CC 2012-10-09_08.b. Paying and Reporting of EPMC to PERSMEMORANDUM
TO: CITYCOUNCIL
FROM: ANGELA KRAETSCH, DIRECTOR OF ADMINISTRATIVE SERVICE
SUBJECT: CONSIDERATION OF A RESOLUTION TO IMPLEMENT PAYING AND
REPORTING OF EMPLOYER PAID MEMBER CONTRIBUTIONS
(EPMC) TO THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT
SYSTEM (PERS) FOR THE INTERNATIONAL ASSOCIA'TION OF FlRE
FIGHTERS LOCAL 4403 OF THE LOCAL SAFETY FlRE GROUP
DATE: OCTOBER 9,2012
RECOMMENDATION:
It is recommended the City Council adopt the attached resolution to implement the
paying and reporting of the Employer Paid Member Contributions (EPMC) to the
California Public Employees' Retirement System (PERS) for the International
Association of Fire Fighters Local 4403 of the local Safety Fire Group.
FINANCIAL IMPACT:
Per the 2012113 Memorandum of Understanding (MOU) between the International
Association of Fire Fighters Local 4403 and the Fives Cities Fire Joint Powers Authority
(FCFA), effective September 28, 2012, the EPMC will decrease from 9% to 6%. This
will reduce the cost to the FCFA by approximately $52,000, of which the City of Arroyo
Grande is responsible for 45% or $21,840.
BACKGROUND:
The Five Cities Fire Authority was established in July of 2010. It is comprised of the City of
Arroyo Grande, the City of Grover Beach and the Oceano Community Services District
(OCSD). Each agency pays a percentage of costs based on their population, service
calls, assessed value, and number of stations and staffing. Based on that formula, the
costs are allocated as follows; City of Arroyo Grande 45%, City of Grover Beach 35% and
OCSD 20%. While the FCFA is a stand alone agency, the employees are listed as City of
Arroyo Grande employees for PERS purposes. Therefore, the City Council has to
approve all resolutions related to a change in PERS benefits for the Fire Group.
PERS benefits are financed through two-part contributions, an employer contribution and
an employee contribution. The employer contribution percentage varies from year to year,
based on a yearly actuarial of accumulated reserves and future payments. The employee
portion remains constant at 9% for ,fire personnel.
Item 8.b. - Page 1
CITY COLlNClL
ADOPTION OF A RESOLLI'TION IMPLEMENTING THE PAYING AND REPORTING
OF 'THE EPMC
OCTOBER 9,201 2
PAGE 2
The FCFA has negotiated to pay a percentage of the employee portion of PERS on behalf
of the employees. For PERS purposes, payments made for the employees are called
Employer Paid Member Contributions (EPMC). In July 1994, under Government Code
Section 20636(c) ernployers were given the option of reporting the EPMC as additional
compensation. This means that the PERS contribution paid by the employer, for the
employee, is reported as income.
ANALYSIS OF ISSLIES:
Employees benefit monetarily when an employer pays EPMC. Those employees take
home 9% more than their counterparts that pay their own PERS. The EPMC earnings are
not subject to state and federal income taxes, nor social security and Medicare deductions.
However, PERS (both employee and employer portions) must be paid on the additional
reported earnings.
Effective September 28, 2012, the employees of the International Association of Fire
Fighters Local 4403 will begin paying 3% of the employee contribution rate with the FCFA
paying the remaining 6%.
PERS requires the City Council to adopt a resolution to pay and report the value of EPMC
before the reporting change can be instituted.
ALTERNATIVES:
The following alternatives are provided for City Council consideration:
- Adopt a Resolution to implement the reporting of the EPMC for the
International Association of Fire Fighters Local 4403 of the local Fire Safety
group;
- Do not adopt the Resolution;
- Provide direction to staff.
ADVANTAGES:
Approving the recommended implementation of the reporting of the EPMC will reduce
costs to the City and will be honoring the agreement reached with the respective union.
DISADVANTAGES:
There is no disadvantage identified in relation to this recommendation.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
Item 8.b. - Page 2
CITY COUNCIL
ADOPTION OF A RESOLU'TION IMPLEMENTING THE PAYING AND REPORTING
OF THE EPMC
OCTOBER 9,2012
PAGE 3
PUBLIC NO'TIFICA'TION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, October 4, 2012. The
Agenda and report were posted on the City's website on Friday, October 5, 2012. No
public comments were received.
Item 8.b. - Page 3
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ARROYO GRANDE TO IMPLEMENT THE
PAYING AND REPORTING THE VALLIE OF THE
EMPLOYER PAID MEMBER CONTRIBUTIONS TO
THE CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM (PERS)
WHEREAS, the City Council of the City of Arroyo Grande has the authority to
implement Government Code Section 20636 (c) (4) pursuant to Section 20691;
WHEREAS, the City Council of the City of Arroyo Grande has a written labor
policy or agreement which specifically provides for the normal member
contributions to be paid by the employer, and reported as additional
compensation;
WHEREAS, one of the steps in the procedures to implement Section 20691 is
the adoption by the City Council of the City of Arroyo Grande of a Resolution to
commence paying and reporting the value of said Employer Paid Member
Contributions (EPMC);
WHEREAS, the City Council of the City of Arroyo Grande has identified the
following conditions for the purpose of its election to pay EPMC:
This benefit shall apply to the International Association of Fire Fighters
Local 4403 of the local Safety Fire Group.
This benefit shall consist of paying 6% of the normal member
contributions as EPMC, and reporting the same percent (value) of
compensation earnable (excluding Government Code Section 20636(c)
(4)) as additional compensation.
The effective date of this Resolution shall be September 28, 201 2.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Arroyo Grande elects to pay and report the value of EPMC, as set forth above.
On motion by 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 I
2012.
Item 8.b. - Page 4
RESOLUTION NO.
PAGE 2
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
Item 8.b. - Page 5
THIS PAGE INTENTIO NALLY LEFT BLANK
Item 8.b. - Page 6