The URL can be used to link to this page

Home My WebLink AboutL- 1 Public Employees' Retirement System C.7 The City of Azusa „. Finance Department *213 E. Foothill Blvd. * P.O. Box 1395* Azusa, CA 91702-1395 Tel : (818) 812-5203 *FAX (818)334-6358 AGENDA ITEM TO: HONORABLE MAYOR AND MEMBERS 1 THE CITY COUNCIL FROM: GEOFF CRAIG, DIRECTOR OF FINANC' VIA: HENRY GARCIA, CITY ADMINISTRATO ' & DATE: JUNE 16, 1997 SUBJECT: AMENDMENT TO CONTRACT WITH PUBLIC EMPLOYEES' RETIREMENT SYSTEM TO INCLUDE EMPLOYER-PAID MEMBER SHARE IN BASE PAY DURING FINAL COMPENSATION PERIOD AND TO RECOGNIZE MILITARY SERVICE CREDIT AS PUBLIC SERVICE FOR LOCAL POLICE MEMBERS Background As part of the negotiations which culminated in the four-year contract with the Azusa Police Officer's Association, management agreed that, in keeping with its other employee units, the City shall amend its contract with the Public Employees' Retirement System (PERS) to include the Employer Paid Member Share in base pay for police members during the final compensation period and to recognize Military Service Credit as Public Service. This report explains the procedure and the cost and presents an Ordinance for second reading and an Urgency Ordinance for Council to adopt. Findings The City of Azusa joined the California Public Employees' Retirement System in 1949. The System is the State of California's retirement plan for its employees and it allows local agencies to contract with it for similar services. In this way, cities such as Azusa are spared the trouble and expense of administering separate, smaller, retirement systems, respectively. Contributions to the System consist of a fixed employee share of 9% of compensation and a variable "employer" share d)/0./3//d- a4/91 (2 /)t4 Honorable Mayor and Members of the City Council June 16, 1997 Page 2 of approximately 13.759% (plus or minus any additional that from time to time is needed to pay for the "unfunded liability" for the cost of changes over the ensuing years in the overall age, longevity and contractual benefits of the City work force). As a rule, cities in California pay both shares of the Retirement System contributions for their full-time employees by depositing the required funds with the System. Employer-Paid Member Contribution Several years ago, the PERS Board of Administration made the finding that, if the employer agrees, the 9% "Employee" share can be included in the measurement of compensation upon which the annuitant's future retirement pay will be based. This is known as "Employer-Paid Member Contribution Converted to Payrate During the Final Compensation Period", which, for local police members, is the final 12 months of PERS-covered full-time employment. As part of the negotiations which culminated in the four-year contract with the APOA, management agreed that, effective June 29, 1997 the City shall amend its contract with the Public Employees' Retirement System (PERS) to include this provision. To implement it, the employee share will be shown as both an addition to and a deduction from gross pay. Federal and State Income Taxes will be deferred until the employee receives his or her retirement income. If the City completes the necessary actions and the contract amendment effective date is prior to July 1, 1997, the estimated cost applicable to the benefit will be a 3.558% increase to the employer contribution rate for local police members. This equates to roughly $125,000 per year. To preserve this cost figure, an Urgency Ordinance is presented. Military Service Amendment A PERS member may elect to purchase up to four years of service credit for any continuous active military or merchant marine service prior to employment. The member must contribute an amount equal to the contribution for current and prior service that the employee and the employer would have made with respect to that period of service. The member's payment will be calculated by PERS based upon the employer's contribution rate at the time of the member's election, and the member's compensation and contribution rate at the first period of service with the employer after the military service. Interest on both employer and employee contributions will be calculated from the date of membership with the current employer to date of the member's election, and included in the member cost. The member may pay for the service in lump sum or by monthly payments not to exceed 96 months. This benefit applies only to active members while in employment with an employer providing this benefit is in its contract. • Honorable Mayor and Members of the City Council June 16, 1997 Page 3 Employer Cost: No valuation required. Actual costs will emerge in future valuations. Member Cost: It is not uncommon for the cost to the member to exceed $5,000 for each year of military service. After the contract has been amended, the member may obtain cost information by contacting Member Services Division. The City of Azusa estimates that it has approximately six employees that might qualify and that its cost will be approximately $30,000. Funds will be budgeted as required, under the allowance for collective bargaining contracts. Recommendations Staff recommends that Council: 1. Conduct the second reading and adopt the Ordinance Authorizing an Amendment to the Contract Between the City Council of the City of Azusa and the Board of Administration of the California Public Employees' Retirement System effective July 17, 1997. 2. Adopt the Urgency Ordinance Authorizing an Amendment to the Contract Between the City Council of the City of Azusa and the Board of Administration of the California Public Employees' Retirement System effective June 17, 1997; and 3. Authorize the Mayor to sign the "Certification of Final Action of Governing Body". Attachments: GJC:pap p/council/9%epms c ORDINANCE NO. 97 — 07 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF AZUSA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM THE CITY COUNCIL OF THE CITY OF AZUSA does ordain as follows: SECTION 1. An amendment to the Contract between the City Council of the City of Azusa and the Board of Administration of the 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 Azusa 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 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 Azusa Herald, a newspaper of general circulation,published and circulated in the City of Azusa and thenceforth and thereafter the same shall be in full force and effect. SECTION 5. The City Clerk shall certify the passage of this Ordinance as an Urgency Ordinance and shall cause the same to be published as required by law. PASSED AND APPROVED this 16"'day of June, 1997. A1i,,,,K i MAYOe,R STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby certify that the foregoing Ordinance No. 97 - 07 was duly introduced and placed upon its first reading at a regular meeting of the Azusa City Council on May 19, 1997 and that thereafter, said Ordinance was duly adopted and passed at a regular meeting of the Azusa City Council on the 16"'day of June, 1997 by the following vote, to wit: AYES: COUNCIL MEMBERS: HARDISON,STANFORD,ROCHA,BEEBE,MADRID NOES: COUNCIL.MEMBERS: NONE ABSENT: COUNCIL MEMBERS: NONE j4LJ / ) CIT/CLERK' jer F:\ORDNCES\PERSordn ORDINANCE NO. 97 - 08 AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF AZUSA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM THE CITY COUNCIL OF THE CITY OF AZUSA does ordain as follows: SECTION 1. An amendment to the Contract between the City Council of the City of Azusa and the Board of Administration of the 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 Azusa is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said agency. SECTION 3. Pursuant to Government Code Sections 36934 and 36937, the City Council of the City of Azusa hereby declares this ordinance to be an urgency ordinance requiring the immediate enactment thereof because the same is necessary for the immediate preservation of the public peace, health, safety and general welfare of the City and its citizens, and accordingly, the provisions of this Ordinance shall become effective at once as an Urgency Ordinance. The facts constituting such urgency are that the City may be at risk due to its inability to effectively carry out its obligations pursuant to its Memoranda of Understanding with the Azusa Police Officers' Association,thereby adversely affecting the health, safety and general welfare of the citizens of the community. SECTION 4. This ordinance shall become effective immediately upon its adoption and shall be in effect for thirty days. SECTION 5. The City Clerk shall certify the passage of this Ordinance as an Urgency Ordinance and shall cause the same to be published as required by law. PASSED AND APPROVED this 16`h day of June, 1997, • J . 1` ' YOR STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby certify that the foregoing Urgency Ordinance No. 97-08 was duly adopted and passed at a regular meeting of the Azusa City Council on the 16th day of June, 1997 by the following vote,to wit: AYES: COUNCIL MEMBERS: HARDISON,STANFORD,ROCHA,BEEBE,MADRID NOES: COUNCIL MEMBERS: NONE ABSENT: COUNCIL MEMBERS: NONE x21 /(( J./ CITY CLERK F:\ORDNCES\FERSURG.ORD