HomeMy WebLinkAboutStaff Report 8326City of Palo Alto (ID # 8326)
City Council Staff Report
Report Type: Action Items Meeting Date: 8/14/2017
City of Palo Alto Page 1
Summary Title: Amend the Contract Between the Board of Administration of
the California Public Employees’ Retiremen
Title: Adoption of (1) Resolution of Intent and (2) 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, International Association of Fire
Fighters (IAFF), Palo Alto Fire Chief's Association (FCA), Palo Alto Peace
Officers' Association (PAPOA) and Palo Alto Police Management Association
(PAPMA)
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 Memoranda
of Agreement between the City of Palo Alto and the following groups:
(a) Service Employees International Union (SEIU),
(b) Local 521 International Association of Fire Fighters (IAFF),
(c) Palo Alto Fire Chief's Association (FCA),
(d) Palo Alto Peace Officers' Association (PAPOA), and
(e) Palo Alto Police Management Association (PAPMA).
(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.
City of Palo Alto Page 2
Background
In the most recent negotiations between the City and the represented labor units, the
parties agreed to Memoranda of Agreement (MOAs) that include provisions for employees
to accept a greater share of pension costs to assist in curtailing the City’s growing
pension expense. While Council has already approved these provisions in the MOAs, approval
of this resolution to amend the pension contracts is an administrative step required by
CalPERS. The CalPERS contract amendment process is stringent and complex, which resulted in
staff combining the implementation steps for these units.
Following full execution of this contract amendment, 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 contract term:
Employee share of CalPERS Employer Contribution
Following council approval of
contract amendment with
CalPERS
Total contribution over the
course of the current MOA
IAFF 3.00% 3.00%
FCA 3.00% 3.00%
PAPOA 3.00% 3.00%
PAPMA 3.00% 3.00%
SEIU 0.50% 1.00%
Management and
Professional* 1.00%
UMPAPA** 0.00% N/A
*Unrepresented groups require additional steps before the resolution can be brought
before Council. Additional amendments will be brought forward for City Council review
once these additional steps are completed.
** 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 September 11, 2017. The contract amendment will become effective during
the payroll period 31 days after this ordinance is adopted.
City of Palo Alto Page 3
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. Although the cost
share arrangements have already been agreed upon through the MOA’s, with the final contract
for the represented units being approved in March 2017, 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’s.
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 terms for these groups, the employee contribution to CalPERS employer
contribution as outlined in this memorandum is anticipated to save $1.0 million annually across
all funds. This savings would be prorated to the date of adoption in FY 2018. The terms of the
adopted MOA’s, including this savings were factored into the development of the FY 2018
Adopted Budget.
Attachments:
Attachment A: Resolution of Intention
Attachment B: Ordinance Amending CalPERS Contract
Attachment C: CalPERS Sample Amendment to Contract
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 .5% for local miscellaneous members in the Service
Employees International Union Local 521 and 3% for local
safety members in the International Association of Fire
Fighters, Palo Alto Fire Chief’s Association, Palo Alto Peace
Officers’ Association and Palo Alto Police Management
Association
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) CalPERS ID# 6373437857 CON-302 (Rev. 3/9/2016 rc)
Attachment A
Not Yet Approved
AY/HR/2017-07-26 Ord Amending CalPERS Contract 1
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.
SECTION 3. This ordinance shall be effective on the thirty-first day after the date of its
adoption.
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
Services
Attachment B
Attachment C