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