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CC 2016-10-25_11a Adopt Ordinance POA CalPERS Cost Sharing MEMORANDUM TO: CITY COUNCIL FROM: DEBORAH MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES BY: KAREN SISKO, HUMAN RESOURCES MANAGER SUBJECT: ADOPTION OF ORDINANCE AMENDING THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM CONTRACT FOR LOCAL POLICE MEMBERS OF THE ARROYO GRANDE POLICE OFFICERS’ ASSOCIATION DATE: OCTOBER 25, 2016 RECOMMENDATION: It is recommended the City Council adopt an Ordinance of the City Council of the City of Arroyo Grande authorizing an amendment to the contract between the City and the Board of Administration of the California Public Employee’s Retirement System regarding cost sharing by local police 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 attached Ordinance was introduced, without modification, at the City Council meeting on September 27, 2016. The Ordinance and contract change will implement GC Section 20516 (Employees Sharing Additional Cost) for local police members of the Arroyo Grande Police Officers’ Association. 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). Item 11.a. - Page 1 CITY COUNCIL ADOPTION OF ORDINANCE AMENDING THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM CONTRACT FOR LOCAL POLICE MEMBERS OF THE ARROYO GRANDE POLICE OFFICERS’ ASSOCIATION OCTOBER 25, 2016 PAGE 2 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, 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). 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 City in local police members of the Arroyo Grande Police Officers’ Association sharing in the cost of the “employer” portion of the CalPERS contribution. ALTERNATIVES: The following alternatives are provided for the Council’s consideration: - Adopt the Ordinance to amend the CalPERS contract; - Do not adopt the Ordinance, which would require staff to renegotiate the approved Memorandum of Understanding with the Arroyo Grande Police Officers’ Association; or - Provide direction to staff. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: An Ordinance summary was published in The Tribune on October 19, 2016 in accordance with State law. The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. Item 11.a. - Page 2 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 11.a. - Page 3 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 11.a. - Page 4 Item 11.a. - Page 5 Item 11.a. - Page 6 Item 11.a. - Page 7 Item 11.a. - Page 8 Item 11.a. - Page 9 Item 11.a. - Page 10