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HomeMy WebLinkAbout1998-07-27 City Council (21)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: HUMAN RESOURCES 5 DATE:JULY 27, 1998 CMR:319:98 SUBJECT:APPROVAL OF AN AMENDMENT AND RESOLUTION TO THE PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (PERS) CONTRACT TO PROVIDE SECTION 21024, MILITARY SERVICE CREDIT PUBLIC SERVICE, FOR FIREFIGHTERS ONLY; AND APPROVAL OF A RESOLUTION TO ALLOW ALL EMPLOYEES TO PARTICIPATE IN THE PRE-TAX PAYROLL DEDUCTION PLAN FOR THE PURCHASE OF SERVICE CREDIT FOR ALL COVERED EMPLOYEES ,. RECOMMENDATION This report recommends Council take the following actions: A.To amend the Public Employees’ Retirement System (PERS) contract to provide Section 21024, Military Service Credit for Firefighters (IAFF, Local 1319): 1.Adopt a Resolution. of Intention of the Council of the City of Palo Alto to approve an Amendment to the Contract between the Board of Administration of the Public Employees’ Retirement System and the City of Palo Alto (Local Firefighter Members). 2.Adopt an Ordinance of the Council of the City of Palo Alto authorizing an Amendment to the Contract between the City Council of the City of Palo Alto and the Board of Administration of the California Public Employees’ Retirement System (Military Service Credit for Local Firefighter Members). B.To provide all covered employees the option of a pre-tax payroll deduction plan for service credit purchases under Internal Revenue Code (IRC) Section 414(h)(2): 1.Adopt a Resolution approving.and implementing Pre-Tax Payroll Deduction Plan for PERS service credit purchases. CMR:319:98 Page 1 of 3 DISCUSSION On December 15, 1997, the City Council approved an agreement with the International Association of Firefighters (IAFF, Local 1319) for a three- year period beginning July 1, 1997 and ending June 30, 2000. Part of this agreement provided for the amendment of the City’s agreement with PERS to permit .active employees to purchase up to four years of service credit for any continuous active military service prior to employment with the City of Palo Alto under Government Code Section 21024. Attached to this report are a Resolution and Ordinance necessary to amend the PERS contract. This provision was added to the City’s contract with PERS in 1987 for Miscellaneous employees and in 1996 for Police employees. Effective July 1, 1996, PERS began offering active members the option to elect the Pre-Tax (Tax Deferred) Payroll Deduction Plan to purchase service credit. The Plan allows employees who elect to participate the benefit of deferring income tax liability on service credit purchases through payroll deduction. RESOURCE IMPACT ~ _. There are no direEt City costs. The cost o£the amendment to the City’s PERS contract is borne solely by the employee. His/her payment, including interest, will be calculated by PERS based upon the employer’s contribution rate at the time of election and the employee’s compensation and contribution rate during their period of service with the City. The cost of the pre-tax purchase of service credit is also borne solely by the employee. POLICY IMPLICATIONS This report does not represent any change to existing City policies. ENVIRONMENTAL REVIEW This is not a project under the Califomia Environment Quality Act (CEQA).. ATTACHMENTS ~’ 1. Resolution Approving and Implementing a Pre-Tax Payroll Deduction Plan for Employee Purchases of CALPERS Service Credit Resolution to Approve an Amendment to the Contract between the Board of Administration of PERS and City of Palo Alto Ordinance Authorizing an Amendment to the Contract between the City of Palo Alto and Board of Administration of PERS (Military Service Credit for Local Fire Fighter Members) PREPARED BY: Leonard Zucker, Employee Benefits Manager CMR:319:98 Page 2 of 3 DEPARTMENT HEAD: JAY~C. ROUNDS~-~ / Director of Human Resources CITY MANAGER APPROVAL: gON Assistant City Manager CMR:319:98 Page 3 of 3 RESOLUTION RESOLUTIONOF THE COUNCIL OF THE CITY OF PALO ALTO APPROVING AND IMPLEMENTING A PRE-TAX PAYROLL DEDUCTION PLAN FOR EMPLOYEE PURCHASES OF CALPERS SERVICE CREDIT WHEREAS, the Board of Administration of the California Public Employees’ Retirement System (CalPERS) at the April, 1996 meeting approved a pre-tax payroll deduction for service credit purchases under Internal Revenue Code (IRC) section 414(h) (2); and WHEREAS, the City~ of Palo Alto has the authority to implement the provisions of IRC section 414(h)(2) and has determined that although implementation is not required by law, the tax benefit offered by this section should be provided to those employees who are members of CalPERS; and WHEREAS, the City of Palo Alto elects to participate in the pre-tax payroll deduction plan for all employees in the following CalPERS coverage groups: Miscellaneous Employees Local Police Officers (Local Safety) Local Fire Fighter (Local Safety) NOW, THEREFORE, the Council of the City Of Palo Alto does hereby RESOLVE as follows: ~.~. The City of Palo Alto will implement the provisions of IRC section 414(h)(2) by making employee contributions for service credit purchases pursuant to the California State Government Code on behalf of its employees who are members of CalPERS and who have made a binding irrevocable election to participate in the pre-tax payroll deduction plan. "Employee contributions" shall mean those contributions reported to CalPERS. which are deducted from the salary of employees and are credited to individual employee accounts for service credit purchases thereby resulting in tax deferral of employee contributions. SE~. The contributions made by the City of Palo Alto to CalPERS, although designated as employee contributions, are being paid by the City of Palo Alto in lieu of contributions by the employees who are members of CalPERS. ~. The employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City of Palo Alto to CalPERS. ~. The City of Palo Alto shall pay to CalPERS the contributions designated as employee contributions from the same source of funds as used in paying salary, thereby resulting in tax deferral of employee contributions. 980721 l~c 0031966 ~. The effective date for commencement of the pre- tax payroll deduction plan cannot be any earlier than the date this adopted resolution is received and approved by CalPERS. ~2&lT!~i_~. This Council shall participate in and adhere to ,the requirements and restrictions of the pre-tax payroll deduction plan by requiring the City Manager or her designee to report pre-tax payroll deductions when authorized by CalPERS for those employees of the above state Coverage Groups who have elected to participate in this plan. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:CityManager Senior Asst. City Attorney Director of Administrative Services Director of Human Resources 2 980721 lac 0031966 RESOLUTION NO. RESOLUTION OF INTENTION OF THE COUNCIL OF THE CITY OF PALO ALTO TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY OF PAL0 ALTO (LOCAL FIRE FIGHTER MEMBERS) 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 Government Code section 21024 (Military Service Credit as Public Service)for local fire.fighter members. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1 The City Council of the City of Palo Alto does hereby give notice of intention to approye an amendment to the contract between the City of Palo A~o and the Board of Administration of the Public Employees’ Retirement System, a copy of said amendment being attached hereto, as an "Exhibit" and by this reference made a part hereof. // // // // // // // ’980511 lac~ 0031965 AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE CITY OF PALO ALTO EXHIBIT 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 entered into a contract effective January 1, 1942, and witnessed March 9, 1942, and as amended effective January 1, 1948, April 1, 1949, January 1, 1952, July 1, 1954, February 1, 1956, November-l, 1964, September 23, 1968, December 14, 1970, February 1, 1974, July 8, 1974, January 5, 1975, April 1, 1975, September 11, 1977, July 1, 1979, February 21, 1981, July 11, 1981, December 12, 1981, June 12, 1982, September 17, 1983, November 12, 1983, February 11, 1991, October 15, 1994, December 10, 1994 and February 27, 1996 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: Ao Paragraphs 1 through 12 are hereby stricken from said contract as executed effective February 27, 1996, and hereby replaced by the following paragraphs numbered 1 through 12 inclusive: 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 60 for local miscellaneous members and age 50 for local safety members. Public Agency shall participate in the Public Employees’ Retirement System from and after January 1, 1942 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 forherein 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. Employees of Public Agency in the following classes shall bee.me members 0f ¯ 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); PLEASE DO NOT SIGN "EXHIBIT ONLY" Co Employees other than local safety members (herein referred to as local miscellaneous members). °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: NO ADDITIONAL EXCLUSIONS The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member shall be determined in accordance with Section 21353 of said Retirement Law (2% at age 60 Full). o 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 of said Retirement Law (2% at age 50 Full). Public Agency elected and elects to be subject to the following optional provisions: ao Section 21571 (Basic Level of 1959 Survivor Benefits). Section 21222.1 (Special 5% Increase-1970). Legislation repealed said Section effective January 1, 1980. Section 21222.2 (Special 5% Increase-1971). Legislation repealed said Section effective January 1, 1980. d.Section 21319 (Special 15% Increase for Local Miscellaneous Members). Section 21325 (Special 3% - 15% Increase) for or on behalf of those local miscellaneous members and local safety members who retired or died prior to January 1, 1974. f.Section 20042 (One-Year Final Compensation). g.Section 21317 (Special 15% Increase for Local Safety Members). ho Section 21326 (Special 1%-7% Increase) for or on behalf of those local miscellaneous members and local safety members who retired or died prior to July 1, 1974. Section 21024 (Military Service Credit as Public Service), Statutes of 1976. jo or.: DO NOT SIGN "EXHIBIT ONLY" Section 20692 (Employer Paid Member Contributions Converted to Payrate During the Final Compensation Period) for local miscellaneous members and local safety members in the following groups: Local miscellaneous members who are Management and Confidential employees. Local police members who are Management and Confidential employees. Local fire members who are Management and Confidential employees. Local miscellaneous members represented by Local 715, SEIU, AFL-CIO, and CLC. Local police members represented by the Palo Alto Peace. Oftieers’ Association. o Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on September 11, 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. 10. " 11. 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. Public Agency shall also contribute to said Retirement System as follows: 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. 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. 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. 12.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. B. -This amendment shall be effective on the day of ,19 Attest: Clerk AMENDMENT PERS-CON-702A (Rev. 8\96) ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AUTHORIZING AN AMENDMENT TO CONTRACT BETWEEN THE CITY OF PALO ALTO AND THE BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES ’RETIREMENT SYSTEM (MILITARY SERVICE CREDIT FOR LOCAL FIRE FIGHTER MEMBERS ) The Council of the City of Palo Alto does ORDAIN as follows: SECTION i. The City Council hereby authorizes an amendment to the Contract between the City Council of the City of Palo Alto and the Board of Administration, California Public Employees’ Retirement System, a copy of said amendment being attached hereto, marked "Exhibit A", and by such reference made a part hereof as though herein set out in full. SECTION .2. The Mayor of the City of Palo Alto is hereby authorized and directed to execute said amendment for and on behalf of the City of Palo Alto. SECTION 3 The City Council finds that this is not a project under the California Environmental Quality Act, and therefore, no environmental impact assessment is necessary. SECTION 4. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED AND PASSED: AYES : NOES : ABSENT: ABSTENTIONS : ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:City Manager Senior Asst. City Attorney Director of Administrative Services Director of Human Resources 9805 ! ! lac 0031964 SECTION 2. The City Council finds that this is not a project under the California Environmental Quality Act, and therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED : AYES : NOES : ABSENT: ABSTENTIONS : ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:City Manager Senior Asst. City Attorney Director of Administrative Services Director of Human Resources 980511 |ac 0031965 AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE CITY OF PALO ALTO EXHIBIT A The Board of Administration, Public Employees’ Retirement System, hereinafter referred to as Board, and the governing body of above public agency, hereinaiter referred to as Public Agency, having entered into a contract effective January 1, 1942, and witnessed March 9, 1942, and as amended effective January 1, 1948, April 1, 1949, January 1, 1952, July 1, 1954,.February 1, 1956, November 1, 1964, September 23, 1968, December 14, 1970, February 1, 1974, July 8, 1974, January 5, 1975, April 1, 1975, September 11, 1977, July 1, 1979, February 21, 1981, July 11, 1981, December 12, 1981, June 12, 1982, September 17, 1983, November 12, 1983, February 11, 1991, October 15, i994, December 10, 1994 and February 27, 1996 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: Paragraphs 1 through 12 are hereby stricken from said contract as executed effective February 27, 1996, and hereby replaced by the following paragraphs numbered 1 through 12 inclusive: ~ 1.All words and terms used herein which are defined in the Public Employees’ Retirement Law shall havethe meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 60 for local miscellaneous members and age 50 for local safety members. Public Agency shall participate in the Public Employees’ Retirement System from and alter January 1, 1942 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. 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: at Local Fire Fighters (herein referred to as local safety members); Loeai Police Officers (herein referred to as loeai safety members); ?L;JASE DO NOT SIGN "EXHIBIT ONLY" Employees other than local safety members (herein referred to as local miscellaneous members). 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: NO ADDITIONAL EXCLUSIONS The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member shall be determined in accordance With Section 21353 of said Retirement Law (2% at age 60 Full). 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 of said Retirement Law (2% at age 50 Full). Public Agency elected and elects to be subject to the following optional provisions: a..Section 21571 (Basic Level of 1959 Survivor Benefits). Section 21222.1 (Special 5% Increase-1970). Section effective January 1, 1980. Legislation repealed said c.Section 21222.2 (Special 5% Increase-1971). Legislation repealed said Section effective January l, 1980. d.Section 21319 (Special 15% Increase for Local/diseellaneous Members). Section 21325 (Special 3% - 15% Increase) for or on behalf of those local miscellaneous members and local safety members who retired or died prior to January 1, 1974. Section 20042 (One-Year Final Compensation). g.Section 21317 (Special 15% Increase for Local Safety Members). Section 21326 (Special 1%-7% Increase) for or on bel~Jf of those local miscellaneous members and local safety members who retired or died prior to July 1,. 1974. Section 21024 (Military Service Credit as Public Service), Statutes of 1976. PLEASE DO NOT SIGN "EXHIBIT ONLY Section 20692 (Employer Paid Member Contributions Converted to Payrate During the Final Compensation Period) for local miscellaneous members and local safety members in the following groups: Local miscellaneous members who are Management and Confidential employees. Local police members who are Management and Confidential employees. Local fire members who are Management and Confidential employees. Local miscellaneous members represented by Local 715, SEIU, AFL-CIO, and CLC. Local police members represented by the Pale Alto Peace Officers’ Association. 10. 11. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on September 11, 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. 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. Public Agency shall also contribute to said Retirement System as follows: 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. 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. 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. 12.Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System within fifteen days atter 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. B. This amendment shall be effective on the day of ,19 BOAKD OF ADMINISTRATION PUBLIC EMPLOYEES’ RETIREMENT KENNETH W. MARZION, C~I~ ’ ACTUARIAL & EMPLOY_F%_ I~ERVICES DIVISION PUBLIC EMPLOYEES’ ..~HREMENT SYSTEM CITY COUNCIL OF THE CITY OF PALO ALTO BY PRESIDING OFFICER Witness Date: Attest: Clerk AMENDMENT PERS-CON-702A (Rev. 8k96)