HomeMy WebLinkAbout1995-06-27; City Council; 13215; MERGER OF CARLSBAD MUNICIPAL WATER DISTRICT AND CITY PUBLIC EMPLOYEE RETIREMENT SYSTEM (PERS) PLANS AND OTHER PLAN AMENDMENTSCn-
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6/27/95 a MTG. a * DEPT. Fl N a, k
TITLE: MERGER OF CARLSBAD MUNICIPAL WATER DISTRICT DEE
AND CITY PUBLIC EMPLOYEE RETIREMENT SYSTEM
(PERS) PLANS AND OTHER PIAN AMENDMENTS CIT
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iJ Cw OF CARLSBAD - AGEBOA BILL py ~d.
RECOMMENDED ACTION:
Adopt Ordinance No. fis- ,?I/ amending the PERS contract.
ITEM EXPLANATION
With the completion of negotiations with employee groups and previous merg
operations with the Carlsbad Municipal Water District (District), changes to the (
Public Employee Retirement System (PERS) plan should now be accomplished. 1
Council approval of the ordinance the following modifications and amendments tc
City’s PERS plan would occur.
1. Merger of the Carlsbad Municipal Water District PERS plan into the City’s P
plan
In January 1990, the Carlsbad Municipal Water District became a subsidiary di
of the Crty of Carlsbad in order to provide a unified water service operation withii
District’s service area. The City and the District approved an Operating Agree1
reflecting the new organizational relationship on June 25, 1991. On Februar
1992, as part of the agreement, all District employees became City employees
were added to the City Public Employee Retirement System (PERS) plan.
State Government Code Section 20567.1 authorizes the merger of the two F
plans. PERS has prepared the necessary documents to amend the City’s plan
merge the District’s PERS plan into the City pian on February 17, 1992. The Di:
and City PERS plans are very similar with former District employees maintainins
same or better PERS benefits. Optional benefits provided by the City’s plan wi
applied only to future service credit. At retirement, former District employees’ mol
PERS benefits will be calculated under the District plan through February 17, ‘
and as City employees thereafter.
2. At no additional out-of-pocket cost to the City, provide higher benefits to elis
survivors of full time City employees who die prior to retirement.
1959 Survivor benefits are similar to Social Security payments to dependents in
a monthly allowance is provided to surviving dependents when an employee
prior to retirement. The level of benefit is separated into three categories: t:
increased and third level. The third level provides the highest benefit. Currently
base level of benefits is provided for all safety employees while general employ
management and elected officials receive the increased level.
PERS recommended that the City amend its 1959 survivor benefit to the third I
to provide a higher benefit for employees at no out-of-pocket cost to the City. Mo
employees to the third level in this benefit would allow surviving dependent
receive payments that start to approach the levels of those offered by Social Seci
Although obtaining higher coverage, employees would make the same $2 payr
per month. The City may utilize otherwise inaccessible survivor benefit reserve
fund the third level coverage at no additional cost to the City.
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PAGE TWO OF AGENDA BILL NO. j 3! 21.5
3. Transfer reserves for 1959 survivor benefits to fund third level of coverage.
Funding for the third level of 1959 survivor benefits is based on the pooled experience of
participating agencies rather than individual agency experience. The City’s PERS surplus
1959 survivor benefits now totals almost $178,000. AI: this time, these funds may only
utilized for survivor benefit coverage. The surplus funds will be transferred to the third le
benefit pool and will be drawn down annually to fund the City’s employer cost for the tt-
level of coverage.
4. Allow employees a second opportunity to elect the PERS survivor benefit coveragc
Approximately 20 long-time City employees did not chose the 1959 survivor benefit when.
PERS benefit was originally implemented. Amending the contract will allow those employe
who are not now covered by the 1959 survivor benefits lo elect coverage. At present, all n
employees receive the 1959 survivor benefit.
FISCAL IMPACT
1. Merger of the District and City PERS plans will result in a decrease to the PE
miscellaneous employer rate. The actuarial valuation shows a 0.246% decrease to the Cil
PERS employer contribution rate for local miscellaneous members which will be reflectec
the PERS rates effective July 1, 1996. All non-safety regular employees are included in
PERS miscellaneous member category, including general employees, management, s
elected officials. Beginning in p/ 1996-97, the annual cost reduction is approximai
$35,000.
2. The cost to the City for third level 1959 survivor benefits are pooled among men-
agencies, thus reducing extremes based on individual experience. Base and increased IC
of 1959 survivor benefit coverage were included in the City’s PERS rates along with all 01
actuarial factors. Historically, the third level pooled cost to the employer has declined c
time with a current cost of $2 per month per employee. Regardless of what level is cho
the employee cost is $2 per month.
3. The transfer of 1959 Survivor reserves will fund the higher benefit. With the change to
third level, the City can now tap into the PERS survivor benefit reserves which t
approximately $1 78,000. Estimated annual payments of $1 1,000 for the third level benefit
be made automatically from the City survivor benefit reserves. The PERS cont
amendment cost analysis shows that the City’s reserve is projected to fund the benefii
25 years.
4. The second opportunity for employees to elect 1959 survivor benefit coverage will h
a small fiscal impact to the City with actual costs emerging from future PERS valuation of
third level pool. Employees electing coverage will pay $2 per month from the date of orig
eligibility. The cost is dependent on the number of employees electing the coverage
length of employment.
EXHl BITS
1. Ordinance No. NS- 311 amending the PERS contract.
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ORDINANCE NO. NS-311 -
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING AN AMENDMENT
BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC
EMPLOYEES RETIREMENT SYSTEM
The City Council of the City of Carlsbad, California does ordain as follows:
SECTION 1. That an amendment to the contract between the City Council of the
City of Carlsbad and the Board of Administration, California Public Employees Retiremeni
System is hereby authorized, a copy of said amendment being attached hereto, markec
"Exhibit A," and by such reference made a part hereof as though herein set out in full.
TO THE CONTRACT BETWEEN THE cin COUNCIL AND THE
SECTION 2. The Mayor of the City of Carlsbad is hereby authorized
empowered, and directed to execute said amendment for and on behalf of said Agency
SECTION 3. This ordinance shall be effective thim days after its adoption, anc
the City Clerk shall certify the adoption of this ordinance and cause it to be published a
least once in a newspaper of general circulation in the City of Carlsbad within fifteen day!
after its adoption.
SECTION 4. To the extent that this ordinance does not deprive any person o
their constitutional rights, it shall be operative on June 29, 1995.
INTRODUCED AND FIRST READ at a regular meeting of the Carlsbad Cit
Council held on the 6th day of June , 1995, and therefore,
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City c
Carlsbad, California, on the 27th day of JUNE , 1995, by the following vote, to wit:
AYES: Council Members Lewis, Nygaard, Kulchin, Finnila
NOES: None
ABSENT: None
ATTEST:
(SEAL)
0. 0 -.
EXHIBIT
AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
OF THE
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
OF THE
CITY OF CARLSBAD
The Board of Administration, Public Employees' Retirement System, hereinafter referred to as Board
and the governing body of above public agency, hereinafter referred to as Public Agency, having enterec
into a contract effective January 1, 1956, and witnessed December 23, 1955, and as amended effectiv
July 1, 1957, January 1, 1959, March 5, 1959, March 18, 1975, April 1, 1975, August 18, 1977, Jun
21, 1980, January 1, 1981, June 21, 1982, November 22, 1982, June 26, 1989, November 16, 199C
July 3, 1992 and November 3, 1993, 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 Novembe
3, 1993, 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' Retiremer
Law shall have the meaning as defined therein unless otherwise specifically provided
"Normal retirement age" shall mean age 60 for local miscellaneous members and age 5
for local safety members.
Public Agency shall participate in the Public Employees' Retirement System from an
after January 1, 1956 making its employees as hereinafter provided, members of sai
System subject to all provisions of the Public Employees' Retirement Law except suc
as apply only on election of a contracting agency and are not provided for herein and t
all amendments to said Law hereafter enacted except those, which by express provisior
thereof, apply only on the election of a contracting agency.
Employees of Public Agency in the following classes shall become members of sai
Retirement System except such in each such class as are excluded by law or th
agreement:
a.
b.
c.
2.
3.
Local Fire Fighters (herein referred to as local safety members);
Local Police Officers (herein referred to as local safety members).
Employees other than local safety members (herein referred to as loc
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said Retiremei
Law, the following classes of employees shall not become members of said Retiremei
System:
a. SENIOR INSTRUCTOWLIFEGUARD HURED AFTER NOVEMBER 3, 19
c 0 u%SE oe NOT &/q "&+//&T *Nhy@
..
5. This contract shall be a continuation of the contract of the Carlsbad Municipal Wate
District, hereinafter referred to as "Former Agency". The accumulated contributions
assets and liability for prior and current service under the Former Agency's contract shal
be merged pursuant to Section 20567.1 of the Government Code. Such merger occurrec
February 17, 1992.
The percentage of final compensation to be provided for local miscellaneous members fo
each year of credited prior and current service shall be determined in accordance wit
Section 21251.13 of said Retirement Law, subject to the reduction provided therein fo
service on and after June 1, 1958, the effective date of Social Security coverage, an
prior to December 31, 1980, termination of Social Security, for members whose servic
has been included in Federal Social Security (2% at 60 Full and Modified).
The percentage of final compensation to be provided for each year of credited prior an(
current service as a local safety member shall be determined in accordance with Sectioi
211252.01 of said Retirement Law (2% at age 50 Full).
Public Agency elected and elects to be subject to the following optional provisions:
a.
b.
6.
7.
8.
Sections 21263, 21263.1 and 21263.3 (Post-Retirement Survivor Allowance).
Section 20020 ("Local Police Officer" shall include employees of a policc
department who were employed to perform identification or communicatioi
duties on August 4, 1972 and who elected to be local safety members).
Section 20862.8 (Credit for Unused Sick Leave).
Section 20024.2 (One-Year Final Compensation).
C.
d.
e. Section 21298 (Improved Non-Industrial Disability Allowance) for local
miscellaneous members only.
Section 20930.3 (Military Service Credit as Public Service), Statutes of 1976.
Section 21382.4 (Third Level of 1959 Survivor Benefits) pursuant to Article f
(commencing with Section 21380).
Section 21388 (Second Opportunity to Elect 1959 Survivor Benefits).
f.
g,
h.
Public Agency, in accordance with Government Code Section 20740, ceased to be ar
"employer" for purposes of Section 20759 effective on August 18, 1977. Accumulatec
contributions of Public Agency shall be fixed and determined as provided in Government
Code Section 20759, and accumulated contributions thereafter shall be held by the Board
as provided in Government Code Section 20759.
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.
9.
10.
J
1 e 0
11. Public Agency shall also contribute to said Retirement System as follows:
a. Public Agency shall contribute $2.00 per member, per month on account of thc
liability for the 1959 Survivor Benefits provided under Section 21382.4 of saic
Retirement Law. In addition, all assets an(
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 member
and local safety members.
A reasonable amount, as fixed by the Board, payable in one installment withi
60 days of date of contract to cover the costs of administering said System as i
affects the employees of Public Agency, not including the costs of specia
valuations or of the periodic investigation and valuations required by law.
A reasonable amount, as fixed by the Board, payable in one installment as th
occasions arise, to cover the costs of special valuations on account of employee
of Public Agency, and costs of the periodic investigation and valuations requirec
by law.
(Subject to annual change.)
b.
C.
12. Contributions required of Public Agency and its employees shall be subject to adjustmen
by Board on account of amendments to the Public Employees’ Ftetirement Law, and o
account of the experience under the Retirement S:ystem as determined by the periodi
investigation and valuation required by said Retirement Law.
Contributions required of Public Agency and its employees shall be paid by Publi
Agency to the Retirement System within fifteen days after the end of the period to whic
said contributions refer or as may be prescribed by Board regulation. If more or les
than the correct amount of contributions is paid foir any period, proper adjustment shal
be made in connection with subsequent remittances. Adjustments on account of error
in contributions required of any employee may be made by direct payments between th
employee and the Board.
13.
B. This amendment shall be ‘effective on the 30 day of June ,1995.
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
BY
CHIEF ACTUARY
ACTUARIAL OFFICE
PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
+j Witri s Date Iqg5
Attest:
-@!&A Clerk AMENDMENT PERS-CON-702A (Rev. 3/95) Aletha L. Rautenkranz
. .=S-PERS e 0
Actuarial Off ice
P.O. Box 942709 Sacramento, CA 94229-2709 Telecommunications Device for the Deaf - (91 6) 326-3240
(91 6) 326-3420 FAX - (91 6) 326-3005
June 23, 1995
Ms. Cheryl E. Allen
Assistant Finance Director
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008-1989
Dear Ms. Allen:
We have received the Resolution of Intention to amend your CalPERS contract to provide for the mergt
of the Carlsbad Municipal Water District (#0503) into the City off Carlsbad (#0338) effective Februa
17, 1992 pursuant to Government Code Section 20567.1 for local miscellaneous members, Sectic
21382.4 (Third Level of 1959 Survivor Benefits) pursuant to Article 6 (commencing with Section 21381
and Section 21388 (Second Opportunity to Elect 1959 Survivor Benefits) for local miscellaneous membe
and local safety members.
Enclosed are the following documents necessary to complete the proposed amendment:
1. Amendment to Contract.
2.
Your agency adopted the Resolution of Intention on June 6, 1995, therefore, the earliest date the fin
Ordinance may be adopted is June 26, 1995, pursuant to Government Code Section 20460. ' THEK
ARE NO EXCEPTIONS TO THIS LAW.
The effective date of this amendment may be as early as the day following the effective date of tt
Ordinance. Please insert the effective date on the last page of the Amendment to Contract.
The following documents must be returned to this office. ORIGINAL SIGNATURES ARE REQUIRE1
ON ALL DOCUMENTS.
1.
2.
3.
Certification of Final Action of Governing Body (Form CON-5).
Amendment to Contract, two original executed sets.
Ordinance, original or certified copy.
Certification of Final Action of Governing Body (CON-5), original.
v pump L~~~~ d/~ud 7 ~4% 7A-u7 (P+-C~~- ,,4,
California Public Employees' Retirement System
Lincoln Plaza - 400 P Street - Sacramento, CA 95814
0 1 0
Page 2 City of Carlsb
A copy of the contract will be returned for your records after it has been executed by CalPERS.
Please contact me at (916) 326-3625 if you have any questions.
Sincerely,
fjii&?dtl&w
Ellie Wright
Retirement Program Specialist 11
Public Agency Contract Services
EW:de
Enclosures
cc: San Diego Field Office
Training and Assistance Unit
Field and Employer Services Division
PUBLIC EMPLOYEES’ aImMENT SYSTEM 0
Employer Services Division
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(9 16) 326-3420
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 7507
I hereby certify that in accordance with Section 7507 of the Government Code the future annual
costs as determined by the System Actuary and/or the increase in retirement benefit(s) have been
made public at a public meeting of the City Council
(governing body)
of the City of Carlsbad
(public agency)
on June 13, 1995 which is at least two weeks prior to the adoption of the
(date)
Resolution/Ordinance.
liLa;tl, &* ClerUSecretary
Date -- Aletha L. Rautenkranz
City Clerk
Title
PERS-CON-12A
(Rev. 8/94)
CALIFORNIA PUBLIC @!f PLOYEES’ RETIREMENT SYSTE I,
Actuarial Office
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(9 16) 326-3420
CERTIFICATION
OF
FINAL ACTION OF GOVERNING BODY
I hereby certify that the City Council of 1
(governing body)
City of Carlsbad adopted
(public agency)
June 27, 1995 , by an affirmative vote of a majority of the members of said Governing Bo(
(date)
Ordinance No. NS-3 11 approving the attached contractual agreement betwe
(Ordinance/Resolution)
the Governing Body of said Agency and the Board of Administration of the Public Employees’ Retiremc
System, a certified copy of said Ordinance No. NS-311 in the form furnished by s
(Ordinance or Resolution)
Board of Administration being attached hereto.
Date &dl- ai-, ,yps-
Clerk/Secretary
Aletha L. Rautenkranz
City Clerk
Title
PERS-CON-5 (Rev. 8/94)