CC 2016-09-27_12a POA CalPERS Cost Sharing
MEMORANDUM
TO: CITY COUNCIL
FROM: DEBORAH MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES
BY: 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
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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
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