SR-602-003 (10)
f:\person:misc/council/staffrpt/council44.doc Santa Monica, California
Council Meeting: March 6, 2001
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to 1) Adopt Resolution of Intention to Amend Contract
Between the California Public Employees' Retirement System and the City
of Santa Monica to Provide Section 21354 (2% @ 55 Full Formula) and
Section 20042 (One-Year Final Compensation) for Local Miscellaneous
Members; 2) Hold a Public Hearing and 3) Hold the First Reading of an
Ordinance to Amend Said Contract as Indicated
INTRODUCTION
This report recommends that City Council 1) adopt a 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 21354
(2% @ 55 Full Formula) and Section 20042 (One-Year Final Compensation) for local
miscellaneous members; 2) hold a public hearing; and 3) hold the first reading of an
ordinance to amend said contract .
DISCUSSION
The City of Santa Monica contracts with CalPERS to provide retirement plans for
permanent employees. As a contracting agency, the City may amend its contract(s) to
provide various optional benefits offered by CalPERS.
According to CalPERS regulations, changes to the CalPERS contract apply to all
miscellaneous members. Santa Monica local miscellaneous members of CalPERS are
currently covered by a 2% @ 60 full formula. As a part of contract negotiations with
each of the City?s non-safety bargaining units, the bargaining units have requested that
the City amend its contract with CalPERS to provide Section 21354 (2% @ 55 Full
Formula) and Section 20042 (One-Year Final Compensation) for local miscellaneous
members. In order to remain competitive in the labor market and to bring the CalPERS
benefits of Santa Monica miscellaneous employees in line with those found in
comparison cities, the City agreed to amend its contract with CalPERS to provide
Section 21354 and Section 20042.
Section 21354 (2% @ 55 full formula) is a CalPERS service retirement formula that
provides to local miscellaneous members at age 55, or older, 2% of pay for each year of
service. For members who retire earlier than age 55, the percentage of pay is less than
2% of pay for each year of service. The formula is not modified because of Social
Security.
Section 20042 (One-Year Final Compensation) provides that the monthly retirement
allowances for members will be based on the highest consecutive twelve (12) months of
earnings reported to CalPERS.
An independent actuary evaluated the impact that implementing Section 21354 and
Section 20042 would have on the City?s budget. That analysis confirmed CalPERS?s
projections.
BUDGET/FISCAL IMPACT
This change to the miscellaneous members CalPERS retirement plan increases the
present value of benefits, or total cost of the plan, by $30,162,428. Since the total cost
is increased, the amount of money the City should have on deposit for this plan, or the
accrued liability, also increases by $18,224,333. However, since the City currently has
a retirement fund surplus of $80,409,131, there will still be a retirement fund surplus of
$62,184,798 after the proposed amendment has been implemented. CalPERS is
projecting that this resulting retirement fund surplus of $62,184,798 will be sufficient to
pay the employer?s contribution for the next 29 years. This means that the City?s
contribution rate would remain unchanged at 0.0% for that period of time. The
independent actuary?s analysis confirmed CalPERS?s cost projections.
RECOMMENDATION
It is recommended that the City Council 1) adopt a 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 21354
(2% @ 55 Full Formula) and Section 20042 (One-Year Final Compensation) for local
miscellaneous members; 2) hold a public hearing; and 3) hold the first reading of an
ordinance to amend said contract.
Prepared By: Karen Bancroft, Director of Personnel
C.M. Dennis, Director of Finance
Attachments: Resolution of Intention with Exhibit
Ordinance Authorizing an Amendment to the CalPERS Contract
RESOLUTION NUMBER _______ (CCS)
(CITY COUNCIL SERIES)
A RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO CONTRACT
BETWEEN THE BOARD OF ADMINISTRATION
OF THE CALIFORNIA PUBLIC EMPLOYEES? RETIREMENT SYSTEM
AND THE CITY COUNCIL OF THE CITY OF SANTA MONICA
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 21354 (2% @ 55 Full Formula) and Section 20042
(One-Year Final Compensation) for local miscellaneous members.
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE
CITY OF SANTA MONICA 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.
The City Clerk shall certify to the adoption of this Resolution, and thenceforth and
thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
__________________________
MARSHA JONES MOUTRIE
City Attorney
ORDINANCE NUMBER
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA AUTHORIZING AN AMENDMENT TO THE CONTRACT
BETWEEN THE CITY COUNCIL OF THE CITY OF SANTA MONICA AND
THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES? RETIREMENT SYSTEM
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES ORDAIN AS FOLLOWS:
SECTION 1. That an amendment to the contract between the City Council of the
City of Santa Monica 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 City Manager is hereby authorized, empowered, and directed
to execute said amendment for and on behalf of the City.
SECTION 3. Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
inconsistencies and no further, are hereby repealed or modified to that extent necessary
to affect the provisions of this Ordinance.
SECTION 4. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
court of any competent jurisdiction, such decision shall not affect the validity of the
remaining portions of this Ordinance. The City Council hereby declares that it would
have passed this Ordinance, and each and every section, subsection, sentence, clause,
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the Ordinance would be subsequently declared invalid or unconstitutional.
SECTION 5. The Mayor shall sign and the City Clerk shall attest to the passage
of this Ordinance. This Ordinance shall take effect 30 days after the date of its
adoption, and prior to the expiration of 15 days from the passage thereof the ordinance
or a summary shall be published at least once in The Argonaut, a newspaper of general
circulation, published and circulated in Los Angeles County and thenceforth and
thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
____________________________
Marsha Jones Moutrie
City Attorney