HomeMy WebLinkAbout2005-06-14; City Council; 18162; Authorization to Expand Separation Incentive Plan9B # 18:162 TITLE:
HTG. 6/14/05 AUTHORIZATION TO EXPAND SEPARATION
INCENTIVE PLAN (SIP) AGREEMENTS TO DEPT. HR ELIGIBLE EMPLOYEES
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DEPT. AD.*
CITY ATTY
RECOMMENDED ACTION:
Adopt Resolution No. 2005-185 authorizing the expansion of a Separation Incentive Plan
(SIP) through the Public Agency Retirement System (PARS), which would provide the City
with the flexibility to offer both voluntary retirement incentive plans and customized
severance packages as options for non-management employees.
ITEM EXPLANATION:
In March 2002 the City of Carlsbad established a Separation Incentive Plan (SIP) agreement
through the Public Agency Retirement System (PARS). This plan was intended for use in
situations where strategic staffing decisions had to be made, such as if a proposed
reorganization of a City department required the elimination of a current job classification or
the assigned duties of a particular position had changed so dramatically that the employee no
longer possesses the necessary skills to perform the job. In such instances, it was deemed
beneficial to the City to have the flexibility to offer supplemental retirement options to
employees who had made positive, historic contributions to the organization. The SIP
allowed for a positive means of ending the employment relationship, resulting in a "win-win"
for both parties.
The PARS SIP was established to provide early retirement options to management employees
under certain parameters with the usage of this system at the complete discretion of the City.
Staff recommends that the PARS SIP program be expanded and made available to eligible
non-management employees.
B acknround
PARS is the third largest multiple employer retirement system in California offering
retirement programs and benefits to 199 member agencies. One of the program options
available through PARS is the Separation Incentive Plan, or SIP. The SIP allows member
agencies to offer packages to qualified employees. This package is designed to incentivize an
employee to separate employment from the organization through an established plan and trust.
The plan and the trust established to hold the assets of the plan are qualified under Section
401(a), are tax-exempt under Section 501(a) of the Internal Revenue Code, and meet the
requirements of a pension trust under California Government Code Sections 5321 5-53224.
The PARS SIP trust is administered by Phase II Systems. Phase 11 Systems has served as a
consultant on more than 300 public agency plans. Phase II Systems provides all
administrative services relative to the program, plus retirement counseling for participants and
guidance in meeting all federal and state reporting requirements.
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PAGE 2 OF AB # 18,162
The PARS SIP offers the City flexibility in terms of being responsive to both the needs of its
various departments and the needs of individual employees. The program allows the City to
offer packages to individual employees or any class or group of employees that the City feels
would benefit from such a program. Eligibility for the program is determined by the City and
may vary in individual circumstances. The PARS SIP is not a guaranteed privilege for any
employee and is available only at the discretion of the City.
Participation in the PARS SIP is subject to the following recommended parameters:
0 that the employee be eligible to participate in the PARS SIP as indicated in the PARS
Trust Agreement with the City of Carlsbad.
0 that due to the strategic objectives and operational needs of the City, the employee’s
position will be eliminated or restructured to the degree that the employee does not
possess the necessary skills for the position,
0 that the employee has worked for the City a minimum of ten (10) years and is eligible
for retirement under the CalPERS retirement plan,
0 that the full cost of the SIP be covered by the participating department’s approved
personnel budget,
0 that the action results in cost savings andor increased efficiencies for the department,
that the City Attorney, the Finance Director, and the Human Resources Director have
analyzed the respective legal, financial, and staffing implications and each
recommends the action, and
that the City Manager (and when applicable, the City Attorney), after considering the
recommendations, approves the action.
The City Manager or hidher designee is the Plan Administrator of the PARS SIP. The City
Manager acting in the capacity as the Plan Administrator is hereby authorized to execute
individual PARS SIP agreements up to a limit of one hundred thousand dollars, consistent
with hidher power of appointment and removal of employees pursuant to Carlsbad Municipal
Code Section 2.12.035 (c). The Plan Administrator will review department requests and
determine whether to approve participation in the SIP based on the above parameters. The
decision of the Plan Administrator will be final, and participation in the SIP would be initiated
upon that decision.
PAGE 3 OF AB # 18,162
The PARS Separation Incentive Plan provides a significant amount of flexibility and
discretion to the Plan Administrator. The City Council will be advised annually of the
program’s status.
The Carlsbad City Employees’ Association, the Carlsbad Firefighters’ Association and the
Carlsbad Police Officers’ Association have been advised of the proposed change.
FISCAL IMPACT:
PARS charges an administrative fee of 5.5% of all contributions made by the City on behalf of
participants. In addition, the PARS trustee (Union Bank of California) has a trustee fee of
0.12% of contributions. PARS SIP agreements will be funded by the employee’s department
personnel budget and may be paid out as a lump sum or in installments over a five year period
as agreed. Cost savings and or productivity enhancements and administrative costs of 5.5%
and 0.12% of contributions will be included in the cost analysis of each package.
EXHIBITS:
1. Resolution No. 2005-1 85
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RESOLUTION NO. 2005-185
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA AMENDING THE SEPARATION
INCENTIVE PLAN THROUGH THE PUBLIC AGENCY
RETIREMENT SYSTEM.
WHEREAS, to fulfill its mission of providing top quality services, the City of
Carlsbad continually strives through its strategic goals to improve the efficiency and
effectiveness of its operations; and
WHEREAS, these efforts occasionally require the City to eliminate positions or to
restructure positions such that the incumbents no longer possess the necessary skills for
the positions; and
WHEREAS, the City is eligible to be a member of the Public Agency Retirement
Systems (PARS); and
WHEREAS, PARS offers its member agencies a variety of products and services,
including retirements incentive programs, such as a Separation Incentive Plan (SIP); and
WHEREAS, PARS SIPS are qualifying governmental plans under relevant
sections of the Internal Revenue Code ($9 401(a) and 501 (a)) and the California
Government Code ($6 53215 et seq.); and
WHEREAS, the establishment of a SIP through PARS will provide the City with
the flexibility, in appropriate cases, of offering incentives in lieu of discharging
employees whose positions are being eliminated or significantly restructured due to the
implementation of the City’s strategic goals and objectives; and
WHEREAS, PARS SIPS are administered by Phase II Systems, the PARS Trust
Administrator, and
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WHEREAS, it is in the best interest of the City to amend the PARS SIP
agreement to include non-management employees.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of
Carlsbad as follows:
1. That the participation by an employee in the SIP be subject to the following
parameters:
a. The employee is eligible to participate in the PARS SIP agreement as
stated in the PARS SIP Trust Plan document;
b. Due to the strategic objectives and operational needs of the City, the
employee’s position is being eliminated or restructured such that the employee no longer
possesses the necessary skills for the position;
c. The employee has worked for the City a minimum of ten (10) years
and is eligible for retirement under the CalPERS retirement plan;
d. The full cost of the employee’s participation in the SIP is covered by
the approved budget of the department in which the employee works;
e. The employee’s participation in the SIP will result in cost savings
and/or increased efficiencies for the department;
f. The City Attorney, the Finance Director, and the Human Resources
Director have analyzed the respective legal, financial, and staffing implications and each
recommends the action; and
Ill
Ill
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g. The City Manager (or when applicable, the City Attorney), after the
considering the recommendations, approves the action.
PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad
City Council, held on this l4th day of JUNE ,2005, by the following vote,
to wit:
AYES: Council Members Hall, Packard , Sigaf oose
NOES: bne
AEW”: Council Members Lewis. Kulchin L
ATTEST: Mayor Pro Tern Matt Hill
I LORRAINE M. W~OD, City clek