SR-602-003 (16)
f:\person:misc/council/staffrpt/council56police3%50.doc Santa Monica, California
Council Meeting: November 12, 2002
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 and a Public
Hearing and First Reading of an Ordinance to Amend Said Contract
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 21362.2
(3% @ 50 full formula) for local police members. The attached resolution and
agreement comply with the procedure required by CalPERS. This report also requests
that Council hold a public hearing and first reading of the ordinance to amend said
contract as indicated. The ordinance is also attached.
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. Santa Monica police members
are currently covered by a 3% @ 55 full formula. As a part of the most recent
Memorandum of Understanding (MOU) negotiated between the City of Santa Monica
and the Santa Monica Santa Monica Police Officers Association (SMPOA) and
approved by City Council on November 12, 2002, the City agreed to amend its contract
with CalPERS to provide Section 21362.2 (3% @ 50 full formula) for local police
members.
Section 21362.2 (3% @ 50 full formula) is a CalPERS service retirement formula which
provides to local fire members at age 50, or older, 3% of pay for each year of service.
The formula is not modified because of Social Security.
BUDGET/FISCAL IMPACT
This change to the police retirement plan increases the present value of the retirement
plan benefits by $7,990,902 and increases the accrued liability of the plan by
$6,938,688. These changes will increase the City?s employer contribution rate by
6.395%. As a result, the net impact on the total City contribution rate (employer rate
plus the employee rate paid by the City) will be to increase it from 14.128% to 20.523%
for FY2002/03. In exchange for the increased retirement benefit, SMPOA has agreed to
forego a 3.1% cost of living adjustment (COLA) for FY 2002-03, to modify the formula
for comparing salaries with other jurisdictions by that amount on an ongoing basis, and
to reduce cashable floating holidays for each year of the three-year contract. The
savings resulting from the elimination of the 3.1% COLA for FY2002-2003 will cover the
partial year increased retirement benefit this fiscal year and approximately one-half of
the cost of the increased retirement benefit for each subsequent fiscal year. The full
year net additional ongoing retirement costs will be reflected in the annual budgets
adopted by City Council.
Sufficient funds are available in the FY2002-2003 budget to finance the additional cost.
The ongoing costs will be reflected in the annual budgets adopted by the City Council.
RECOMMENDATION
It is recommended that the City Council 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 21362.2 (3% @ 50 full formula) for local police
members. It is further recommended that there be a first reading of the Ordinance to
amend said contract.
Prepared By: Karen Bancroft, Director of Human Resources
Attachments: Resolution of Intention with Exhibit
Ordinance Authorizing an Amendment to the CalPERS Contract