HomeMy WebLinkAboutStaff Report 4.A 10/15/2012 4g�e'naw I teww#4-:A
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DATE: October 15, 2012
TO: Honorable Mayor and Members of the City Council through the City Manager
FROM: Pamala Stephens, Human Resources Manager Kia
SUBJECT: Adoption of the Ordinance Authorizing an Amendment to the Contract to Provide
the 3%@55 Full Formula and Three-year Final Compensation to City of Petaluma
Local Safety Members Entering Membership for the First time in the Safety
Classification after the Effective the Date of the Amendment to the Contract.
RECOMMENDATION.
•
It is recommended that the City Council adopt the Ordinance Authorizing,an Amendment to the
Contract Between the City of Petaluma,and Board of Administration of the California Public
Employees' Retirement System'to Provide the 3%@55 Full formula and Three-year Final
Compensation to City of Petaluma Local Safety Members Entering Membership for the First
Time in the Safety Classification after the effective date of the Amendment to Contract.
BACKGROUND
Following agreement with all City safety bargaining units the City proceeded to process a
contract amendment required by'Ca1PERS for a lower retirement benefit. On September 24,
2012 the City Council approved the Resolution of Intention and introduced for first reading the
Ordinance to amend the City's contract with Ca1PERS. Ca1PERS requires that adoption of the
Ordinance take place no less than 20:days following approval of the Resolution of Intention.
Assuming.adoption of the ordinance on October 15, 2012, the City will have adhered to the
requirement.
If it unanimously approved on October 15, 2012,the Ordinance will become effective 30 days
later, on November.14,;2012. The effective date of the CaIPERS Contract Amendment would be
effective the following day which-is;November 15, 2012.
This contract'amendment-creates a second tier of retirement benefits that provide the 3% at 55
full formula and the three-year final average compensation to City of Petaluma local safety
members entering membership for the first time in the safety classification on or after November
15,+2012;
Agenda Review:
City Attorney W` Finance Director City Ma.
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FINANCIAL IMPACTS
Government Code.Section 7507 requires that the future annual costs as determined by the
CalPERS Actuary for the change in retirement;benefits'besmade public at a public meeting at
least two weeks prior to the adoption of the Ordinance. In compliance with Government Code
Section 7507 the Actuary Reports for Fire and Polices Safety Plans were made public at the City
Council meeting on September 24,'2012.
There will be no immediate savings to the City when the second-tier or contract amendment is
implemented. Ultimately,.itsis,expected-that City costs will decrease as the mix of first tier
employees decreases and second tier employees increase. When the mix of all first and second
tier employees reaches a 50-50% ratio, it is estimated by Ca1PE'RS that the employer
contribution rate will decrease by 1.55%(average of 13% for Fire and 1.8% for Police). In
current,dollars a decrease of I.55%'would reduce the City's annual employer contribution for
safety members by $182,490.
ATTACHMENTS
1. Ordinance Authorizing An Amendment to the Contract
ATTACHMENT 1
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EFFECTIVE DATE ORDINANCE NO. N.C.S.
OF ORDINANCE
1 Introduced by Seconded by
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8 AUTHORIZING AN AMENDMENT'TO THE CONTRACT BETWEEN THE CITY OF PETALUMA
9 AND BOARD OF ADMINISTRATION OF THE CALIFORNIAPUBLIC EMPLOYEES'
10 RETIREMENT SYSTEM TO PROVIDE THE 3%@55 FULL FORMULA AND
11 THREE-YEAR FINAL COMPENSATION TO CITY OFIPETALUMA LOCAL SAFETY MEMBERS
12 ENTERING MEMBERSHIP FOR THE FIRST TIME:IN THE SAFETY CLASSIFICATION
13 AFTER THEEFFECTIVE DATE OF THIS AMENDMENT TO CONTRACT.
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15 BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PETALUMA AS FOLLOWS:
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17 Section 1. An amendment to the contract between the City of Petaluma and the Board of
18 Administration; California Public Employees' Retirement System.is hereby authorized, a copy of
19 said amendment being attached hereto, marked Exhibit A, and by such reference made a part
20 hereof as though herein set out in full.
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22 Section 2. The Mayor of the City Council is hereby authorized and directed to execute said
23 amendment for and on behalf of the City of Petaluma.
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'25 Section,3. Severability. The provisions of this Ordinance are severable and if any provision,
26 clause, sentence, word or part thereof is held illegal, invalid, unconstitutional,or.inapplicable to
27 any person or circumstances,,suchsillegality, invalidity, unconstitutionality, or inapplicability shall
28 not affect or impair any of the.remaining provisions, clauses, sentences, sections, words or parts
29 thereof of this Ordinance or their applicability to other persons or circumstances.
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31 Section.4. Effective Date: This Ordinance of the City of Petaluma shall be effective thirty (30)
32 days after the date of its passage.
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34 Section 5. Publication. The City Clerk is hereby directed to post and/or publish this ordinance or
35 a synopsis of this ordinance for the period and'in the manner required by City Charter.
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37 I HEREBY CERTIFY that this ordinance was INTRODUCED at a regular meeting of the City Council
38 of the City of Petaluma, held on the 24th day of September, 2012 and ADOPTED AND PASSED at a
39 regular meeting of the City Council of the City of Petaluma, held on the 15th day of October,
40 2012 by the'following vote:
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42 AYES:
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44 NOES:
Ordinance No. N.C.S. Page 1
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2 ABSENT:
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4 ABSTAIN:
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11 David'Glass, Mayor
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15 ATTEST: APPROVED AS TO FORM:
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22 Claire Cooper, CMC, City Clerk Eric W. Danly, City Attorney
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Ordinance'.No. N.C.S. Page 2
AL
CaJPERS
EXHIBIT A
California
Public Employees', Retirement System
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the.
City Council
City of Petaluma.
efr
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 and October 7, 2008 which provides for participation
of Public Agency in said System, Board and Public Agency herebyagree as follows:
A. Paragraphs 1 through 12 are hereby stricken from said contract as executed
effective October 7; 2008, and hereby replaced by the following paragraphs
numbered 1 through 14 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; age 50 for local safety
members entering membership in the safety classification on or prior to
the 'effective date of this amendment to contract and age 55 for local
Safety, members entering membership for the first time in the safety
classification"after the effective date of this amendment to contract.
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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. Public Agency agrees to indemnify, defend and hold harmless the
California Public Employees' Retirement System (CaIPERS) and its
trustees,;agentsand employees, the CaIPERS 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 attorneys fees
that may arise as ,a result of any of the following:
(a) Public c 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-CaIPERS retirement program.
(b) Public Agency's election to'amend°this Contract to provide
retirement:benefits, provisions or formulas that,are different than
existing retirement benefits; provisions or formulas.
(c) Public Agency's agreement with;a third party other than
CaIPERS 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.
(d) Public Agency's election tofile for bankruptcy under Chapter 9
(commencing with section 901) of Title 11 of.the United States
Bankruptcy Code and/or Public Agency's election to reject this
Contract with the CaIPERS Board of Administration pursuant to
section 365, of-Title 11, of the United States Bankruptcy Code
• or any similar provision of law.
(e) Public Agency's election to assign this Contract without the prior
written consent of the CaIPERS' Board of Administration.
(0
(f) The termination of this Contract either voluntarily by request of
Public Agency or involuntarilypursuant to the Public Employees'
Retirement Law.
(g) Changes sponsored by Public Agency in existing retirement
benefits, provisions or formulas made as a result of
amendments, additions or deletions to California statute or to
the.California Constitution.
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).
5. In addition to the classes of employees excluded from membership by
said.Retiremenf,Law, the following classes:of employees shall not become
members of said Retirement System:
NO ADDITIONAL EXCLUSIONS
6. 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).
7. The percentage of final compensation to lie provided for each year of
credited prior and current service as a local safety member entering
membership in the safety classification on or-prior`to the effective date of
this amendment to contract shall be determined in accordance with
Section 21362.2 of said Retirement Law (3% at age 50 Full).
8. The percentage of final compensation to be provided for each year of
credited current service as a local safety member entering membership for
the first time in the safety classification. after the effective date of this
amendment to contract shall; be determined in accordance with Section
21363.1 of said Retirement Law (3% at age 55 Full).
9. 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 local
miscellaneous members and :those local safety members entering
membership on or prior to the effective date of this amendment to
contract.
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c. Section 20965 (Credit for Unused Sick Leave).
d, Section. 21326 (One-Time 1% 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 211024 (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 afire 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 local safety members entering
membership for the first time in the safety classification after the
effective date of this amendment to contract.
10. 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.
11. Public Agency shall contribute to said,RetirementSystem 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.
12. Public Agency-shall also contribute to said Retirement System as follows:
a. Contributions/requiredyer 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,percovered 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.
13. 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.
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14. 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 ahy 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' RETIREMENT SYSTEM CITY OF PETALUMA
BY BY
KAREN DE FRANK, CHIEF 'PRESIDING OFFICER
CUSTOMER ACCOUNT SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Witness Date
Attest:
,Clerk
AMENDMENT CaIPERS.ID#5476407298
PERS-CON-702A
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