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Home My WebLink About07 - Appointing the City Manager as the Plan Administrator for the Public Agency Retirement Services (PARS), and Delegating Authority to the City Manager to Administer Other Employee Benefit PlansQ SEW Pp�T CITY OF z NEWPORT BEACH c�<,FORN'P City Council Staff Report March 12, 2024 Agenda Item No. 7 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Jason AI -Imam, Finance Director/Treasurer - 949-644-3126, jalimam@newportbeachca.gov PREPARED BY: Jason AI -Imam, Finance Director/Treasurer TITLE: Resolution No. 2024-16: Appointing the City Manager as the Plan Administrator for the Public Agency Retirement Services (PARS), and Delegating Authority to the City Manager to Administer Other Employee Benefit Plans ABSTRACT: The City Council has, from time to time, designated particular officers to serve as the plan administrator for retirement and post -employment benefit plans for qualified employees. It is recommended that the City Council appoint the city manager as the plan administrator, thereby consolidating administration authority over several plans into the office of the city manager. 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; b) Adopt Resolution No. 2024-16, A Resolution of the City Council of the City of Newport Beach, California, Appointing the City Manager as the Plan Administrator for the Public Agency Retirement Services (PARS), and Delegating Authority to the City Manager to Administer Other Employee Benefit Plans; and c) Authorize the City Manager to negotiate and execute the documents to implement the 401(a) Defined Contribution Plan with Empower Trust Company, LLC. DISCUSSION: The City Council has previously designated certain officers, such as the city manager, city attorney and the human resources director, to serve as the plan administrator for retirement and post -employment benefit plans for qualified employees, including but not limited to, Internal Revenue Code Section 401(a) and 457(b) plans, a Retirement Health Savings Plan, a Flexible Spending Account, and the LIUNA Pension Fund. Staff recommends that the City Council appoint the city manager as the plan administrator to consolidate administration authority over several plans. 7-1 Resolution No. 2024-16: Appointing the City Manager as the Plan Administrator for the Public Agency Retirement Services (PARS), and Delegating Authority to the City Manager to Administer Other Employee Benefit Plans March 12, 2024 Page 2 The need to consolidate the authority of plan administration was brought to light as City staff pursued the transfer of 401(a) defined contribution plan assets from PARS to Empower Trust Company, LLC (Empower) for assets held on behalf of the city manager, city clerk, city attorney, and the executive management group. Pursuant to the Key & Management Compensation Plan, employees in those classifications designated as executive management shall receive a two percent contribution to each employee's 401(a) defined contribution plan account on or after January 1, 2022. In addition, the city manager, city clerk and city attorney each receive contributions to their 401(a) defined contribution plan accounts based on the amounts set forth in each employee's employment agreement. If the City Council delegates authority to the city manager to administer employee benefit plans, the city manager will execute the documents to effectuate the transfer of 401(a) defined contribution plan assets from PARS to Empower. Certain fees associated with the 401(a) plan assets are currently paid for by the City since PARS is unable to pass these fees onto plan participants, which amounts to $4,800 annually. If the assets for these employees are transferred to Empower, the 401(a) plan fees are estimated to amount to approximately $260 annually and would be passed on to plan participants as it is handled for most other employee benefit accounts. Therefore, City staff pursued establishing a 401(a) plan with Empower, which also holds 457(b) plan assets on behalf of various employee groups. PARS also holds 401(a) plan assets for the Newport Beach Fire Management Association and the Newport Beach Firefighter's Association. City staff explored moving 401(a) plan assets for the fire associations to Empower. However, Empower was unable to accommodate their vesting restrictions. Therefore, the 401(a) plan assets for the fire associations will remain with PARS, which means the City will continue to pay the annual fee of $4,800 to PARS. FISCAL IMPACT: There is no fiscal impact related to the consolidation of authority over plan administration. In addition, if 401(a) plan assets are transferred from PARS to Empower, the fees associated with the plan will be passed on to plan participants. Therefore, there is no fiscal impact to the City as it relates to the transfer of plan assets from PARS to Empower. 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). ATTACHMENT: Attachment A — Resolution No. 2024-16 7-2 ATTACHMENT A RESOLUTION NO. 2024- 16 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, APPOINTING THE CITY MANAGER AS THE PLAN ADMINISTRATOR FOR THE PUBLIC AGENCY RETIREMENT SERVICES (PARS), AND DELEGATING AUTHORITY TO THE CITY MANAGER TO ADMINSTER OTHER EMPLOYEE BENEFIT PLANS WHEREAS, on November 12, 1991, the City Council of the City of Newport Beach ("City") adopted Resolution 91-106, authorizing the City's participation in the Public Agency Retirement Services ("PARS") to provide a defined contribution pension plan to qualified employees; WHEREAS, the City is required to designate a plan administrator to make decisions and execute documents on behalf of the City in order to maintain and administer the City's participation in PARS ("Plan Administrator"); WHEREAS, the City Council has, from time to time, designated particular officers to serve as the Plan Administrator, including the City Manager, the Assistant City Manager, the Director of Personnel, the Administrative Services Director, and most recently, the Human Resources Director; WHEREAS, on October 10, 2017, the City Council adopted Resolution 2017-65, which authorized the City Manager to take any and all actions necessary to administer and manage the City's Internal Revenue Code Section 457(b) deferred compensation plan, and a Retirement Health Savings Plan; WHEREAS, the City also participates in other retirement and post -employment benefit plans for qualified employees, including but not necessarily limited to, Internal Revenue Code Sections 401(a) and 457(b) plans, a Retirement Health Savings Plan, Flexible Spending Account, and the LIUNA National (Industrial) Pension Fund ("Other Plans"); and WHEREAS, to coordinate the interplay between plans, foster plan synergy, and for ease of administration, the City Council desires to appoint the City Manager as the Plan Administrator of PARS, and additionally, delegate authority to the City Manager to administer the Other Plans, thereby consolidating the administration of the several plans into the office of the City Manager. 7-3 Resolution No. 2024- Page 2 of 3 NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council hereby appoints the City Manager, or designee, as the Plan Administrator for PARS, and authorizes the Plan Administrator to execute any and all legal and administrative documents on behalf of the City, and to take whatever additional actions are necessary to establish and maintain the City's participation in PARS, and to ensure compliance with any relevant rule, regulation, or law related thereto. Section 2: The City Council hereby authorizes the City Manager, or designee, to execute any and all legal and administrative documents on behalf of the City, and to take whatever additional actions are necessary to establish and maintain the City's participation in the Other Plans, and to ensure compliance with any relevant rule, regulation, or law related thereto. Section 3: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Any previously adopted resolution, or portion thereof, in conflict with the provisions of this resolution is hereby repealed to the extent it conflicts. Section 4: If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 5: The City Council finds the adoption of this resolution 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, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 7-4 Resolution No. 2024- Page 3 of 3 Section 6: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 12th day of March, 2024. Will O'Neill Mayor ATTEST: Leilani 1. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE ; ;, , L ar n C. harp City Attorney 7-5