HomeMy WebLinkAbout03 - Contract Amendment with PERSCITY OF NEWPORT BEACH /ate
• CITY COUNCIL STAFF REPORT
Agenda Item No. 5
January 22, 2008
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources Department
Barbara Ramsey, Human Resources Director
949- 644 -3303, bramsey @city.newport- beach.ca.us
SUBJECT: Resolution to Provide Section 20516 (Employee Sharing Cost of Additional
Benefits) applicable to Section 21354.4 (2.5% @ 55 formula) for local
miscellaneous members.
RECOMMENDATION:
1. Adopt Resolution 2008 -_ relating to the City's Intention to Approve an Amendment to the
Contract between the Board of Administration, California Public Employees' Retirement
System (PERS) and the Newport Beach City Council to authorize cost sharing for the
"2:5 %0 @55" . retirement formula for local miscellaneous members, including Key and
• Management.
2. Introduce Ordinance 2008 -_ relating to a PERS contract amendment.
DISCUSSION:
The California Public Employees Retirement System (PERS or www.calpers.ca.gov) manages
the largest retirement. program for Newport Beach city employees, as well as City employees'
health benefit plans (Newport Beach City employees generally do not receive Social Security,
because the City does not participate in Social Security). The PERS portfolio is one of the
largest in the nation, and provides retirement and health benefits to approximately 1.5 million
public employees, retirees, and their families and to more than 2,500 employers. Newport
Beach contracts with PERS to administer city employees' benefits, including a defined benefit
(DB) retirement plan.
This agenda item is related to the cost sharing agreement between the City of Newport Beach
miscellaneous employees and the City Council relating to the new 2.5% @ 55 retirement
formula that was implemented December 22, 2007. Although PERS is aware of this cost
sharing agreement, they require that we approve a separate contract amendment.
The City reached agreement with the three Miscellaneous units as a result of negotiations on
July 19, 2007. Among other things, the agreement provided that the City would amend its
contract with PERS to implement a "2.5% @ 55" retirement benefit with the City's miscellaneous
•employees effective January 1, 2008, if the employees would pay for the benefit by forgoing
certain salary increases.
PERS contract amendment for employee cost sharing
January 22, 2008
Page 2
The City Council directed that the employees pay for the benefit by requiring that the "employee •
rate" portion of the PERS rate (which the City now pays on behalf of the employees, a relatively
common practice in municipalities) be changed to clearly show that the net increase in cost
(PERS puts this cost at about 3.42% of eligible payroll) resulting from the 2.5% @ 55 plan be
put on the employee rate side of the PERS payment.
As a part of negotiations, the Miscellaneous units agreed to forgo 3.42% in salary increases and
instead have 3.42% of an overall 3 -year, 11 % salary package applied directly to PERS to cover
the full cost of the 2.5% @ 55 plan. In effect, this employee -paid benefit will serve as a Defined
Contribution ( "DC ") component of the PERS "DB" plan, because the employees can take their
accrued 3.42% of payroll payment with them should they leave the PERS system.
On October 23, 2007 the City Council adopted Ordinance 2007 -62 approving the 2.5% @ 55
retirement formula for miscellaneous employees. This new contract amendment completes the
negotiated benefit by amending our contract with PERS to allow the employees to pay for the
additional benefit and be added to the employee rate.
The attached Resolution of Intention is required by PERS for the employee cost sharing. The
resolution's purpose is to notify the public that the City Council intends to amend the City's
contract with PERS for cost sharing and what the cost will be.
The PERS contract amendment cannot become effective until the adoption of an ordinance.
The ordinance will be heard today for 1St reading. Second reading may not occur until at least
twenty (20) days have .passed since the Council adopted the proposed Resolution of Intention. •
Therefore, 2nd reading of the ordinance approving the PERS contract amendment is expected to
be on the City Council's agenda for February 12, 2008. The ordinance takes effect 30 days
after 2' reading.
Funding Availability:
The enhanced retirement for miscellaneous employees is fully funded by the employees and
there is no additional cost to the City.
Prepared & Submitted by:
Barbara Ramsey
Human Resources Director
Attachments:
Resolution NO.2008-
Ordinance NO. 2008 -
Draft Contract Amendment
•
RESOLUTION NO. 2008-
• A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH DECLARING ITS INTENTION TO APPROVE
AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION, CALIFORNIA, PUBLIC EMPLOYEES'
RETIREMENT SYSTEM AND THE CITY COUNCIL, CITY OF
NEWPORT BEACH
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 20516 (Employees Sharing Cost of Additional Benefits)
applicable to: Section 21354A (2.5 % �@ v5 Full formula) for local miscellaneous
members, effective December 22, 2007. The employee cost sharing contributions
• are not to exceed 2.420 %. The maximum employee cost sharing contribution is
the normal cost plus the increase in the accrued liability due to the benefit
improvement amortized over 20 years. In no event shall the employee cost sharing
'contribution attributable to the unfunded liability remain in effect beyond December
31, 20207. Thereafter, in any given contribution year, the maximum employee cost
sharing contribution cannot exceed .838% of payroll.
NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency
does hereby give notice of 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 an "Exhibit" and by this reference made a
part hereof. Passed and adopted by the City Council of the City of Newport Beach at a regular
meeting held on the 22nd day of January 2008.
ATTEST:
LaVonne Harkless, City Clerk
•
-1-
Ed Selich, Mayor
ORDINANCE NO. 2008-
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF •
NEWPORT BEACH, CALIFORNIA, AUTHORIZING AN
AMENDMENT TO THE CONTRACT BETWEEN THE CITY
AND THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT
SYSTEM
NOW THEREFORE, the City Council of the City of Newport Beach, California, HEREBY
ORDAINS as follows:
SECTION 1: That the Amendment to the contract between the City of Newport Beach and
the Board of Administration, California Public Employees' Retirement System is hereby
authorized, a, copy of said Amendment being attached hereto, marked °- Exhibit ", and by
such reference made a part hereof as though set out in full.
SECTION 2: The Mayor of the City .of Newport Beach is hereby authorized,
empowered and direction to execute said Amendment for and on behalf of the City.
SECTION 3.: If .any. section, subsection, sentence, clause or phrase of this ordinance is,
for any reason, heldta be invalid or unconstitutional, such decision shall not affect the
validity or, constitutionality of the remaining portions of this ordinance. The City Council
hereby declares that it would have passed this ordinance, and each.section, subsection, •
clause or phrase .hereof, irrespective of the fact that any one or more sections,
subsections, sentences, clauses: and phrases be declared unconstitutional.
SECTION 4: This ordinance shall take effect thirty (30) days after its adoption, and
prior to expiration,of fifteen (15) days from the passage thereof shall be published once
in the Dam Pilot, a newspaper of general circulation, published in Costa Mesa and
circulated in the City of Newport Beach, and thenceforth and thereafter shall be in full
force and effect.
SECTION 5: This ordinance was introduced at a regular meeting of the City Council of the
City of Newport Beach, held on the _ day of 2008, and adopted on the
— day of 2008, by the following vote, to wit:
AYES, COUNCILMEMBERS
NOES, COUNCI
ABSENT COUNCILMEMBERS
ATTEST:.
•
CITY CLERK
•
Ca1PERS
California
Public Employees' Retirement System
EXHIBIT
Al MMENT TQ . CONTRACT
Between the
Board of Administration
California Public Employees• Retirement System
and the
City Council
City of Newport 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 July 1,
1945, and witnessed April 27, 1945, and as amended effective March 1, 1948,
November 1, 1951, April 1,1956, October 31, 1970, September 18, 1971, December
11, 1971, September 24, 1977, December 18, 1977, June 17, 1978, March 24, 1979,
June 30, 1979, January 12, 1989, December 2, 1989, June 12, 1996, July 12, 2000,
August 26, 2000, June 15, 2002, November 30, 2002, November 13, 2004, July 23,
2005 and December 22, 2007 which provides for participation of Public Agency in said
System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 14 are hereby stricken from said contract as executed
effective December 22, 2007, and hereby replaced by the following paragraphs
numbered 1 through 14 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 55 for ocean beach
• lifeguards and age 50 for local fire members and local police members.
PLEASE DO Nil
2. Public Agency shall participate in the Public Employees' Retirement
System from and after. July 1, 1945 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. POLICE CADETS; AND
b. RESERVE OFFICERS.
5. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member in
employment before and not on or after December 22, 2007 shall be
determined in accordance with Section 21354 of said Retirement Law
(2% at age 55 Full).
6. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member in
employment on or after December 22, 2007 shall be determined in
accordance with Section 21354.4 of said Retirement Law (2.5% at age 55
Full).
7. The percentage of final compensation to be provided for each year of
.credited prior and current service as a local fire member and local police •
member shall be determined in accordance with Section 21362.2 of said
Retirement Law (3% at age 50 Full).
• 8. The percentage of final compensation to be provided for each year of
credited prior and current service as ocean beach lifeguards shall be
determined in accordance with Section 21363.1 of said Retirement Law
(3% at age 55 Full).
9. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 20421 ( "Local Safety Member" shall include ocean beach
lifeguards of a city as described in Government Code Section
20421).
b. Section 21574 (Fourth Level of 1959 Survivor Benefits).
G. Section 21024 (Military Service Credit as Public Service).
d. Section 21389 (Second Opportunity to Elect 1959 Survivor
Benefits). Legislation repealed said Section effective September
27, 1 979.
• e. Section 20965 (Credit for Unused Sick Leave) for local
miscellaneous members only.
f. Section 20042 (One -Year Final Compensation).
g. Section 21548 (Pre - Retirement Option 2W Death Benefit).
h. Section 20516 (Employees Sharing Cost of Additional Benefits):
Section 21354.4 (2.5% @ 55 Full formula) for local miscellaneous
members.
The employee cost sharing contributions are not to exceed 2.420 %.
The maximum employee cost sharing contribution is the normal
cost plus the increase in the accrued liability due to the benefit
improvement amortized over 20 years. In no event shall the
employee cost sharing contribution attributable to the unfunded
liability remain in effect beyond December 31, 2027. Thereafter, in
any given contribution year, the maximum employee cost sharing
contribution cannot exceed .838% of payroll.
•
,J t „rfw. i c ..
11 11
u
10. Public Agency, in accordance with Govemment Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
September 24, 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.
11. 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.
12. 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.
13. 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.
•
r1
L J
•
14. 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 js 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 th@tmployee and the Board.
B. This amendment shall bkctive on the day of
BOARD OF ADMINIST
PUBLIC EMPLOYEES'
SYSTEM
BY
LORI MCGARTtD, CHIEF
EMPLOYER,�f ICES DIVISION
PUBLIC EMJLOYEES' RETIREMENT SYSTEM
AMENDMENT ER# 0060
• PERS- CON- 702A (Rev. 70105)
CITY. COUNCIL
CITY OF NEWPORT BEACH
�yv
BY ` a�
PRESIDING OFFIC
VIV
Witnes,s�64te
Attest.
Clerk
�i
Ca1PERS
California
Public Employees' Retirement System
®s
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Newport 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 July 1,
1945, and witnessed April 27, 1945, and as amended effective March 1, 1948,
November 1, 1951, April 1, 1956, October 31, 1970, September 18, 1971, December
11, 1971, September 24, 1977, December 18, 1977, June 17, 1978, March 24, 1979,
June 30, 1979, January 12, 1989, December 2, 1989, June 12, 1996, July 12, 2000,
August 26, 2000, June 15, 2002, November 30, 2002, November 13, 2004, July 23,
2005 and December 22, 2007 which provides for participation of Public Agency in said
System. Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 14 are hereby stricken from said contract as executed
effective December 22, 2007, and hereby replaced by the following paragraphs
numbered 1 through 14 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 55 for ocean beach
lifeguards and age 50 for local fire members and local police members.
2. Public Agency shall participate in the Public Employees' Retirement
System from and after July 1, 1945 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. POLICE CADETS; AND
b. RESERVE OFFICERS.
5. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member in
employment before and not on or after December 22, 2007 shall be
determined in accordance with Section 21354 of said Retirement Law
(2% at age 55 Full).
6. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member in
employment on or after December 22, 2007 shall be determined in
accordance with Section 21354.4 of said Retirement Law (2.5% at age 55
Full).
7. The percentage of final compensation to be provided for each year of
credited prior and current service as a local fire member and local police
member shall be determined in accordance with Section 21362.2 of said
Retirement Law (3% at age 50 Full).
8. The percentage of final compensation to be provided for each year of
credited prior and current service as ocean beach lifeguards shall be
determined in accordance with Section 21363.1 of said Retirement Law
(3% at age 55 Full).
9. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 20421 ( "Local Safety Member" shall include ocean beach
lifeguards of a city as described in Government Code Section
20421).
b. Section 21574 (Fourth Level of 1959 Survivor Benefits).
C. Section 21024 (Military Service Credit as Public Service).
d. Section 21389 (Second Opportunity to Elect 1959 Survivor
Benefits). Legislation repealed said Section effective September
27. 1979.
e. Section 20965 (Credit for Unused Sick Leave) for local
miscellaneous members only.
f. Section 20042 (One -Year Final Compensation).
g. Section 21548 (Pre- Retirement Option 2W Death Benefit).
h. Section 20516 (Employees Sharing Cost of Additional Benefits):
Section 21354.4 (2.5% @ 55 Full formula) for local miscellaneous
members.
The employee cost sharing contributions are not to exceed 2.420°/x.
The maximum employee cost sharing contribution is the normal
cost plus the increase in the accrued liability due to the benefit
improvement amortized over 20 years. In no event shall the
employee cost sharing contribution attributable to the unfunded
liability remain in effect beyond December 31, 2027. Thereafter, in
any given contribution year, the maximum employee cost sharing
contribution cannot exceed .838% of payroll.
10. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
September 24, 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.
11. 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.
12. 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.
13. 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.
14. 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 15th day of March 2008
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY NEVWIPORT EACH
BY /: �1L
�� ��`
BY
LORI G; RTLAND, CHIEF P E I ING FFI ER
EMPLOYER SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
.3308'
Witness Date
Attest:
Clerk
AMENDMENT ER #0060
PERS- CON -702A (Rev. 10105)