MEMORANDUM TO: FROM: BY: CITY COUNCIL DEBORAH MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES KAREN SISKO, HUMAN RESOURCES MANAGER SUBJECT: RESOLUTION OF INTENTION AND INTRODUCTION OF ORDINANCE TO APPROVE AN AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM AND THE CITY OF ARROYO GRANDE DATE: SEPTEMBER 27, 2016 RECOMMENDATION: It is recommended the City Council adopt and authorize the Mayor to sign on behalf of the City a Resolution of Intention with the California Public Employees Retirement System and introduce an Ordinance to approve an amendment to the California Public Employee s Retirement System Contract regarding cost sharing by members of the Arroyo Grande Police Officers Association. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: The retirement contract amendment will have an estimated $41,000 in savings to the City for future annual costs as the employees will be picking up a portion of the employer share of their retirement cost. BACKGROUND: The City contracts with the California Public Employees Retirement System (CalPERS) to provide retirement benefits to employees. The retiree benefits are based on the number of years of service, the employee earnings, and the benefit provision of the contract. In the most recent contract negotiations with the Arroyo Grande Police Officers Association, the membership agreed to participate in cost sharing for their CalPERS retirement benefit. In addition to the employee portion that the members currently pay, the classic local police members will pick up an additional 2.0% of the employer contribution and the new local police members will pick up 0.5% of the employer contribution. This agreement for cost sharing is contained in the Memorandum of Understanding (MOU). ANALYSIS OF ISSUES: This current contract change for cost sharing went into effect on August 12, 2016 and the City has been withholding the agreed upon contributions from employee paychecks, Item 12.a. - Page 1
CITY COUNCIL RESOLUTION OF INTENTION AND INTRODUCTION OF ORDINANCE TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYTSEM AND THE CITY OF ARROYO GRANDE SEPTEMBER 27, 2016 PAGE 2 however, they cannot be reported to CalPERS until a contract amendment has been executed. The contributions are processed in accordance with IRC 414(h)(2). CalPERS requires that the City Council adopt a Resolution of Intention and introduce the Ordinance for the contract amendment. The Ordinance will come back for the second reading at the October 25, 2016 City Council meeting for approval. The contract amendment is scheduled to go into effect on December 2, 2016, which is the first day of the new payroll period following the November 24, 2016 effective date of the Ordinance. ADVANTAGES: By amending the contract with CalPERS, local police members will be contributing more to their retirement costs and the contributions will be made on a pre-tax basis. DISADVANTAGES: There are no disadvantages to the Arroyo Grande Police Officers Association sharing in the cost of the Employer CalPERS contribution. ALTERNATIVES: The following alternatives are provided for the Council s consideration: - Approve staff s recommendation by adopting the Resolution of Intention and introducing the Ordinance; - Do not approve staff s recommendations; or - Provide direction to staff. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall and on the City s website in accordance with Government Code Section 54954.2. Item 12.a. - Page 2
RESOLUTION NO. A 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 ARROYO GRANDE 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 20516 (Employees Sharing Additional Cost) of 2% for classic local police members and.5% for new local police members in the Arroyo Grande Police Officers Association. 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. On motion of Council Member, seconded by Council Member, and on the following roll call vote, to wit: AYES: NOES: ABSENT: The foregoing Resolution was passed and adopted this day of September, 2016. Item 12.a. - Page 3
RESOLUTION NO. PAGE 2 JIM HILL, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: ROBERT McFALL, INTERIM CITY MANAGER APPROVED AS TO FORM: HEATHER WHITHAM, CITY ATTORNEY Item 12.a. - Page 4
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ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS: SECTION 1: That an amendment to the contract between the City Council of the City of Arroyo Grande 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 of Arroyo Grande 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 (30) days after the date of its adoption, and SECTION 4: A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council members voting for and against the Ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance. On motion of Council Member, seconded by Council Member, and on the following roll call vote to wit: AYES: NOES: ABSENT: the foregoing Ordinance was adopted this day of, 2016. Item 12.a. - Page 11
ORDINANCE NO. PAGE 2 JIM HILL, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: ROBERT McFALL, INTERIM CITY MANAGER APPROVED AS TO FORM: HEATHER WHITHAM, CITY ATTORNEY Item 12.a. - Page 12
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