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(1) Adoption of a Resolution (a) Providing Additional Service Credit Pursuant to Government Code Section 20903 for Local Miscellaneous Members of the California Public Employees Retirement System (CalPERS); (b) Designating the Window Period as February 1, 2017 to June 1, 2017; and (c) Specifying the Eligible Group of Members; and (2) Authorize the Mayor to Execute the Certification of Compliance with Government Code Section 20903.
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Meeting Date: January 9, 2017
Contact Person/Dept: Serena Wright-Black/Administrative Services
Phone Number: 310-253-5640
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: []
Commission Action Required: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (01/04/17); Culver City Employees Association (12/07/16)
Department Approval: Serena Wright-Black (12/01/16)
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RECOMMENDATION
Staff recommends that the City Council (1) adopt a Resolution (a) providing additional service credit pursuant to Government Code Section 20903 for Local Miscellaneous Members of the California Public Employees Retirement System (CalPERS); (b) Designating the Window Period as February 1, 2017 to June 1, 2017; and (c) Specifying the Eligible Group of Members; and (2) Authorize the Mayor to Execute the Certification of Compliance with Government Code Section 20903.
BACKGROUND/DISCUSSION
On October 10, 2016 City Council adopted a resolution approving a side letter agreement with the Culver City Employees Association (CCEA) pertaining to consolidation of emergency dispatch services. One aspect of the negotiated agreement is to provide an early retirement incentive to effected eligible employees within the classification of Safety Services Communications Operator.
At its November 28, 2016 meeting, the City Council considered information in accordance with Government Code Section 7507 regarding the potential costs and savings related to the elimination of those positions through the CalPERS Early Retirement Incentive Program. The item was considered as an action item, with an opportunity for members of the public to provide comment. As mentioned at that time, the second step of the process is for the City Council to adopt a resolution which: (1) provides additional service credit pursuant to Government Code Section 20903 for Local Miscellaneous Members of the California Public Employees Retirement System (CalPERS); (2) Designates the Window Period; and (3) Specifies the Eligible Group of Members.
In accordance with the Public Employees Retirement Law, two years of additional service credit may be offered to employees who have at least five years of CalPERS service and meet the minimum age requirement for a service retirement. Additionally, an agency must be facing impending mandatory transfers, demotions or layoffs that constitute at least one percent (1%) of the job classification, department or organizational unit, as designated by the City. Further, the City must certify that it intends to keep all vacancies created by retirements under this program or at least one vacancy in any position in any department or organizational unit permanently unfilled resulting in an overall reduction in the work force. The City can choose to eliminate the position associated with the early retirement incentive or another position within the department or organizational unit.
To provide this early retirement incentive, the City must designate a window period of between 90 and 180 days during which eligible employees must retire to receive the early retirement incentive. Staff has proposed that the designated window period February 1, 2017 - June 1, 2017.
FISCAL ANALYSIS
The projected cost if all five eligible employees within the designated classification were to take advantage of the early retirement incentive would be $200,257 or $15,125 if annualized over twenty years. This cost calculation was performed utilizing a procedure provided by CalPERS incorporating the classification’s retirement formula, pay rate, employee age, and other cost factors.
The funding for this cost shall be provided by the projected annual salary and benefit savings resulting from the affected positions being eliminated as a result of early retirement.
Classification Projected Annual Salary
Savings (excluding benefits)
Safety Services Communications Operator
(Annual Salary) $ 64,072
Total Projected Annual Salary Savings: $320,360*
(*if all five eligible employees accept the incentive)
Less Projected Annual City Cost to implement
the Early Retirement Incentive: ($15,125)
Net Projected Annual Salary Savings: $305,235**
(**These savings are anticipated to be used towards the contract to consolidate emergency dispatch services with the South Bay Regional Public Communications Authority)
In order to reduce the impact to the City, CalPERS allows the City to pay the annual cost through an increase in the employer contribution rate, starting two fiscal years after the end of the designated period, which may continue for as long as twenty (20) years. The impact of this change on the City’s employer contribution rate is anticipated to be minimal, approximately 0.0001%, compared to the overall contributions. Also, such impacts are far less than the annual savings resulting from the positions being eliminated.
The City will also experience a one-time cost when the employees cash-out their accrual leave banks upon retirement in accordance with the terms of their respective Memorandum of Understanding.
ATTACHMENTS
1. Proposed Resolution
2. Certification of Compliance with Government Code Section 20903
MOTION
That the City Council:
1. Adopt a Resolution (a) providing additional service credit pursuant to Government Code Section 20903 for Local Miscellaneous Members of the California Public Employees Retirement System (CalPERS); (b) Designating the Window Period as February 1, 2017 to June 1, 2017; and (c) Specifying the Eligible Group of Members; and
2. Authorize the Mayor to execute the Certification of Compliance with Government Code Section 20903.