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�441F°RN`4 City Council Staff Report
DATE: October 17, 2012 Consent Calendar
SUBJECT: AMENDMENT TO THE CONTRACT CALIFORNIA PUBLIC
EMPLOYEES' RETIREMENT SYSTEM NEW 2%@60 FORMULA AND
THREE YEAR FINAL COMPENSATION MISCELLANEOUS GROUP
SECOND TIER WITHIN A NON-POOLED PLAN (SECTION 20475:
DIFFERENT LEVEL OF BENEFITS PROVIDED FOR NEW
EMPLOYEES)
FROM: David H. Ready, City Manager
BY: Human Resources
SUMMARY
The City will consider adopting a Resolution of intent and Introduce on first reading an
Ordinance to modify the contract with the California Public Employees' Retirement
System for a new 2%@60 and Three Year Average Compensation Miscellaneous
Group Second Tier (Section 20475: Different Level of Benefits Provided for New
Employees).
RECOMMENDATION:
1. Adopt Resolution No. _, "A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF PALM SPRINGS, CALIFORNIA, DECLARING ITS INTENTION TO
APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS."
2. Introduce on first reading Ordinance No. , "AN ORDINANCE OF THE CITY
OF PALM SPRINGS, CALIFORNIA, APPROVING AN AMENDMENT TO
CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY
COUNCIL OF THE CITY OF PALM SPRINGS."
ITEM NO. _
City Council Staff Report
October 17, 2012--Page 2
Miscellaneous Contract Amendment
STAFF ANALYSIS:
The City has approved a new Memorandum of Understanding with the Management
Association of Palm Springs (MAPS) and the Service Employees International Union
Local 721 (General Unit). The MOU's provide a modification of the California Public
Employees' Retirement System for a new 2%@60 formula and Three Year Average
Compensation Miscellaneous Group Second Tier (Section 20475: Different Level of
Benefits Provided for New Employees). Additionally, this second tier will apply to other
non-represented Miscellaneous Group employees including Executive Management
(EX) and Optional Members (City Council).
The Resolution of Intent amending the California Public Employees' Retirement System
contract must be certified by City Council to comply with the California Public
Employees' Retirement System contract amendment procedures and; an Ordinance
approving and amending the California Public Employees' Retirement System contract
must be certified by City Council to comply with the California Public Employees'
Retirement System contract amendment procedures to amend the contract.
Description of Benefit Provisions and Section(s): Section 20475 Different Level of
Benefits. Section 21354.5 (2.7%@55 Full Formula) and Section 20042 (Three Year
Final Compensation) is applicable to only those Miscellaneous Group employees
entering membership on or prior to the effective of this amendment to Contract, which
will be December 7, 2012. Section 21353 (2%@60 Full Formula) and Section 20037
(Three Year Final Compensation) is applicable to Miscellaneous Group employees
entering membership for the first time after the effective date of this amendment to
contract.
Attached is the California Public Employees' Retirement System's Actuarial Valuation
for the proposed contract amendment.
FISCAL IMPACT
There is no immediate employer contribution rate change from this amendment.
Ultimately, the employer normal cost will decrease. According to the Actuarial Valuation
"if the mix of active member entry ages were the same for both the current continuing
first tier employees and the new second tier employees, the decrease in the employer
rate would be 4.2% and the decrease in the employee contribution rate would be 1 W.
This rate reduction will occur gradually, beginning on July 1, 2014, if there are second
tier employees hired on or before June 30, 2012. For fiscal years 2014/2015 and
beyond, the projected cumulative of rate reduction expected from introducing a second
tier is approximately equal to the ratio of your second tier payroll to your total plan
annual payroll two and a half years earlier.
02
City Council Staff Report
October 17, 2012-- Page 3
Miscellaneous Contract Amendment
FISCAL IMPACT CONT:
For example if 1/10 of our miscellaneous members were in second tier on June 30,
2012, and the ultimate expected normal cost decrease was 4.2%, the cumulative rate
reduction expected by the 2014/1015 fiscal year would be 1/10 x 4.2% = 0.42%."
C
G
Perry Madis , Director o uman Resources David H. Ready, Cit er
Attachments: Resolution
Ordinance
Amendment to Contract
California Public Employees' Retirement System's Actuarial Valuation
03
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, DECLARING ITS
INTENTION TO APPROVE AN AMENDMENT TO
CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION OF THE CALIFORNIA PUBLIC
EMPLOYEES' RETIREMENT SYSTEM AND THE CITY
COUNCIL OF THE CITY OF PALM SPRINGS.
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 20475 (Different Level of Benefits). Section 21353 (2%@60
Full Formula) and Section 20037 (Three Year Average Compensation) is applicable to
local miscellaneous members entering membership for the first time after the effective
date of this amendment to contract.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY
RESOLVE AS FOLLOWS:
SECTION 1. The City Council of the City of Palm Springs does hereby give
notice of its 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 Exhibit A and by this reference
made a part hereof, as on file in the office of the City Clerk.
ADOPTED THIS 17th DAY OF OCTOBER, 2012.
David H. Ready, City Manager
04
Resolution No.
Page 2
ATTEST:
James Thompson, City Clerk
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on this 17th day of October,
2012, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
James Thompson, City Clerk
City of Palm Springs, California
05
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)
CERTIFICATION OF GOVERNING BODY'S ACTION
I hereby certify that the foregoing is a true and correct copy of a Resolution adopted by the
of the
(governing body)
(public agency)
on
(date)
Clerk/Secretary
Title
PERS-CON-12(rev. 1/96)
06
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)
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 7507
1 hereby certify that in accordance with Section 7507 of the Government Code
the future annual costs as determined by the System Actuary for the
increase/change in retirement benefit(s) have been made public at a public meeting
of the
of the
(governing body)
(public agency)
on which is at least two weeks prior to the adoption of the
(date)
Resolution /Ordinance.
Adoption of the retirement benefit increase/change will not be placed on the consent
calendar.
Clerk/Secretary
Title
Date
07
PERS-CON-12A(rev. 1/96)
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)
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 20475
1 hereby certify that the of the
(governing body)
(public agency)
has fully discharged all of the obligation imposed by Chapter 10 (commencing with
Section 3500) of Division 4 of Title 1, Government Code.
By
Title
Witness
Date
PERS-CON-30(Rev. 1/96)
08
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, APPROVING AN AMENDMENT TO CONTRACT
BETWEEN THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE CITY COUNCIL OF THE CITY OF PALM SPRINGS.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS HEREBY ORDAINS:
SECTION 1. An amendment to the contract between the City Council of the City
of Palm Springs and the Board of Administration of the California Public Employees'
Retirement System is hereby authorized and approved, 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, as on file in the office of the City Clerk.
SECTION 2. The City Manager of the City of Palm Springs is hereby authorized,
empowered, and directed to execute said amendment for and on behalf of the City
Council and the City of Palm Springs.
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, or the summary thereof, to be
published and posted pursuant to the provisions of law and this Ordinance shall take
effect thirty (30) days after adoption.
PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY
COUNCIL THIS 7tn DAY OF NOVEMBER, 2012.
STEPHEN P. POUGNET, MAYOR
ATTEST:
JAMES THOMPSON, CITY CLERK
09
Ordinance_
Page 2
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, California, do
hereby certify that Ordinance No. is a full, true, and correct copy, and was
introduced at a regular meeting of the Palm Springs City Council on October 7, 2012,
and adopted at a regular meeting of the City Council held on November 7, 2012, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAMES THOMPSON, CITY CLERK
City of Palm Springs, California
10
California Public Employees' Retirement System
Actuarial Office
P.O. Box 942709
Ao
Sacramento, CA 95812-1494
TTY: (877)249-7442
Ca1PER5 (888)225-7377 phone• (916) 795-2744 fax
www.calpers.ca.gov
June 27,2012
CALPERSID: 5389648201
Employer Name: CITY OF PALM SPRINGS
Rate Plan: MISCELLANEOUS PLAN
Re: New 2%@ 60 Full Formula and Three-Year Final Compensation Second Tier within a Non-pooled Plan(Section
20475: Different Level of Benefits Provided for New Employees)
Dear Requestor:
As requested,employer contribution rate information on your proposed second tier follows.
If you are aware of others interested in this information(i.e.payroll staff,county court employees,
port districts,etc.),please inform them.
The information is based on the June 30, 2010 annual valuation and is good until June 30, 2013. Note, however,
that your rate after June 30, 2013 could change substantially. If your agency has not taken action to amend its
contract by June 30, 2013, you must contact the Retirement Contract Services Unit for an updated cost
analysis.
If the employee contribution rate changes,that change would take place immediately. There will be no
immediate employer contribution rate impact from this amendment. Ultimately,though,your employer normal cost
will decrease. If the ma of active member entry ages were the same for both the current continuing first tier
employees and the new second tier employees,the decrease in the employer rate would be 4.2%and the decrease
in the employee contribution rate would be 1%.
The employer rate reduction will occur gradually, beginning on July 1, 2014, if there are second tier employees hired
on or before June 30, 2012. For fiscal years 2014/2015 and beyond, the projected annual amount of rate reduction
you can expect from introducing a second tier is approximately equal to the ratio of your second tier annual payroll
to your total plan annual payroll two and a half years earlier. For example if 1/10 of your Miscellaneous Plan
members were in second tier on June 30, 2012 and the ultimate expected normal cost decrease was 4.2%, the
cumulative rate reduction you can expect by the 2014/2015 fiscal year would be 1/10 x 4.2%=0.42%.
To initiate an amendment to the contract, please follow the Contract Amendment Request process on MyCaIPERS
with our Retirement Contract Services Unit, indicating your wish to contract for Section 20475 (Different Level of
Benefits)and identifying the group(s)to which the benefit reduction applies.
In sections 20463 (b) and (c), the California Public Employees' Retirement Law requires the governing body of a
public agency within five days of receipt of the contract amendment cost analysis, to provide each employee
organization with a copy of the analysis. If this cost analysis was requested by an employee organization, the
employee organization is also required within five days of receipt of the analysis, to provide a copy of the analysis to
the public agency.
If you have questions, please call(888)CaIPERS(225-7377).
0,,� a 6,4,
DAVID DU BOIS,FSA
Senior Pension Actuary,CaIPERS
California Public Employee's Retirement System 1 1
www.calpers.ca.gov
i,
Ca1PERS
EXHIBIT
California
Public Employees' Retirement System
1 400.-
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Palm Springs
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, 1957, and witnessed December 3, 1956, and as amended effective July 14,
1965, January 14, 1973, January 1, 1975, September 5, 1976, July 10, 1977, October
15, 1978, April 29, 1979, February 27, 1983, July 1, 1984, June 29, 1986, April 18,
1998, August 23, 1998, April 18, 1999, August 19, 2001, April 28, 2002, May 25, 2003,
January 4, 2004, June 17, 2011 and December 17, 2011 which provides for
participation of Public Agency in said System, Board and Public Agency hereby agree
as follows:
A. Paragraphs 1 through 15 are hereby stricken from said contract as executed
effective December 17, 2011, and hereby replaced by the following paragraphs
numbered 1 through 16 inclusive:
12
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 entering membership in
the miscellaneous classification on or prior to the effective date of this
amendment to contract and age 60 for local miscellaneous members
entering membership for the first time in the miscellaneous classification
after the effective date of this amendment to contract; age 50 for local
police members entering membership in the police classification on or
prior to June 17, 2011 and those local fire members entering membership
in the fire classification on or prior to December 17, 2011; age 55 for local
police members entering membership for the first time in the police
classification after June 17, 2011 and those local fire members entering
membership in the fire classification after December 17, 2011.
2. Public Agency shall participate in the Public Employees' Retirement
System from and after January 1, 1957 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.
13
(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 CalPERS 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.
(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. The percentage of final compensation to be provided for each year of
credited prior and current service for local miscellaneous members in
employment before and not on or after April 28, 2002 shall be determined
in accordance with Section 21354 of said Retirement Law, subject to the
reduction provided therein for service prior to December 31, 1974,
termination of Social Security, for members whose service has been
included in Federal Social Security (2% at age 55 Full and Modified).
14
7. The percentage of final compensation to be provided for each year of
credited prior and current service for local miscellaneous members in
employment on or after April 28, 2002 and not entering membership for
the first time in the miscellaneous classification after the effective date of
this amendment to contract shall be shall be determined in accordance
with Section 21354.5 of said Retirement Law, subject to the reduction
provided therein for service prior to December 31, 1974, termination of
Social Security, for members whose service has been included in Federal
Social Security (2.7% at age 55 Full and Modified).
8. The percentage of final compensation to be provided for each year of
credited current service as a local miscellaneous member entering
membership for the first time in the miscellaneous classification after the
effective date of this amendment to contract shall be determined in
accordance with Section 21353 of said Retirement Law (2% at age 60
Full).
9. The percentage of final compensation to be provided for each year of
credited prior and current service as a local police member entering
membership in the police classification on or prior to June 17, 2011 and
local fire members entering membership in the fire classification on or
prior to December 17, 2011 shall be determined in accordance with
Section 21362.2 of said Retirement Law (3% at age 50 Full).
10. The percentage of final compensation to be provided for each year of
credited current service as a local police member entering membership for
the first time in the police classification after June 17, 2011 and local fire
members entering membership for the first time in the fire classification
after December 17, 2011 shall be determined in accordance with Section
21363.1 of said Retirement Law (3% at age 55 Full).
11. Public Agency elected and elects to be subject to the following optional
provisions:
a. Sections 21624, 21626 and 21628 (Post-Retirement Survivor
Allowance).
b. Section 21024 (Military Service Credit as Public Service).
C. Section 20042 (One-Year Final Compensation) for local safety
members and for those local miscellaneous members entering
membership on or prior to the effective date of this amendment to
contract.
d. Section 20965 (Credit for Unused Sick Leave) for local fire
members only.
e. Section 21574 (Fourth Level of 1959 Survivor Benefits). 15
f. Section 20475 (Different Level of Benefits). Section 21363.1 (3%
@ 55 Full formula) is applicable to local police members entering
membership for the first time in the police classification after June
17, 2011.
Section 21363.1 (3% @ 55 Full formula) is applicable to local fire
members entering membership for the first time in the fire
classification after December 17, 2011.
Section 21353 (2% @ 60 Full formula) and Section 20037 (Three-
Year Final Compensation) are applicable to local miscellaneous
members entering membership for the first time in the
miscellaneous classification after the effective date of this
amendment to contract.
12. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer' for purposes of Section 20834 effective on
September 5, 1976. 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.
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 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 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.
16
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 day of
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF PALM SPRINGS
BY BY
KAREN DE FRANK, CHIEF PRESIDING OFFICER
CUSTOMER ACCOUNT SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Witness Date
Attest:
Clerk
AMENDMENT CaIPERS ID#5389648201
PERS-CON-702A
17