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CC 2017-11-14_11a Adopt Ord_POA Cost Sharing MEMORANDUM TO: CITY COUNCIL FROM: DEBBIE MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES SUBJECT: ADOPTION OF AN ORDINANCE TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY OF ARROYO GRANDE DATE: NOVEMBER 14, 2017 SUMMARY OF ACTION: Amend the City’s contract with the California Public Employee’s Retirement System (CalPERS) to reflect additional employee 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 $20,000 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. Approximately 10 hours of staff time is required to implement this action. RECOMMENDATION: It is recommended the City Council adopt an Ordinance of the City Council of the City of Arroyo Grande 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. BACKGROUND: The attached Ordinance was introduced, without modification, at the City Council Meeting on October 10, 2017. The Ordinance and contract change will implement Government Code Section 20516 (Employees Sharing Additional Cost) for local police members of the Arroyo Grande Police Officers’ Association that are designated as “classic” employees by CalPERS. The City contracts with 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. Item 11.a. - Page 1 CITY COUNCIL ADOPTION OF AN ORDINANCE TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY OF ARROYO GRANDE NOVEMBER 14, 2017 PAGE 2 In the most recent contract negotiations with the Arroyo Grande Police Officers’ Association, the membership agreed to participate in additional cost sharing for their CalPERS retirement benefit. Members currently pay an “employee contribution” as well as a share of the “employer contribution” (2.0% for classic employees and 0.5% for newer employees). The classic local police members will pick up an additional 1.0% of the “employer contribution” This agreement for cost sharing is contained in the Memorandum of Understanding (MOU) which was approved by the City Council on July 25, 2017. ANALYSIS OF ISSUES: This current contract change for cost sharing went into effect in July 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). CalPERS requires that the City Council adopt a Resolution of Intention and introduce the Ordinance for the contract amendment, which occurred on October 10, 2017. The Ordinance is now before the Council for adoption. The contract amendment is scheduled to go into effect on December 15, 2017, which is the first day of the new payroll period following the December 14, 2017 effective date of the Ordinance. ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Adopt the Ordinance; 2. Modify and re-introduce the Ordinance; or 3. Do not approve staff’s recommendation and provide direction to staff. 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. 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 11.a. - Page 2 ORDINANCE NO. AN ORDINANCE 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 , 2017. Item 11.a. - Page 3 ORDINANCE NO. PAGE 2 JIM HILL, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: _______ JAMES A. BERGMAN, 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