CITY OF ENCINITAS CITY COUNCIL AGENDA REPORT Meeting Date: March 28, 2012

Transcription

1 CITY OF ENCINITAS CITY COUNCIL AGENDA REPORT Meeting Date: March 28, 2012 TO: VIA: FROM: Mayor & City Council Members Gus Vina, City Manager nl.~?:.r V J1/t./ City Clerk Cervone 9-~ SUBJECT: Second reading and adoption of Ordinance No authorizing an Amendment to the Contract between the City Council of the City of Encinitas and the Board of Administration of the California Public Retirement System. BACKGROUND & ANALYSIS: The contract amendment will change the use of the 12 highest paid consecutive months for determining the average monthly pay rate when calculating retirement for Safety Fire members to the use of the 36 highest paid consecutive months for determining the average monthly pay rate when calculating retirement for Safety Fire members hired on or after the effective date of the Amendment to the Contract between the Board of Administration of the California Public Employees' Retirement System and the City of Encinitas. The California Public Employees' Retirement Law, Section 20471, requires that any contract amendment between a municipality and CalPERS will be by Ordinance and adopted by an affrmative vote of the majority of the members of the governing agency. FISCAL AND STAFF IMPACTS: There is no immediate fiscal impact. The California Public Employees' Retirement System Actuarial Office estimates that the ultimate employer annual dollar savings to be 0.9% times the second tier fiscal year payroll. Based on Fiscal Year CalPERS Employer Contribution Rates, the change would be from % of payroll for the existing plan to % for newly hired (second tier) members. RECOMMENDATION: Adopt Ordinance Last printed 3/15/ :12:00 PM 03/28/2012 ITEM #05 1

2 03/28/2012 ITEM #05 2 ORDINANCE AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ENCINITAS AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF ENCINITAS AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM The City Council of the City of Encinitas does ordain as follows: Section 1. Section 2. Section 3. That an amendment to the contract between the City Council of the City of Encinitas 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 heron set out in full. The Mayor of the City Council is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said Agency. This Ordinance shall take effect thirty (30) days after the date of its adoption and prior to the expiration of nine (9) days from the passage thereof shall be published at least once in a newspaper of general circulation, published and circulated in the City of Encinitas and thenceforth and thereafter the same shall be in full force and effect. This Ordinance was introduced on March 14,2012. Adopted and approved on this wit: day of, 2012, by the following vote to AYES: NAYES: ABSENT: ABSTAIN: Jerome Stocks, Mayor of City of Encinitas the ATTEST: Deborah Cervone, City Clerk Last printed 3/15/ :12:00 PM

3 03/28/2012 ITEM #05 3 ATTACHMENT A ÂCallERS California Public Employees' Retirement System Actuarial Ofce P.O. Box Sacramento, CA TTY: (916) (888) phone' (916) fax ww.calpers.ca.gov February 22, 2012 CALPERS ID: Employer Narne;ÇI OF ENCINITAS Rate Plar;i'i:~iil!&l. 1f.ó, -i.'f..~'---.,- --,-,-...._~"t,!!~!;,~: ;:'fi Re: New Second Tier Plan (Section 20475: Different Level of Benefits Provided for New Employees; Secion 20037: Three-Year Final çompensation) Dear Requestor: In the tables below, we show your and employer contribution rates before and after opening a second tier. Of the rate components shown below, the firs two are specific to the pool to which the plan belongs and others are specific to your agency. However, th,e Phase out of Normal Cost Difference wil normally be 0% beginning with rates estblished for , so it has no impact from that time on. The Side Fund wil continue to be paid off by the firs tier plan since all the past service on which it is based belongs to those current members who wil continue in the first tier. The scheduled dollar amounts payable wil continue as before. However, because newly hired members wil be covered by the seond tier, the number of members and payroll in the first tier wil (after several years) gradually decline. The Amortii:ation of Side Fund rate component is the wil increase as its payroll decreases.. dollars needed to payoff the slde fund divided by the payroll. So as long as the Side Fund remains, the first tier rate Therefore, in determining the employer contributions savings, Amortization of Side Fùnd should be excluded. For your agency, the ultimate annual employer savings equals the difference between the Normal Cost and Surcharges rates times the second tier payroll. For the Normal Cost and Surdiarges percentage savings is (15.725%+2.698%) ~ (15.725%+1.754%) = 0.944%. Based on the 2009 valuation, the ultimate employer annual dollar savings would then be 0.9% times the second tier fiscal year payroll. Thè Risk Pool's Payment on Amortzation Bases is a temporary adjustent to the pool's contribution to "get the pool back on schedule". This temporary adjustment varies in amount and duration Jrom pool to pool. As of June 30, 2009 Existing Plan New Second Tier Plan Employer Contribution Rate: 3.0%( %( 55 for newly hired members Risk Pool's Net Employer Normal Cost % % Risk Pool's Payment on Amorti:tion Bases 4.583% 4.583% One-Year Final Compensation 0.944% 0.000% PRSA 50% 1.754% 1.754% Phase out of Normal Cost Difference 0.000% 0.000% Amorti:ation of Side Fund 0.000% 0.000% Total Employer Contribution Rate % % Employee Contribution Rate 9.000% 9.000% California Public Employees' Retirement System

4 03/28/2012 ITEM #05 4 SAFET FIRE PLAN OF THE CI OF ENCINITAS (CALPERS ID: '00) February 2012 Page 2 For the percentage savings is (15.524%+2.687%) - (15.524%+1.745%) = 0.942%. Based on the 2010 valuation, the ultimate employer annual dollar savings would then be 0.9% times the second tier fiscal year payroll. The Risk Pool's Payment on Amortization Bases is a temporary adjustent to the pool's contribution to "get the pool back on schedule". This temporary adjustment varies In amount and duration from pool to pool. As of June 30, 2010 Existing Plan New Second Tier Plan 3.0%(Ç55 3.0%(Ç55 for newly hired member: Employer Contribution Rate: Risk Pool's Net Employer Normal Cost % % Risk Pool's Payment on Amortzatiôn Bases i 4.533% One-Year Final Compensation 0.942% 0.000% PRS50% 1.745% 1.745% Phase out of Normal Cost Difference 0.000% 0.000% Amortzation of Side Fund 0.000% 0.000% Total Employer Contribution Rate % % Employee Contribution Rate 9.000% 9.000%. To initiate an amendment to the contract, please follow the Contract Amendment Report process on MycalPERS with our Retirement Contract Services Unit, indicating your wish to contract for Secion (Different Level of Benefits) and identifying the group(s) to which the benefi reduction applies. In secions (b) and (c), thè california Public Employees' Retirement Law requires the governing body of a public agency within five days of receipt of the contract amendment cost analysis, to provide each employee organization with. a copy of the analysis. If this cost analysis was requested by an employee organization, the employee organization is also required within five days of receipt of the analysis, to provide. a copy of the analysis to the public agency. The June 30, 2010 Section 2 Risk Pool actuarial valuation report applicable to your new second tier plan can be viewed on the following website: htt://w..calpers.ca.gov /index.jsp?bc=/ employer/actuarial-gasb/risk-poling/valuation-report.xml If you have questicins, please call (888) calpers ( ). ~~f.~...,t,--_ -., -~....;';~.... r~'-,.- - NANCY E. CAMPBELL,. ASA, MAA Enrolled Actuary SuperVising PensIon Actary, calpers

5 ,, 03/28/2012 ITEM #05 5 ORDINANCE AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ENCINITAS AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF ENCINITAS AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM The City Council of the City of Encinitas does ordain as follows: Section 1. Section 2. Section 3. That an amendment to the contract between the City Council of the City of Encinitas 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 par hereof as though heron set out in full. The Mayor of the City Council is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said Agency. This Ordinance shall take effect thirty (30) days after the date of its adoption and prior to the expiration of nine (9) days from the passage thereof shall be published at least once in a newspaper of general circulation, published and circulated inthe City of Encinitas and thenceforth and thereafter the same shall be in full force and effect. This Ordinance was introduced on March 14, Adopted. and approved on this wit: day of, 2012, by the following vote to AYES: NAYES: ABSENT: ABSTAIN: Jerome Stocks, Mayor of the City of Encinitas ATTEST: Deborah Cervone, City Clerk Last printed 3/8/20129:59:00 AM

6 03/28/2012 ITEM #05 6 Â. CalPERS California Employees' Retirement System EXHIBIT A Public ==+ AMENDMENT TO CONTRACT Between the Board of Administration California Public Employees' Retirement System and the City Council City of Encinitas +- The 80ard 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 October 31, 1987, and witnessed October 1, 1987, and as amended effective June 22, 1990, January 13, 1996, June 14, 1997, December 26, 1998, April 26, 2001, December 1, 2002, June 21, 2003 and July 2, 2005 which provides for participation of Public Agency in said System, 80ard and Public Agency hereby agree as follows: A. Paragraphs 1 through 14 are hereby stricken from said contract as executed effective July 2, 2005, and hereby replaced by the following paragraphs numbered 1 through 15 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 and age 55 for local safety members.

7 03/28/2012 ITEM # Public Agency shall participate in the Public Employees1 Retirement System from and after October 31, 1987 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 (CaIPERS) 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 benefis, provisions or formulas under this Contract that are different than the retirement benefits, provisions or formulas provided under the Public Agency's prior non-caipers retirement program. election to amend this Contract to provide different than retirement benefits, provisions or formulas that are existing retirement benefits,. provisions or formulas. (b) Public Agency's (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 Employees' RetirementLaw. (d) Public Agency's election to file for bankruptcy under Chapter ) of Title 11 of the United States. (commencing with section Bankruptcy Code and/or Public Agency's election to reject this Contract with thecalpers 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.

8 03/28/2012 ITEM #05 8 (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 Galifornia Constitution. 4. Employees of Public Agency in the following classes shall become members of said Retirement System exceptsuch in each such class as are excluded by Jawor this agreement: a. Local Fire Fighters (herein referred to as local safety membèrs); b. Ocean Beach Lifeguards (included 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. POLICE OFFICERS. 6. This contract shall be a continuation of the contract of the Encinitas Fire Protection District and the Encinitas Sanitary District, hereinafter referred to as "Former Agency". The accumulated contributions, assets and liability for prior and current service under the Former Agency's contract shall be merged pursuant to Section of the Government Code. Such merger occurred June 6, The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member in employment before and not on or after July 2, 2005 shall be determined accordance with Section Full). in of said Retirement Law (2% at age The percentage of final compensation to be provided for each year of credited prior and current service as a employment with Section of local miscellaneous member in on or after July 2, 2005 shall be determined in accordance. said Retirement Law (2.7% at age 55 Full). 9. The percentage of final compensation to be provided for each year of credited prior and current service as a local safety member shall be determined in accordance with Section of said Retirement Law (3% at age 55 Full).

9 10. Public Agency elected and elects to be subject to the following optional provisions: a. Section (Limit Prior Service to Members Employed on Contract Date) for local miscellaneous members and ocean heach lifeguards only. b. Section (Third Level of 1959 Survivòr Benefits). c. Section (One-Year Final Compensation) for local miscellaneous members, ocean beach lifeguards and for those local fire members entering membership on or prior to the effective date of this amendment to contract. d. Section (Credit for Unused Sick Leave) for local fire members only. e. Sections and (Post-Retirement Survivor Allowance) for local fire members only. f. Section (Two Years Additional Service Credit) for local miscellaneous members only. g. Section (Different Level of Benefits). Section (Three- Year Final Compensation) is applicable to local fire members entering membership for the first time in the fire classification after the effective date of this amendment to contract. 11. Public Agericy,in accordance with Government Code Section 20834, shall not be considered an "employer" for purposes of the Public Employees' Retirement Law. Contributions of the Public Agency shall be. fixed. and determined as provided in Government Code Section 20834, and such contributions hereafter made shall be held by the Board as provided in Government Code Section 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. 13. 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 of said Retirement Law. (Subject to annual change.) In addition, all assets and Iìabilities 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 and local safety members. t' " I 03/28/2012 ITEM #05 9

10 03/28/2012 ITEM #05 10 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. 14. 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. 15. 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':ámendment shall be effective on the \:~;~/_,. BOARD OFArDMtNISTRATION PUBLIC EMPLÓYSijS' RETIREMENT SYSTEM c.~ i' ' it,,\. BY.(J,.,~~. ;t".",\ J R r. KAREN DE FRANK CHlèR:;:/".. CUSTOMER ACCOUNT SERVICES DIVISION PUBLIC EMPLOYEES' RETIRÉM:IENT SYSTEM ~0;;:~')\ /0,. ;:::~~~.~ f \,,:..':;. day of CITY COUNCIL.Q~TY OF ENCINITAS (or""\ \~~:; ;.'n, BY's"''' PREŠ~NG OFFICER ~1.,1;"') L";. '" ") () '" '"':';') ~-",,"1 Witness Dat "..,\. \ 'i 7'? Attest: '~i~?~..',)".r ","". (".cet ":': ':"~.. \., Clerk AMENDMENT CalPERS 10 # PERS-CON-702A