provide,an enhanced retirement program to members of those bargaining
'units. This program is commonly referred to 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.
Council Priority: THIS AGENDA ITEM IS CONSIDERED TO BE.PART OF, OR NECESSARY TO, ONE OR
MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY!COUNCIL ON JANUARY 30, 1999
AND MARCIU18, 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:omfirstreading to Amend the existing PERS contract.
Reviewed by.Finance-Director: Reviewed by City.Aitornev: A 1 s •d by City Manager:
.n�. /� D te: . /� ate:/ /a7
Today's Da e: Revision # aTh 1 . Revised: /'Ile Co I •:
3-22-2001 # S:/agenda/PERSstaff report&resolution
CITY OF'PETALUMA, CALIFORNIA
DATE March-5;200f
•
O • AGENDA REPORT
FOR' .
AMENDMENTS,TO 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 to 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.
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: The Ordinance will be brought
back to Council for final approval.at.the.May 7, 2001 meeting.
PERS requires that a public hearing beheld 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 S„ 8,005,549
Change in the Unfunded Accrued Liability $' 4,154,957
Change in the Employer Rate 9.671%
The "Present Value,ofBenefits"-represents the total dollarsthat areneeded todayto fund all
future benefits for"currentmeinbers of the plan. The difference between this amount and current
plan assets tnust.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`vdlued 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.
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% 4.662% 17:352%
Unfunded/Excess Asset Cost -5.673%° 5.009% -0.664%
Total Employer Rate 7.017% 9.671% 16.688% •
Based on the proposed amendments to the existing PERS contract, the employer rate for public
safety members:will increase from its current 7.017%ti to 16,:688%. This rate change will be
effective on June 30, 2001.
3. ALTERNATIVES:
Do not approve amendments to the PERS contract as provided for in the existing MOU',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'be'
approximately'$842,000. Thus the actual is within 3% of the estimates that were developed
during negotiations.
•
5. CONCLUSION:
The current1MOU for Section 21362.2 3/ot at various
full formula retirement benefit. In order to provide that the City provide
` ° er to provide;this benefit, he
City Council must adopt a;Resolution of Intention 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/PERSstaff report'&resolution
•
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.EIVIPLOYEES' RETIREMENT SYSTEM
8 AND THE
9 CITY COUNCIL
10 - CITY OFPETALUMA
11
12
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 of a resolution giving notice;of its intention to approve an
20 amendment to said contract, which resolution shall contain a summary of the change proposed in
21 . said contract; and
22
23 WHEREAS, the following is a statement of the proposed change:
24
2' To provide Section 21362.2 (3%u'at 50 Full formula) for local safety.
2
27 NOW, THEREFORE, BE IT RESOLVED, that the governing body of the above agency does
28 hereby give notice of intention to.approve an amendment to:the contract between said public agency
29 and the Board of Administration of the Public Employees' Retirement System, a copy of said
30 amendment being attached hereto, as an "Exhibit A" and by this reference made a part hereof.
31
32
33
34 .
35
36 Under the,power.and authority conferred upon this Council by;the Charter of said City.
37 REFERENCE`. I hereby certify the foregoing Resolution was introduced and'adopted,by the
38 Council of the City of Petaluma at a Regular meeting on 2000 Approved as to
39 by the following vote: form:
41
42 City Attorney
43 AYES:
44 NOES:
45 ABSENT:
46
ATTEST:
City Clerk Mayor
4
50 Resolution No. NCS
ORDINANCE NO. N.C.S.
Introduced Seconded
By Councilmember
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 AS
FOLLOWS:
Section 1. That an amendment to the contract between the City_Pet'aluma
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 for 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 iCity of Petaluma and thenceforth and thereafter the
same shall be,in full force and effect.
•
•
•
o CaTPERS
EXHIBITA
•
.California
Public Employees' Retirement System
AMENDMENT TO CONTRACT
]Between the
Board off'Administration
California Public']Emiplloyees' 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, 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, 1.996, May 4, 1998 and April 5, 1999
which provides for participation of Public Agency in said System, Board and Public
Agency hereby agree rasfollows:
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.
•
, 'J'I
2. Publr;. Agency shall participate in the Public Employees' Retirement
System from and after January 1, 1950 making its employees as
IP
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
localTiscellaneous 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% atage 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,60 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 212221 '.(Specia15% 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).
•
PLEASE: DO SOT SIGN "EXHIBIT O , [Y"
• 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 21573 (Third Level of 1959 Survivor Benefits) for local
miscellaneous members only.
-
-15nlicriCorps: VISTA Ccrvice).
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 byactuarial 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.
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 beprescribed
by Board regulation. If more or less than the correct .amount of
contribution's 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' RETIREI4NT'SYSTEM CITY OF PETALUMA
•
BY ;- BY
KENNETHW: MARZION, CHIEF PRESIDING OFFICER
ACTUARIAL& EMPLOYER' SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT:SYSTEM
•
Witness Date
Attest:
C lerlu
S
AMENDMENT
P E RS-CON-702A'(Rev. 8 196)