HomeMy WebLinkAboutStaff Report 9035
City of Palo Alto (ID # 9035)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 4/2/2018
City of Palo Alto Page 1
Summary Title: Amend the Contract Between the Board of Administration of
the California Public
Title: Adoption of: (1) a Resolution of Intent, and (2) an Ordinance to Amend
the Contract Between the Board of Administration of the California Public
Employees’ Retirement System (CalPERS) and the City of Palo Alto to
Implement the Share of Employer Contribution in Accordance With Section
20516 of the California Government Code and the Memorandum of
Agreement Between the City of Palo Alto and Service Employees
International Union (SEIU) Local 521 and Compensation Plan for
Management and Professional Personnel And Council Appointees
From: City Manager
Lead Department: Human Resources
Recommendation
Staff recommends the City Council:
(1) Adopt the attached Resolution of Intention of the Council of the City of Palo Alto stating
its intent to amend the contract between the California Public Employees’ Retirement
System (CalPERS) and the City of Palo Alto in order to implement the pension cost share
provision in accordance with California Government Code section 20516 and the
Memorandum of Agreement (MOA) and Compensation Plan between the City of Palo Alto
and the following groups:
(a) Service Employees International Union (SEIU),
(b) Management and Professional Personnel (MGMT)
(2) Adopt, on first reading, the attached ordinance amending the City’s contract with CalPERS.
This ordinance will return to the Council on second reading in accordance with state law.
Background
In the most recent MOA with SEIU and the compensation plan for MGMT (approved by the
City Council April 2016), provisions were included for employees to accept a greater share of
City of Palo Alto Page 2
pension costs to assist in curtailing the City’s growing pension expense. While Council has
already approved these provisions in the MOA and Compensation Plan, approval of this
resolution to amend the pension contracts is an administrative step required by CalPERS.
The pension cost sharing agreement includes a phase-in schedule for the employee pick-up of
the employer contribution. This chart outlines the total employee share over the current MOA
and Compensation Plan term (all ending by the close of calendar year 2018):
Employee share of CalPERS Employer Contribution
Following council approval of
this contract amendment with
CalPERS
Total contribution over the
course of the current
MOA/Compensation Plan
IAFF completed 3.00%
FCA completed 3.00%
PAPOA completed 3.00%
PAPMA completed 3.00%
SEIU second 0.50% 1.00%
Management and
Professional 0.50% 1.00%
UMPAPA* 0.00% N/A
*No current agreement for a cost share of the CalPERS Employer contribution has been
reached with the Utilities Management group at this time.
Discussion
The first step in the process is for the Council to adopt a Resolution of Intent and conduct a
first reading of the ordinance amending the California Public Employees Retirement System
(CalPERS) contract. An amendment to the contract, which changes the employees’ rate of
contribution, requires a secret ballot election among the employees affected. This election
must follow adoption of the Resolution of Intention and precede adoption of the final
documents. The final ordinance will return to Council for approval of the second reading and
adoption on May 7, 2018. The contract amendment will become effective during the payroll
period 31 days after this ordinance is adopted.
With the employer contribution of pension costs continuing to rise, it was in the City’s best
interest to negotiate a cost share arrangement with all bargaining units and implement for the
non-represented groups as well. Although the cost share arrangements have already been
agreed upon through the MOA/Compensation Plan, CalPERS requires this administrative step
for Council to adopt a resolution in order to amend the pension contracts. This amendment
seeks to bring the CalPERS contract in alignment with the current adopted
MOA/Compensation Plan.
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Policy Implications
This recommendation supports the City Council’s goal of reducing pension costs to the City and
is consistent with existing City policies.
Resource Impact
Per the adopted MOA term and Compensation Plan, the employee contribution to CalPERS
employer contribution as outlined in this staff report is anticipated to save approximately
$410,000 annually across all funds, of which $200,000 would be in the General Fund. This
savings is factored into the development of the annual budget process per the terms in the
MOUs.
Attachments:
Attachment A: Resolution of Intention
Attachment B: Ordinance Amending CalPERS Contract
Attachment C: CalPERS Sample Amendment
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 PALO ALTO
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 20516 (Employees Sharing Additional Cost)
of an additional 0.5% for local miscellaneous members in the
Service Employees International Union Local 521, 0.5% for
local miscellaneous members in the Unrepresented
Management group and 1.5% for local safety members in the
Unrepresented Safety Management group.
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 System, a copy of said amendment being attached
hereto, as an "Exhibit" and by this reference made a part hereof.
By:_________________________________
Presiding Officer
_________________________________
Title
________________________________
Date adopted and approved
(Amendment)
CON-302 (Rev. 3/9/2016 rc)
Not Yet Approved
1 AY/HR/2017-07-26 Ord Amending CalPERS Contract
Ordinance No.
Ordinance of the Council of the City of Palo Alto Authorizing an Amendment to the
Contract between the City of Palo Alto and the Board of Administration of the
California Public Employees’ Retirement System to
Add Cost-Sharing Pursuant to Government Code Section 20516
The Council of the City of Palo Alto ORDAINS as follows:
SECTION 1. That an amendment to the contract between the City of Palo Alto and the Board
of Administration, California Employees’ System is hereby authorized, a copy of said amendment hereto,
marked Exhibit A, and such reference made a part hereof as though herein set out in full.
SECTION 2. The City Manager, or his designee is authorized, empowered, and directed to
execute said amendment for and on behalf of the City of Palo Alto.
adoption.
SECTION 3. This ordinance shall be effective on the thirty-first day after the date of its
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
City Attorney City Manager
Director of Human Resources
Director of Administrative
Service
Not Yet Approved
2 AY/HR/2017-07-26 Ord Amending CalPERS Contract