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HomeMy WebLinkAboutItem 3a: Adopt Ordinance No. 2301 authorizing an amendment to the PERS contractDATE: September 4, 2012 STAFF REPORT Administrative Services Department TO: Honorable Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Michael Casalou, Human Resources Administrator By: Heather McDowell, Senior Human Resources Analyst k_, SUBJECT: ORDINANCE NO. 2301, AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF ARCADIA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, ADDING SECTION 21548 PRE - RETIREMENT OPTIONAL SETTLEMENT 2W DEATH BENEFIT Recommendation: Adopt SUMMARY On August 7, 2012, the City Council: (1) Adopted Resolution No. 6840, a Resolution of Intention to approve an amendment to the contract between the Board of Administration, California Public Employee's Retirement System (hereinafter "CaIPERS ") and the City Council, City of Arcadia; (2) Introduced Ordinance No. 2301 authorizing an amendment to the contract between the City Council of the City of Arcadia and the Board of Administration of CaIPERS; and (3) Approved an appropriation of funds to cover the increased costs associated with the amendment. The request before the City Council is for a second reading of Ordinance No. 2301 authorizing the amendment to the contract between the City Council of the City of Arcadia and the Board of Administration of CaIPERS regarding Pre - Retirement Optional Settlement 2W Death Benefit. DISCUSSION The request contained in this staff report is the final City Council action required to enact a contract amendment to enhance the survivor benefits contained in the City's contract with CaIPERS; specifically, the addition of the Pre - Retirement Option 2W CalPERS Contract Amendment September 4, 2012 Page 2of2 Death Benefit, which preserves benefits for a surviving spouse of a deceased employee who was age eligible to retire at the time of death. The 2W survivor benefit provides a monthly allowance equal to the amount the member would have received if he /she had retired for service on the date of death and elected Option 2W, the highest monthly allowance a member can leave a spouse or domestic partner. The difference between spousal benefits with and without the 2W is substantial. Without the 2W Death Benefit, a surviving spouse would be left with a maximum benefit of one -half of what the employee would have been eligible for at the time of death. The adoption of Ordinance No. 2301 will amend the City's contract with CalPERS, adding the Pre - Retirement Option 2W Death Benefit, with an effective date of October 7, 2012. FISCAL IMPACT The contract amendment cost analysis (actuarial valuation) has been completed based on the most recent annual valuation. The total Employer rate will increase .276% for the Miscellaneous /Non- Safety group and .220% for the Safety groups, which represents approximately $60,510 for Fiscal Year 2012 -13. The City bargaining groups (ACEA, AFFA, APCEA, APOA, and APWEA) have agreed to share in the cost of this amendment, thereby cutting the realized cost to the City in half. Annualized costs to the City is estimated at $25,757 from the General Fund and $4,500 from various other funds. RECOMMENDATION It is recommended that the City Council amend its contract with CalPERS to include the Pre - Retirement Optional Settlement 2W Death Benefit provided under Section 21548 of the Government Code by: Adopting Ordinance No. 2301, authorizing an amendment to the contract between the City Council if the City of Arcadia and the Board of Administration of the California Public Employees' Retirement System. Approved: biii inic Lazzarato City Manager Attachment: Ordinance No. 2301 ORDINANCE NO. 2301 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF ARCADIA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM REGARDING PRE- RETIREMENT OPTIONAL SETTLEMENT 2W DEATH BENEFITS THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES ORDAIN AS FOLLOWS. SECTION 1. An amendment to the contract between the City Council of the City of Arcadia and the Board of Administration, California Public Employees' Retirement System is hereby authorized, a copy of said amendment being attached hereto, marked Exhibit "A ", and by such reference made a part hereof as though herein set out in full. SECTION 2. The Mayor of the City Council is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said Agency. SECTION 3. This Ordinance shall be implemented on October 7, 2012. SECTION 4, The City Clerk shall certify to the adoption of this Ordinance and shall cause a copy of same to be published in the official newspaper of the City of Arcadia within fifteen (15) days after its adoption. This Ordinance shall take effect on the thirty -first (31 ") day after its adoption. 1 Passed, approved and adopted this day day of 2012. Mayor of the City of Arcadia ATTEST: City Clerk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney ca1PERs California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Admi ni s t+ at- ion California Public Employees' Retirement, System and the City Council City of Arcadia `Iiiiiiiiw The Board of Administration, valifomia Public Employees' Retirement System, hereinafter referrer` to as Board, and the governing body of the above public agency, hereinafter referred to as Public Agency, having entered into a contract effective October 1, 1945, and witnessed September 24, 1945, and as amended effective July I, 1953, January 1, 1957, January 1, 1958, January 1, 1959. January 19, 1964, February 28, 1965, October 1, 1972, June 24, 1973, Januarrr 4, 1976, April 10, 1977, March 1 1, 1979, June 22, 1986, November 6, 1988, December 2, 1994, June 4, 199.0, October 11, 1999, December 8, 1999, October 19, 2001, March 5, 2004, September 28, 2008 and October 9, 2011 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1 through 16 are hereby stricken from said contract as executed effective October 9, 2011, and hereby replaced by the following paragraphs numbered 1 through 16 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 entering membership in the miscellaneous classification on or prior to October 9, 2011, age 60 for local miscellaneous members entering membership for the first time in the miscellaneous classification after O ^tober 9, 2011, age 50 for iccal safety/ members entering membership in the safety classification on or prior to October 9, 2011 and age 55 for local safety member;: entering membershiC; for thy: first time in the safety, classification after October 9, 201 If 2. Public Agency shall participate in the Public Employees' Retirement System from and after October 1, 1945 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, which by express provisions thereof, apply only on the election of a contracting agency. 3. Public Agency agrees to indemnify, defend and hold harmless the California Public Employees' Retirement System (CaIPERS) and its trustees, agents and employees, the CaIPERS Board of Administration, and the California Public Employees' Retirement Fund from any claims.. demands, actions, losses, liabilities, damages, judgments, expenses and costs, including but not limited to interest, penalties and attorneys fees that may arise as a result of any of the following: (a) Public Agency's election to provide retirement benefits, provisions or formulas under this Contract that are different than the retirement benefits, provisions or formulas provided under the Public Agency's prior non - CaIPERS retirement program. (b) Public Agency's election to amend this Contract to provide retirement benefits, provisions or formulas that are different than existing retirement benefits, provisions or formulas. (c) Public Agency's agreement with a third party other than CaIPERS to provide retirement benefits, provisions, or formulas that are different than the retirement benefits, provisions or formulas provided under this Contract and provided for under the California Public Employees' Retirement Law. (d) Public Agency's election to file for bankruptcy under Chapter 9 (commencing with section 901) of Title 11 of the United States Bankruptcy Code and /or Public Agency's election to reject this Contract with the CaIPERS Board of Administration pursuant to section 305, of Title 11, of the united States Bankruptcy Code or any similar provision of law. (e) Public Agency's election to assign this Contract without the prior written consent of the CaIPERS' Board of Administration. (f) The termination of this Contract either voluntarily by request of Public Agency or involuntarily pursuant to the Public Employees` Retirement Law. (g; Changes sponsore b by Public Agency in existing retirement benefits, provisions or formulas made as a result of amendments, additions or deletions to California statute or to the California Constitution. 4. 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); C. Employees other than local safety members (herein referred to as local miscellaneous members). 5. In addition to the classes of employees excludes,' from membership by said Retirement Law, the following classes of employees shall not become members of said Retirement System: NO ADDITIONAL EXCLUSIONS 6. The percentage of final compensation to be provided for each year of credited prior and current service for local miscellaneous members in employment before and not or or after- September 28, 2008 shall be determined in accordance with Section 21354 of said Retirement Law, subject to the reduction provided therein for service prior to March 31, 1977, termination of Socia; Security, for members whose service has beer included in Federal Social Security (2% at age 55 Full and Modified). 7. The percentage of final compensation to be provided for each vear of credited prior and current service for local miscellaneous member; in employment on or after September 28, 2008 and not entering membership for the first time in the miscellaneous classification after October 19, 2011 shall be determined in accordance with Section 21354.4 of said Retirement Law, subject to the reduction provided therein for service prior to March 31, 1977, termination of Social Security, for members whose service has been included in Federal Social Security (2.5% at age 55 Full and Modified). 0. The percentage of final compensation to be provided for each vear of credited current service as a local miscellaneous member enterinc membership for the first time it the miscellaneous classifcatior afte• October C,, 2011 shall be determined in accordance with Section 21353 o said Retirement Law (2% a-L' age 60 Full). c a year G? P'. The percentage of final compensation io be provided for each y. credited prior and current service as a local safety member entering membership in the safety classification on or prior to October 9, 2011 shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). 10. The percentage of final compensation to be provided for each year 01 credited current service as a local safety member entering membership for the first time in the safety classification after October 9, 2011 shall be determined in accordance with Section 21363.1 of said Retirement Law (3% at age 55 Full). 11. Public Agency elected and elects to be subject to the following optional provisions: a. Section 21573 (Third Level of 1959 Survivor Benefits) for local miscellaneous members and local police members only. b. Section 20042 (One -Year Final Compensation) for those kcal miscellaneous members and local safety members entering, membership on or prior to October 9, 2011. C. Section 20965 (Credit for Unused Sick Leave). d. Sections 21624 and 21626 (Post- Retirement Survivor Aliowance). e. Section 21024 (Military Service Credit as Public Service). f. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local fire members only. g. Section 21027 (Military Service Credit for Retired Persons). f;. Section 20475 (Different Level of Benefits). Section 21353 (2% C 60 Full formula) and Section 20037 (Three -Year Final Compensation) are applicable to local miscellaneous members, entering membership for the first time in the miscellaneous classification after October 9, 2011. 21363.1 (3% @ 55 Full formula) and Section 20037 (Three -Yea( Final Compensation) are applicable to local safety members entering membership for the first time in the safety classificatior, after October 9, 2011. Section 21548 (Pre - retirement Option 2W Death Benefit). 12. Public Agency, in accordance with Government Code Section 2079C, ceased to be an "employer " for purposes of Section 20334 effective on April 10, 1977. Accumuiated 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 20334. 13. Public Agency shall contribute to said Retirement System the contributions determined by actuarial valuations of prior and future service liability with respect to focal miscellaneous members and local safety members of said Retirement System. 14. Public Agency shall also contribute to said Retirement System as follows: a. Contributions required per covered member on account of the 1959 Survivor Benefits provided under Section 21573 of said Retirement Law. (Subject to annual change.) In addition, all assets and liabilities of Public Agency and its employees shall be pooled in a single account, based on term insurance rates, for survivors of all local miscellaneous members and local police members. r b. Contributions required per covered member on account of the 1959 Survivor Benefits provided under Section 21574 of said Retirement Law. (Subject to annual change.) In addition; all assets and liabilities of Public Agency and its employees shall be pooled in a single account, based on term insurance rates, for survivors of all local fire members. C. A reasonable amount, as fixed by the Board, payable in one installment within 60 days oT date of contract to cover the costs of administering said System as it affects the employees of Public Agency, not inciuding the costs of special vaivations o- of the periodic investigation and valuations required by law. d. A reasonable amount, as fixed by the Board, payable in one installment as the occasions arise, to cover the costs of specia valuations on account of employees of Public Agency, and costs of the periodic investigation and valuations required by iara, 15. Contributions required of Public Agenc,,, and its employees shalt be subject to adjustment by Board on account of amendments to the Public Employees' Retirement `_aw, and on accoun° of the experience unde,- the Retirement: System as determined by the periodic investigation ant': valuation required by said Retirement Law. 16, Contributions required of Public Agency and its employees steal! 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. E. This amendment shall be effective on the day of BOARD OF ADMINISTRATION CITY COUNCIL PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF ARCADIA BY KAREN DE FRANK, CHIEF CUSTOMER ACCOUNT SERVICES DIVISION PUBLIC EMPLOYEES' RETIREMENT SYSTEDVi AMENDMENT CaIPERS ID #1676318862 PERS- CON -702F, BY PRESIDING OFFICER Witness Date Attest: Cierk- M