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Home My WebLink About10 - Employer Paid Member Contributions for Part-Time & Council MembersCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 10 January 25, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dave Kiff, City Manager 949 - 644 -3000, dkiff(aDnewportbeachca.gov Terri L. Cassidy J.D., Human Resources Director 949 - 644 -3303, tcassidy(a)newportbeachca.gov SUBJECT: Resolutions 2011- _ Modifying the Paying and Reporting of the Value of the Employer Paid Member Contribution for Part -time Employees and City Council Members RECOMMENDATION: Approve Resolutions 2011 - to modify the paying and reporting of the value of the Employer Paid Member Contribution to the California Public Employees Retirement System (PERS) for Part-time Employees and City Council Members. DISCUSSION: At the December 14, 2010, regular meeting, City Council adopted Resolutions approving labor agreements with the City's Miscellaneous bargaining units; City Employees Association (CEA), Professional and Technical Employees Association, (Prof Tech), the Employees League (League), and the unrepresented Key and Management group. Included in each agreement was a provision for an increase in employee contributions to the PERS retirement benefit in a cost - saving arrangement. Effective January 1, 2011, these employees increased their PERS contribution by 1.5% (prior to 1/1/2011, employees had been contributing 3.42 %), for a total 4.92% employee contribution. In July 2011 employees will pay an additional 1.5% and in January 2012 another 1.58 %. The net result is that these employees will be paying 8.0% toward the PERS retirement benefit. We have recently been advised by CalPERS Senior Actuary Rick Santos, that our retirement costs will continue to rise in coming years due to investment losses, adjusted actuarial assumptions, and longer life spans. As reflected in the agreements with CEA, Prof Tech, and League, and the Key & Management Compensation Plan, to ensure long -term financial stability, employee cost sharing will help keep PERS pension costs more realistic for the City of Newport Beach. Part -time employees and City Council members, not members of these units, have not yet increased their contribution to PERS. For equity reasons and consistency in philosophy, it is recommended part-time Resolutions Modifying EPMC January 25, 2011 Page 2 employees and City Council Members pick up a greater share of PERS costs, equal to the amount other Miscellaneous employees are contributing. To facilitate this change, City Council must adopt Resolutions to reduce the City's contribution to the Employer Paid Member Contribution (EPMC). The attached Resolutions (Attachments A and B) provide the following adjustments to PERS contributions for part -time employees and City Council members: a 1.5% contribution effective January 15, 2011, reflected as a reduction of the EPMC from 7% to 5.5 %; an additional 1.5% effective July 2, 2011, reflected as a reduction of the EPMC from 5.5% to 4.0 %; and an additional 1.58% effective January 1, 2012, reflected as a reduction of the EPMC from 4.0% to 2.42 %. These amounts, plus the 3.42% employees are currently contributing will, by January 1, 2012 result in a net 8% contribution toward PERS retirement costs. Many part -time employees have been represented by the Newport Beach Part-time Unit, UPEC, Local 777, in past years. However, the Part -time Unit does not currently have any active board members, existing by -laws, or negotiation team. The City recently sent a letter to the last known representative of the Part-time Unit regarding its desire to discuss PERS contributions, but was informed there is no longer an active relationship between part -time employees and UPEC, Local 777. Since the Meet and Confer process requires participation of both parties, the City is unable to negotiate and is unilaterally imposing the PERS' contribution increase. The status of this now defunct unit will be clarified prior to the next negotiation cycle with other Miscellaneous units. Public Notice: Public notice was fulfilled with the posting of the agenda and report for this item. Fiscal Impact: The additional employee and City Council member contribution toward PERS will provide an estimated $16,200 in retirement costs savings for the remainder of FY2010- 11 and an additional $79,000 for FY2011 -12, for a total of $95,200. Submitted by: jy��C, 1 Dave Kiff, City Manager Attachments: A - Resolution Modifying the Employer Paid Member Contribution for Part -time Employees B - Resolution Modifying the Employer Paid Member Contribution for City Council Members ATTACHMENT A RESOLUTION NO. 2011- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH TO MODIFY THE PAYING AND REPORTING OF THE VALUE OF THE EMPLOYER PAID MEMBER CONTRIBUTION TO THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM (CALPERS) FOR PART -TIME EMPLOYEES WHEREAS, the City Council of the City of Newport Beach has the authority to implement Government Code Section 20636(c)(4) pursuant to Section 20691 to report the value of the Employer Paid Member Contribution; and WHEREAS, the City Council of the City of Newport Beach has an agreement which specifically provides for the normal member contribution to be paid by the employer, and reported as additional compensation; and WHEREAS, one of the steps in the procedures to implement Section 20691 is the adoption by the City Council of the City of Newport Beach of a Resolution to modify the paying and reporting of the value of said Employer Paid Member Contributions; pursuant to CCR title 2 Section 571 (a)(1); and WHEREAS, the City Council of the City of Newport Beach has identified the following conditions for the purpose of its election to pay and report the value of the Employer Paid Member Contribution. NOW, THEREFORE, the City Council of the City of Newport Beach does RESOLVE as follows: Section 1. This benefit shall apply to all part -time employees. Section 2. Effective January 15, 2011, this benefit shall be modified to consist of paying 5.5% of the normal contributions as EPMC and reporting the same percent (value) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation; Section 3. Effective July 2, 2011, this benefit shall be modified to consist of paying 4.0% of the normal contributions as EPMC, and reporting the same percent (value) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation; Section 4. Effective December 31, 2011, this benefit shall be modified to consist of paying 2.42% of the normal contributions as EPMC, and reporting the same percent (value) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation. Adopted this day of 2011. ATTEST: City Clerk Mayor of the City of Newport Beach ATTACHMENT B RESOLUTION NO. 2011- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH TO MODIFY THE PAYING AND REPORTING OF THE VALUE OF THE EMPLOYER PAID MEMBER CONTRIBUTION TO THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM (CALPERS) FOR NEWPORT BEACH CITY COUNCIL MEMBERS WHEREAS, the City Council of the City of Newport Beach has the authority to implement Government Code Section 20636(c)(4) pursuant to Section 20691 to report the value of the Employer Paid Member Contribution; and WHEREAS, the City Council of the City of Newport Beach has an agreement which specifically provides for the normal member contribution to be paid by the employer, and reported as additional compensation; and WHEREAS, one of the steps in the procedures to implement Section 20691 is the adoption by the City Council of the City of Newport Beach of a Resolution to modify the paying and reporting of the value of said Employer Paid Member Contributions; pursuant to CCR title 2 Section 571 (a)(1); and WHEREAS, the City Council of the City of Newport Beach has identified the following conditions for the purpose of its election to pay and report the value of the Employer Paid Member Contribution. NOW, THEREFORE, the City Council of the City of Newport Beach does RESOLVE as follows: Section 1. This benefit shall apply to all City of Newport Beach City Council members. Section 2. Effective January 15, 2011, this benefit shall be modified to consist of paying 5.5% of the normal contributions as EPMC and reporting the same percent (value) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation; Section 3. Effective July 2, 2011, this benefit shall be modified to consist of paying 4.0% of the normal contributions as EPMC, and reporting the same percent (value) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation; Section 4. Effective December 31, 2011, this benefit shall be modified to consist of paying 2.42% of the normal contributions as EPMC, and reporting the same percent (value) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation. Adopted this day of 2011. AVA ATTEST: City Clerk Mayor of the City of Newport Beach