HomeMy WebLinkAboutItem 2a: Resolution 6785: Paying & Reporting Value of Employer Paid Member Contributions for Safety Employees oFF e4,6
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al,r,iry or STAFF REPORT
Administrative Services Department
DATE: August 2, 2011
TO: Mayor and City Council FR
OM: Hue Quach, Administrative Services Director iMichael A. Casalou, Human Resources Administrator
Prepared by: Heather McDowell, Senior Human Resources Analyst
SUBJECT: Adopt Resolution No. 6785 for Paying and Reportinq the Value of
Employer Paid Member Contributions (Safety Employees).
Recommendation: Adopt
SUMMARY
Staff recommends adoption of Resolution No. 6785 allowing grandfathering of safety
employees for payment and reporting of the employer paid member contributions hired
prior to August 3, 2011. Safety employees hired on or after August 3, 2011 will pay
their full employee share, or nine percent (9%), of their pension costs.
DISCUSSION
At the request of City Council, the City negotiations team has been in lengthy
discussions with the City's bargaining groups discussing options for pension reform.
The City currently pays an employer share and an employee share of the pension
obligations with CaIPERS. The employer share fluctuates based on contributions to the
employer account and market performance. The City of Arcadia has realized
substantial employer rate increases and expects this trend to continue. The employee
share, however, is fixed and set at nine percent (9%) of an employee's salary for safety
employees.
The existing arrangement for the employer to pick up the employee share of the
pension costs is referred to as Employer Paid Member Contribution (EPMC). The
EPMC has benefits for both employees and the employer. For employees, the nine
percent (9%) is reported to CaIPERS as special compensation for retirement purposes,
which increases final salary for retirement computation; employees do not pay tax on
this amount; and their gross pay is not reduced by a CaIPERS retirement contribution.
For employers, paying the EPMC has allowed the City to add a benefit for employees
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Mayor and City Council
August 2, 2011
Page 2 of 2
without increasing their salary and associated benefit costs, as well as help the City to
remain competitive with other employers in the area who also have historically picked
up this cost in order to recruit qualified candidates.
Due to drastic changes in the economy, local governments are making changes to
pension plans and restructuring pension plan costs in order to reduce costs and long
term pension obligations. One common change is related to the EPMC benefit which
would require new hires to pick up the employee share of their pension costs. By taking
this action, the City is now keeping up with current market trends.
The City Council has also expressed a desire to preserve these benefits for existing
employees. Therefore, staff proposes existing employees be grandfathered into the
EPMC benefit, with new employees hired on or after August 3, 2011, pay the full
employee share of the pension costs.
FISCAL IMPACT
Adopting Resolution No. 6785 will result in cost savings to the City. For all new safety
employees hired on or after August 3, 2011, the City will not be paying the employee's
cost share of the California Public Employees' Retirement System (CaIPERS). For
safety employees, the savings will be nine percent (9%) of salary per employee. This
cost savings will be immediate with each new employee and will increase over time as
turnover and/or retirements occur and new employees are hired.
RECOMMENDATION
It is recommended that the City Council:
Adopt Resolution No. 6785 for Paying and Reporting the Value of Employer Paid
Member Contributions (Safety Employees).
APPROVED:
fie ./.
Donald Penman, City Manager
RESOLUTION NO. 6785
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, FOR PAYING AND REPORTING
THE VALUE OF EMPLOYER PAID MEMBER
CONTRIBUTIONS (SAFETY EMPLOYEES)
WHEREAS, the City Council of the City of Arcadia has the authority to implement
Government Code Section 20636(c)(4) pursuant to Section 20691; and
WHEREAS, the City Council of the City of Arcadia has a written policy or
agreement which specifically provides for the normal member contributions to be paid
by the employer, and reported as additional compensation; and
WHEREAS, one of the steps in the procedures to implement Section 20691 is
the adoption by the City Council of the City of Arcadia of a Resolution to commence
paying and reporting the value of said Employer Paid Member Contributions (EPMC)
pursuant to CCR title 2 Section 571(a)(1); and
WHEREAS, the City Council of the City of Arcadia has identified the following
conditions for the purpose of its election to pay EPMC:
• This benefit shall apply to all employees of the sworn Police and Fire
Management, Police Chief, Fire Chief, Arcadia Firefighters' Association, and
Arcadia Police Officers' Association designated by the City's Fringe Benefit
Resolution and related amendments.
• The benefit shall consist of paying 9% of the normal member contributions as
EPMC, and reporting the same percent (value) of compensation earnable
(excluding Government Code Section 20636(c)(4)) as additional
compensation for those employees hired before August 3, 2011, and 0% of
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the normal member contributions for those employees hired on or after
August 3, 2011.
• This Resolution shall become effective immediately upon its adoption.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, DOES
HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
SECTION 1. The City Council of the City of Arcadia elects to pay and report the
value of EPMC, as set forth above.
SECTION 2. This Resolution shall become effective immediately upon its
adoption.
SECTION 4. That the City Clerk shall certify to the adoption of this Resolution.
Passed, approved and adopted this day of August, 2011.
Mayor of the City of Arcadia
ATTEST:
City Clerk
APPROVED AS TO FORM:
vge,„, P 4
Stephen P. Deitsch
City Attorney
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