City of Culver City, California
Agenda Item Report
Meeting Date: 03/12/12 Item Number: C-6
CITY COUNCIL AGENDA ITEM: Adoption of an Ordinance Authorizing a Contract
Amendment between the Public Employees’ Retirement System (PERS) and the City
of Culver City to Implement Section 20475, Different Level of Benefits, for Newly
Hired Safety Plan Members in the Police Officers’ Association (POA), Police
Management Group (PMG), Firefighters’ Association (FFA) and Fire Management
(FMG)
Contact Person/Dept.: Serena Wright Phone Number: 310-253-5640
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Dates:
Public Notification: (E-Mail) Agenda and Meetings – City Council (03/08/12); Police
Officers’ Association (POA), Police Management Group (PMG), Firefighters’ Association
(FFA), and Fire Management Group (FMG) (03/08/12)
Department Approval:
Serena Wright (03/07/12)
City Attorney Approval:
Carol Schwab (by H. Baker) (03/07/12)
Chief Financial Officer Approval:
Jeff Muir (03/07/12)
City Manager Approval:
John M. Nachbar (03/07/12)
RECOMMENDATION:
Staff recommends that the City Council adopt an ordinance authorizing a contract
amendment between the Public Employees’ Retirement System (PERS) and the City
of Culver City to Implement Section 20475, Different Level of Benefits, for newly hired
safety plan members in the Police Officers’ Association, Police Management Group
(PMG), Firefighters’ Association (FFA) and the Fire Management Group (FMG).
BACKGROUND:
The City Council recently approved labor agreements with the POA, PMG, FFA and
FMG. In accordance with the labor agreements, the City will create a second tier
retirement formula for all Police and Fire Safety members hired after the effective
date of the PERS contract amendment.
DISCUSSION:
The labor agreements provide for implementation of the following second-tier
benefits for newly hired safety members represented by POA, PMG, FFA and FMG:
Police Officers’ Association and Police Management Association
PERS Section 20475, Different Level of Benefits: Section 21363.1, 3% @ 55 Full
Formula, and Section 20037, Three-Year Final Compensation. City of Culver City, California
Agenda Item Report
Firefighters’ Association and Fire Management Association
PERS Section 20475, Different Level of Benefits: Section 20037, Three-Year Final
Compensation.
The City must comply with specific PERS contract amendment procedures and
timelines. On February 13, 2012, the City Council adopted Resolutions of Intention
Nos. 2012-R019 and 2012-R020, declaring the City Council’s intent to amend the
PERS Contract to implement a second tier of benefits for newly hired safety
members in POA, PMG, FFA and FMG. Upon adoption of the Resolutions of
Intention, and pursuant to Government Code Section 20471, the City must wait at
least twenty (20) days to adopt the final ordinance. The proposed ordinance was
introduced for first reading on February 13, 2012, and is presented tonight for
adoption. Assuming adoption this evening, the ordinance would become effective
April 10, 2012, and the contract amendment would become effective April 23, 2012,
in compliance with PERS requirements.
FISCAL ANALYSIS:
• Firefighters’ Association and Fire Management Group
Employer Contribution Rate
There will be no immediate change in the Employer Contribution Rate as a result of
the second tier being implemented. CalPERS estimates that the long-term effect of
the second tier (when all active employees are second tier) will be a 0.3% reduction
in the Employer Contribution Rate. The rate for Fiscal Year 2011/2012 is 32.506%
for Safety Employees. The long-term rate reduction is small because the only
change is moving from single highest year to highest three years’ compensation.
There is no change to the pension formula (3% at 55) for FF or FMG.
Employee Contribution Rate
Second tier employees will pay the full 9% employee contribution. There will be
limited immediate savings from this change until a significant level of turnover
occurs.
• Police Officers’ Association and Police Management Group
Employer Contribution Rate
There will be no immediate change in the Employer Contribution Rate as a result of
the second tier being implemented. CalPERS estimates that the long-term effect of
the second tier (when all active employees are second tier) will be a 2.0% reduction
in the Employer Contribution Rate. The rate for Fiscal Year 2011/2012 is 32.506% City of Culver City, California
Agenda Item Report
for Safety Employees. Based on the current year rate, the long-term reduction in the
Employer Contribution Rate for POA and PMG employees is approximately 6%. It
will take many years to achieve this.
Employee Contribution Rate
Second tier employees will pay the full 9% employee contribution. There will be
limited immediate savings from this change until a significant level of turnover
occurs.
ATTACHMENTS:
1. Proposed Ordinance including Exhibit Amendment to Contract
MOTION:
That the City Council:
Adopt an ordinance authorizing a contract amendment between the Public
Employees’ Retirement System (PERS) and the City of Culver City to implement
Section 20475, Different Level of Benefits for newly hired Safety Plan Members
in the Police Officers’ Association (POA), Police Management Group (PMG),
Firefighters’ Association (FFA), and the Fire Management Group (FMG).
MEETING DATE: 03/12/12
AGENDA ITEM: Adoption of an Ordinance Authorizing a Contract
Amendment between the Public Employees' Retirement
System (PERS) and the City of Culver City to Implement
Section 20475, Different Level of Benefits, for Newly
Hired Safety Plan Members in the Police Officers'
Association (130A), Police Management Group (PMG),
Firefighters' Association (FFA) and Fire Management
(FMG)
ATTACHMENT
Pages
1. Proposed Ordinance including Exhibit Amendment to
1-8
Contract 1 ORDINANCE NO. 2012-
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AN ORDINANCE OF THE CITY OF CULVER CITY,
CALIFORNIA, AUTHORIZING AN AMENDMENT TO THE
CONTRACT BETWEEN THE CITY OF CULVER CITY AND THE
BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC
EMPLOYEES' RETIREMENT SYSTEM (Local Police and Fire
Safety Plan Members)
NOW, THEREFORE, the City Council of the City of Culver City, California,
DOES HEREBY ORDAIN as follows:
SECTION 1. That an amendment to the contract between the City Council of
the City of Culver City and the Board of Administration of the California Public Employees'
Retirement System (PERS) is hereby authorized, effective April 10 1 2012, a copy of said
amendment being attached hereto as Exhibit "A"' and incorporated herein by this reference
as though set forth in full.
15 SECTION 2. The City Council of the City of Culver City is hereby authorized,
16 empowered, and directed to execute said amendment on behalf of the City of Culver City.
17 SECTION 3. Pursuant to Section 619 of the City Charter, this Ordinance
18 shall take effect thirty (30) days after the date of its adoption. Pursuant to Sections 616
19 and 621 of the City Charter, prior to the expiration of fifteen (15) days after the adoption,
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the City Clerk shall cause this Ordinance, or a summary thereof, to be published in the
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11/ I Culver City News and shall post this Ordinance or a summary thereof in at least three
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g I ATTEST:
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APPROVED and ADOPTED this day of
, 2012.
MICHEAL O'LEARY, Mayor
City of Culver City, California
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11 MARTIN R. COLE, City Clerk
12 11102-00244
OL A. SCHWAB, City Attorney
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cZ CalPERS
EXHIBIT
California
Public Employees' Retirement System
40n
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Culver City
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 August 1, 1945, and witnessed
August 9, 1945, and as amended effective October 1, 1947, November 1, 1951, June 1, 1954,
January 1, 1960, July 1, 1960, June 1, 1963, December 4, 1967, January 1, 1972, January 1,
1973, August 1, 1973, September 28, 1973, July 4, 1977, October 20, 1980, June 29, 1981,
October 14, 1992, July 14, 1994, August 12, 1997, July 6, 1998, November 5, 1999,
November 20, 2000, June 17, 2002, July 1, 2002, June 28, 2004, January 22, 2007 and
December 19, 2011 which provides for participation of Public Agency in said System, Board
and Public Agency hereby agree as follows:
A. Paragraphs 1 through 17 are hereby stricken from said contract as executed effective
December 19, 2011, and hereby replaced by the following paragraphs numbered 1
through 18 inclusive:
1 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 December 19, 2011, age 60 for local miscellaneous members
entering membership for the first time in the miscellaneous classification after
December 19, 2011, age 50 for local police members entering membership in the
police classification on or prior to the effective date of this amendment to
contract, age 55 for local fire members and for those local police members
entering membership for the first time in the police classification after the
effective date of this amendment to contract. 2. Public Agency shall participate in the Public Employees' Retirement System from
and after 'August 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 (CalPERS) and its trustees, agents and
employees, the CalPERS 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-CalPERS 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.
(0)
Public Agency's agreement with a third party other than CalPERS 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 CalPERS Board of Administration pursuant to section
365, 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 CalPERS' 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 sponsored 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 excluded from membership by said
Retirement Law, the following classes of employees shall not become members
of said Retirement System:
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:
a. AUDITORIUM HELPERS; CROSSING GUARDS; RECREATION
LEADERS; LIFEGUARDS; LOCKER ROOM ATTENDANTS; AND
CASHIERS HIRED ON OR AFTER AUGUST 2, 1973.
6. Prior to January 1, 1975, those members who were hired by Public Agency on a
temporary and/or seasonal basis not to exceed 6 months were excluded from
PERS membership by contract. Government Code Section 20336 superseded
this contract provision by providing that any such temporary and/or seasonal
employees are excluded from PERS membership subsequent to January 1,
1975. Legislation repealed and replaced said Section with Government Code
Section 20305 effective July 1, 1994.
7 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 on or after July 1, 2002 shall be determined in accordance with Section
21354 of said Retirement Law, subject to the reduction provided therein for
service on and after January 1, 1956, the effective date of Social Security
coverage, for members whose service has been included in Federal Social
Security (2% at age 55 Full and Modified).
8. The percentage of final compensation to be provided for each year of credited
prior and current service for local miscellaneous members in employment on or
after July 1, 2002 and not entering membership for the first time in the
miscellaneous classification after December 19, 2011 shall be determined in
accordance with Section 21354.4 of said Retirement Law, subject to the
reduction provided therein for service on and after January 1, 1956, the effective
date of Social Security coverage, for members whose service has been included
in Federal Social Security (2.5% at age 55 Full and Modified). 9. The percentage of final compensation to be provided for each year of credited
current service as a local miscellaneous member entering membership for the
first time in the miscellaneous classification after December 19, 2011 shall be
determined in accordance with Section 21353 of said Retirement Law subject to
the reduction provided therein for Federal Social Security (2% at age 60
Modified).
10. The percentage of final compensation to be provided for each year of credited
prior and current service as a local police member entering membership in the
police classification on or prior to the effective date of this amendment to contract
shall be determined in accordance with Section 21362.2 of said Retirement Law
(3% at age 50 Full).
11. The percentage of final compensation to be provided for each year of credited
current service as a local police member entering membership for the first time in
the police classification after the effective date of this amendment to contract
shall be determined in accordance with Section 21363.1 of said Retirement Law
(3% at age 55 Full).
12. The percentage of final compensation to be provided for each year of credited
prior and current service as a local fire member shall be determined in
accordance with Section 21363.1 of said Retirement Law (3% at age 55 Full).
13. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 21571 (Basic Level of 1959 Survivor Benefits) for local
miscellaneous members only.
b. Section 20425 ("Local Police Officer" shall include employees of a police
department who were employed to perform identification or
communication duties on August 4, 1972 and who elected to be local
safety members).
c. Sections 21624 and 21626 (Post-Retirement Survivor Allowance) for local
safety members only.
d. Section 21317 (One-Time 15% Increase for Certain Local Safety
Members Who Retired for Service Retirement). Legislation repealed said
Section effective January 1, 2002.
e.
Section 21319 (One-Time 15% Increase for Local Miscellaneous
Members Who Retired or Died Prior to July 1, 1971). Legislation repealed
said Section effective January 1, 2002.
f.
Section 20903 (Two Years Additional Service Credit).
g.
Section 21548 (Pre-Retirement Option 2W Death Benefit). h. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local safety
members only.
Section 20042 (One-Year Final Compensation) for those local
miscellaneous members entering membership on or prior to December 19,
2011 and those local safety members entering membership on or prior to
the effective date of this amendment to contract.
Section 21024 (Military Service Credit as Public Service).
k. Section 20475 (Different Level of Benefits). Section 21353 (2% @ 60
Modified 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 December 19, 2011.
Section 21363.1 (3% @ 55 Full formula) and Section 20037 (Three-Year
Final Compensation) are applicable to local police members entering
membership for the first time in the police classification after the effective
date of this amendment to contract.
Section 20037 (Three-Year Final Compensation) is applicable to local fire
members entering membership for the first time in the fire classification
after the effective date of this amendment to contract.
14. Public Agency, in accordance with Government Code Section 20790, ceased to
be an "employer" for purposes of Section 20834 effective on October 20, 1980.
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.
15.
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.
16.
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 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 safety members,
b.
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. c. A reasonable amount, as fixed by the Board, 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.
17. 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.
18. 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 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 effective on the day of
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF CULVER CITY
BY
KAREN DE FRANK, CHIEF
CUSTOMER ACCOUNT SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BY
PRESIDING OFFICER
Witness Date
Attest:
Clerk
AMENDMENT CalPERS ID #5061097655
PERS-00N-702A