HomeMy WebLinkAboutAgenda Bill 05/07/2001 (17) CITY OF PETALUMA, CALIFORNIA
° AGENDA BILL
MAY 07200 ' 5
Agenda'Title Meeting:Date:
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 Petaluriia.
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 Wilham J. Tho` as William J. Thomas 7784352
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 IntentiontorApptove:an Amendment to Existing-PERS contract
2. Ordinance to Approve Amendment Existing PERS contract
Summary Statement: •
eAs the result of contract negotiations with Unit 7 Fire, Unit 6 Police and Unit 10 Public Safety Mid-
lanagement 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 OE, OR NECESSARY TO, ONE OR
MORE OF THE 1999-2000 PRIORITIES ESTABLISHED By THE CITY COUNCIL ON JANUARY 30, 1999
AND MARCH 18, 2000•• Priority(s): N/A
Recommended City Council,Action/Suggested Motion:,
Adopt Resolution.of Intentionto,Approvean,Amendment to the existing,PERS`contract.
Adopt,Ordinance,orrfirstreadingto-Amend the existing PERS contract:,
Reviewed:bv Finance Director Reviewed by City Attorney: Ap d"by City Manager:
D eDate:
Today's Dde: Revision# a'ij! Revised: //File Co.pc
3-22-2001 #. - 'SJagenda/PERS staff report&resolution
•
•
•
•
•
. .
. .
•:4..-
., _
•
CITY-OF PETALUMA, CALIFORNIA
.DATE March 5, 2001
AGENDKREPORT
FOR
Aa NDMENTS TO'THEEXISTINGTPERS CONTRACT •
1. EXECUTIVE SUMMARY:
• As-the result of contract;negotiations:with Unit 7 Fire;,Unit 6 Police and Unit 10 Public Safety
• Mid-Management thee City agreed to5provide 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 hack from PERS.and intends to budget
the cost of this program into`the FY 2002 budget.
2. BACKGROUND:
Existing Memorandums of Und'erstandirig4(MOU) with the various publicsafety bargaining units.
requires thatthe City provide their members with the 3%,at 50'PERSretirement plan.
Management has been working with PER S to have am actuarial;study,done as the first step in the
process of providing this benefit. PERS has provided us'with,these calculations and the,nextstep
is to notify PERS of our intention:to modify the existing-contract to provide`this benefit to the
affected employees: Botha 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 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 $ • 4,154957
Change in the Employer Rate; 9.671%
The "Present Value bf Benefits" represents the total dbllars'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 oftthe,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
$4,042,266. With the addition of$8;005;549 the liability reverts to-an unfunded status of
•
$4,154,957. PERS allows citiesssto amortize this unfunded?liability over 20 years. A summary of
• howthe'PERS rate:is calculated is as follows: . •
Changes.Due to • Post
Pre-Amendment; Plan Amendment &
Amendmentand "-PostMethod,
Method Change Change
Normal Cost 12.690% 4.662% 17.352%
•
Unfunded/Excess Asset:Cost -5,673%0, 5,009% ' -0:664%
Total Employer Rate . 7.01.7% .9:671% 1'6:688%
Based on the'proposed;;amendments to the existing PERS contract,the,employer ratefor public
safety members will'increase from its current 7.017%o.to 16.688%. This rate:change will•be
effective on Junei30,'2001.
3: ALTERNATIVES:
Do-not approve amendments to the PERS contract,as provided for':in the existing MOLT'S
4. FINANCIAL IMPACTS:.
By approving the amendment,for 3% at.50'FulliFormula, 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 costwaSi,estnnateelto be
approximately'$842,000. Thus the actual is within 3% of the:estimates that were developed
duringnegotiations.
5. CONCLUSION:
The current for the various•publicjsafety groups contain a requirement_that the City provide
Section 21362.2=3%'at 50 full formula retirement benefit. In order,to provide,this benefit;the
City Council-must",adopt a Resolution of Intention and an Ordinance that provides:for the
amendment tothe existing retirement plan with;PERS.
6. OUTCOMES:0R PERFORMANCEMEASUREMENTS THAT WILL
INDENTIFYISUCCESS:OR COMPLETION:
Finalization ofthe'amended,contract with PERS.
7. 'RECOMMENDATION:
Adopt the Resolution ofintent.and Introduce Ordinance to.Artrendidh first-reading to amend
contract with PERS.
sJagenda/PERS staff repot&resolution •
1
• •.
•
•
Resolution Noy N.C.S.
"z of the City ofPetaturrla, California°
•
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
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
23 WHEREAS, the following.'isastatement of the proposed change:
24
2111 To provide.Section 21362.2 (3% at 50 Full fouuula) fat local safety.
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 andadopted?by the
38 Council of:the City of Petaluma at a Regular meeting on 2000. Approved as to
39 by the following vote: form: .
40
41
42 - • City Attorney
43. AYES:
44 NOES:
45 ABSENT:
46
4'STTEST:
City Clerk Mayor
49-
50 Resolution No. NCS •
ORDINANCE NO. N.C.S.
•
•
Introduced Seconded
By Councilmember
•
AN ORMANANCE AUTHORIZING AN AMENDMENT TO THE
CONTRACT BETWEEN THE CITY OF PETALUMA ANDJBOARD
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 bethreen the City Petaluma
and the Board of Administration, California Public Employees' Retirement System
is herebrauthoriZed, a copy of said:met-lathe-Pt being attached hereto, marked
Exhibit A, and by such reference made a part hereof as though herein set outin
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 Argils-Geuther, a:newspaper of general circulation,
published and circulated in the City of Petaluma and thenceforth and thereafter the
smite Shall be in hill force and effect.
•
•
•
A
• Ca1PERS
•
EXHIBITA
California
• Public Employees' RetirementSSystem
•
AMENDMENT TO CONTRACT
Betaaieen the •
Board of Administration. •
California PuiblicEmlployees 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 l, 1981 July 1, 1982, January 1, 1987, December 28,
1987 January 1, 1992, January 4, 1996 June-30, 1996, May4, 1998,and April 5, 1999.
which provides, for participation of Public Agency in said System, Board and 'Public
Agency[hereby agree as fdllows: •
A. Paragraphs 1 through 12 are hereby stricken from said contract as executed
effective .April 5, 1999, and hereby replaced ;b9 -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
"miernber`s. •
-./1 f 1:; 11
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 iapply 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 of-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 rnembership;'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% af_age55 Full). •
6. The percentage of final compensation to' be provided for each year of
credited prior sand 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 cornpensation:
7. . Public Agency elected and, elects to be subject to the following optional
provisions: -
a. . Section1/421222.1 i(Special 5% Ihcrease21970). 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 ‘21.326411,(Special 1% to .7% Increase For iLocal
Miscellaneous'Members'Who Retired orDied Prior to July 1, 1974).
PLEASE GO NOT SIGN "EX1 i61T ONLY/'
•
e. Sections 21624, '21.626 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.
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 b e 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 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 safetymembers.
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 fad:
•
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 b9 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'ameridment shall be effective on the day of •
•
• BOARD OF ADMINISTRATION ; CITY"COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF PETALUMA
BY - BY
KENNETH W. MARZLON,;CHIEF PRESIDING OFFICER
ACTUARIAL &,EMPLOYER'SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
• Witness Date
Attest:
C'
Clerk
AMENDMENT' — ----•
P E R s-CON-702A-(Rev. 8\96),