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Home My WebLink About03 - 4th Level Benefits to Miscellaneous Employees� 5 - /q -0�- • AGENDA ITEM 4 TO: Mayor and City Council FROM: Sharon Wood, Assistant City Manager SUBJECT: Resolution of Intention to Approve an Amendment to PERS Contract to Provide Fourth Level of 1959 Survivor Benefits to Miscellaneous Employees Recommendation • 1. Adopt Resolution No. 2002- , A Resolution of Intention to Approve an Amendment to Contract Between the Board of Administration, California Public Employees' Retirement System and the City Council of the City of Newport Beach. 2. Introduce Ordinance No. 2002- , An Ordinance of the City Council of the City of Newport Beach Authorizing an Amendment to the Contract Between the City Council of the City of Newport Beach and the Board of Administration of the California Public Employees' Retirement System, and pass to second reading on May 14, 2002. 3. Approve initial payment method that preserves the City's assets in the program. Discussion The Memoranda of Understanding (MOUs) with the three miscellaneous (non- safety) employee groups that were approved by the City Council in June provide that the City will implement the Fourth Level of 1959 Survivor Benefits as soon as possible. This benefit provides a higher level of payment to a spouse or eligible children of an employee who dies prior to retirement. Staff has received and reviewed an actuarial valuation of this benefit from PERS, and • received the contract amendment documents from PERS. The next steps in the process are for the City Council to adopt the Resolution of Intention and an Ordinance approving the amendment. Staff is recommending that the Resolution be adopted and the Ordinance • introduced at this meeting. The actuarial valuation for this benefit improvement shows that the City's normal cost will be $5.00 per member per month, which is offset somewhat by the assets the City already has in this program. The PERS Board has given member agencies two alternative methods of paying for improved retirement benefits to employees. With the first option, there will be an annual cost of $23,414 for the next five years (when the City will have "bought into" the program). There will be no immediate cost using the second option, but the City's assets in the program will be used for the buy -in. This would cause our annual rate for the program to increase much sooner. Staff is recommending the first option to preserve our assets. 2 is r� L M • 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 NEWPORT BEACH 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 21574 (Fourth Level of 1959 Survivor Benefits) for local miscellaneous members. 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. Presiding Officer Title Date adopted and approved • (Amendment) CON -302 (Rev. 4196) J ORDINANCE NO. • AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM The City Council of the City of Newport Beach does ordain as follows: Section 1. That an amendment to the contract between the City Council of the City of Newport Beach and the Board of Administration, California Public Employees' Retirement System is hereby authorized, a copy of said amendment being attached hereto, marked Exhibit A, and by such reference made a part hereof as though herein set out in full. Section 2. The Mayor of the City of Newport Beach is hereby authorized, empowered, and directed to execute said amendment for and on behalf of the said Agency. Section 3. This Ordinance shall take effect thirty days after the date of its adoption, and prior to the expiration of fifteen days from the passage thereof shall be published at . least once in the Daily Pilot, a newspaper of general circulation, circulated in the City of Newport Beach, and thenceforth and thereafter the same shall be in full force and effect. Adopted and approved this day of April, 2002. Mayor Attest: City Clerk • �F Ao-*00o','- Ca1PERS California Public Employees' Retirement System Q` EXHIBIT Between the Board of Administration California ]Public Employees' Retirement System and the City Council City of Newport Beach CJ The Board of Administration, California Public Employees' Retirement System, hereinafter referred to as Board, and the governing body of the above public agency, hereinafter referred to as Public Agency, having entered into a contract effective July 1, 1945, and witnessed April 27, 1945, and as amended effective March 1, 1948, November 1, 1951, April 1, 1956, October 31, 1970, September 18, 1971, December 11, 1971, September 24, 1977, December 18, 1977, June 17, 1978, March 24, 1979, June 30, 1979, January 12, 1989, December 2, 1989, June 12, 1996, July 12, 2000 and August 26, 2000 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1 through 12 are hereby stricken from said contract as executed effective August 26, 2000, and hereby replaced by the following paragraphs numbered 1 through 12 inclusive: All words and terms used herein which are defined in the Public Employees' Retirement Law shall have the meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 55 for local miscellaneous members and age 55 for local safety members. 0 r PLEASE DO NOT SIGN "EXHIBIT ONLY" 2. Public Agency shall participate in the Public Employees' Retirement System from and after July 1, 1945 making its employees as hereinafter • provided, members of said System subject to all provisions of the Public Employees' Retirement Law except such as apply only on election of a contracting agency and are not provided for herein and to all amendments to said Law hereafter enacted except those, which by express provisions thereof, apply only on the election of a contracting agency. 3. Employees of Public Agency in the following classes shall become members of said Retirement System except such in each such class as are excluded by law or this agreement: a. Local Fire Fighters (herein referred to as local safety members); b. Local Police Officers (herein referred to as local safety members); C. Ocean Beach Lifeguards (included as local safety members); d. Employees other than local safety members (herein referred to as local miscellaneous members). 4. In addition to the classes of employees excluded from membership by said Retirement Law, the following classes of employees shall not become members of said Retirement System: • a. CADETS; AND b. RESERVE OFFICERS. 5. The percentage of final compensation to be provided for each year of credited prior and current service as a local miscellaneous member shall be determined in accordance with Section 21354 of said Retirement Law (2% at age 55 Full). 6. The percentage of final compensation to be provided for each year of credited prior and current service as a local safety member shall be determined in accordance with Section 21363.1 of said Retirement Law (3% at age 55 Full). 7. Public Agency elected and elects to be subject to the following optional provisions: a. Section 20421 ( "Local Safety Member" shall include ocean beach lifeguards of a city as described in Government Code Section 20421). b. Section 21574 (Fourth Level of 1959 Survivor Benefits). 9 1� PLEASE DO NOT SIGN "EXHIBIT ONLY" C. Section 21024 (Military Service Credit as Public Service), Statutes of 1976. d. Section 21389 (Second Opportunity to Elect 1959 Survivor Benefits). Legislation repealed said Section effective September 27, 1979. e. Section 20965 (Credit for Unused Sick Leave) for local miscellaneous members. f. Section 20042 (One -Year Final Compensation). 8. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on September 24, 1977. Accumulated contributions of Public Agency shall be fixed and determined as provided in Government Code Section 20834, and accumulated contributions thereafter shall be held by the Board as provided in Government Code Section 20834. 9. Public Agency shall contribute to said Retirement System the contributions determined by actuarial valuations of prior and future service liability with respect to local miscellaneous members and local safety members of said Retirement System. • 10. Public Agency shall also contribute to said Retirement System as follows: a. Contributions required per covered member on account of the 1959 Survivor Benefits provided under Section 21574 of said Retirement Law. (Subject to annual change.) In addition, all assets and liabilities of Public Agency and its employees shall be pooled in a single account, based on term insurance rates, for survivors of all local miscellaneous members and local safety members. b. A reasonable amount, as fixed by the Board, payable in one installment within 60 days of date of contract to cover the costs of administering said System as it affects the employees of Public Agency, not including the costs of special valuations or of the periodic investigation and valuations required by law. C. A reasonable amount, as fixed by the Board, payable in one installment as the occasions arise, to cover the costs of special valuations on account of employees of Public Agency, and costs of the periodic investigation and valuations required by law. 11. Contributions required of Public Agency and its employees shall be • subject to adjustment by Board on account of amendments to the Public Employees' Retirement Law, and on account of the experience under the Retirement System as determined by the periodic investigation and valuation required by said Retirement Law. 12. Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System within fifteen days after the end of the period to which said contributions refer or as may be prescribed by Board. regulation. If more or less than the correct amount of contributions is paid for any period, proper adjustment shall be made in connection with subsequent remittances. Adjustments on account of errors in contributions required of any employee may be made by direct payments betweea%he employee and the Board. B. This amendment BOARD OF ADMIN PUBLIC EMPLOYE BY KENNETH W. ACTUARIAL fi PUBLIC EMW 41 Q� AMENDMENT PERS- CON -702A (Rev. 8 \96) effective on the day of SYSTEM N, CHIEF (ER SERVICES DIVISION RETIREMENT SYSTEM CITY COUNCIL J CITY OF NEWPORT BFfi BY PRESIDING OFFER Witne� ate A-O Q� 1yrM11 •