The URL can be used to link to this page

Home My WebLink About1999-03-02; City Council; 15072; 1-4 Year Service Credit For Eligible EmployeesCl=Y OF CARLSBAD - AGEHA BILL ONE TO FOUR YEARS ADDITIONAL SERVICE CREDIT FOR ELIGIBLE CITY EMPLOYEES RETIRING FROM CITY SERVICE RECOMMENDED ACTION: Adopt Resolution No. 9 9 c I~ granting four years additional service credit to eligible City employees. 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. .- A PAGE 2 OF AB# t 5 ,092 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: I Department/ } Fire Rev. I-FXKZT Park Maint. Pub. Works/ Streets Public Works/ Facilities Public Works/ Fleet Maint. Public Works/ Engineering Public WorW AdIIlin. Public worw Water Operations Current Classification Secretary Park Maint. Wkr. Ill Street Mamtenance Superintendent Building Maint. supervisor Equip. Maint. Supt. Equip. Tech. II principal Civil Eng. Associate Engineer Sr. Mgmt. Analyst Projects Manager Utility Worker III Engineering Asst. I1 Eng. Secretary Storekeeper Facility Maint. Leadworker Engineering Tech. III Proposed Classification Downgrade to: Sr. Office Specialist Downgmde to: Park Maint. Wkr. II Delete position Delete position; replace with new classification: Public Works Supv. Delete 2 positions; replace with: Lead Equip. Tech. Delete 2 Engineering classifications and replace with 2 new positions classified as: Senior Civil Engineers Downgrade to: Management Analyst Delete position Downgrade to: Utility Worker II Downgrade to: OEce Specialist 11 Downgrade to: Sr. Oflice Specialist Delete position Downgrade to: Utility Worker II Downgrade to: Engineering Tech. II Current Top Step salary $33,248 $37,094 $77,100 $53,500 $77,100 $40,569 $90,000 $61,615 $67,100 $77,100 $38,2 18 $28,791 $42,166 $42,038 $42,166 $44,453 R~poSed Mid- Range Salary $26,763 $28,128 -$O- $47,000 $42,300 $68,400 $68,400 $59,900 -SO- $32,012 $24,7 1 5 $26,763 -SO- $32,012 $37,912 2 c PAGE3OFAB# /s,ma 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. 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. Cumulative Salarv Saw l33isQa Net savings (Cost) FY 99-00 July - June $350,000 $790,000 <$440,000> FY 00-01 July - June $350,000 -$O- c690,000~ 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 $61 0,000 As shown in the table above, in FY 99/00 and 00/01 the lump sum payment to PEW will exceed the projected salary savings by $440,000 and $90,000 respectively. These costs will be recouped by salary savings beginning in N 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 $61 0,000. These savings will be reflected in future budgets. EXHIBITS: 1. 2. Resolution No. - 99 - 7 Certification of Compliance With and Agreement to the Requirements of - Government Code Section 20903.5 3 RESOLUTION NO. 99-72 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, GRANTING ONE TO FOUR YEARS ADDITIONAL SERVICE CREDIT. WHEREAS, the City of Carlsbad is a contracting Public Agency of the Public Employees’ .Retirement System; and WHEREAS, California Government Code Section 20903.5 provides that when the governing body of a contracting agency 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 conditions specified in said section exist; and WHEREAS, said section requires the governing body to specify the number of whole years of additional service credit being granted and to determine a period in which eligible members, who meet the conditions, must retire to be entitled to receive said credit; and WHEREAS, said period may begin as early as one day following, and end not more than 120 days following, the governing body’s adoption of the resolution; and WHEREAS, said Section requires the governing body to designate the categories of eligible members and allows for eligibility to be limited to members employed in specific Department(s), Program(s) and/or position classifications within said Agency; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Council, as the governing body of the City of Carlsbad, has determined that because of an impending curtailment of service, or change in the manner of performing service, the best interests of the City of Carlsbad would be served by encouraging the retirement of local members and desires to provide four whole years additional service credit pursuant to Section 20903.5 for eligible local Miscellaneous members. a . , i E E 1c 11 12 13 14 15 16 17 16 19 20 21 22 23 24 25 26 27 28 BE IT FURTHER RESOLVED, that said governing body determines that the period in which eligible members who meet the conditions, must retire to be entitled to the additional credit shall begin on March 3, 1999 and end on June 30, 1999, and that to be entitled to the additional service credit, eligible members who meet the conditions must be employed in the following departments and job classifications of the City of Carlsbad on the date of adoption of this Resolution: Major Service Area/ Denartment Job Classification Public Safety/Fire Prevention Secretary Public Works/Park Maintenance Park Maintenance Worker III Public Works/Streets Street Maintenance Superintendent Public Works/Facilities Maintenance Building Maintenance Supervisor Public Works/Fleet Maintenance Equipment Maintenance Superintendent Public Works/Fleet Maintenance Equipment Technician II Public Works/Engineering Principal Civil Engineer Public Works/Engineering Associate Engineer Public Works/Administration Senior Management Analyst Public Works/Administration Administrative Services/Projects Mgr. Public Works/Water Operations Utility Worker III Public Works/Water Operations Engineering Assistant II Public Works/Water Operations Engineering Secretary Public Works/Water Operations Storekeeper Public Works/Water Operations Facility Maintenance Leadworker Public Works/Water Operations Engineering Technician III Ill Ill Ill Ill Ill _- . . . 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. That the Mayor is hereby authorized to execute the Certification of Compliance and Agreement to Requirements for Section 20903.5 of the Government Code. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Carlsbad City Council held on the 2 nd day of March , 1999, by the following vote, to wit: AYES: Council Members Lewis, Nygaard, Finnila, Kulchin & Hall NOES: None ABSENT: None CITY COUNCIL ATTEST: (SEAL) . _- . CALIFORNIA PUBLIC 4PLOYEES’ RETIREMENT SYSTt..r Actuarial and Employer Services Division Public Agency Contract Services P.O. Box 942709 Sacramento, CA 94229-2709 (916) 326-3420 CERTIFICATION OF GOVERNING BODY’S ACTION I hereby certify that the foregoing is a true and correct copy of a Resolution adopted by the CITY COUNCIL of the (governing body) CITY OF CARLSBAD (public agency) on MARCH 2, 1999 (date) KAREN R. KUNDTZ, Assistant City Clerk Title PERS-CON-12 (rev. l/96) CERTIFICATION OF COMPLIANCE WITH AGREEMENT TO THE REQUIREMENTS OF GOVERNMENT CODE SECTION 20903.5 In accordance with the requirements of Government Code Section 20903.5, the City of Carlsbad certifies that: 1. THE EXTENT THE SAVINGS WILL EXCEED THE PAYMENT TO PERS: 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 a salary savings of approximately $1,400,000. The cost of providing the additional four (4) years of PERS service credit is approximately $790,000, leaving a net salary savings of $610,000 over four years. 2. THE SPECIFIC MEASURES TO BE TAKEN TO ASSURE THE EXTENT TO WHICH THE SAVINGS WILL EXCEED THE NECESSARY PAYMENTS TO CALPERS: The following table summarizes stafl’s 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: Public Works/ Admin. Sr. Mgmt. Analyst Projects Manager Senior Civil Engineers Downgrade to: Management Analyst Delete position $67,100 $59,900 $77,100 -$O- Public Works/ Water Operations Utility Worker III Engineering Asst. II Eng. Secretary Storekeeper Facility Ma&. Leadworker Engineering Tech. III Downgrade to: Utility Worker II Downgrade to: Office Specialist II Downgrade to: Sr. Office Specialist Delete position Downgrade to: Utility Worker II Downgrade to: Engineering Tech. II $38,218 $28,79 1 $42,166 $42,038 $42,166 $44,453 $32,012 $24,715 $26,763 -$O- $32,012 $37,912 3. SUFFICIENT POSITIONS HAVE BEEN DELETED WITH A TOTAL COST THAT EQUALS OR EXCEEDS THE LUMP SUM ACTUARIAL COST OF THE ADDITIONAL SERVICE CREDIT GRANTED: Sixteen positions are eligible for this retirement option. Should all sixteen employees elect to retire within the specified timef?ame, the positions will either be eliminated or reclassified. This reorganization will produce a salary savings of approximately $1,400,000. The cost of providing the additional four (4) years of PERS service credit is approximately $790,000, leaving a net salary savings of $6 10,000 over four years. The City of Carlsbad hereby agrees to: 1. Transmit to the retirement fund an amount determined by the Board to equal the actuarial equivalent of the difference between the allowance the member receives after receipt of the additional service credit and the amount the member would have received without the additional service credit and administrative costs; and 2. Maintain records for each worker retiring pursuant to this section (name, social security number, retirement effective date, cost of additional service credit); and 3. Provide verification of its certifications through independent review if the Board so requires; and 4. Certify to CalPERS that the eligible employees do not receive unemployment insurance payments anytime within two years of the governing body’s adoption of 8 the Resolution granting the additional service, due to employment with any employer participating in the CalPERS retirement program; and 5. Certify the amount of actual savings and the measures taken to achieve the savings at such time the City of Carlsbad has achieved savings that are more than adequate to meet necessary payments to the Board, or that such savings have been achieved within five years after March 3,1999, whichever occurs first. CITY OF CARLSBAD /z&,il 01, \$99 Date