CC - Item 9H - PERS Contract Amendment ResolutionROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: JEFF ALLRED, CITY MANAGER
DATE: SEPTEMBER 28, 2010
SUBJECT: PERS CONTRACT AMENDEMENT RESOLUTION
SUMMARY
On June 22, 2010, the City Council approved a modified benefits package for
employees, which includes pension reform measures. Based on direction given at that.
meeting, staff has been coordinating with California Public Employees' Retirement
System (CaIPERS) to finalize the implementation of the 2%@55 pension formula for
miscellaneous employees who are hired after July 1, 2010.
In order to finalize this process, the City Council must approve a Resolution of Intention
(Attachment A) to amend the City's contract with CaIPERS and approve the first reading
of Ordinance No. 904 requesting a contract amendment. At the October 12, 2010 City
Council meeting, staff will prepare the final documentation that must be formally
approved by the City Council to implement the amendment to the existing pension
program.
Staff Recommendation
Staff recommends that the City Council approve the attached Resolution of Intention
and the first reading of Ordinance No. 904 for the purpose of formalizing an amendment
to the contract between the Board of Administration of the California Public Employees'
Retirement System and the City Council of the City of Rosemead.
FISCAL IMPACT
The current employer contribution rate under the 2.7%@55 is 22.476% and the
employee contribution rate is 8%. Under the 2%@55 formula, the employer contribution
will be reduced to 8.984% and the employee contribution will be reduced to 7%. This
modification will result in future cost savings. The cost savings will be realized over time
as turnover occurs. However, there are some potential unintended consequences that
could have negative effects on the City's operations in the long term. For example, the
lower 2%@55 formula may place Rosemead in a less competitive position relative to
other cities, which could make it difficult for the City to recruit and retain highly qualified
staff members. This concern may be particularly problematic relative to department
heads and executive management personnel.
APPROVED FOR CITY COUNCIL AGENDA: ITEM NUMBER: q~A
City Council Meeting
September 28, 2010
Page 2 of 2
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process and public
notices have been published in the San Gabriel Valley Tribune as required.
Submitted by:
Su Tan
Human Resources Manager
Attachment: A - Resolution of Intent & Exhibit
B - Ordinance No. 904
RESOLUTION OF INTENTION
TO APPROVE AN AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
CITY OF ROSEMEAD
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 21354 (2% @ 55 Supplemental formula) is
applicable to local miscellaneous members entering
membership for the first time in the miscellaneous
classification after the effective date of this amendment to
contract.
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.
Presiding Officer
Title
Date adopted and approved
(Amendment)
CON-302 (Rev. 4/96)
RESOLUTION NO. 2010-65
RESOLUTION OF INTENTION
TO APPROVE AN AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
CITY OF ROSEMEAD
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 21354 (2% @ 55 Supplemental formula) is
applicable to local miscellaneous members entering
membership for the first time in the miscellaneous
classification after the effective date of this amendment to
contract.
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.
By:
Presiding Officer
Title
Date adopted and approved
(Amendment)
CON-302 (Rev. 4/96)
Afk"
Ca1PERS
EXHIBIT
California
Public Employees' Retirement System
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Rosemead
44001-
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
October 12, 1992, and witnessed September 8, 1992, and as amended effective April 9,
1993, July 27, 1998, November 5, 2007, and April 24, 2009 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 April 24, 2009, 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.
PLEASE DO NOT SIGN "EXHIBIT ONLY"
2. Public Agency shall participate in the Public Employees' Retirement
System from and after October 12, 1992 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
California Public Employees' Retirement System (CaIPERS) and its
trustees, agents and employees, the CaIPERS 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-CaIPERS 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
CaIPERS 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 CaIPERS Board of Administration pursuant to
section 365, of Title 11, of the United States Bankruptcy Code
or any similar provision of law.
(e) Public Agency's 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.
PLEASE GO f°¢ T SIGN "EXHIBIT ONLY"
(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. 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:
a. SAFETY EMPLOYEES;
b. "PLANNING AND TRAFFIC COMMISSION"; AND
C. ADMINISTRATIVE INTERNS HIRED ON OR AFTER APRIL 24,
2009
6. Assets heretofore accumulated with respect to members in the local
retirement system have been transferred to the Public Employees'
Retirement System and applied against the liability for prior service
incurred thereunder.
7. 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 November 5, 2007 shall be
determined in accordance with Section 21354 of said Retirement Law (2%
at age 55 Supplemental to Federal Social Security).
8. 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 November 5, 2007 and not entering membership
for the first time in the miscellaneous classification after the effective date
of this amendment to contract shall be determined in accordance with
Section 21354.5 of said Retirement Law (2.7% at age 55 Supplemental to
Federal Social Security).
9. The percentage of final compensation to be provided for each year of
credited current service as a local miscellaneous member entering
membership for the first time in the miscellaneous classification after the
effective date of this amendment to contract shall be determined in
accordance with Section 21354 of said Retirement Law (2% at age 55
Supplemental to Federal Social Security).
LEASE DO i' 0 i SIGN "EXHISIT ONLY,;
1b. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 20938 (Limit Prior Service to Members Employed on
Contract Date).
b. Section 21536 (Local System Service Credit Included in Basic
Death Benefit).
C. Section 21031 (Public Service Credit for Limited Prior Service).
d. Section 21024 (Military Service Credit as Public Service).
e. Section 20042 (One-Year Final Compensation).
f. Section 20475 (Different Level of Benefits). Section 21354 (2% @
55 Supplemental formula) is applicable to local miscellaneous
members entering membership for the first time in the
miscellaneous classification after the effective date of this
amendment to contract.
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 of said Retirement System.
12. Public Agency shall also contribute to said Retirement System as follows:
a. 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.
b. 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
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BY
LORI MCGARTLAN
EMPLOYER SERVI
PUBLIC EMPLOYE
ENT SYSTEM
Fyn.
day of
CITY COUNCIL
CITY OF ROSEMEAD
A~
BYF~P
PRESIIZ NNG OFFICER
vO
Witness Date+F
Attest:
Clerk
AMENDMENT ER# 1595
PERS-CON-702A
ORDINANCE NO. 904
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF ROSEMEAD, CALIFORNIA, FOR AN
INTENTION OF AN AMENDMENT TO THE CONTRACT
BETWEEN THE CITY COUNCIL OF THE CITY
OF ROSEMEAD AND THE BOARD OF ADMINISTRATION
OF THE CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
WHEREAS, an ordinance of the City Council of the City of Rosemead, California
("City Council") authorizing an amendment to the contract between the City Council of
the City of Rosemead and the Board of Administration of the California Public
Employees' Retirement System (CaIPERS); and
WHEREAS, the Board of Administration of the California Public Employees'
Retirement System approved the request to amend the contract between the City Council
of the City of Rosemead and Ca1PERS with the proposed change: "To provide Section
20475 (Different Level of Benefits). Section 21354 (2% @55 Supplemental formula) is
applicable to local miscellaneous members entering membership for the first time in the
miscellaneous classification after the effective date of this amendment to contract."; and
WHEREAS, the City Council of the City of Rosemead approved the Resolution
of Intent (Resolution No 2010-65) to amend the contract with the Board of
Administration of the California Public Employees' Retirement System on September 28,
2010; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ROSEMEAD,
CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. That an amendment to the contract between the City Council of the
City of Rosemead and the Board of Administration, California Public Employees'
Retirement System is hereby authorized, a copy of said amendment being attached
hereto, marked Exhibit "A", and by such reference made a part of hereof as though herein
set out in full.
Section 2. The Mayor of the City of Rosemead is hereby authorized,
empowered, and directed to execute said amendment for and on behalf of said agency.
Section 3. The Ordinance shall take effect 30 days after the date of its
adoption, and prior to the expiration of 15 days from the passage thereof shall be
published at least once in the San Gabriel Valley Tribune, a newspaper of general
circulation, published and circulated in the County of Los Angeles and thenceforth and
thereafter the same shall be in full force and effect.
PASSED AND ADOPTED this 12`h day of October, 2010, by the following vote:
YES:
NO:
ABSTAIN:
ABSENT:
GARY TAYLOR, MAYOR
ATTEST:
GLORIA MOLLEDA, City Clerk
APPROVE AS TO FORM:
RACHEL RICHMAN, CITY ATTORNEY