sr-120611-3g10_
City of City Council Report
Santa Monica
City Council Meeting: December 6, 2011
Agenda Item: D —(-1
To: Mayor and City Council
From: Donna C. Peter, Director of Human Resources
Subject: Adoption of a Resolution Correcting CaIPERS Retirement Program
Employer Paid Member Contributions
Recommended Action
Staff recommends that the City Council adopt the attached resolution required by
the CaIPERS Retirement System which correctly identifies Employer Paid
Member Contributions.
Executive Summary
The City currently reports the value of Employer Paid Member Contributions
(EPMC) to CaIPERS as additional compensation upon which employees'
retirement benefits are based. Employees reimburse the City for the cost of this
benefit. When the EPMC amount increased from seven percent to eight percent
with the adoption of the 2.7 % @55 retirement formula for all non -sworn
employees, the City did not adopt the CaIPERS required resolution to reflect the
increase in EPMC. Adoption of this resolution corrects the records with
CaIPERS.
Background
The City contracts with the California Public Employees Retirement System
(CaIPERS) for retirement benefits for City employees. The retirement benefits
are funded through employee and employer designated contributions. Employee
contributions paid by an employer on the employees' behalf may be reported as
additional compensation under CaIPERS regulations and may be included in the
final compensation used to determine an employee's retirement benefit amount.
This benefit is known as Employer Paid Member Contributions (EPMC). The City
has been reporting the value of EPMC for most miscellaneous non -sworn
employees since June 2003 and employees have been reimbursing the City for
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the cost of this benefit since its implementation. The City changed its retirement
benefit formula from 2 % @55 to 2.7 % @55 effective May 27, 2007 for
miscellaneous employees. This change increased the employee rate from 7% to
8 %. As required under CaIPERS regulations and following negotiations with the
employee bargaining units through the Coalition of Santa Monica 'Employees
(Coalition), the City amended its CalPERS contract and approved a
Memorandum of Understanding (MOO) with the Coalition. The MOO included a
provision increasing the EPMC from 7% to 8 %; however, a separate resolution
specifically designating the 8% EPMC was not completed as required. The City
has been reporting the value of the 8% EPMC since 2007 and CalPERS has
been receiving contributions based on the higher amount. Additionally,
employees have been reimbursing the City for the costs associated with the 8%
EPMC. The attached resolution corrects the City's record and brings the City
into compliance with CalPERS regulations.
Discussion
As stated above, the City has been reporting the value of EPMC at 8% since May
27, 2007 when the change to the 2.7 % @55 benefit formula was adopted.
Recently, CalPERS replaced its payroll reporting computer system. When
CalPERS reviewed its contract documents to set up their new computerized
payroll and reporting system, it was discovered that the City had not adopted a
separate 8% EPMC resolution at the time it amended its CalPERS contract as
required. The result was that errors were being reported in the automated
system. Upon contacting CalPERs to correct the reporting problem, CalPERS
notified the City that the appropriate EPMC resolution was not on file. Staff
researched the issue and determined that the appropriate resolution had not
been adopted at the time of the contract amendment.
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Financial Impacts & Budget Actions
There is no additional fiscal impact. The City has been paying and reporting its
retirement contributions based on the 8% EPMC since the CalPERS contract
was amended and the 2.7 % @55 benefit formula went into effect as agreed upon
with the Coalition. Additionally, CalPERS has been accepting the City's
contributions based on the 8% EPMC.
Prepared by: Michael Earl, Human Resources Manager
Approved:
Donna C. Peter
Director of Human Resources
Attachement:
A: Resolution
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Forwarded to Council:
C
Rod Gould
City Manager
Reference Resolution No.
10639 (CCS)