HomeMy WebLinkAbout06 - NB-1 - Amendment to Contract Between CalPers - 1/18/2011CITY COUNCIL AGENDA REPORT
MEETING DATE: JANUARY 18, 2011 ITEM NUMBER: V-1
SUBJECT: AMENDMENT TO THE CONTRACT BETWEEN CALPERS AND THE CITY OF COSTA
MESA TO INCLUDE PROVISIONS PURSUANT TO GOVERNMENT CODE 20516 "COST
SHARING" (LOCAL SAFETY AND MISCELLANEOUS PLANS)
DATE: JANUARY 11, 2011
FROM: ADMINISTRATIVE SERVICES DEPARTMENT/HUMAN RESOURCES DIVISION
PRESENTATION DEBRA YASUI, HUMAN RESOURCES ADMINISTRATOR
BY: BOBBY YOUNG, BUDGET AND RESEARCH OFFICER
FOR FURTHER INFORMATION CONTACT: DEBRA YASUI AT (714) 754-5052
RYAN THOMAS AT (714) 754-5104
RECOMMENDATION:
1) Adopt a Resolution of Intention (Attachment 1) to approve an Amendment to the
Contract between the Board of Administration of the California Public Employees'
Retirement System (CaIPERS) and the City Council of the City of Costa Mesa
(Exhibit) in order to implement Government Code Section 20516 "Cost Sharing" for
Local Safety and Local Miscellaneous employees.
2) Introduce, give first reading to be read by title only to, and waive further reading of
Ordinance No. (Attachment II), which authorizes the amendment to the
CaIPERS contract to implement Government Code Section 20516 "Cost Sharing"
for Local Safety and Local Miscellaneous employees.
3) Authorize the City Clerk to execute required CaIPERS certifications:
a. Certification of Governing Body's Action — PERS-CON-12 (Attachment III).
b. Certification of Employee Election PERS-CON-15 (Attachment IV).
c. Certification of Compliance with Government Code Section 20516 for Local
Safety and Miscellaneous (Attachment V).
BACKGROUND:
Presently, the City of Costa Mesa contracts for three retirement plans with CaIPERS: a
3% @ 50 plan for Sworn Police employees, a 3% @ 50 plan for Sworn Fire employees
and a 2.5% @ 55 plan for Miscellaneous employees.
At the City Council Meeting on October 12, 2010, the City Council approved a Side
Letter of Agreement (LOA) that amended certain portions of the 2007-2013
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Memorandum of Understanding (MOU) between the Costa Mesa Firefighters
Association and the City. Specifically, the LOA called for the employees covered by the
agreement to contribute 5% of the employee's PERSable earnings towards their
employee retirement contribution, commencing October 24, 2010, and continuing
through 26 consecutive pay periods.
At the Special Meeting of the City Council Meeting on October 26, 2010, the City
Council adopted Side Letter of Agreements (LOAs) with the Costa Mesa City
Employees Association (CMCEA), the Costa Mesa Police Management Association
(CMPMA), the Costa Mesa Police Association (CMPA) and Costa Mesa Fire
Management Association (CMFMA); and a Resolution for Unrepresented Employees
(Executive and Confidential). These LOAs and Resolution also called for increases in
employee contributions towards retirement. Specifically, the CMCEA agreed to an
additional employee contribution of 4% PERSable earnings towards the employee
portion of retirement for 52 pay periods (total of 7.52%). The CMPMA and CMPA
agreed to employee contributions totaling 5% PERSable earnings for 104 pay periods.
The CMFMA also agreed to employee contributions of 5% PERSable earnings towards
the employee retirement contribution commencing October 24, 2010. This would occur
for a minimum of 26 consecutive pay periods and continue for up to 104 pay periods.
The Unrepresented Executive and Confidential Employees would be subject to the
same cost sharing as CMCEA members.
On October 28, 2010, City staff submitted a request to CalPERS to initiate the contract
amendment process. CalPERS confirmed that actuarial valuations will not be required.
On December 16, 2010, the City received the contract amendment packet.
ANALYSIS:
This CalPERS contract amendment was a key provision of the negotiated agreements
between the City and the CMFA, CMCEA, CMPA, CMPMA and CMFMA that were
approved by the City Council on October 12 and October 26, 2010. The parties to
these agreements 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 are guidelines provided by CaIPERS in order to complete
the contract amendment process:
• First, a Resolution of Intention must be approved by the City Council, and a first
reading of the Ordinance authorizing an amendment to the contract must occur. In
addition, authorization for the City Clerk to provide "Certification of Governing
Body's Action" and "Certification of Compliance with Government Code Section
20516" are required.
• Government Code Section 20474 requires a secret ballot election by the
employees affected whenever the contract is amended to provide a benefit which
changes the employees' rate of contribution. This election must be held for each
contract group prior to the adoption of the final Ordinance.
E
• A final reading of the Ordinance and a City Council vote on adoption must occur at
least twenty (20) days after the adoption of the Resolution of Intention (February 15,
2011 City Council Meeting). The City Attorney recommends that an Urgency
Ordinance be acted on concurrently. If the Urgency Ordinance is adopted, it may
take effect as early as the day following adoption, February 16, 2011. If the regular
Ordinance is adopted, it may take effect no less than 30 days later. In this case, the
effective date of the regular Ordinance will be March 18, 2011.
• 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 (or
Urgency Ordinance). Therefore, the earliest possible effective date of the contract
amendment would be February 27, 2011, the first day of a payroll period.
ALTERNATIVES CONSIDERED:
The LOAs were adopted by the City Council and represent the successful conclusion of
the legal process. As such, no alternatives are being considered.
FISCAL REVIEW:
The implementation of the LOA articles with CMCEA, CMFA, CMPMA, CMPA, CMFMA,
and the Resolution affecting the Unrepresented Executive and Confidential groups will
provide an annual total cost savings to the City of approximately $3.6 million.
Implementing this resolution will provide a savings of approximately $1,167,000 in the
2010-2011 fiscal year. It is estimated that for the two (2) fiscal years following the cost
sharing contract amendment, the City will achieve a cost savings of approximately $6.0
million.
LEGAL REVIEW:
The City Attorney's Office has reviewed the attached documents and, where appropriate,
approved them as to form.
CONCLUSION:
In order to amend the CalPERS contract, the following must occur: adoption of the
"Resolution of Intention to Approve an 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"; introduction and first reading of the Ordinance
authorizing the amendment to the contract to implement Government Code Section
20516 "Cost Sharing"; and authorization given to the City Clerk to execute required
CalPERS certifications. The amendment must be completed in order to obtain the cost
savings agreed to through the side letters with the various employee groups.
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DEBRA YASUI
Human Resources Administrator/Risk
COLLEEN O'DONOGHUE
Assistant Finance Director
STEPHEN N. MANDOKI
Director of Administrative Services
KIMBERLY HALL BARLOW
City Attorney
DISTRIBUTION: City Manager
Assistant City Manager
City Attorney
City Clerk
Assistant Finance Director
Budget and Research Manager
ATTACHMENTS: I Resolution of Intention and Exhibit Amendment to Contract
II Ordinance No.
III Certification of Governing Body's Action (PERS-CON-12)
IV Certification of Employee Election (PERS-CON-15)
V Certification of Compliance with Government Code Section
20516 for Local Safety and Miscellaneous
011811 Council Agenda Report-CalPERS Contract Amendment Cost 01/06/2011 2pm
Sharing for Local Safety and Local Miscellaneous
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IN •I I ii 1 lii'111!11115112
■
BOARD OF
ADMINISTRATION
CITY COUNCIL
WHEREAS, the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the Public Employees' Retirement System
by the execution of a contract, and sets forth the procedure by which said
public agencies may elect to subject themselves and their employees to
amendments to said Law; and
WHEREAS, one of the steps in the procedures to amend this contract is the adoption
by the governing body of the public agency of a resolution giving notice of
its intention to approve an amendment to said contract, which resolution
shall contain a summary of the change proposed in said contract; and
WHEREAS, the following is a statement of the proposed change:
To provide Section 20516 (2.469% Employees Sharing
Cost of Additional Benefits) applicable to Section 21354.4
(2.5% @ 55 Full formula) for local miscellaneous members;
and
Section 20516 (5% Employees Sharing Cost of Additional
Benefits) applicable to Section 21362.2 (3% @ 50 Full
formula) for local safety members.
NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency
does hereby give notice of intention to approve an amendment to the
contract between said public agency and the Board of Administration of the
Public Employees' Retirement System, a copy of said amendment being
attached hereto, as an "Exhibit" and by this reference made a part hereof.
Presiding Officer
Title
Date adopted and approved
(Amendment)
CON -302 (Rev. 4/96)
5
W
California
Public Employees' Retirement System
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, August 20, 2009 and June 6, 2010 which provides for participation
of Public Agency in said System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 16 are hereby stricken from said contract as executed
effective June 6, 2010, and hereby replaced by the following paragraphs
numbered 1 through 16 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.
C:
M
Y
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.
(f) The termination of this Contract either voluntarily by request of
Public Agency or involuntarily pursuant to the Public Employees'
Retirement Law.
7
(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:
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.
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).
FQ
i
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 only.
i. Section 21031 (Public Service Credit for Limited Prior Service) for
local miscellaneous members only.
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).
DO NOT SIGN "EXHIBIT ONLY"
M. Section 20516 (Employees Sharing Cost of Additional Benefits):
Section 21354.4 (2.5% @ 55 Full formula) for local miscellaneous
members. From and after the effective date of this amendment to
contract the miscellaneous employees of Public Agency shall be
assessed an additional 2.469% of their compensation for a total
contribution rate of 10.469% pursuant to Government Code Section
20516.
Section 21362.2 (3% @ 50 Full formula) for local safety members.
From and after the effective date of this amendment to contract the
safety employees of Public Agency shall be assessed an additional
5% of their compensation for a total contribution rate of 14%
pursuant to Government Code Section 20516.
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 miscellaneous 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.
M
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.
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
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BY
LORI MCGARTLAND, CHID
It
EMPLOYER SERVICES DIV` ff N
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AMENDMENT ER# 1193
PERS-CON-702A
day of ,
CITY COUNCIL
CITY OF COSTA MESA
BY
PRES(61W, OFFICER
Witness Date
Attest:
Clerk
11
ATTACHMENT II
ORDINANCE NO. 11 -
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
COSTA MESA AUTHORIZING AN AMENDMENT TO THE
CONTRACT BETWEEN THE CITY OF COSTA MESA AND
BOARD OF ADMINISTRATION OF THE CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM.
WHEREAS, due to the ongoing economic difficulties, the City recently negotiated
and approved revised agreements with its employees whereby all employee groups will
contribute additional sums towards the employee portion of their retirement contribution;
and
WHEREAS, to effectuate this cost-sharing agreement under the State of California
Public Employee Retirement Law Section 20516, an amendment to the contract between
Costa Mesa and the California Public Employees' Retirement System must be approved.
NOW, THEREFORE, 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 "A," and by such reference made a part hereof as though herein set out in
full.
Section 2. The Mayor 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. The Mayor shall sign and the City Clerk shall certify to the passage and
adoption of this Ordinance and shall cause the same to be published and posted pursuant
to the provisions of law.
Section 4. This Ordinance shall take effect and be in full force thirty (30) days from
and after the passage thereof, and prior to the expiration of fifteen (15) days from its
passage shall be published once in the DAILY PILOT, a newspaper of general circulation,
printed and published in the City of Costa Mesa or, in the alternative, the City Clerk may
cause to be published a summary of this Ordinance and a certified copy of the text of this
Ordinance shall be posted in the office of the City Clerk five (5) days prior to the date of
adoption of this Ordinance, and within fifteen (15) days after adoption, the City Clerk shall
cause to be published the aforementioned summary and shall post in the office of the City
Clerk a certified copy of this Ordinance together with the names and member of the City
Council voting for and against the same.
PASSED AND ADOPTED this day of , 2011.
12
ATTEST:
Julie Folcik
City Clerk of the City of Costa Mesa
Gary Monahan
Mayor of the City of Costa Mesa
APPROVED AS TO FORM:
Kimberly Hall Barlow, City Attorney
13
STATE OF CALIFORNIA )
COUNTY OF ORANGE )ss
CITY OF COSTA MESA )
I, Julie Folcik, City Clerk and ex -officio clerk of the City Council of the City of Costa
Mesa, hereby certify that the above and foregoing Ordinance No. 09- was introduced
and considered section by section at a regular meeting of said City Council held on the 21 st
day July 2009, and thereafter passed and adopted as a whole at a regular meeting of said
City Council held on the day of , 2009, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Seal of
the City of Costa Mesa this day of 12009.
City Clerk and ex -officio Clerk of the
City Council of the City of Costa Mesa
14
ATTACHMENT I.II
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(888) CalPERS (225-7377)
I hereby certify that the foregoing is a true and correct copy of a Resolution adopted by the
(governing body)
(public agency)
on
(date)
Clerk/Secretary
Title
PERS-CON-12 (rev. 1196)
of the
15
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(888) CalPERS (225-7377)
hereby certify that the following employees of the City of Costa Mesa have expressed
their approval or disapproval of said agency's intention to amend its contract to provide
Section 20516 (2.469% Employees Sharing Cost of Additional Benefits) applicable to
Section 21354.4 (2.5% @ 55 Full formula) for local miscellaneous members; and
Section 20516 (5% Employees Sharing Cost of Additional Benefits) applicable to Section
21362.2 (3% @ 50 Full formula) for local safety members on the basis described in the
Resolution of Intention adopted by said agency's governing body on
, in such manner as to permit each employee
to separately and secretly express his choice and that the outcome of such election was
as follows:
Number of
employees
eligible to vote
Local Police Officers as
defined in Govt. Code
Section 20425
Local Fire Fighters as
defined in Govt. Code
Section 20433
Local Miscellaneous
Members as defined in
Govt. Code Section
20383
Number of votes
approving said
participation
Clerk or Secretary
Date
Number of votes
disapproving said
participation
(Amendment)
PERS-CON-15 (Rev. 9/03) 16
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(888) CalPERS (225-7377)
I hereby certify that in accordance with Section 20516 of the Government Code, City of
Costa Mesa and its miscellaneous employees have agreed in writing to share the costs
of the following benefit:
Section 21354.4 (2.5% @ Full formula).
Signature
Title
Witness
Date
PERS-CON-500 (Rev. 1/96)
17
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(888) CalPERS (225-7377)
11121M
01 RON If d�' MZW-41472 VE
hereby certify that in accordance with Section 20516 of the Government Code, City of
Costa Mesa and its safety employees have agreed in writing to share the costs of the
following benefit:
Section 21362.2 (3% @ 50 Full formula).
Signature
Title
Witness
®ate
PERS-CON-500 (Rev. 1/96)
MR