r-10557Gity Council Meeting 02-08-2011 Santa Monica, California
RESOLUTION NUMBER 10557 (CCS)
(City Council Series)
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA
REGARDING EMPLOYER PAID MEMBER CONTRIBUTIONS
WHEREAS, the City of Santa Monica {"City") is a participating employer in the
California Public Employees' Retirement System ("Ca1PERS"); and
WHEREAS, on June 24, 2003, the City Council adopted Resolution Number
9866 (CCS) (Firefighters) in which the City elected to pay the CaIPERS contribution
(nine percent [9%] of the normal contributions) on behalf of employees, safety
members, of the Santa Monica Firefighters {Local 1109 IAFF) and the Santa Monica
Police Officers Association ("Employer Paid Member Contributions") pursuant to
California Government Code section 20691, which permits a contracting agency to pay
all or a portion of the normal contributions required to be paid by a member; and
WHEREAS, on June 24, 2003, the City Council adopted Resolution Number
9867 (CCS) (Miscellaneous Members) in which the City elected to pay
the CaIPERS contribution {seven percent [7%] of the normal contributions) an behalf of
employees, miscellaneous members, of the Administrative Team Associates, Executive
Pay Plan, Management Team Associates, Municipal Employees Association, and
Supervisory Team Associates, and the following bargaining unit and individual
classifications in the Santa Monica Rent Control Board: Society for Union Employment,
Assistant Public information Manager, General Counsel, Hearings Manager, Public
Information
Manager, and Senior Administrative Analyst-Rent Control ("Employer Paid Member
Contributions") pursuant to California Government Code section 20691; and
WHEREAS, on March 9, 2004, the City Council adopted Resolution Number
9933 (CCS) in which the City elected to pay the CaIPERS contribution (seven percent
[7%] of the normal contributions) on behalf of employees, miscellaneous members, of
the Public Attorneys' Legal Support Staff Union ("Employer Paid Member
Contributions") pursuant to California Government Code section 20691; and
WHEREAS, on September 14, 2004, the City Council adopted Resolution
Number 9974 (CCS) in which the City elected to pay the CaIPERS contribution (seven
percent [7%] of the normal contributions) on behalf of employees, miscellaneous
members, of the Public Attorneys Union, Hearing Officer Representational Organization,
and the unrepresented coordinators' unit in the Santa Monica Rent Control Board,
which consists of Board Office Coordinator, Budget Office Coordinator, and Agency
Office Coordinator ("Employer Paid Member Contributions") pursuant to California
Government Code section 20691; and
WHEREAS, on May 25, 2005, the City Council adopted Resolution Number
10039 (CCS) in which the City elected to pay the CaIPERS contribution (seven percent
[7%] of the normal contributions) on behalf of employees, miscellaneous members, of
the Employees Action Committee ("Employer Paid Member Contributions") pursuant to
California Government Code section 20691; and
WHEREAS, on October 25, 2005, the City Council adopted Resolution Number
10075 (CCS) in which the City elected to pay the CaIPERS contribution (seven percent
[7%] of the normal contributions) on behalf of employees, miscellaneous members, of
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the United Transportation Union, Local 1785 ("Employer Paid Member Contributions")
pursuant to California Government Code section 20691; and
WHEREAS, the foregoing resolutions provided that the percent (value) of the
Employer Paid Member Contributions would be reported as compensation earnable,
excluding the option provided by California Government Code section 20636(c)(4), as
additional compensation; and
WHEREAS, the Employer Paid Member Contributions were paid from the City's
general funds, and were not deducted from an employee's salary, nor was it provided in
lieu of an increase in an employee's salary; and
WHEREAS, sections 3121(a)(5)(A) and 3401(a)(12)(A) of the Internal Revenue
Code ("Code") exclude employer contributions from an employee's wages until the time
when such contributions are distributed to the employee; and
WHEREAS, under section 414(h)(2) of the Code, employee contributions to a
public employer pension plan may be picked up on a pre-tax basis by the public
employer and excluded from an employee's gross income if the employer specifies that
the contributions, although designated as employee contributions to the plan, are being
paid by the employer in lieu of contributions by the employee, and the employee cannot
choose to receive the amounts directly instead of having them paid by the employer;
and
WHEREAS, since the City participates in CaIPERS, it must comply with all
requirements of CaIPERS as administered by the CaIPERS Board of Administration;
and
WHEREAS, the foregoing resolutions were each based on a CaIPERS template,
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the only template which CaIPERS has approved permitting an employer to pay normal
member contributions, and report such as additional compensation; and
WHEREAS, the CaIPERS Board of Administration has represented that the
template used for the foregoing resolutions complies with the requirements of section
414(h)(2) of the Code as set forth in Internal Revenue Service Revenue Ruling 2006-43;
and
WHEREAS, although it is the City's position that the foregoing resolutions meet
the requirements of section 414(h)(2) of the Code, the resolutions do not facially comply
with such requirements; and
WHEREAS, in the event that the Internal Revenue Service takes a contrary
position, concluding that the foregoing resolutions do not meet the requirements of
section 414(h)(2) of the Code, the City wishes to adopt this additional resolution to
ensure the tax-deferral of the Employer Paid Member Contributions on a going forward
basis; and
WHEREAS, pursuant to section 414(h)(2) of the Code, employee contributions to
a public employer pension plan may be picked up on a pre-tax basis by the public
employer and excluded from an employee's gross income if the employer specifies that
the contributions, although designated as employee contributions to the plan, are being
paid by the employer in lieu of contributions by the employee, and the employee cannot
choose to receive the amounts directly instead of having them paid by the employer;
and
WHEREAS, the City has determined that, even though the implementation of the
provisions of section 414(h)(2) of the Code is not required by law, the tax benefits of
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section 414(h)(2) of the Code in reducing taxable employee gross income should be
provided to its employees who are members of CaIPERS; and
WHEREAS, Internal Revenue Service Revenue Ruling 2006-43 requires that the
City take contemporaneous action evidencing an intent to establish a proper pick-up
under section 414(h)(2) of the Code;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS:
SECTION 1. The City shall pay the CaIPERS employee contribution (nine
percent [9%] of the normal contributions) on behalf of employees, safety members, of
the Santa Monica Firefighters (Local 1109 IAFF) and the Santa Monica Police Officers
Association pursuant to Section 20691 of the California Government Code.
SECTION 2. The City shall pay the CaIPERS employee contribution (eight
percent [8%] of the normal contributions) on behalf of employees, miscellaneous
members, of the of the Administrative Team Associates, Executive Pay Plan,
Management Team Associates, Municipal Employees Association, and Supervisory
Team Associates, and the following bargaining unit and individual classifications in the
Santa Monica Rent Control Board: Society for Union Employment, Assistant Public
Information Manager, General Counsel, Hearings Manager, Public Information
Manager, Senior Administrative Analyst-Rent Control, and all other employees who are
not part of any bargaining unit, but who receive, pursuant to individual employment
agreements with the City, the. same CaIPERS contribution benefits of the foregoing
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bargaining units, pursuant to Section 20691 of the California Government Code.
SECTION 3. The City shall pay the CaIPERS employee contribution (eight
percent [8%] of the normal contributions) on behalf of employees, miscellaneous.
members, of the Public Attorneys' Legal Support Staff Union, and all other employees
who are not part of any bargaining unit, but who receive, pursuant to individual
employment agreements with the City, the same CaIPERS contribution benefits of the
foregoing bargaining unit, pursuant to Section 20691 of the California Government
Code.
SECTION 4. The City shall pay the CaIPERS employee contribution (eight
percent [8%] of the normal contributions) on behalf of employees, miscellaneous
members, of the Public Attorneys Union, Hearing Officer Representational Organization,
and the unrepresented coordinators' unit in the Santa Monica Rent Control Board,
which consists of Board Office Coordinator, Budget Office Coordinator, and Agency
Office Coordinator, and all other employees who are not part of any bargaining unit, but
who receive, pursuant to individual employment agreements with the City, the same
CaIPERS contribution. benefits of the foregoing bargaining units, pursuant to Section
20691 of the California Government Code.
SECTION 5. The City shall pay the CaIPERS employee contribution (eight
percent [8°/0] of the normal contributions) on behalf of employees, miscellaneous
members, of the Employees Action Committee, and all other employees who are not
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part of any bargaining unit, but who receive, pursuant to individual employment
agreements with the City, the same CaIPERS contribution benefits of the foregoing
bargaining unit, pursuant to Section 20691 of the California Government Code.
SECTION 6. The City shall pay the CaIPERS employee contribution (eight
percent [8%] of the normal contributions) on behalf of employees, miscellaneous
members, of the United Transportation Union, Local 1785, and all other employees who
are not part of any bargaining unit, but who receive, pursuant to individual employment
agreements with the City, the same CaIPERS contribution benefits of the foregoing
bargaining unit, pursuant to Section 20691 of the California Government Code.
SECTION 7. The City will implement the provisions of section 414(h)(2) of the
Code with respect to the Employer Paid Member Contributions.
SECTION 8. The Employer Paid Member contributions, though designated as
employee contributions, will be picked up on a pre-tax basis by the. City in lieu of
employee contributions so that such are treated as employer contributions.
SECTION 9. Amounts picked up by the City shall be paid from the same sources
of funds as used in paying salary.
SECTION 10. An employee may not elect to receive such Employer Paid
Member Contributions directly instead of having them paid by the City to CaIPERS.
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SECTION 11. The effective date of the pick-up by the City shall be the effective
date of this Resolution, and the pick-up applies only to contributions made after this
effective date.
SECTION 12. The City Clerk shall certify to the adoption of this Resolution, and
thenceforth and thereafterthe same shall be in full force and effect.
APPROVED AS TO FORM:
Adopted and approved this 8~h day of February, 2011.
C \ \
Richard Bloom, Mayor
I, Maria M. Stewart, City Cierk of the City of Santa Monica, do hereby certify that
the foregoing Resolution No. 10557 {CCS) was duly adopted at a meeting of the Santa
Monica City Council held on the 8th day of February, 2011, by the following vote:
Ayes: Councilmembers: Holbrook, McKeown, O'Connor, U'Day,
Mayor Pro Tem Davis, Mayor Bloom
Noes: Councilmembers: None
Abstain: Councilmembers: None
Absent: Councilmembers: Shriver
ATTEST:
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~L ... ~ ~
Maria M. Stewart, ~ y Clerk