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Home My WebLink AboutCC AG PKT 2003-03-24 #P AGENDA REPORT 0/ • DATE: March 24, 2003 1 viri/ TO: Honorable Mayor and City Council FROM: John B. Bahorski, City Manager e:7 SUBJECT: (PERS Contract Amendment — 3% @ 50) SUMMARY OF REQUEST: That Council adopt the attached Ordinance to amend the California Public Employees' Retirement System contract to provide Section 21362.2 (3% @ 50 formula) to the City's sworn employees. BACKGROUND: The City has a three year contract with the Police Management Association (Captains, Sergeants and a non - safety Records Supervisor) and the Police Officers Association (Corporals, Officers). Pursuant to the provision of Article IX. Retirement, Section 2, of the POA MOU and a similar provision in the SBPMA MOU, the City is to amend the California Public Employees' Retirement System contract to provide Section 21362.2 (3% @ 50 formula) for safety members by the end of this fiscal year. To fulfill the obligations of this contract, Ca1PERS requires a resolution of intention to be adopted giving notice of the City's intention to approve an amendment to the PERS contract to adopt the 3% @ 50 formula; that action was taken by Council on February 24, 2003. The attached Ordinance authorizing the PERS contract amendment is now before Council for consideration. As the City adopted a resolution of intention, no second reading of the ordinance is needed. FISCAL IMPACT: Government Code 7507 requires that the future annual costs of the proposed contract amendment be made known. Currently, the City is contributing 24.24% of each safety employees' salary into the PERS retirement system. With the contract amendment, that contribution will change to 39.582 %. In year 2004 /05, the contribution is estimated to be 50.8% due to the losses incurred in the PERS investments for FY 2001/02 which impacts future contribution rates. The change in the total employer rate due to the amendment is an additional 12.061%. AGENDA ITEM / • 3 % @50 Report —Page2 March 24, 2003 Currently the City pays $704,486 annual for the 2% @ 50 retirement costs for safety employees. With the contract amendment, the City would contribute $1,079,118 the following year and in year 04/05 the City would contribute $1;384,932. These costs would be paid by the City over multiple years until the assets in the safety PERS retirement account cover the benefits provided. RECOMMENDATION: Pursuant to contract obligations with Police Officers Association and the Police Management Association, adopt the Proposed Ordinance to amend the City's contract with the Public Employees Retirement System to provide Section 21362.2 (3% @ 50 formula) to the City's sworn full -time employees — effective May 7, 2003. Attachment: Proposed Ordinance No. PERS Contract Amendment • Ca1PERS California Public Employees' Retirement System 40 . whvr===aassage AMENDMENT TO CONIC • CT Between the Board of Administration California Public Employees' Retirement System and the City Council City of Seal Beach 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 June 1, 1958, and witnessed April 28, 1958, and as amended effective August 1, 1968, July 1, 1972, May 16, 1973, October 12, 1977, July 4, 1979, August 13, 1980, September 17, 1986, July 22, 1987, July 11, 1991, September 23, 1994, December 15, 1995 and July 10, 1997 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1 through` 12 are hereby stricken from said contract as executed effective July 10, 1997, and hereby replaced by the following paragraphs numbered 1 through 13 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. 2. Public Agency shall participate in the Public Employees' Retirement System from and after June 1, 1958 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. 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. Ocean Beach Lifeguards (included as local safety members); d. Employees other than local safety members (herein referred to as local miscellaneous members). . 4. 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: a. PERSONS COMPENSATED ON AN HOURLY BASIS HIRED AUGUST 1, 1968 OR AFTER. - 5. The percentage of final compensation to be provided for each year of credited prior and current service for local miscellaneous members shall be determined in accordance with Section 21354 of said Retirement Law, subject to the reduction provided therein for service prior to June 30, 1972, termination of Social Security, for members whose service has been included in Federal Social Security (2% at age 55 Full and Modified). 6. The percentage of final compensation to be provided for each year of credited prior and current service as a local fire member and an ocean beach lifeguard shall be determined in accordance with Section 21362 of said Retirement Law (2% at age 50 Full). 7. The percentage of final compensation to be provided for each year of credited prior and current service as a local police member shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). 8. Public Agency elected and elects to be subject to the following optional provisions: - a. Section 21571 (Basic Level of 1959 Survivor Benefits) for local fire members only. b. Sections 21624, 21626 and 21628 (Post- Retirement Survivor Allowance). - c. Section 21222.1 (One -Time 5% Increase - 1970). Legislation repealed said Section effective January 1, 1980. d. Section 20042 (One -Year Final Compensation). e. Section 20965 (Credit for Unused Sick Leave) for local miscellaneous members and local police members only. f. Section 21024 (Military Service Credit as Public Service), Statutes of 1976. g. Section 20421 ( "Local Safety Member" shall include ocean beach • lifeguards of a city as described in Government Code Section 20421). h. Section 21573 (Third Level of 1959 Survivor Benefits) for local miscellaneous members, local police members and ocean beach lifeguards only. Section 20903 (Two Years Additional Service Credit) for local miscellaneous members only. 9. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on October 12, 1977. 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. 10. 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. 11. 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, local police members and ocean beach lifeguards. 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. 12. 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. 13. 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 Tess 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. 7 B. This amendment shall be effective on the _. ' day of I , 02003. BOARD OF ADMINISTRATION CITY COUNCIL PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF SEAL BEACH BY BY KENNETH W. MARZION, CHIEF PRESIDING OFFICER ACTUARIAL & EMPLOYER SERVICES DIVISION PUBLIC EMPLOYEES' RETIREMENT SYSTEM Witness Date Attest: Clerk • • AMENDMENT ER# 0377 PERS- CON -702A (Rev 8 \02)