HomeMy WebLinkAbout16 - PSA for an Evaluation of Potential Options for Exiting the Laborer's International Union of North America Supplemental Retirement PlanQ SEW Pp�T
CITY OF
z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
November 14, 2023
Agenda Item No. 16
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Jason AI -Imam, Finance Director/Treasurer — 949-644-3126,
jalimam@newportbeachca.gov
PREPARED BY: Michael Gomez, Deputy Finance Director,
mgomez@newportbeachca.gov
PHONE: 949-644-3124
TITLE: Award of Professional Services Agreement to Eide Bailly, LLP for an
Evaluation of Potential Options for Exiting the Laborer's International
Union of North America Supplemental Retirement Plan
ABSTRACT:
This report recommends that the City Council authorize the City Manager and City Clerk
to execute a professional services agreement with Eide Bailly, LLP for services pertaining
to an evaluation of potential options for exiting the Laborer's International Union of North
America Supplemental Retirement Plan.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
and
b) Authorize the City Manager and City Clerk to execute a Professional Services
Agreement with Eide Bailly, LLP for consulting services for the period ending June 30,
2024, with a total not -to -exceed amount of $42,000.
DISCUSSION:
Since 1999, certain City of Newport Beach (City) employee groups have agreed to
participate in the Laborer's International Union of North America (LIUNA) Supplemental
Retirement Plan. When employees initially entered the LIUNA plan, employees agreed to
contribute 1 % to LIUNA in exchange for certain supplemental pension benefits. Beginning
in 2007, LIUNA began to reduce the supplemental pension benefits to maintain the
solvency of the plan during and following the Great Recession.
Over the last decade, LIUNA has increased the required contribution rate eight times
without increasing the benefits payable to participants. Employees are currently required
to contribute 3.22% to LIUNA. It is also important to note that individual employers do not
have separate accounts within LIUNA. Therefore, contributions made to LIUNA from the
City are pooled with the contributions from all other participating employers, which means
the benefits promised to employees are affected by the actions of other participating
employers.
16-1
Award of Professional Services Agreement with Eide Bailly, LLP
November 14, 2023
Page 2
Consequently, the required contributions to LIUNA are no longer commensurate with the
benefits that are promised. Furthermore, the 3.22% employee contribution is a deterrent
for recruitment and retention for those impacted positions, including all Key &
Management, Professional &Technical, and City Employees Association employees.
Staff recommends City Council authorization of an agreement with Eide Bailly, LLP to
evaluate potential options for exiting LIUNA. The scope of work includes Eide Bailly
working with LIUNA staff, an actuary, legal counsel, and management to develop a report
that includes the supplemental pension plan history, actuary's analyses, and the costs,
risks and benefits associated with potentially exiting the plan.
Eide Bailly is a certified public accounting firm with a government advisory services
division, which will provide the services for this agreement. Eide Bailly has been
authorized to do business in California since 1997 and is the 17t" largest accounting firm
in the United States. In addition, the firm employs the City's former finance director,
Scott Catlett. If this agreement is approved, Mr. Catlett will be assigned as the project
manager due to his knowledge of the LIUNA plan. Because of his familiarity, the use of
Eide Bailly and Mr. Catlett will be a cost-effective way to complete the analysis.
Section I of City Council Policy F-14 (Contract Procurement and Authority to Contract)
requires City Council approval for professional services agreements with former
employees who have separated within the past five years. Since Mr. Catlett separated in
2022, City Council approval is requested pursuant to City Council Policy F-14.
FISCAL IMPACT:
The adopted budget includes sufficient funding for this agreement, which will be expensed
to the General Fund, account number 01030005-811008.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
16-2