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Home My WebLink About1999-02-16; City Council; 15065; 1-4 Year Service Credit For Eligible EmployeesCI=Y OF CARLSBAD - AGEMA BILL 48 # I535 TITLE: HTG. 2-16-99 ONE TO FOUR YEARS ADDITIONAL SERVICE CREDIT FOR ELIGIBLE CITY EMPLOYEES RETIRING FROM CITY SERVICE DEPT. m RECOMMENDED ACTION: CITY MGRi Receive the report regarding PERS One to Four Years Additional Service Credit for eligible City employees retiring from City service, and direct staff to place the item on the March 2, 1999 agenda for Council action. ITEM EXPLANATION: Government Code Section 20903.5 (added by Chapter 458, Senate Bill 1192) provides that when the governing body of a contracting agency of the Public Employees’ Retirement System (PERS) determines that, because of an impending curtailment of or change in the manner of performing service, the best interests of the agency would be served by encouraging the retirement of local members, the governing body may adopt a resolution to grant eligible employees one to four years additional service credit when certain specified conditions exist. This option is only available to PERS contracting agencies until June 30, 1999. Under this program, the City is required to determine 1) who is eligible, 2) how many years of service credit to be extended (from one to four), and 3) a 120-day period in which members must retire. The City must certify to PERS that the salary savings realized by deleting positions exceeds the cost of the additional service credit, and the costs must be made public at least 14 days prior to adoption of a resolution. The purpose of granting the additional service credit is to reduce the City’s budget by facilitating the reorganization of current City functions, primarily the Public Works Major Service Area, or MSA. Department Heads were asked to recommend those positions that could be permanently deleted and/or downgraded in order to be considered as eligible for this option. The recommendations offered by the Department Heads were reviewed and further refined by the City’s senior management staff. One hundred fourteen employees were initially identified as meeting the PERS criteria (age 50 and a minimum of 10 years PERS service). Based on the restrictions imposed by PERS, as well as the analysis done by staff, sixteen positions are recommended as eligible for the One to Four Years Service Credit retirement option. Staff conducted an analysis of the cost and net savings for each additional year of service credit and found that significant salary savings can be realized if four years of additional service credit are offered. This option will allow the City to consolidate functions within the newly formed Public Works MSA and to provide better service to the citizens of Carlsbad. Therefore, staff recommends that the City provide four years of service credit to eligible members who retire from City service within the specified timeframe listed below. PERS allows a 120-day period in which eligible members who meet the conditions must retire in order to receive the service credit. This period may begin as early as one day following, and end not more than 120 days following, the City’s adoption of the Resolution. Per these requirements, the City of Carlsbad’s One to Four Years Additional Service Credit period will begin on March 3,1999 and end on June 30, 1999. Fleet Maint. Lead Equip. Tech. $42,300 Public Principal Civil Eng. Delete 2 Engineering $90,000 Works/ Associate Engineer positions and replace $61,615 Engineering with 2 new positions classified as: Senior $68,400 Civil Engineers $68,400 Public Sr. Mgmt. Analyst Downgrade to: $67,100 Works/ Management Analyst $59,900 Admin. Projects Manager Delete position $77,100 -$O- Public Utility Worker III Downgrade to: $38,218 Works/ Utility Worker II $32,012 Water Operations Engineering Asst. II Downgrade to : $28,791 Office Specialist II $24,715 Eng. Secretary Downgrade to: $42,166 Sr. Office Specialist $26,763 Storekeeper Delete position $42,038 -$O- Facility Maint. Downgrade to: Leadworker Utility Worker II $42,166 $32,012 Engineering Tech. III Downgrade to: Engineering Tech. II $44,453 $37,912 Under this program, the City must certify the extent to which the savings will exceed the cost of the service credit and the specific measures that will be taken to assure such savings. The following table summarizes staffs recommendations for amendments to the General Employees’ and Management classification and salary plans that would result if the sixteen eligible members take the offered retirement option: h PAGE 3 OF AEW /<d&c The sixteen affected employees have all indicated that they are interested in this voluntary benefit option. Should they elect to retire within the 120-day window, staff will then return to Council for authorization to make amendments to the classification and compensation plans as required. FISCAL IMPACT: Sixteen positions are eligible for this retirement option. Should all sixteen employees elect to retire within the specified timeframe, the positions will either be eliminated or reclassified. This reorganization will produce an estimated net annual salary savings of $350,000. PERS will require a one-time lump sum payment of approximately $790,000 following the retirements to cover the cost of providing the additional service credit. This one-time payment to PERS will result in higher costs to the City initially; however, these costs will be recouped over time as the salary savings are recognized in the future. FY 99-00 Cumulative Salarv Savings PERS Cost Net Savings (Cost) July - June $350,000 $790,000 <$440,000> FY 00-01 July - June $350,000 -$O- <$90,000> FY 01-02 July - June $350,000 -$O- $260,000 FY 02-03 July - June $350.000 -$O- $350,000 $1,400,000 $790,000 $610,000 As shown in the table above, in FY 99/00 and OO/Ol the lump sum payment to PERS will exceed the projected salary savings by $440,000 and $90,000 respectively. These costs will be recouped by salary savings beginning in FY 01/02. Thereafter, the net annual salary savings will continue at $350,000 per year. The total savings that the City will realize over the next four years is $610,000. These savings will be reflected in future budgets. CALIFORNIA PUBLIC 4PLOYEES’ RETIREMENT SYSI JUl Actuarial and 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 February 16, 1999 which is at least two weeks prior to the adoption of the (date) Resolution / Ordinance. Karen R. Kundtz, Assistant City Clerk Tiie Date February 18, 1999 PERSCON-12A (rev. l/96)