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HomeMy WebLinkAboutCMR- 458-012 City of Palo Alto City Manager's Report TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT: HUMAN RESOURCES DECEMBER 17, 2001 CMR:458:01 APPROVAL OF A RESOLUTION AND ORDINANCE TO AMEND THE CITY OF PALO ALTO'S CONTRACT WITH THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) TO AMEND GOVERNMENT SECTION 21362.2, 3 % @ 50 FULL FORMULA FOR THE PALO ALTO POLICE DEPARTMENT SAFETY MEMBERS RECOMMENDATION Staff recommends that Council approve amending the City's contract with the Public Employees' Retirement System (PERS) to provide Section 21362.2, 3% @ 50 Full Formula for the Palo Alto Police Department Safety Members as follows: 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 Public Employees' Retirement System and the City of Pale Alto. 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. DISCUSSION On September 19, 2001, the Council approved a six-year Memorandum of Agreement (MOA) with Palo Alto Peace Officers' Association (PAPOA). The agreement covers the period beginning July 1, 2001 and ending June 30, 2007. The MOA includes a provision under Section 19 Retirement Benefits for 3% @ 50 to be placed in effect following ratification of the agreement. The benefit would be effective for-eligible PAPOA representation unit members and management police safety members as soon thereafter as possible. RESOURCE IMPACT As estimated by CalPERS, the annual cost of this benefit to the City of Palo Alto is approximately 15.3% of PAPOA salary expense or $1.0 million. With a March 1, 2002 effective date, the cost is estimated to be $333,000 in fiscal 2001-02. The 2001-2002 CMR: 458:01 Page lof 2 Adopted Budget includes a PAPOA PERS employer rate of 18.8%, which fully funds the employers' portion of the retiree pension cost. The PERS employer contribution rate is calculated annually based upon actuarial assumptions on investment, turnover, salary inflation as well as the cost of amendments to the contract between PERS and the City. Additional funding of approximately $162,000 will be required in fiscal 2002-2003 as the employer rate is increasing to 20.1% POLICY IMPLICATIONS This policy does not reflect a change in existing policies. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act. ATTACHMENTS Resolution to Approve an Amendment to the Contract between the Board of Administration of PERS and the City of Palo Alto to include Government Code Section 21362.2. Ordinance to Approve an Amendment to the Contract between the Board of Administration of PERS and the City of Palo Alto to include Government Code Section 21362.2. PREPARED BY: Leonard Zucker, Employee Benefits Manager DEPARTMENT HEAD: ROUNDS Directo;~ of Hun), an Resources CITY MANAGERAPPROVAL:~. ~ EMIEY HARRISON Assistant City Manager CMR: 458:01 Page 2of 2 ORDINANCE NO. ORDINANCE OF THE COUNCIL .OF THE CITY OF PALO ALTO AUTHORIZING AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ~ ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY OF PALO ALTO TO PROVIDE SECTION 21362.2 (3% @ 50 FULL FORMULA) FOR LOCAL POLICE 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", 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. // // // // // // // // // // 011212 c18120248 1 SECTION 4. 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 APPR0VED. AS TO FORM: Mayor APPROVED: Senior Asst. City Attorney C.ity Manager Director of Human Resources Director of Administrative Services 011212 c18120248 2 CalPER5 EXHIBIT California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Administxation C~l~fornia Public Employees' Retirement System and the City Council City of Palo Alto The Board of Administration, California Public Employees' Retirement System, hereinafter referred to as Board, and the governing body of the above public agency, hereinafter referred to as Public Agency, having entered into a contract effective January 1, 1942, and witnessed March 8, 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, 1994, December 10, 1994, February 27, 1996, October 15, 1998, January 1, 1999, October 14, 1999, July 1, 2000, and October 20, 2001 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: Paragraphs 1 through 13 are hereby stricken from said contract as executed effective October 20, 2001, 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 55 for local miscellaneous members and age 50 for local safety members. PLEASE DO NOT SIGN "EXHIBIT ONLY" 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 for herein and to all amendments to said Law hereafter enacted except those, ~ch 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: ~ a. Local Fire Fighters (herein referred to as local safety members); b.Local Police Officers (herein referred to as local safety members); Co Employees other than local safety members (herein referred to as local miscellaneous members), In addition to the classes of employe.es excluded from membership by said. Retirement Law, the following classes of employees shall not become members of said Retirement System: a=PROJECT PROFESSIONAL;PROJE ~CT MANAGER;PROJECT TECHNICIAN;PROJECT ASSISTANT~PROJECT LABORER; LANDSCAPE MAINTENANCE TRAINEE;LIBRARY PAGE; RECREATION LEADER; WATER SAFETY INSTRUCTOR/LIFEGUARD; AND POOL MANAGER HIRED ON OR AFTER OCTOBER 14, 1999. 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 21354 of said Retirement Law (2% at age 55 Full). The percentage of final compensatidn to be provided for each year of credited prior and current service as a local safety member shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). Public Agency elected and elects to be subject to the following optional provis=ons: a.Section 21571 (Basic Level of 1959 Survivor Benefits). b=Section 21222.1 (One-Time 5% Increase -1970). Legislation repealed said Section effective January 1, 1980. Co Section 21222.2 (One-Time 5% Increase - 1971). Legislation repealed said Section effective January 1, 1980. do Section 21319 (One-Time 15% Increase for Local Miscellaneous Members Who Retired or Died Prior to July 1, 1971). fo Section 21325 (One-Time 3% to 15% Increase For Local Miscellaneous Members and Local Safety Members Who Retired or Died Prior to January 1, 1974). Section 20042 (One,Year Final Compensation). Section 21317 (One-Time 15% Increase for Certain Local Safety Members Who Retired for Service Retirement). Section 21326 (One-Time 1% tq 7% }ncrease For 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. 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 w.ho are Management and confidential employees; Local police members who are Management and confidential employees; Local fire members who are Management aridconfidential employees; Local miscellaneous members represented by Local 715, SEIU AFL-CIO and CLC; and Local police members represented by the Palo Alto Peace Officer's Association Section 20434.5 ("Local Fire Fighter" shall include any officer .or employee of a fire department employed to perform hazardous materials services as described in Government Code Section 20434.5). Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on September 1i, 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. 10.Public a. 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. 11. bo A reasonable amount, as fixed by the B~ard, 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 ~nd 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 effe_~ve on the ~ BOARD OFADMINIS,T, RATION ~ PUBLIC EMPLOYEES RETIR~T SYSTEM BY KENNETH W. MARZION ACTUARIAL & PUBLIC SERVICES DIVISION REMENT SYSTEM AMENDMENT PERS-CON-702A (Rev. 8\96) day of CITY COUNCIL CITY OF PALO ALTO PRESIDING OFFICER Witness Date Attest: Clerk 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 CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) AND THE CITY OF PALO ALTO TO PROVIDE SECTION 21362.2 (3% @ 50 FULL FORMULA) FOR LOCAL POLICE 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 Section 21362.2 (3% @ 50 Full formula) for local police members only. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION i. The City Council of the City of Palo Alto does hereby give notice of intention to approve an amendment to the contract between the City of Palo Alto 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. // // // // // 011212 c1812024.7 SECTION 2. The City Council finds that this is not a project under ~the California Envir~nmental Quality Act, and therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Senior Asst. City Attorney City Manager Director of Human Resources Director of Administrative Services 011212 cl 8120247 2 CalPERS EXHIBIT . .California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Administration California Public Employees' Retirement System and the City Counci! City of Palo Alto The Board of Administration, California Public Employees' Retirement System, hereinafter referred to as Board, and the governing body of the above public agency, hereinafter referred to as Public Agency, having entered into a contract effective January 1, 1942, and witnessed March 8, 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, 1994, December 10, 1994, February 27, 1996, October 15, 1998, January 1, 1999, October 14, 1999, July 1, 2000, and October 20, 2001 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A.Paragraphs 1 through 13 are hereby stricken from said contract as executed effective October 20, 2001, and hereby replaced by the following paragraphs numbered t 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 55 for local miscellaneous members and age 50 for local safety members. o PLEASE DO NOT SIGN "EXHIBIT ONLY" 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 ele ion of a contracting agency and are not provided for herein and to atl amen~nents 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 s~ch class as are excluded by law or this agreement: '~ a.Local Fire Fighters (herein referred to as local .safety meml~ers); bo Local Police Officers (herein referred to as local safety members); 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: au PROJECT PROFESSIONAL;PROJE.CT MANAGER;PROJECT TECHNICIAN;PROJECT ASSISTANTi PROJECT LABORER; LANDSCAPE MAINTENANCE TRAINEE;LIBRARY PAGE; RECREATION LEADER; WATER SAFETY INSTRUCTOR/LIFEGUARD; AND POOL MANAGER HIRED ON OR AFTER OCTOBER 14, 1999. 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 21354 of said Retirement Law (2% at age 55 Full). The percentage of final compensatiSn to be provided for each year of credited prior and current service as a local safety member shall be determined in accordance with Section 21362.2 of said Retirement Law (3% 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). bo Section 21222.1 (One-Time 5% Increase --1970). Legislation repealed said Section effective January 1, 1980. C°Section 21222.2 (One-Time 5% Increase - 1971). Legislation repealed said Section effective ,. ~quary 1, Section 21319 (One-Time 15% Increase for Local Miscellaneous Members Who Retired or Died Prior to July 1, 1971). Section 21325 (One-Time 3% to 15% Increase For Local Miscellaneous : Members and Local Safety Members Who Retired or Died Prior to January 1, 1974). Section 20042 (One-Year Final compensation). "Section 21317 (One-Time 15% Increase for Certain Local Safety Members Who Retired for Service Retirement). Section 21326 (One-Time 1% to 7% }ncrease For Local MiscellaneousMembers and Local Safety Members Who Retired or Died Prior to July 1, 1974). Section 21024 (Military Service Credit as Public Service), Statutes of.1976. Section 20692 (Employer Paid Member Contributions Converted to Payrate During the Final Compensation Period) for local miscellaneous members and Ioca~ 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 al:~d confidential employees; Local miscellaneous members represented by Local 715, SEIU AFL-CIO and CLC; and Local police members represented by the Palo Alto Peace Officer's Association Section 20434.5 ("Local Fire Fighter" shall include any officer .or employee of a fire department employed"to perform hazardous materials services as described in Government Code Section 20434.5). 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. 10. 11. 12. as follows:Public Agency h~" !so contribute to said Retirement System a. A reasor,~ amount, as fixed by the Board, payable in one installment within 60 ~ys of date of contract to cov~" the costs of administering said System. as it affects the employees of ~'L~blic Agency, not including the costs of special valuations or o.f the periodic investigation and valuations required by law. b.A reasonable amount, as fixed by the E~'oard, 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. 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 contri~ions refer or as may be prescribed by Board regulation. If more or less than the correct amount of contributio_ns is paid for. any period, proper adjustment shall be made in connection wi{b, 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 effe._~ve on the ~ day of BOARD OF ADMINISTRATION CITY COUNCIL PUBLIC EMPLOYEES'SYSTEM " CITY OF PALO ALTO BY KENNETH W. MARZION ACTUARIAL & PUBLIC EMPL IEF SERVICES DIVISION IREMENT SYSTEM BY PRESIDING OFFICER Witness Date Attest: Clerk AMENDMENT PERS-CON-702A (Rev. 8\96)