City of Culver City, California
Agenda Item Report
Meeting Date: 10/10/11 Item Number: A-1
CITY COUNCIL AGENDA ITEM: (1) Adoption of a Resolution of Intention to Approve
a Contract Amendment between the Public Employees’ Retirement System (PERS)
and the City of Culver City to Implement 2% at 60 and Three-Year Final
Compensation for New Hires in the Local Miscellaneous Plan (Culver City
Management Group (CCMG) and Culver City Employees’ Association (CCEA)); and
(2) Introduction of an Ordinance Authorizing said Contract Amendment.
Contact Person/Dept.: Serena Wright Phone Number: 310-253-5640
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Commission Action Required: Yes [] No [X] Dates:
Public Notification: (E-Mail) Agenda and Meetings – City Council (10/05/11); Culver City
Management Group (10/05/11); Culver City Employees’ Association (10/05/11)
Department Approval:
Serena Wright (10/04/11)
City Attorney Approval:
Carol A. Schwab (by H. Baker) (10/05/11)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (10/05/11)
City Manager Approval:
John M. Nachbar (10/05/11)
RECOMMENDATION:
Staff recommends that the City Council: (1) adopt a Resolution of Intention to
Approve a Contract Amendment between the Public Employees’ Retirement System
(PERS) and the City of Culver City to implement 2% at 60 and Three-Year Final
Compensation for new hires in the Local Miscellaneous Plan (Culver City
Management Group (CCMG) and Culver City Employees’ Association (CCEA)); and
(2) introduce an Ordinance authorizing said contract amendment.
BACKGROUND:
The City Council recently adopted two (2) Memoranda of Understanding (MOU’s)
and the Executive Compensation Plan:
• May 23, 2011: Culver City Management Group (CCMG);
• June 13, 2011: Executive Compensation Plan
• July 25, 2011: Culver City Employees’ Association (CCEA); and,
In accordance with both MOU’s and the Executive Compensation Plan, the City will
create a second tier retirement formula for all new employees hired after approval of
the PERS contract amendment. These employees will participate in the PERS 2%
@ 60 pension plan and shall be required to pay the entire 7% PERS employee
contribution rate. Final pension compensation shall be based on the highest average
full-time monthly pay rate for a 3-year period. City of Culver City, California
Agenda Item Report
DISCUSSION:
Both MOU’s and the Executive Compensation Plan provide for implementation of
PERS Section 20475 (Different Level of Benefits), Section 21353 (2% @ 60
Modified Formula) and Section 20037 (Three-Year Final Compensation). PERS
does not make a distinction between the CCMG and CCEA bargaining units, and
instead categorizes both groups as “Local Miscellaneous Plan.” Upon adoption of
the contract amendment, PERS will establish a separate, second-tier coverage
group in the Local Miscellaneous Plan that will apply to all new hires represented by
CCMG and CCEA.
The City must comply with specific PERS contract amendment procedures and
timelines. Before you tonight is the first reading of the proposed Ordinance, and
adoption of the Resolution of Intention declaring City Council’s intent to amend the
PERS contract to implement a second tier of benefits for Local Miscellaneous Plan
Members. Upon adoption of the Resolution of Intention, pursuant to Government
Code Section 20471, the City must wait at least twenty (20) days to adopt the
Ordinance.
Assuming the Resolution of Intention is adopted this evening, consideration of
adoption of the Ordinance will be placed on the November 7, 2011 City Council
agenda. Should City Council adopt the Ordinance, it would become effective on
December 6, 2011, and the contract amendment would become effective December
19, 2011, in compliance with PERS requirements.
FISCAL ANALYSIS:
Employer Contribution Rate
According to the PERS Actuarial Office, there will be no immediate impact to the
City’s employer contribution rate (15.080% for Fiscal Year 2011/2012) due to this
amendment. However, over time the employer contribution rate will decrease as the
number of new second tier employees increases. PERS estimates that if the mix
between continuing first tier and the new second tier employees was equal, the
decrease in the employer rate would be 2.7%. It will likely take ten to fifteen years to
reach this point. Therefore, as discussed when the MOU’s were presented for
approval, the savings from implementing this second tier will be recognized over the
long term.
Employee Contribution Rate
Second tier employees will pay the full 7% employee contribution.
City of Culver City, California
Agenda Item Report
ATTACHMENTS:
1. Resolution of Intention including Exhibit Amendment to Contract
2. Actuarial Valuation in accordance with Government Code Section 7507
3. Proposed Ordinance
MOTION:
That the City Council:
1. Adopt a Resolution of Intention to Approve a Contract Amendment
between the Public Employees’ Retirement System (PERS) and the City
of Culver City to Implement 2% at 60 and Three-Year Final Compensation
for New Hires in the Local Miscellaneous Plan (Culver City Management
Group (CCMG) and Culver City Employees’ Association (CCEA) and
those employees covered by the Executive Compensation Plan; and,
2. Introduce an Ordinance authorizing said contract amendment.
MEETING DATE: 10/10/2011
AGENDA ITEM: (1) Adoption of a Resolution of Intention to Approve a
Contract Amendment between the Public Employees'
Retirement System (PERS) and the City of Culver City to
Implement 2% at 60 and Three-Year Final Compensation
for New Hires in the Local Miscellaneous Plan, and (2)
Introduction of an Ordinance Authorizing said Contract
Amendment
ATTACHMENT
Pages
1. Resolution of Intention including Exhibit Amendment to 1-8
Contract
2. Actuarial Valuation in accordance with Government Code 9
Section 7507
3. Proposed Ordinance including Exhibit Amendment to 10-17
Contract 2
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ATTACHMENT 1
RESOLUTION NO. 2011-R
A RESOLUTION OF INTENTION OF THE CITY COUNCIL
OF THE CITY OF CULVER CITY, CALIFORNIA TO
APPROVE A CONTRACT AMENDMENT BETWEEN THE
PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) AND
THE CITY OF CULVER CITY TO IMPLEMENT 2% AT 60
AND THREE-YEAR FINAL COMPENSATION FOR NEW
HIRES IN THE LOCAL MISCELLANEOUS
WHEREAS, the Public Employees' Retirement Law permits the
participation of public agencies and their employees in the Public Employees'
Retirement System (PERS) by The execution of a contract, and sets forth the procedure
by which public agencies may elect to subject themselves and their employees to
amendments to the Law; and
WHEREAS, one of the steps in the procedures to amend this contract is
the adoption of a resolution by the governing body of the public agency, 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 the
contract between the City of Culver City and the Board of Administration of PERS:
To provide Section 20475 (Different Level of Benefits).
Section 21353 (2% @ 60 Modified formula) and
Section 20037 (Three-Year Final Compensation) are
applicable to local miscellaneous plan members
entering membership for the first time in the
miscellaneous classification after the effective date of
this amendment to contract.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City
of Culver City, California, does hereby give notice of intention to approve an
amendment to the contract between the City of Culver City and the Board of day of , 2011.
MICHEAL O'LEARY, Mayor
City of Culver City, California
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iL A. SCHWAB
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City Attorney
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Administration of PERS, a copy of said amendment being attached hereto, as Exhibit
"A" and incorporated herein by this reference.
APPROVED and ADOPTED this
ATTEST:
MARTIN R. COLE
City Clerk
Al 1-00591 EXHIBIT
California
Public Employees' Retirement System
ADEEIMIDIENrr TO oclisnranceir
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 and January 22, 2007 which provides for participation of
Public Agency in said System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 15 are hereby stricken from said contract as executed
effective January 22, 2007, and hereby replaced by the following paragraphs
numbered 1 through 17 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 the effective date of this
amendment to contract, age 60 for local miscellaneous members entering
membership for the first time in the miscellaneous classification after the
effective date of this amendment to contract, age 55 for local fire members
and age 50 for local police members. 1, 4
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2.
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.
(c) 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 Employee& 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.
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(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:
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). 1
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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 the effective date of this
amendment to contract 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 the
effective date of this amendment to contract 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 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 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).
12. 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 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 local safety
members and for those local miscellaneous 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% ©
GO 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 the effective date of this amendment to contract.
13. Public Agency, in accordance with Government Code Section 20790,
ceased to be an nemployer" 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.
14. 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.
1& 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.
7 Witness Date
ix. el
Attest:
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.
16. 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_
17. 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.
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