HomeMy WebLinkAbout09 - OB-1 - Ordinance Authorizing Amendment to the - 5/4/2010CITY COUNCIL AGENDA REPORT
MEETING DATE: MAY 4, 2010 ITEM NUMBER:
SUBJECT: ORDINANCE AUTHORIZING AMENDMENT TO THE CONTRACT BETWEEN CALIPERS
AND THE CITY OF COSTA MESA - 3%@50 FORMULA (SAFETY -FIRE PLAN)
DATE: APRIL 22, 2010
FROM: ADMINISTRATIVE SERVICES DEPARTMENT/HUMAN RESOURCES DIVISION
PRESENTATION DEBRA YASUI, HUMAN RESOURCES ADMINISTRATOR
BY:
FOR FURTHER INFORMATION CONTACT: DEBRA YASUI AT (714) 754-5052
RYAN THOMAS AT (714) 754-5104
RECOMMENDATION:
1) Give second reading to and adopt Ordinance No. 10-4 (Attachment 1), which
authorizes the amendment to the contract between the Board of Administration of
the California Public Employees' Retirement System and the City Council of the City
of Costa Mesa to implement the 3%@50 retirement formula for eligible Safety -Fire
employees.
BACKGROUND:
Presently, the City of Costa Mesa has three separate retirement plans with the
California Public Employees' Retirement System (CalPERS): a 3% @ 50 plan for Sworn
Police personnel, a 3% @ 55 plan for Sworn Fire Personnel and a 2.5% @ 55 plan for
Miscellaneous employees.
At the Special Meeting of the City Council on August 11, 2009, the City Council
approved the Memorandum of Understanding (MOU) with the Costa Mesa Firefighters
Association (CMFA) that extended their agreement through June 30, 2013. In this
MOU, the City agreed to amend the CalPERS Safety Plan to provide Government Code
21362.2 (3%@50) retirement benefits for eligible Safety -Fire employees.
At the City Council meeting on April 6, 2010, the City Council adopted Resolution No.
10-24. This is a Resolution of Intention to approve an amendment to the CalPERS
contract for the Safety—Fire group. In addition, a first reading was given to the attached
Ordinance, and the required "Certification of Compliance with Government Code
Section 7507" and "Certification of Governing Body's Action" were authorized. As
required by Government Code Section 7507, Richard Santos, Senior Pension Actuary
of CalPERS, was also present at the meeting to address questions related to future
costs of this contract amendment.
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ANALYSIS:
This CalPERS contract amendment was a key provision of the negotiated agreement
between the City and the CMFA that was approved by the City Council on August 11,
2009. The parties to this agreement considered a wide variety of issues in the context
of good faith negotiations in accordance with Government Code Section 3500 et seq.
(Meyers-Milias-Brown Act).
CalPERS requires that clearly defined procedures be followed for contract
amendments. The following guidelines provided by CalPERS are necessary in order to
complete the amendment process. The next steps subsequent to this City Council
meeting will be:
• If adopted, the Ordinance may take effect no less than 30 days later. The effective
date of the Ordinance will be June 3, 2010.
• The effective date of the contract amendment must be the first day of a payroll
period and may not be earlier than the day after the effective date of the Ordinance.
Therefore, the earliest possible effective date of the contract amendment would be
June 6, 2010, the first day of the payroll period.
Employees who retire after June 6, 2010, will be eligible for the 3%@50 factor in their
retirement calculations. This amendment will not affect any retirees or former employees
of the City of Costa Mesa.
ALTERNATIVES CONSIDERED:
The Memorandum of Understanding (MOU) was adopted by the City Council, and it
represents the successful conclusion of the legal process. As such, no alternatives are
being considered.
FISCAL REVIEW:
As summarized in the City Council agenda report of April 6, 2010, the CalPERS contract
amendment cost analysis/actuarial study indicates that this enhancement will lead to an
increase in the 2010/2011 employer contribution rate of 6.549% (from 26.242% to
32.791 %). The employee rate for this amendment would remain unchanged at 9%. The
budget impact of this rate increase for 2010/2011 is an increase in the Fire Department —
Retirement Account of $694,171. This increase is offset by the reduction in total
personnel from 96 to 84, a savings of approximately $1.8 million. The total net savings for
2010/2011 is approximately $1.1 million.
According to CalPERS, the change in the Plan's Present Value of the Benefits is
$5,251,094, from $144.6 million to $149.8 million. Also, the change in the Plan's Accrued
Liability to provide this benefit is $4,936,806, from $119.7 million to $124.6 million.
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LEGAL REVIEW:
Legal has reviewed the documents and approved them as to form.
CONCLUSION:
Staff recommends that the City Council give second reading to and adopt Ordinance
No.10-4 which authorizes the amendment to the contract between the Board of
Administration of CalPERS and the City Council of the City of Costa Mesa to implement
the 3%@50 retirement formula for eligible Fire Safety employees.
DEBRA YASUI
Human Resources Administrator/Risk
COLLEEN O'DONOGHUE
Assistant Finance Director
STEPHEN N. MANDOKI
Director of Administrative Services
11: : ■� :�: • Ol
City Attorney
DISTRIBUTION: City Manager
City Attorney
City Clerk
Assistant Finance Director
Budget and Research Manager
ATTACHMENTS: I Ordinance No. 10-4 with Exhibit Amendment to Contract
050410 Council Agenda Report-CalPERS Contract Amend Fire 4/22/10
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ATTACHMENT I
1610911 Z F -11Z L41:111 Z [0I PIMP
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF COSTA MESA, CALIFORNIA, AUTHORIZING AN
AMENDMENT TO THE CONTRACT BETWEEN THE
CITY COUNCIL OF THE CITY OF COSTA MESA AND
THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT
SYSTEM.
WHEREFORE, THE CITY COUNCIL OF THE CITY OF COSTA MESA DOES
HEREBY ORDAIN AS FOLLOWS:
Section 1. That an amendment to the contract between the City Council of the City of
Costa Mesa and the Board of Administration, California Public Employees' Retirement
System is hereby authorized, a copy of said amendment being attached hereto, marked
Exhibit, and by such reference made a part hereof as though herein set out in full.
Section 2. The City Manager of the City of Costa Mesa is hereby authorized,
empowered, and directed to execute said amendment for and on behalf of said Agency.
Section 3. This Ordinance shall take effect 30 days after the date of its adoption, and
prior to the expiration of fifteen (15) days from the passage thereof shall be published
once in the NEWPORT BEACH/COSTA MESA DAILY PILOT, a newspaper of general
circulation, published and circulated in the City of Costa Mesa, and thenceforth and
thereafter shall be in full force and effect.
PASSED AND ADOPTED this 4th day of May, 2010.
Allan Mansoor, , Mayor
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ATTEST:
APPROVED AS TO FORM:
Julie Folcik, City Clerk Kimberly Hall Barlow, City Attorney
THIS PAGE RESERVED FOR CITY CLERK'S OFFICE
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss
CITY OF COSTA MESA )
I, JULIE FOLCIK, City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY
that the above and foregoing Ordinance No. 10-4 was duly introduced for first reading at
a regular meeting of the City Council held on the 6th day of April, 2010, and that
thereafter, said Ordinance was duly passed and adopted at a regular meeting of the
City Council held on the 4th day of May, 2010, by the following roll call vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the
City of Costa Mesa this 5th day of May, 2010.
JULIE FOLCIK, CITY CLERK
(SEAL)
I hereby certify that the above and foregoing is the original of Ordinance No. 10-4 duly
passed and adopted by the Costa Mesa City Council at the regular meeting held May 4,
2010, and that Summaries of the Ordinance were published in the Newport Beach -
Costa Mesa Daily Pilot on Month XX, 2010.
JULIE FOLCIK, CITY CLERK
(SEAL)
AR,
CaIPERS
California
Public Employees' Retirement System
1 9 11, 11 0 -
EXHIBIT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Costa Mesa
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 August
13, 1978, and witnessed August 7, 1978, and as amended effective July 15, 1979,
October 25, 1987, October 30, 1992, September 18, 1994, January 4, 1996, June 22,
1998, June 16, 2000, December 31, 2000, May 20, 2001, December 19, 2002,
September 28, 2008 and August 20, 2009 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 August 20, 2009, and hereby replaced by the following paragraphs
numbered 1 through 16 inclusive:
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.
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2. Public Agency shall participate in the Public Employees' Retirement
System from and after August 13, 1978 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 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 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 to file 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.
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(f) The termination of this Contract either voluntarily by request of
Public Agency or involuntarily pursuant 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 Retirement Law, the following classes of employees shall not become
members of said Retirement System:
NO ADDITIONAL EXCLUSIONS
6. Assets heretofore accumulated with respect to members in the local
retirement system have been transferred to the Public Employees'
Retirement System on September 18, 1994 and applied against the
liability for prior service incurred thereunder. That portion of the assets so
transferred which represent the accumulated contributions (plus interest
thereof) required of the employees under said local system has been
credited to the individual membership account of each such employee
under the,Public Employees' Retirement System.
7. Benefits paid to pensioner or annuitants under the local system on or prior
to September 18, 1994 shall be continued and paid at their existing rates
by the Public Employees' Retirement System as authorized by Section
20481 of the Government Code.
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8. The percentage of final compensation to be provided for local
miscellaneous members in employment before and not on or after
September 28, 2008 for each year of credited prior service is 0% and the
percentage of final compensation to be provided for each year of credited
current service is 100% and determined in accordance with Section 21354
of said Retirement Law (2% at age 55 Full).
9. The percentage of final compensation to be provided for local
miscellaneous members in employment on or after September 28, 2008
for each year of credited prior service is 0% and the percentage of final
compensation to be provided for each year of credited current service is
100% and determined in accordance with Section 21354.4 of said
Retirement Law (2.5% at age 55 Full).
10. 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).
11. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 20042 (One -Year Final Compensation).
b. Section 20965 (Credit for Unused Sick Leave).
C. Sections 21624 and 21626 (Post -Retirement Survivor Allowance).
d. Section 21573 (Third Level of 1959 Survivor Benefits) for local
miscellaneous members only.
e. Section 20903 (Two Years Additional Service Credit).
f. Section 20938 (Limit Prior Service to Members Employed on
Contract Date) for local safety members only.
g. Section 21536 (Local System Service Credit Included in Basic
Death Benefit) for local safety members only.
h. Section 21427 (Improved Nonindustrial Disability Allowance) for
local fire members.
i. Section 21031 (Public Service Credit for Limited Prior Service) for
local miscellaneous members only.
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j. Section 21024 (Military Service Credit as Public Service).
k. Section 21027 (Military Service Credit for Retired Persons).
I. Section 21023.5 (Public Service Credit for Peace Corps,
AmeriCorps VISTA, or AmeriCorps Service).
12. Public Agency, in accordance with Government Code Section 20834, shall
not be considered an "employer" for purposes of the Public Employees'
Retirement Law. Contributions of the Public Agency shall be fixed and
determined as provided in Government Code Section 20834, and such
contributions hereafter made shall be held by the Board as provided in
Government Code Section 20834.
13. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local msicellaneous members and local safety members of said
Retirement System.
14. 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 and local safety members.
b. 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.
C. 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.
15. 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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A
16. 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 day of ,
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF COSTA MESA ;
BY BY
LORI MCGARTLAND, CHIEF PRESIDING OFFICER
EMPLOYER SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AMENDMENT ER# 1193
PERS-CON-702A
Witness Date
Attest:
Clerk
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