CITY OF GLENDALE CALIFORNIA REPORT TO CITY COUNCIL

Transcription

1 FORM CM-36 CITY OF GLENDALE CALIFORNIA REPORT TO CITY COUNCIL November 2, 2010 AGENDA ITEM Report regarding the amendment of contract with CalPERS for local miscellaneous members and sworn fire safety members to provide a 2 nd tier retirement formula for new hires. 1) Ordinance for Introduction COUNCIL ACTION: Public Hearing [ ] Ordinance [ x ) Consent Calendar [ Approved for ---,\o..~i-"v'-'\\-" \..;.D calendar Action Item [ x ) Report Only [ ) ADMINISTRATIVE ACTION Signature Submitted/Prepared /:?Af!!J'~ sv Matt Doyle, Director of Human Resources ~ ApprO~:~es Starbird, City Manager... ~ ~ Reviewed Scott Howard, City Attorney... Robert Elliot, Director of Finance J.. ~f"''-i..dl.:!f;i~:l--=-:x:----, RECOMMENDATION It is requested that the City Council introduce the ordinance authorizing the amendment of the contract between the City of Glendale and the Ca lifornia Public Employees' Retirement System (CaIPERS). This ordinance is required to amend the City's contract with CalPERS to provide a 2 nd tier retirement formula for all new employees hired on or after January 1, in miscellaneous and sworn fire classifications. SUMMARY Over the course of the past year, the City has engaged in the meet and confer process with all of the respective employee bargaining groups. From the City's perspective, one of the primary objectives of this process was to identify means of reducing the costs of services provided and 8 D

2 implement meaningful reform of th e pension system at th e local leve l. Thus, in each of th e meet and confer processes with the respective employee associations, the City proposed the modification or amendment of existing retirement formulas under the CalPERS pension plan for new hires. The City and Glendale Fire Fighters Association (GFFA) were the first to come to terms on an amendment to the retirement formula by agreeing to modify the formula from the current 3% at 50 to 3% at 55 for new hires effective January 1, Next, the City and Glendale Management Association (GMA) came to terms on the modification of the retirement formula for two of the groups represented : sworn Fire managers and non-sworn miscellaneous managers. For a ll new sworn Fire managers hired on or after January 1, 2011, the retirement formula would be modified from the current 3% at 50 formula to 3% at 55. For all new non-sworn miscellaneous managers hired on or after January 1, 2011, the retirement formula would be modified from the current 2.5% at 55 formula to 2% at 55, with a move away from the "single-highest yea r ~ calculation to the "three final years" calculation. The City and th e Glendale City Employees' Association (GCEA) were unable to come to agreement on term s for an MOU; however, the City's imposition of its July 19, 2010 offer will modify the retirement formula for non-sworn miscellaneous employees represented by the GCEA hired on or after January 1, from the current 2.5% at 55 formula to 2% at 55, with the "three final years" calculation. No agreement could be reached with the Glendale Police Officers' Association on this matter. This ordinance authorizes the Mayor to execute this contract amendment with CaIPERS. A related resolution also requires City Council approval and has been included on this agenda. FISCAL IMPACT The immediate savings from the adoption of a second tier retirement formul a is negligible. However, as new employees are hired into the second tier plan, the savings will increase into the future. According to estimates provided by the City's actuarial, savings for the remainder of the 201 0/2011 fiscal year would amount to approximately $54,000 for the sworn Fire and misce llaneous bargaining groups. However, those savings wo uld increase to approx imately $226,500 for th e same bargaining groups for 2011/201 2 and $386,000 for 201 2/ BACKGROUND Over the course of the past year, the City has engaged in the meet and confer process with all of the respective employee bargaining groups. The respective Memoranda of Understanding between the City and Glendale Management Associati on (GMA) and the City and Glendale City Employees' Association (GCEA) each expired June 30, Although th e MOU's with the Glendale Fire Fighters' Association (GFFA) and Glendale Police Officers' Association (GPOA) did not expire this year, both groups agreed to reopen their contracts and engage in meet and confer at the City's request to discuss efforts to address budgetary concerns and explore cost savings. 2

3 From the City's perspective, one of the primary objectives of this process was to identify means of reducing the costs of services provided largely in the areas of employee pension and benefit costs. These are two areas of increasing expenses at a time when revenues are either declining or falling flat. In the absence of any meaningful reform of the pension system at the State level, the City sought to reduce its costs and decrease long-term pension liability by proposing 2"" tier retirement formulas through the CalPERS system for new hires within each of the respective bargaining units. Such action wo uld not affect current employees or retirees, whose pension benefits are vested; however, the respective reti re ment formulas can be modified for new hires, thus creating two tiers. Currently, public safety employees represented by GFFA, GPOA and GMA (sworn only) fall under the 3% at 50 public safety formula. Miscellaneous employees represented by the GCEA and GMA (non-sworn members) receive th e 2.5% at 55 form ula. In the meet and confer process, the City proposed modification of each of the above retirement formu las. Ultimately, in the co urse of the negotiations, agreements were reached as follows: GFFA: change from 3% at 50 to 3% at 55 formula for new hires effective January 1, GMAIFire Sworn: change from 3% at 50 to 3% at 55 formula for new hires effective January 1, 2011 GMAIMiscelianeous: change from 2.5% at 55 to 2% at 55 formula with the "3 final years" calculation for new hires effective January 1, 2011 The City was unable to come to agreement with the GCEA, and thus by tonight's previous action, will impose a change from the 2.5% at 55 formula to the 2% at 55 formula, with the "3 final years" calculation, similar to the GMAIMisce lianeous group for new hires effective January 1, CalPERS requires all miscellaneous employee groups to be on th e same retirement formu la. No agreement could be reached with the GPOA on this matter. Since, the GPOA has a multiyear MOU th at does not expire until June 30, 20 11, the City cannot impose its pension reform proposal at this time. Approval of this ordin ance is required to enact the amendments to the City's contracts with PERS. This item will be brought back for adoption a minimum of twenty days following the Resolution of Intention. EXHIBIT Amendment to Contract Between the Board of Administration California Public Employees' Retirement System and the City Council City of Glendale 3

4 ORDlNANCENO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GLENDALE AUTHORlZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY COUNCIL OF THE CITY OF GLENDALE AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM BE IT ORDAINED BY THE COUNCIL OF THE CITY OF GLENDALE: SECTION I: That an amendment of the contract between the City Council of the City of Glendale and the Board of Administration, California Public Employees' Retirement System is hereby authorized, a copy of said amendment being attached hereto, marked "Exhibit A", and by such reference made a part hereof as though herein set out in full SECTION 2: The Mayor of the City Council is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said City. SECTION 3: This Ordinance shall take effect 30 days after the date of its adoption, and prior to the expiration of 30 days from the passage thereof shall be published at least oncc in the Glendale News Press, a newspaper of general circulation, published and circulated in the City of Glendale and thenceforth and therealter the same shall be in fuu force and effect. SECTION 4: The City Clerk shall cci1iry to the adoption of this Ordinance. Adopted and approved th is.day of, An'EST: City Clerk STATE OF CALIFORNIA COUNTY OF LOS ANGELES CITY OF GLENDALE ) ) SS ) Mayor APPROVED AS TO FOh", ~~ CH~ TCITY ATIORNEY DATED /0/ "-'i I II) 1, Ardashes Kassakhian, City Clerk of the City of Glendale, do hereby certify that the foregoing Ordinance No. was passed by the Counci l of the City of Glendale, California, by a majority vote of the members thereof, at a regular meeting held on the day of,2010 by the following vote: Ayes: Noes: Absent: City Clerk 8 o 1

5 CalPERS EXHIBIT California Public Employees' Retirement System AMENDMENT TO CONTRACT Between the Board of Administration California Public Employees' Retirement System and the City Council City of Glendale The Board of Administration, California Public Employees' Retirement System, hereinafter referred to as Board, and the governing body of the above public agency, hereinafter referred to as Public Agency, having entered into a contract effective July 1, 1945, and witnessed June 14, 1945, and as amended effective May 1, 1947, October 1, 1947, September 17,1948, March 31, 1949, September 1, 1949, July 1,1950, July 1, 1951, November 1,1953, June 1, 1954, November 1,1955, November 1,1958, July 1, 1959, July 1, 196 1, June 16, 1965, July 1, 1969, September 1,1969, July 1, 1971, January 1, 1973, January 1,1974, July 1, 1975, September 1,1976, October 1, 1977, October 17,1978, September 13, 1985, March 16, 1990, November 15,1991, October 14,1 994, November 5,1994, June 30, 1996, January 1,1997, July 1,1997, October 1, 1997, June 16,1998, June 30, 200 1, August 16, 2002, December 1, 2004, December 1, 2005 and July 1, 2007 which provides for participation of Public Agency in said System, Board and Public Agency hereby agree as follows: A. Paragraphs 1 through 14 are hereby stricken from said contract as executed effective July 1, 2007, and hereby replaced by the following paragraphs numbered 1 through 17 inclusive: 1. All wo rd s and terms used herein which are defined in the Public Employees' Retirement Law shall have the meaning as defined therein unless otherwise specifically provided. "Norm al retirement age" shall mean age 55 for local miscellaneous members, age 50 for local po lice members and for those local fire members entering membership in the fire classification on or prior to the effective date of this amendment to contract and age 55 for local fire members entering membership for the first time in the fire classification after the effective date of this amendment to contract.

6 ~~li r-~ ":'It: ;."... ~,lr,l' ~_." :' 1,1 ) L-t_hvl... ~.h.; Ie..; j.jii:.!: J "'_'_" 2. Public Agency shall participate in the Public Employees' Retirement System from and after July 1, 1945 making its employees as hereinafter provided, members of said System subject to all provisions of the Public Employees' Retirement Law except such as apply only on election of a contracting agency and are not provided for herein and to all amendments to said Law hereafter enacted except those, which by express provisions thereof, apply only on the election of a contracting agency. 3. Public Agency agrees to indemnify, defend and hold harmless the California Public Employees' Retirement System (CaIPERS) and its trustees, agents and employees, the CalPERS Board of Administration, and the California Public Employees' Retirement Fund from any claims, demands, actions, losses, liabilities, damages, judgments, expenses and costs, including but not limited to interest, penalties and attorneys fees that may arise as a result of any of the following: (a) (b) (c) Public Agency's election to provide retirement benefits, provisions or formulas under this Contract that are different than the retirement benefits, provisions or formulas provided under the Public Agency's prior non-caipers retirement program. Public Agency's election to amend this Contract to provide retirement benefits, provisions or formulas that are different than existing retirement benefits, provisions or formulas, Public Agency's agreement with a third party other than CalPERS to provide retirement.benefits, provisions, or formulas that are different than the retirement benefits, provisions or formulas provided under this Contract and provided for under the California Public Employees' Retirement Law. (d) Public Agency's election to file for bankruptcy under Chapter 9 (commencing with section 901) of Title 11 of the United States Bankruptcy Code and/or Public Agency's election to reject this Contract with the CalPERS Board of Administration pursuant to section 365, of Title 11, of the United States Bankruptcy Code or any similar provision of law. (e) (I) (g) Public Agency's election to assign this Contract without the prior written consent of the CaIPERS' Board of Administration. The termination of this Contract either voluntarily by request of Public Agency or involuntarily pursuant to the Public Employees' Retirement Law. Changes sponsored by Public Agency in existing retirement benefits, provisions or formulas made as a result of amendments, additions or deletions to California statute or to the California Constitution.

7 4. Employees of Public Agency in th e following classes shall become members of said Retirement System except such in each such class as are excluded by law or this agreement: a. Local Fire Fighters (herein referred to as local safety members); b. Local Police Offi cers (herein referred to as local safety members); c. Employees other than local safety members (herein referred to as local misce llaneous members). 5. In addition to the classes of employees excluded from membership by said Retirement Law, the following classes of employees shall not become members of said Retirement System: a. CITY PHYSICIANS HIRED ON OR AFTER JANUARY 1, Prior to January 1, 1975, those members who were hired by Public Agency on a temporary and/or seasonal basis not to exceed 6 months were excluded from PERS membership by contract. Government Code Section superseded this contract provision by providing that any such temporary andlor seasonal employees are excluded from PERS membership subsequent to January 1, Legislation repealed and replaced said Section with Government Code Section effective July 1, The percentage of final compensation to be provided for each year of cred ited prior and current service as a local miscellaneous member in employment before and not on or after December 1, 2005 shall be determined in accord ance with Section of said Retirement Law (2% at age 55 FUll ). 8. The percentage of final compensation to be provided for each year of cred ited prior and cu rrent service as a local miscellaneous member in employment on or after December 1, 2005 and not entering membership for the first time in the miscellaneous classification after the effective date of this amendment to contract shall be determined in accordance with Section of said Retirement Law (2.5% at age 55 Full). 9. The percentage of final compensation to be provided for each year of credited current service as a local miscellaneous member entering membership for the first time in the miscellaneous classification after the effective date of this amendment to contract shall be determined in accordance with Section of said Retirement Law (2% at age 55 Full ).

8 10. The percentage of final compensation to be provided for each year of credited prior and current service as a local police member and for those local fire members entering membership in the fire classification on or prior to the effective date of this amendment to contract shall be determined in accordance with Section of sa id Retirement Law (3% at age 50 Full). 11. The percentage of fin al compensation to be provided for each year of credited cu rrent service as a local fire member entering membership for the first time in the fire classification after the effective date of this amendment to contract shall be determined in accordance with Section of said Retirement Law (3% at age 55 Full). 12. Public Agency elected and elects to be subject to the following optional provisions: a. Sections 21624, and (Post-Retirement Survivor Allowance). b. Section (One-Time 5% Increase ). Legislation repealed said Section effective January 1, c. Section (One-Year Final Compensation) for local safety members and those local misce llaneous members entering membership on or prior to the effective date of this amendment to contract. d. Section (One-Time 15% Increase for Local Miscellaneous Members Who Retired or Died Prior to July 1, 1971). Legislation repealed said Section effective January 1, e. Section (Post-Retirement Survivor Allowance to Continue After Remarriage). f. Section (One-Time 4% Increase For Local Police Members Who Retired or Died Prior to January 1, 1981). Legislation repealed said Section effective January 1, g. Section (Military Service Credit as Public Service ). h. Section (Fourth Level of 1959 Survivor Benefits). i. Section (Cred it for Unused Sick Leave). j. Section (Pre-Retirement Option 2W Death Benefit).

9 k. Section (Different Level of Benefits). Section Full formula) and Section (Three Year Final Compensation) are applicable to local miscellaneous members entering membership fo r the first tim e in the miscellaneous classification after the effective date of thi s amendment to contract. Section (Different Level of Benefits). Section Full formula) is applicable to local fire members entering membership for th e first time in the fire classification after the effective date of this amendment to contract. 13. Public Agency, in accordance with Government Code Section 20790, ceased to be an " employe~' for purposes of Section effective on October 1, Accumulated contributions of Public Agency shall be fixed and determined as provided in Government Code Section 20834, and accumulated contributions thereafter shall be held by the Board as provided in Government Code Section Public Agency shall contribute to said Retirement System the contributions determined by actuarial va luations of prior and future service liability with respect to local miscellaneous members and local safety members of said Retirement System. 15. Public Agency shall also contribute to said Retirement System as follows: a. Contributions required per covered member on account of the 1959 Survivor Benefits provided under Section of said Retirement Law. (Subject to annual change.) In add ition, all assets and liabilities of Public Agency and its employees shall be pooled in a single account, based on term insurance rates, for survi vors of all local misce llaneous members and local safety members. b. A reasonable amount, as fixed by the Board, payable in one installment within 60 days of date of contract to cover the costs of administering said System as it affects the employees of Public Agency, not including the costs of special valuations or of the periodic investigation and va luations required by law. c. A reasonable amount, as fixed by the Board, payable in one installment as the occasions arise, to cover th e costs of special valuations on account of employees of Public Agency, and costs of the periodic investigation and valuations required by law.

10 16. Contributions required of Public Agency and its employees sha ll be subject to adjustment by Board on account of amendments to the Public Employees' Retirement Law, and on account of the experience under the Retirement System as determined by the periodic investigation and va luation required by sa id Retirement Law. 17. Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System within fifteen days after the end of the period to which said contributions refer or as may be prescribed by Board regulation. If more or less than th e correct amount of contributions is paid for any period, proper adjustment shall be made in connection with subsequent remittances. Adjustments on account of errors in contributions required of any employee may be made by direct payments between the employee and the Board. B. This amendment shall be effective on the day of BOARD OF ADMINISTRATION PUBLIC EMPLOYEES' RETIREMENT SYSTEM < " BY LO~R~I~M~C~G~A~R=T~LA~N~D~,~C~H~I E~F~----- EMPLOYER SERVICES DIVISION PUBLIC EMPLOYEES' RETIREMENT SYSTEM " CITY COUNCIL CITY OF GLENDALE, \.. I, '. -, BY '-: ;" PRESIDING OFFICER c', '- '.,.', Witness Date Attest: Clerk AMENDMENT ER# 0071 PERS-CON 702A