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HomeMy WebLinkAbout2003-07-08; City Council; 17231; Amendment to CalPERS Safety ContractP w i5 a n a p. Z 0 F 0 a d 0 z 3 8 4B # 17,231 TITLE: HTG, 7-8-03 AMENDMENT TO CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (CALPERS) SAFETY CONTRACT IMPACTING LOCAL, FIRE SAFETY MEMBERS DEPT. H-R- CITY ATTY c,Ty MGRm 1. Adopt Resolution No. 2003-180 , a resolution of intention to approve an amendment to the contract between the Board of Administration of the California Public Employees’ Retirement System (CalPERS) and the City of Carlsbad. 2. Introduce Ordinance No. NS-665 amending the CalPERS safety contract impacting local fire safety members. 3. Adopt Resolutions No. 2003-181 and 2003-182 reducing the City’s current nine percent (9%) CalPERS employer paid member contribution for local fire safety employees to eight percent (8%) and authorizing the resulting one percent (1 %) employee retirement contribution to be deducted from each employee’s salary on a pre-tax basis. ITEM EXPLANATION: On January 15,2002, the City Council adopted Resolution No. 2002-030 approving a Memorandum of Understanding (MOU) with the Carlsbad Firefighters’ Association (CFA). The term of the MOU is five (5) years and will expire on December 3 1 , 2006. By approving this MOU, the City Council authorized the City to initiate an amendment of the City’s contract with CalPERS to provide the 3% at 50 retirement benefit (Section 21362.2) for all local fire safety employees effective the pay period inclusive of January 1 , 2004. The Carlsbad sworn police employees received the 3% at 50 retirement benefit on June 30,2001. Therefore, upon approval of this amendment, all local safety employees will have the same retirement benefit. The City Council would need to take two actions to implement the proposed revisions to the retirement contract: (1) adopt a Resolution of Intention and, (2) introduce the Ordinance to amend the contract. Adoption of the final Ordinance cannot be earlier than 20 days after adoption of the Resolution of Intention. Therefore, adoption of the final Ordinance is scheduled for August 5,2003. The effective date of the Ordinance would be September 4, 2003. The effective date of the contract amendment would be December 22,2003. There are two rates associated with the cost to the City for the CalPERS retirement benefit: 1) the employer contribution rate and 2) the employer paid member contribution rate. The City Council authorized a reduction of the City’s current nine percent (9%) CalPERS employer paid member contribution for local fire safety employees to eight percent (8%) effective the pay period inclusive of January 1,2004. The resulting one percent (1%) employee contribution can be deducted from each employee’s salary on a pre-tax basis by implementing provisions of section 414(h)(2) of the Internal Revenue Code (IRC). Page 2 of AB # 17,231 FISCAL IMPACT: A portion of the FY 2003/2004 fiscal impact of the 3% @ 50 retirement benefit for local fire safety employees will be offset by the reduction of the City’s current nine percent (9%) CalPERS employer paid member contribution rate for local fire safety employees to eight percent (8%). Based on current payroll costs this equates to an annual reduction in cost of approximately $50,700. There will be no fiscal impact associated with allowing the resulting one percent (1%) employee retirement contribution to be paid on a pre-tax basis. The way that the City of Carlsbad’s retirement contract with CalPERS is structured, both fire safety employees and sworn police employees are combined into one “safety” contract. Therefore, the CalPERS employer contribution rate associated with the safety retirement contract is applied to both fire and sworn police employees. Implementation of the 3% @ 50 retirement benefit for local fire safety employees will increase the City’s CalPERS employer contribution rate for all safety employees by an estimated 6.584% (from 9.367% to 15.951%) as of the effective date of the contract amendment. Using current payroll costs, this represents an annual cost of approximately $795,000. The net fiscal impact of the implementation of this benefit, approximately $744,300, is included in the 2003/2004 adopted budget. All the long-range forecasts that were presented to the City Council during the 2003/2004 budget presentations reflected the fiscal impact of this benefit. Future fiscal year impacts will be reflected during the annual budget process. EXHIBITS: 1. Resolution No. 2003-180 , including Exhibit A 2. Ordinance No. NS-665 3. Resolution No. 2003-181 2003-182 4. Resolution No. DEPARTMENT CONTACT: Debbie Porter, (760) 602-244 1, dport@ci.carlsbad.ca.us RESOLUTION NO. 2003-180 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 CARLSBAD 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 21 362.2 (3% @J 50 Full formula) for local fire members. 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 S attached hereto, as an "Exhibit" a By: MAYOR Title July 8, 2003 Date adopted and approved (Amendment) CON-302 (Rev. 4/96) CalPERS EXHIBIT A California Public Employees' Retirement System Between the Board of Administration Calitornia Public Employees' Retirement System and the City Council City of Carlsbad 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 January 1, 1956, and witnessed December 23, 1955, and as amended effective July I, 1957, January 1, 1959, March 5, 1959, March 18, 1975, April 1, 1975, August 18, 1977, June 21, 1980, January 1, 1981, June 21, 1982, November 22, 1982, June 26, 1989, November 16, 1990, July 3, 1992, November 3, 1993, June 30, 1995, June 3, 1996, January 1, 1997, June 14, 1997 and June 25, 2001 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 June 25, 2001, 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' Retirement Law shall have the meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 55 for local miscellaneous members and age 50 for local safety members. 2 .- IC GO NOT SIGN "EXHIBIT ONLY" 2. Public Agency shall participate in the Public Employees' Retirement System from and after January 1, 1956 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. 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. SENIOR INSTRUCTOWLIFEGUARD HIRED AFTER NOVEMBER 3, 1993. 5. This contract shall be a continuation of the contract of the Carlsbad Municipal Water District, hereinafter referred to as "Former Agency". The accumulated contributions, assets and liability for prior and current service under the Former Agency's contract shall be merged pursuant to Section 20508 of the Government Code. Such merger occurred February 17, 1992. 6. The percentage of final compensation to be provided for each year of credited prior and current service for local miscellaneous members shall be determined in accordance with Section 21354 of said Retirement Law, subject to the reduction provided therein for service on and after June 1, 1958, the effective date of Social Security coverage, and prior to December 31, 1980, termination of Social Security, for members whose service has been included in Federal Social Security (2% at age 55 Full and Modified). ' '/?ACE .< \L? DO NOT SIGN "EXHIBIT ONLY" 7. The percentage of final compensation to be provided for each year of credited prior and current service as a local safety member shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). 8. Public Agency elected and elects to be subject to the following optional provisions: a. b. C. d. e. f. 9- h. I. j. Sections 21624, 21626 and 21628 (Post-Retirement Survivor Allowance). Section 20425 ("Local Police Officer" shall include employees of a police department who were employed to perform identification or communication duties on August 4, 1972 and who elected to be local safety members). Section 20965 (Credit for Unused Sick Leave). Section 20042 (One-Year Final Compensation). Section 21 427 (Improved Nonindustrial Disability Allowance) for local miscellaneous members only. Section 21024 (Military Service Credit as Public Service), Statutes of 1976. Section 21573 (Third Level of 1959 Survivor Benefits) for local miscellaneous members and local police members only. Section 21583 (Second Opportunity to Elect 1959 Survivor Benefits). Section 20434 ("Local Fire Fighter" shall include any officer or employee of a fire department employed to perform firefighting, fire prevention, fire training, hazardous materials, emergency medical services, or fire or arson investigation services as described in Government Code Section 20434). Section 21574 (Fourth Level of 1959 Survivor Benefits) for local fire members only. 9. Public Agency, in accordance with Government Code Section 20790, ceased to be an “employer” for purposes of Section 20834 effective on August 18, 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. IO. 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. 11. 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 21 573 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 police members. b. Contributions required per covered member on account of the 1959 Survivor Benefits provided under Section 21 574 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 fire members. c. 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. d. 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. 12. 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. 7 13. 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. d -' -. \ B. This amendment shall be &&tive on the day of I + ,/ BOARD OF AD M I N I STRATI O&J~ -. a' Xb L- CITY COUNCIL PUBLIC EMPLOYEES RET@~ENT SYSTEM CITY OF CARLSBAD $3 BY p\ KENNETH W. MARZl@$ CHIEF ACTUARIAL & EMR~OYER SERVICES DIVISION C'L,' A ". c+ A*4 BY PRESIDING OFFIC&$l e. a - -3 43 PUBLIC EMPLOY@* RETIREMENT SYSTEM GJ ,/i -. \ B. This amendment shall be &&tive on the day of I BOARD OF AD M I N I STRATI O&J~ -- . a' CITY COUNCIL PUBLIC EMPLOYEES RET@~ENT SYSTEM CITY OF CARLSBAD C'L,' A. m. f i' BY BY p.- \ -, KENNETH W. MARZIC$$ CHIEF PRESIDING OFFIC&$l e. a - ACTUARIAL & EMRtOvER SERVICES DIVISION -3 43 PUBLIC EMPLOY@* RETIREMENT SYSTEM GJ ,/i J ,: I Clerk AMENDMENT ER# 0338 PERS-CON-702A (Rev. 8\02) I ! 1C 11 1; 12 14 15 16 17 18 19 20 21 22 23 24 25 26 27 20 ORDINANCE NO. NSz665 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM WHEREAS, the City Council authorized the City to initiate an amendment of the City’s contract with CalPERS to provide the 3% at 50 retirement benefit (Section 21362.2) for all local fire safety employees effective the pay period inclusive of January 1,2004; and NOW, THEREFORE, the City Council of the City of Carlsbad ordains as ‘ollows: SECTION 1 : That an amendment to the contract between the City Council of he City of Carlsbad and the Board of Administration of the California Public fmployees’ Retirement System is hereby authorized, a copy of said amendment narked “Exhibit A to Resolution No. 2003-180 SECTION 2: The Mayor of the City of Carlsbad is hereby authorized, :mpowered, and directed to execute said amendment for and on behalf of said igency. EFFECTIVE DATE: This ordinance shall be effective thirty days after the late of its adoption; and the City Clerk shall certify the adoption of this ordinance nd cause it to be published at least once in a newspaper of general circulation in ie City of Carlsbad within fifteen days after its adoption. I I f 1 1 1; 1: 14 1: 1E 17 1E 1s 20 21 22 23 24 25 26 27 28 INTRODUCED AND FIRST READ at a regular meeting of the Carlsbad City Council on the day of July 8, 2003, and thereafter PASSED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad on the day of , by the following vote, to wit: AYES: NOES: ABSENT: CLAUDE A. LEWIS, Mayor ATTEST: LORRAINE M. WOOD, City Clerk (SEAL) age 2 of 2 of Ordinance No. NS-665 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 ia 19 20 21 22 23 24 25 26 27 28 t RESOLUTION NO. 2003-181 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, REDUCING THE CITY'S CURRENT NINE PERCENT (9%) CALPERS EMPLOYER PAID MEMBER CONTRIBUTION FOR LOCAL FIRE SAFETY EMPLOYEES TO EIGHT PERCENT (8%) WHEREAS, the City Council of the City of Carlsbad has the authority to implement Government Code Section 20691 ; and WHEREAS, the City Council of the City of Carlsbad has a written labor policy or agreement which specifically provides for the normal member contributions to be paid by the employer; and WHEREAS, one of the steps in the procedures to implement Section 20691 is the adoption by the City Council of the City of Carlsbad of a Resolution to commence said Employer Paid Member Contributions (EPMC); and WHEREAS, the City Council of the City of Carlsbad has identified the following conditions for the purpose of its election to pay EPMC: I. This benefit shall apply to all local fire safety employees. II. This benefit shall consist of paying 8% of the normal member contributions as EPMC. 111. The effective date of this Resolution shall be December 22, 2003. NOW, THEREFORE, BE IT RESOLVED by the City Council for the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. Ill Ill Ill 1 2 3 4 5 6 7 0 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. That the City Council of the City of Carlsbad elects to pay EPMC, as set forth above. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad on the 8th day of July, 2003; by the following vote, to wit on behalf of the City: AYES: Council Members Lewis, Finnila, Kulchin, Hall, Packard NOES: None ABSENT: None ATTEST: @A, @aa.X LORRAINE M. MOD, City Cl&k (SEAL) Page 2 of 2 of Resolution No. 2003-181 1 r L 5 4 E E 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 20 RESOLUTION NO. 2003-182 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE ONE LOCAL FIRE SAFETY EMPLOYEES TO BE DEDUCTED ON A PERCENT (1 %) CALPERS EMPLOYEE CONTRIBUTION FOR PRE-TAX BASIS. WHEREAS, the City of Carlsbad has the authority to implement the provisions of section 414(h)(2) of the Internal Revenue Code (IRC); and WHEREAS, the Board of Administration of the California Public Employees’ Retirement System adopted its resolution re section 414(h)(2) IRC on September 18, 1985; and WHEREAS, the Internal Revenue Service has stated in December 1985, that the implementation of the provisions of section 414(h)(2) IRC pursuant to the Resolution of the Board of Administration would satisfy the legal requirements of section 414(h)(2) IRC; and WHEREAS, the City of Carlsbad has determined that even though the Implementation of the provisions of section 414(h)(2) IRC is not required by law, the tax benefit offered by section 414(h)(2) IRC should be provided to its local fire safety mployees who are members of the California Public Employees’ Retirement System. NOW, THEREFORE, BE IT RESOLVED by the City Council for the City of zarlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City of Carlsbad will implement the provisions of section 41 4(h)(2) Internal Revenue Code by making employee contributions pursuant to 1 2 .: 4 E E 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 California Government Code section 20691 to the California Public Employees’ Retirement System on behalf of its local fire safety employees who are members of the California Public Employees’ Retirement System. “Employee contributions” shall mean those contributions to the California Public Employees’ Retirement System which are deducted from the salary of employees and are credited to individual employee’s accounts pursuant to California Government Code section 20691. 3. That contributions made by the City of Carlsbad to the California Public Employees’ Retirement System, although designated as employee contributions, are being paid by the City of Carlsbad in lieu of contributions by the local fire safety employees who are members of the California Public Employees’ Retirement System . 4. That employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City of Carlsbad to the California Public Employees’ Retirement System. 5. That the City of Carlsbad shall pay to the California Public Employees’ Retirement System the contributions designated as employee contributions from the same source of funds as used in paying salary. 6. That the amount of the contributions designated as employee contributions and paid by the City of Carlsbad to the California Public Employees’ Retirement System on behalf of an employee shall be the entire contribution required of the employee by the Public Employees’ Retirement Law (California Government Code sections 20000, et seq.). I// I// Page 2 of 3 of Resolution No. 2003-182 I 1 # i L C . E 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7. That the contributions designated as employee contributions made by the City of Carlsbad to the California Public Employees' Retirement System shall be treated for all purposes, other than taxation, in the same way that member contributions are treated by the California Public Employees' Retirement System. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad on the 8" day of July, 2003; by the following vote, to wit on behalf of the City: AYES: Council Members Lewis, Finnila, Kulchin, Hall, Packard NOES: None ABSENT: None ATTEST: 1 LORRAINE M. MOD, City Cl& (SEAL) 'age 3 of 3 of Resolution No. 2003-182 15 CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM Actuarial and Employer Services Division Public Agency Contract Services P.O. Box 942709 Sacramento, CA 94229-2709 (9 16) 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 JULY 8, 2003 (date) CIerWSecretary PERS-CON-12 (rev. 1/96) CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM Actuarial and Employer Services Division Public Agency Contract Services P.O. Box 942709 Sacramento, CA 94229-2709 (91 6) 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 of the CITY COUNCIL (governing body) CITY OF CARLSBAD (public agency) On July 8, 2003 which is at least two weeks prior to the adoption of the (date) CIeridSecretary PERS-CON-12A (rev. 1/96)