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CC - Receipt and Filing of the Information Related to the City’s Intention to Provide Additional Service Credit for Local Miscellaneous Members of the California Public Employees Retirement System
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Meeting Date: November 28, 2016
Contact Person/Dept: Serena Wright-Black/Administrative Services Department
Phone Number: (310) 253-5640
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: []
Commission Action Required: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (); Culver City Employees Association (11/22/16)
Department Approval: Serena Wright-Black, Director of Administrative Services (11/16/16)
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RECOMMENDATION
Staff recommends the City Council receive and file information related to the City’s intention to provide additional service credit for Local Miscellaneous Members of the California Public Employees Retirement System.
BACKGROUND
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, consisting of two years of additional service credit, to effected eligible employees within the classification of Safety Services Communications Operator.
DISCUSSION
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 1 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.
In order 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 is recommending that the designated window period be February 1, 2017 - June 1, 2017.
To offer this early retirement incentive, CalPERS requires the City follow certain procedures. Publicly acknowledging cost considerations is the first step in the process. This staff report has been prepared in compliance with Government Code Sections 7507(c)(1)(A) and 20903(i), which requires the City to publicly disclose “…the additional employer contributions, and the funding therefor…” at least two weeks prior to the City Council adopting a resolution implementing the early retirement benefit.
Staff will be bringing back a report for the City Council’s consideration to adopt the two years additional service credit on December 12, 2016.
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 ($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.
Classification Projected Annual Salary Savings
(excluding benefits)
Safety Services Communication Operator $64,072
Total Projected Annual Salary Savings $320,360*
(*if all five eligible employees were to 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)
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.
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 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 would 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
None
MOTION
That the City Council:
Receive and File this report.