HomeMy WebLinkAbout10/19/2011 - STAFF REPORTS - 2.L. �O�PALM gp4
k O
u- a
City Council Staff Report
cgl(FORN�P
DATE: October 19, 2011 Consent
SUBJECT: AMENDMENT TO THE CONTRACT CALIFORNIA PUBLIC
EMPLOYEES' RETIREMENT SYSTEM NEW 3% @ 55 SAFETY FIRE
SECOND TIER WITHIN A NON-POOLED PLAN (SECTION 20475:
DIFFERENT LEVEL OF BENEFITS PROVIDED FOR NEW
EMPLOYEES) — FOR FIRE ONLY
FROM: David H. Ready, City Manager
BY: Human Resources
SUMMARY
City Council adopted Resolution No. 23028 on September 21, 2011, which declared 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 providing a new 3% @ 55 Safety Fire Second Tier (Section 20475:
Different Level of Benefits Provided for New Employees).
RECOMMENDATION:
1. Waive reading of the full text of the Ordinance and introduce by title only.
2. Introduce on first reading Ordinance No. _, "AN ORDINANCE OF THE CITY
OF PALM SPRINGS, CALIFORNIA AUTHORIZING 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."
STAFF ANALYSIS:
The City adopted a new Memorandum of Understanding on September 21, 2011 with
the Fire Safety Unit and the Fire Management Unit that provides for a modification of
the California Public Employees' Retirement System for a new 3% @ 55 Safety Fire
Second Tier. Additionally, the Council adopted Resolution No. 23028, which declared
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 providing a new 3% @ 55 Safety Fire Second Tier (Section 20475:
Different Level of Benefits Provided for New Employees).
ITEM NO. �/
City Council Staff Report
October 19, 2011 --Page 2
Fire Safety Ordinance
An Ordinance 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 21362.2 (3% @ 50 Full Formula) is applicable to only those local
safety fire members entering membership on or prior to the effective of this amendment
to Contract. Section 21363.1 (3% @ 55 Full Formula) is applicable to local safety fire
members entering membership for the first time in the safety classification after the
effective date of this amendment to contract. (Coverage group 75101 will be
established for this benefit).
Attached is the California Public Employees' Retirement System's Actuarial Valuation
for the proposed contract amendment.
FISCAL IMPACT
There will be no immediate employer contribution rate impact from this amendment.
Ultimately, the employer normal cost will decrease. According to this 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 ultimate
decrease would be 0.9%.
This rate reduction will occur gradually, beginning on July 1, 2013, if there are second
tier employees hired on or before June 30, 2011. For fiscal years 2013/2014 and
beyond, the projected cumulative of rate reduction expected from introducing a second
tier payroll to our total plan payroll two and a half years earlier.
Perry Ma is n, Director of Human Resources David H. Ready, Cit er
Attachments: Resolution
Ordinance
Amendment to Contract
California Public Employees' Retirement System's Actuarial Valuation
02
RESOLUTION NO. 23028
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS 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 21363.1 (3%@55
Full formula) is applicable to local fire members entering membership for the first time in
the fire classification 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.
PASSED, APPROVED AND ADOPTED BY THE PALM SPRINGS CITY
COUNCIL THIS 21ST DAY OF SEPTEMBER, 2011.
ATTEST: DAVID H. READY,�AGER
G�J,!�I ED COPY
certify is >t this i z true and correct copy of the document
MES THOMPSON, CITY CLERK on file iii .ie o icial records of the City of Palm Springs.
City Clerk
This certification must appear in blue with an original 03
signature.
Resolution No.23028
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, hereby certify that
Resolution No. 23028 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 September 21, 2011, by the
following vote:
AYES: Councilmember Foat, Councilmember Hutcheson, Councilmember Mills,
Mayor Pro Tern Weigel, and Mayor Pougnet.
NOES: None.
ABSENT: None.
ABSTAIN: None.
JAMES THOMPSON, CITY CLERK
City of Palm Springs, California�Q/Zd`�'0
04
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, AUTHORIZING 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_ DAY OF 2011.
STEPHEN P. POUGNET, MAYOR
ATTEST:
JAMES THOMPSON, CITY CLERK
05
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. 1799 was introduced at a regular meeting of the Palm
Springs City Council on the 19th day of October, 2011, and adopted at a regular meeting
of the City Council held on the_day of , 2011 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAMES THOMPSON, CITY CLERK
City of Palm Springs, California
06
Ca1PERS
EXHIBIT
Califomia
Public Employees' Retirement System
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, Califomia 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 and June 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 June 17, 2011, and hereby replaced by the following paragraphs
numbered 1 through 15 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 police members
entering membership in the .police classification on or prior to June 17,
2011 and for those local fire members entering membership in the fire
classification on or prior to the effective date of this amendment to contract
and 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 the effective 7
date of this amendment to contract.
PLEAS-GU it'JT SIGUN "EX14,151T O ET
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
Califomia Public Employees' Retirement System (CalPERS) and its
trustees, agents and employees, the CalPERS 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-CalPERS 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
CalPERS 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 CalPERS Board of Administration pursuant to
section365, of Title 11, of the United States Bankruptcy Code
or any similar provision of law.
08
I .
PLEASE DO NOT SIGN "EX,IMBIT OPJCY"
(e) Public Agencys 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).
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 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).
09
-10TS"INI "EXIIIHSIT ONLY"
8. The percentage of final compensation to be provided for each year of
credited prior and current service as a local police members 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 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).
9. 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 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).
10. 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).
d. Section 20965 (Credit for Unused Sick Leave) for local' fire
members only.
e. Section 21574 (Fourth Level of 1959 Survivor Benefits).
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 the effective date of this amendment to contract.
10.
!?; 4•
OM
11. 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.
12. 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.
13. 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.
14. 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.
11
I '
15. 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.
`<h9.
y`t,B,, This amendment shall be effective on the day of
B8- OF ADMINISTRATION CITY COUNCIL
PUBU6,EOPLOYEES' RETIREMENT SYSTEM CITY OF PALM SPRINGS
c ,
BY BY
DARRYL WATS HIEF PRESIDING OFFICER
CUSTOMERACC6J SERVICESDIVISIOId��}'�
PUBLIC EMPLOYEE E REMENT SYSTEM
Witness Dat "^
Attest:
Clerk
AMENDMENT ERN 355 -
PERS0014-7020k - -
12
California PIiDIIc Employees' Retirement System
Actuarial Office
P.O. Box 1494
Sacramento, CA 95812-1494
A4,-, TTY: (916)795-3240
CaIPERS (888)225-7377 phone • (916) 795-2744 fax
www.calpers.ca.gov
June 08,2011
Employer Number: 355
Employer Name:CITY OF PALM SPRINGS
Rate Plan: SAFETY PLAN
Re: New 3% @ 55 Second Tier for local Safety Plan members within a Non-pooled Plan(Section 20475: Different
Level of Benefits Provided for New Employees)—For Fire Only
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 30,2009 annual valuation.
For your new tier, there will be no immediate employer contribution rate impact from this amendment. Ultimately,
however, your employer normal cost will decrease. 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 0.9%.
The employer rate reduction will occur gradually, beginning on July 1, 2013, if there are second tier employees hired
on or before June 30, 2011. For fiscal years 2013/2014 and beyond, the projected cumulative amount of rate
reduction you can expect from introdudng a second tier is equal to the ratio of your second tier payroll to your total
plan payroll two and a half years earlier. For example if 1/10 of your Safety Plan members were in second tier on
June 30, 2011 and the ultimate expected norms/cost decrease was 0.9°/u, the cumulative rate reduction you can
expect by the 2013/2014 fiscal year would be 1/10 x 0.9%= 0.09%.
To initiate an amendment to the contract, please complete the attached election form and mail or FAX (916) 795-
3005 the form with a letter to the Contracts Maintenance 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 )CaIPERS(225-7377).
l..f' .
RICHARD SANTOS,CFA,ASA, MAAA
Senior Pension Actuary,CalPERS
13
California Public Employees'Retirement System
www.calpers.ca.gov