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HomeMy WebLinkAbout12-15-1999 Agenda Item 6BSARATOGA CITY COUNCIL EXECUTIVE SUMMARY NO. ~ZZ 7 AGENDA ITEM /, , MEETING DATE: December 15,1999 CITY MANAGER: n ORIGINATING DEPT: Administrative Services DEPT. SUBJECT: Public Employees' Retirement System (PERS) Contract Amendment to Provide the Third Level of Pre-Retirement Death Benefits RECOMMENDED MOTION(S): 1. Adopt the Resolution of intention to approve an amendment to the contract between the California Public Employees' Retirement System (PERS) and the City of Saratoga to provide the third level ofpre-retirement death benefits for City employees, 2. Introduce an Ordinance authorizing amendment to the contract between the City and PERS, and 3. Adopt the Agreement to pool 1959 survivor benefits assets and liabilities between PERS and the City, and 4. Direct staff to return on January 5 with the final Ordinance to formally amend the PERS contract. REPORT SUMMARY: The recent negotiations between the City of Saratoga and the Saratoga Employees' Association (SEA) culminated in the Memorandum of Understanding (MOU) that was approved by the City Council on July 13, 1999. Pursuant to the MOU, the City agreed to increase the PERS 1959 survivor benefits program that provides monthly pre-retirement death benefits. In 1959, the California Legislature initiated a schedule of monthly payments, but without any annual cost of living provision. Due to the lack of indexing, three additional levels of the 1959 survivor benefit were added over the years in an attempt to stay comparable with Social Security. The City is currently still at level 1, the benefit level approved in 1959. The City never upgraded to level 2, created in 1975, but that level is no longer available to PERS members as it is deemed too inadequate by today's standards. Staff recommends increasing the coverage to level 3 that was crated in 1984. The survivor death benefits in level 3 are approximately double the level 1 benefits, while the cost to the City and employees is minimal. A comparison of the monthly benefit levels is summarized below: Benefit Year With One With Two With Three or Level Created Survivor Survivors More Survivors Levell 1959 $180 $360 $430 Leve12 1975 225 450 538 Level 3 1984 350 700 840 Leve14 1993 950 1,900 2,280 To implement the change, PERS requires the City to adopt the attached Resolution of Intention to amend the contract and the attached Agreement to pool 1959 survivor benefits assets and liabilities between PERS and the City. The City is also required to adopt the attached Ordinance formally amending the contract. On January 5, the second reading of the Ordinance will be presented to the City Council, formally amending the contract. The Ordinance will take effect thirty days later on February 5, 2000. FISCAL IMPACTS: There are three components that constitute the total cost to participate in the 1959 Survivor Benefits program at level 3: • Employer Unfunded Liability is a one-time payment of $4,001 that would be required to bring the City's unfunded liability current. • Employer Normal Costs are the City's annual contributions for current members. Since the City has excess assets in this PERS account, PERS estimates that the City's normal costs will be $0 for at least three years. • Employee Monthly Costs are currently at $2.00 per month ($0.93 per pay period) and would not change as a result of this amendment. ADVERTISING, NOTICING AND PUBLIC CONTACT: Nothing additional. CONSEQUENCES OF NOT ACTING ON RECOMMENDED MOTION(S): The City would not be in compliance with the MOU between the City of Saratoga and the SEA which was approved on July 13, 1999. FOLLOW UP ACTIONS: Direct staff to return on January 5, 2000, with the final Ordinance to amend the PERS contract. 2 ATTACHMENTS: Resolution of Intention to Approve an Amendment to Contract between PERS and the City along with example of Amendment to Contract, marked "Exhibit" Ordinance Authorizing Amendment to the Contract between the City and PERS Agreement to Pool 1959 Survivor Benefits Between PERS and the City PERSbene 12/8/1999 3 RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL CITY OF SARATOGA WHEREAS, the Public Employees' Retirement Law permits the participation of public agencies and their employees in the Public Employees' Retirement System by the execution of a contract, and sets forth the procedure by which said public agencies may elect to subject themselves and their employees to amendments to said Law; and WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the governing body of the public agency of a resolution 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 provide Section 21573 (Third Level of 1959 Survivor Benefits) for local miscellaneous members. NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency does hereby give notice of intention to approve an amendment to the contract between said public agency and the Board of Administration of the Public Employees' Retirement System, a copy of said amendment being attached hereto, as an "Exhibit" and by this reference made a part hereof. By: Presiding Officer Title Date adopted and approved (Amendment) CON-302 (Rev. 4/96) ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SARATOGA AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF SARATOGA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM The City Council of the City of Saratoga does ordain as follows: SECTION 1. That an amendment to the contract between the City Council of the City of Saratoga and the Board of Administration, California Public Employees' Retirement System is hereby authorized, a copy of said amendment being attached hereto, marked Exhibit, and by such reference made a part hereof as though herein set out in full. SECTION 2. The Mayor of the City Council of the City of Saratoga is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said Agency. SECTION 3. This Ordinance shall take effect thirty days after the date of its adoption, and prior to the expiration of fifteen days from the passage thereof shall be published a summary of this Ordinance at least once in the Saratoga News, a newspaper of general circulation, published and circulated in the City of Saratoga and thenceforth and thereafter the same shall be in full force and effect. Adopted and approved this day of , 2000, by the following vote: AYES: NOES: ABSENT: ATTEST: Mayor City Clerk i, Ca1PERS EXHIBIT California Public Employees' Retirement System APVgENDM]E1lT"d' TO CONTRACT Between tfl~e Board o~ Adrrainistration Callifornia ]Pa~lbiic En~uplloyees' I~etire~nent System and t]~e City Connci~ City o~ Saratoga 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 June 1, 1961, and witnessed April 27, 1961, and -as amended effective April 6, 1973, April 1, 1977, May 1, 1978 and September 18, 1999 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1 through 12 are hereby stricken from said contract as executed effective September 18, 1999, and hereby replaced by the following paragraphs numbered 1 through 12 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. 2. Public Agency shall participate in the Public Employees' Retirement System from and after June 1, 1961 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. ~N:°~ my ~j~;~vT SIGN "EXliic~i di~LY° 3. 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. Employees other than local safety members (herein referred to as local miscellaneous members). 4. 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. EXCLUDE PERSONS HIRED ON OR AFTER APRIL 6, 1973 WHO ARE EMPLOYED ON A TEMPORARY AND/OR SEASONAL BASIS IF IT IS A CONDITION OF EMPLOYEMENT AT TIME OF HIRE THAT SAID EMPLOYMENT NOT EXCEED SIX MONTHS; AND b. SAFETY EMPLOYEES. 5. 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 20305 supersedes this contract provision by providing that any such temporary and/or seasonal employees are excluded from PERS membership subsequent to January 1, 1975. 6. The percentage of final compensation to be provided for local miscellaneous members for each year of credited prior and current service shall be determined in accordance with Section 21354 of said Retirement Law, subject to the reduction provided therein for service prior to March 31, 1978, termination of Social Security, for members whose service has been included in Federal Social Security (2°!o at age 55 Full and Modified). 7. Public Agency elected and elects to be subject to the following optional provisions: a. Section 20042 (One-Year Final Compensation). b. Section 20965 (Credit for Unused Sick Leave). "'~~,':~d ~~? SOT SIGN EXHIBIT G-.~.`r c. Sections 21624 and 21626 (Post-Retirement Survivor Allowance). d. Section 21573 (Third Level of 1959 Survivor Benefits). 8. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on April 1, 1977. 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. 9. 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 of said Retirement System. 10. 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. 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. 11. 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. 12. 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 BOARD OF ADMINISTRATION PUBLIC EMPLOYEES' RETIREMENT SY ~~M Q BY ~~ KENNETH W. MARZION, CHIEF ~kv~ ACTUARIAL & EMPLOYER SERV ~S DIVISION PUBLIC EMPLOYEES' RETIRET SYSTEM ~d ~~i ~~~s, GCS.. day of , 19 CITY COUNCIL CITY OF SARATOGA BY PRESIDING OFFICER ~"~ .~:: ~ . Witness Date Attest: Clerk AMENDMENT PERS-CON-702A (Rev. 8\96) AGREEMENT TO POOL 1959 SURVIVOR BENEFITS ASSETS AND LIABILITIES BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL CITY OF SARATOGA WHEREAS, Government Code Section 21573 provides for a single employer rate to be established to provide benefits under said Section on account of members employed by contracting agencies electing to include the provision of said Section in their contracts; and WHEREAS, Government Code Section 21573, requires pooling of all assets and liabilities of all contracting agencies subject to said Section; NOW, THEREFORE BE IT AGREED, that assets and liabilities of the City of Saratoga and its covered employees shall be pooled pursuant to the provisions of Government Code Section 21573. BOARD OF ADMINISTRATION CITY COUNCIL PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF THE CITY OF SARATOGA BY BY KENNETH W. MARZION, CHIEF PRESIDING OFFICER ACTUARIAL & EMPLOYER SERVICES DIVISION PUBLIC EMPLOYEES' RETIREMENT SYSTEM Date PERS-CON-59 (Rev. 7/96)