SR-602-003 (26)
F:\person:misc/council\council69.Misc.PERS 21548-21574 Santa Monica, California
Council Meeting: August 10, 2004
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Resolution Authorizing the City Manager to Execute a Memorandum of
Understanding with the Bargaining Units that Represent the City?s
Miscellaneous (Non-Safety) Employees to Provide CalPERS Death Benefits
Set Forth in Sections 21548 and 21574 of the California Government Code
INTRODUCTION
This report requests that Council adopt the attached resolution authorizing the City
Manager to execute a Memorandum of Understanding (MOU) with the bargaining units that
represent the City?s miscellaneous (non-safety) employees to provide two death benefits
offered by CalPERS under Sections 21548 and 21574 of the California Government Code.
The employees will reimburse the City for the additional costs of these benefits.
BACKGROUND
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.
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The Pre-Retirement Optional Settlement 2 Death Benefit (Section 21548) allows the
spouse of a member, who dies before retirement but who was eligible to retire for service
at the time of death, to elect an alternative to the lump sum Basic Death Benefit. The
alternative provides a monthly allowance equal to the amount the member would have
received if he/she had retired for service on the date of death and elected the highest
monthly allowance a member can leave a spouse.
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. The City
currently offers the Third Level of 1959 Survivor Benefit to miscellaneous employees in
addition to city-paid life insurance. As Social Security benefits improved over the years,
CalPERS has modified the l959 Survivor Benefit option by providing additional benefit
levels. The Fourth Level (Section 21574) 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 and the bargaining units that represent all of the miscellaneous (non-safety) City
employees have reached agreement on a Memorandum of Understanding (MOU) that calls
for the City to amend its contract with CalPERS to provide Section 21548 (Pre-Retirement
Optional Settlement 2 Death Benefit) and Section 21574 (Fourth Level of 1959 Survivor
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Benefits) for miscellaneous members. The employees will pay any additional costs that
result from the two CalPERS contract amendments. Those costs will be determined by
CalPERS.
BUDGET/FISCAL IMPACT
The Memorandum of Understanding between the City and the bargaining units that
represent all of the City?s miscellaneous (non-safety) employees will have no net budget or
financial impact on the City. Under the terms of the MOU, the miscellaneous employees
will reimburse the City for the full additional cost of these benefits. The reimbursement will
be made through bi-weekly payroll deductions. The amount to be deducted will change
annually based on the new CalPERS rate. The reimbursement amount from employees
will be adjusted annually to ensure that employees are paying the full additional costs of
these benefits.
RECOMMENDATION
It is recommended that the City Council adopt the attached resolution authorizing the City
Manager to execute a Memorandum of Understanding with the bargaining units that
represent all of the City?s miscellaneous (non-safety) employees to provide Section 21548
(Pre-Retirement Optional Settlement 2 Death Benefit) and Section 21574 (Fourth Level of
1959 Survivor Benefits) for local miscellaneous members only, with the miscellaneous City
employees reimbursing the City for the additional costs associated with the two CalPERS
benefits.
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Prepared By: Karen Bancroft, Director of Human Resources
(See adopted Resolution No. 9968 (CCS)).
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