SR-603-004 (4)
f:\person:misc/council\council49 Santa Monica, California
Council Meeting: July 24, 2001
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Resolution of Intention to Amend Contract Between the California Public
Employees' Retirement System and the City of Santa Monica to Amend
the Survivor Benefit Option for Local Police Members
INTRODUCTION
This report requests that Council adopt the attached resolution stating its intent to
approve an amendment to the contract between the California Public Employees?
Retirement System (CalPERS) and the City of Santa Monica to provide Section 21574
Fourth Level of 1959 Survivor Benefits for local police members only. This report also
requests that the City Council authorize the City Manager to execute the agreement to
pool 1959 survivor benefits assets and liabilities between the Board of Administration of
the Public Employees? Retirement System and the City Council of the City of
Santa Monica. The attached resolution and agreement comply with the procedure
required by CalPERS . This report also requests that on July 24, 2001 there be a public
hearing and first reading of an ordinance which would amend said contract as indicated.
The ordinance is also attached.
DISCUSSION
The City of Santa Monica contracts with CalPERS to provide a retirement plan for its
permanent safety (police and fire) and miscellaneous (non-safety) employees. As a
contracting agency, the City may amend its contract(s) to provide various optional
benefits offered by CalPERS.
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The 1959 Survivor Benefit option is an additional CalPERS benefit which contracting
agencies can offer to employees who are not covered by Social Security. The 1959
Survivor Benefit option is modeled after the Social Security program in that it provides a
monthly benefit to the families of CalPERS members who die prior to retirement. As
Social Security benefits improved over the years, CalPERS has modified the 1959
Survivor Benefit option by providing additional benefit levels. The Fourth Level provides
a monthly payment of up to $2,280 per month to the CalPERS member?s family
whereas the Third Level provides the family with up to $840 per month. The City
currently offers the Third Level of 1959 Survivor Benefit to all employees in addition to
City-paid life insurance.
As a part of the most recent Memorandum of Understanding (MOU) negotiated between
the City of Santa Monica and the Santa Monica Police Officers Association (SMPOA),
the City agreed to amend its contract with CalPERS to provide Section 21574 Fourth
Level of 1959 Survivor Benefits for local police members only. This optional CalPERS
benefit will replace City-paid life insurance for SMPOA employees.
BUDGET/FISCAL IMPACT
The cost to the employee for this benefit is $2.00 per month, the same as the current
cost for the Third Level 1959 Survivor Benefit program. The employer cost is based on
the experience of a large pool of all assets and liabilities of all CalPERS contracting
agencies rather than the experience of the City alone and may vary from year to year.
The City's anticipated cost for the Fourth Level of 1959 Survivor Benefits is $5.10 per
month for each of the 206 covered members ($12,607). Due to an unfunded liability
amortization payment at the Fourth Level (which is currently a credit due to surplus
assets with CalPERS), the annual payment for the first year will be $727. This annual
payment, and future annual payments, will be at least partially offset by the savings,
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anticipated to be approximately $6,000, which results from the elimination of City-paid
life insurance for SMPOA employees.
RECOMMENDATION
It is recommended that the City Council authorize the City Manager to execute the
CalPERS-required Agreement to pool 1959 survivor benefits assets and liabilities
between the Board of Administration of CalPERS and the City Council of the City of
Santa Monica and to adopt the attached resolution indicating its intent to approve an
amendment to the contract between CalPERS and the City of Santa Monica to provide
Section 21574 Fourth Level of 1959 Survivor Benefits for local police members only. It
is further recommended that on July 24, 2001 there be a public hearing and first reading
of the Ordinance to amend said contract.
Prepared By: Karen Bancroft, Director of Personnel
Attachments: Resolution of Intention
Ordinance Authorizing an Amendment to the CalPERS Contract
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AGREEMENT
TO POOL
1959 SURVIVOR BENEFITS ASSETS AND LIABILITIES
BETWEEN THE
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES? RETIREMENT SYSTEM
AND THE
CITY COUNCIL
CITY OF SANTA MONICA
WHEREAS, Government Code Section 21574 provides for a single employer rate to be
established to provide benefits under said Section on account of members
employed by contracting agencies electing to include the provision of said Section
in their contracts; and
WHEREAS, Government Code Section 21574, requires pooling of all assets and liabilities of
all contracting agencies subject to said Section;
NOW, THEREFORE BE IT AGREED, that assets and liabilities of the City of Santa Monica and
its covered employees shall be pooled pursuant to the provisions of Government
Codes Section 21574.
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES? RETIREMENT SYSTEM CITY OF SANTA MONICA
BY_______________________________________BY______________________________
KENNETH W. MARZION, CHIEF SUSAN E. McCARTHY,
ACTUARIAL & EMPLOYER SERVICES DIVISION CITY MANAGER
PUBLIC EMPLOYEES? RETIREMENT SYSTEM
Date ____________________________
ATTEST: APPROVED AS TO FORM:
________________________ __________________________
MARIA M. STEWART MARSHA JONES MOUTRIE
CITY CLERK CITY ATTORNEY
PERS-CON-59 (Rev. 9/00)
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