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City of Palo Alto
City Manager's Report
.1'0: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT, HUman Resources
AGENDA DATE, September 7, 1994 eMIt: 418:94
J. " •
SUB1ECI', Report 0( F/naIl(IaJ Informatioo re RtsoIutIoos IUId OrdInances for
PERS Cootinll8tion of Employer-Pald Member Cootributlons
Cooverslon
REOUEST
At the Allgust 8, 1994 Council meeting, the City Council approved the Re-solutions of
Intention and !he first reading of Ordirulllees Amending the Contract between the City of
Palo AHo and Ibe California Publlc Employees' Retirement System (PERS) for both Service
Employees' International Union (SEIU), as well as Management and Confidential
employees.
UDder S8 53, it is 1\eC<'SSIlf)' to report the cost of the contract amendment for Council
consideration at two consecutive CouDcil meetings. This matte' is placed OD Ute Council
agenda at this time to comply with notification and consideration requirements of
Government Code Sections 7507 and 20615.5(c) .
. RECOMMENDATIONS
Staff recommends 00 action at this time. Final reading of the Ordinances will occur 00
Seplember 12, 1994.
POLICY IM1'I,JCAllQNS
Approval of the Ordinances will continue an existi ng retirement benetit on a pre-funded
basis and assure compliance wim the collective bargaining agreement with SEIU and the
Compensation Plan for Management and Confidential employees.
EXEcrfIDTE SUMMARy
On July 25, Council approved an agreement with employees repr~,enlcd by me Service
Emplo)' ... • International Union (SElU), Local 715, for fiscal years 1994-95 and 1995-96
CMR,411:94 Pog. 1 of 3
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1
I
(CMR:38S:94).PortQfthat agreemenr provided for amendment of the City agreement with
PERS 10 provide benefits under Government Code Se<:tion 20615.5, 'Reporting the Value
ef Employer-Paid Member Contributions as Compensation in Employees' Final
Compensation ITrlod.'
Coun.:i1 also approved a compensation plan for Management and Confidential employees.
Pan of this oompensation plan \'TOvided for the amendment with PERS to continue final year
Employer-Paid Member Contribution conversions on a pre-fundC"d basl,. The effect of the
PERS amendment is to continue, on a pre-funded basis, a pension benefit which allows City
paid retirement contributions (7 percent for Mi=lIaneous employees and 9 pe'~nt for
Safety employees) to be in<iudro in pension calculations. This benefil has been provided
since 1988, bill due to r=nl cbanges in Sial< law, must nOw be granted I)" a pre-funded
basis.
For SEIU represented employees, the actuarial "alaation for adding Seclion 20615.5, as
calculated by PERS, indicates an increase of 1045 porcelli in the employ" cOlllrib.ution rate.
The employer contribution rate will increase from 6.047 percenllo 7.497 percenl of PERS
defined payroll. The ~nnual cost is $343,000, or 1 percent of the SEIU salary and benefit
payroll.
For Management and Confidential employees, lb. actua,ial v.lualion for continuing this
benefit, as calculJlted by PERS, indicat<:s an increase of 1.45 percenl in Ule employer
contribution rate for Management and Confidential employees. The employer contribution
rate wi!! increase from 6.047 percellllo 7.497 pe=nt of PERS defined payroll. The annual
cost Is $213,000, or I.I percenl of the Managemenl and Confidential salary and benefil
payroll.
The total annual cost for both groups is $556,000. Funding is provided in the 1994-95
Budget.
~RONME.1I/TAI, ASSfSSMEJliT
None required.
(''MR:418~ l'IIg.2 01 )
ATIACRMEN'IS
None
PREPARED BY' u.onard ZUCker~
DEPARTMENT HEAD REVIEW: ( --~
JAY C.\: OUNDS
Dire..;:!or Or Human Resources
CITY MANAGER APPROVAL:~_ . ~_=} ________ _
B NARD :-SThOJNY
ssislan! _Hy Manager
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