HomeMy WebLinkAbout07-21-1999 Agenda Item 4B (5)SARATOGA CITY COUNCIL
EXECUTIVE SUMMARY NO. ~ ~ ~ AGENDA ITEM ~ ~~
MEETING DATE: July 21,1999 CITY MANAGER:
ORIGINATING DEPT: Administrative Services DEPT. HEAD: / / /~
SUBJECT: Public Employees' Retirement System (PERS) Contract Amendment to
Provide the 2% at age 55 Retirement System Option
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 2% at age 55 retirement option for City employees.
2. Introduce an Ordinance authorizing amendment to the contract between the City and PERS
3. Direct staff to return on August 10 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) which was approved by the
City Council on July 13, 1999. Pursuant to the MOU, the City agreed to change the PERS
retirement formula to the 2% at age 55 option. This option allows employees to receive a
pension at the age of 55 in the amount of 2% for every year of service in the PERS retirement
plan.
To implement the change, PERS requires the City to adopt the attached Resolution of Intention
to amend the contract. The City is also required to adopt the attached Ordinance formally
amending the contract. On August 10, 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 September 10, and the new retirement option will implemented the first day of the next
pay cycle, September 18, 1999.
FISCAL IMPACTS:
PERS provided the City with an actuarial analysis of the cost of adopting this retirement plan
amendment. The actuarial analysis is highly technical, but is required to be provided to the
public. The change in the present value of the City's benefits as a result of this amendment is
$1,225,689, and the change in the unfunded accrued liability is $821,077. However, since the
City has more than this amount in the PERS account (primarily due to very positive returns by
PERS on their investments on a statewide basis) there is no increase in the amount which the
City will be required to pay PERS for a number of years (currently estimated at 13 years).
In other words, there is no increase in the PERS rate associated with providing this retirement
benefit on a short-term basis. In the long term, however, PERS rates will most certainly increase.
To provide for these costs in years to come, a separate Retirement Reserve Fund will be opened
on the City's books, and an amount will be transferred into the fund each year in an amount
sufficient to provide this benefit to all employees. As the excess in PERS is used up over the
years, there will be sufficient monies in this City special retirement fund to finance the program
over the next 35 years. Staff estimates the amount which will need to be transferred into this
retirement fund to be about $34,900 annually for all City employees.
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 August 10, 1999, with the final Ordinance to amend the PERS contract.
ATTACHMENTS:
Resolution of Intention to Approve Amendment to Contract between the City and PERS
Ordinance Authorizing Amendment to the Contract between the City and PERS
July I5, 1999
2@SS
2
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 21354 (2% @ 55 Full and Modified
formula) for 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)
i,
Ca1PERS
EXHIBIT
California
Public Employees' Retirement System
AM~NI9Ng~N"g' TO CONTF2ACT
Between tl~e
Board of Ada~ninist~ation
California ]Public E~n~loyee~' Reti~ren~ent 5ysten~
and the
City Council
City of Sa~ato~a
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, and May 1, 1978 which provides for participation of Public Agency in said
System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 9 are hereby stricken from said contract as executed
effective May 1, 1978, 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 {ocal 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.
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 EMPLOYMENT 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 andJor 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
sha{I 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% at age 55 Full and Modified).
7. Pubic 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).
c. Section 21624 and 21626 (Post-Retirement Survivor Allowance).
d. Sections 21571 (Basic leve{ 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 shalt 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. 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.
b. 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 effe~ive on the day of
`~,
BOARD OF ADMINISTRATIONN~~~ CITY COUNCIL
PUBLIC EMPLOYEES' RETIf~!'L+MENT SYSTEM CITY OF SARATOGA
~~
~~~~
BY ~~
KENNETH W. MARZ,~ 'CHIEF
ACTUARIAL & EMrr~" ER SERVICES DIVISION
PUBLIC EMPLO~~S' RETIREMENT SYSTEM
~'
19
~~ti
BY ~ `~~
PRESIDING OFFICE
~~~~
h~4~
AV
Witness e
ti
Attest
Clerk
AMENDMENT
PERS-CON-702A (Rev. 896)
r .
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 , 1999, by the following vote:
AYES:
NOES:
ABSENT:
ATTEST:
Mayor
City Clerk