CITY COUNCIL: Ordinance Amending Provisions of Municipal Code Section 2.56 (Retirement System) Establishing a 2% at 60, 3-Year FAS Retirement Plan for Miscellaneous Employees Hired On or After April 15, 2012

Meeting Date: March 6, 2012
Prepared by: Jason Stilwell


City Council
Agenda Item Summary


Name: Consideration of an Ordinance amending provisions of Municipal Code Section 2.56 (Retirement System) establishing a 2% at 60, 3-Year FAS Retirement Plan for Miscellaneous Employees hired on or after April15, 2012. (Second reading)

Description: On September 13, 2011, the City Council approved agreements with the bargaining units and unrepresented miscellaneous employees to establish a new Retirement Benefit Tier (2% at 60, PAS 3) for certain Miscellaneous Employees and on November 1, 2011, the Council approved an agreement with the Police Officers Association covering its Miscellaneous Employees. These actions established a new Retirement Benefit Tier (2% at 60, F AS 3) for certain Miscellaneous Employees. In order to implement this benefit, however, the City's contract with CalPERS must be amended.

At the February 7, 2012 Council meeting, Resolution 2012-10 (Resolution oflntent) was adopted and Council held the first reading of the ordinance to amend the CalPERS contract and to establish the 2% at 60, F AS 3 retirement plan for Miscellaneous Employees hired by the City on or after April15, 2012.

Overall Cost: There are no immediate savings anticipated from the implementation of this twotier system as the reduced contribution rate applies only to new hires. Long-term savings however, will be realized as staff turnover occurs. The employer contribution rate will be 7.73% of reportable earnings for employees entering membership for the first time in the Miscellaneous classification after the effective date of this amendment to the contract.

Staff Recommendation: Adopt the Ordinance upon second reading.
Important Considerations: The ordinance will become effective AprilS, 2012. As the
effective date of this amendment cannot be earlier than the first day of a payroll period
following the effective date of the final ordinance, the 2% at 60, F AS 3 Retirement Plan
will be effective on April15, 2012. Employees in the Miscellaneous group hired by the
City on or after that date will be fall under the new retirement plan.
Decision Record: On September 13, 2011 and November 1, 2011, the City Council approved
establishing a new retirement tier of 2% at 60, F AS 3 for miscellaneous employees. On
February 7, 2012, Council adopted Resolution 2012-10 and held the first reading of this
ordinance to amend the CalPERS contract and to establish the 2% at 60, F AS 3
retirement plan for Miscellaneous Employees hired by the City on or after April15, 2012.
Reviewed by:
Jason ~ity : dministrator Date
CITY OF CARMEL-BY-THE-SEA
STAFF REPORT
TO: MAYOR MCCLOUD AND MEMBERS OF THE CITY COUNCIL
FROM: JASON STILWELL, CITY ADMINISTRATOR
DATE: 6 MARCH 2012
SUBJECT: CONSIDERATION OF AN ORDINANCE AMENDING
PROVISIONS OF MUNICIPAL CODE SECTION 2.56
(RETIREMENT SYSTEM) ESTABLISHING A 2% AT 60, 3-YEAR
FAS RETIREMENT PLAN FOR MISCELLANEOUS EMPLOYEES
HIRED BY THE CITY OF CARMEL-BY-THE-SEA ON OR AFTER
APRIL 15, 2012 (SECOND READING)
.
RECOMMENDATION
The recommendation is for Council to adopt this Ordinance upon second reading.
DISCUSSION
On February 7, 2012, the City Council adopted the proposed ordinance upon first
reading. The ordinance would take effect 30 days after the date adopted by the City
Council, however the effective date of the contract amendment cannot be earlier than the
first day of a payroll period following the effective date of the final ordinance.
Accordingly, the implementation date of the 2% at 60 3-year FAS Retirement Plan would
be April 15, 2012. This will affect any miscellaneous employee entering membership
with the City of Carmel after the effective date of this amendment to the contract. The
proposed ordinance to adopt the 2% at 60, three-year final average compensation
Retirement Plan and amend the CalPERS contract is part of the final steps required by
CalPERS prior to implementation.
FISCAL IMPACT
There are no immediate savings anticipated from the implementation of this two-tier
system as the reduced contribution rate applies only to new hires. Long term savings will
be realized, however, as staff turnover occurs. The employer contribution rate will be
19.169% of reportable earnings for local safety members entering membership for the
first time in the safety classification after the effective date of this amendment to the
contract.
47
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
ORDINANCE 2012-2
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CARMEL-BY-THE-SEA, AMENDING PROVISIONS OF MUNCIPAL
CODE SECTION 2.56 (RETIREMENT SYSTEM) AND APPROVING AN
AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION OF THE PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM AND THE CITY COUNCIL OF THE
CITY OF CARMEL-BY-THE-SEA WHICH PROVIDES FOR A 2% AT 60
THREE-YEAR FINAL COMPENSATION RETIREMENT PLAN FOR
MISCELLANEOUS MEMBERS HIRED BY THE CITY OF CARMEL-BYTHE-
SEA ON OR AFTER APRIL 15, 2012
____________________________________________________________________________
WHEREAS, the California Public Employees’ Retirement Law permits the participation
of public agencies and their employees in the California Public Employees’ Retirement System
by the execution of a contract, and sets forth the procedure by which said public agencies may
elect to subject themselves and their employees to amendments to said Law;
WHEREAS, the City of Carmel-by-the-Sea entered into its original contract with the
Board of Administration of the California Public Employees’ Retirement System, effective
January 1, 1955.
WHEREAS, one of the requirements to amend said contract is the adoption by the
governing body of the public agency a resolution of its intent to adopt an ordinance to amend
said contract, which has been met by the City Council’s approval of Resolution No. 2012-10 on
February 7, 2012;
WHEREAS, an ordinance is necessary due to severe budgetary difficulties being
experienced by the City and structural reforms are needed to achieve and maintain financial
stability and sustainability;
WHEREAS, the City negotiated with its affected bargaining units to reduce personnel
and benefit costs, if the City Council approves the proposed contract amendment to implement
the 2% @ 60, FAS 3 Retirement Plan for miscellaneous employees hired on or after April 15,
2012;
WHEREAS, the contract amendment to provide a Different Level of Benefits, pursuant
to Government Code Section 20475 and Section 21353 (2% @ 60, FAS 3 Full formula) which
shall apply to miscellaneous members entering membership for the first time in the
miscellaneous classification after the effective date of this amendment to contract;
WHEREAS, the notice requirement for the proposed CalPERS contract amendment was
met by the City Council, which adopted the resolution of intent on February 7, 2012 and adopted
the ordinance on March 6, 2012.
48
BE IT ORDAINED by the City Council of the City of Carmel-by-the-Sea as follows:
SECTION 1. That an ordinance is necessary due to severe budgetary difficulties being
experienced by the City and structural reforms are needed to achieve and maintain financial
stability and sustainability;
SECTION 2. That the amendment to the contract between the City Council of the City of
Carmel-by-the-Sea and the Board of Administration of the California Public Employees’
Retirement System to provide a Different Level of Benefits, pursuant to Government Code
Section 20475, by implementing, pursuant to Government Code Section 21353 a 2% at 60
Retirement Plan and Section 20037 (Three-Year Final Compensation) which shall apply to
miscellaneous members entering membership for the first time in the miscellaneous
classification after the effective date of this amendment to contract, as set forth in the full text of
the amendment attached hereto as Exhibit A, is hereby approved.
SECTION 3. The City Administrator of the City of Carmel-by-the-Sea, or his designee,
is hereby authorized, empowered, and directed to execute said amendment for and on behalf of
the City of Carmel-by-the-Sea.
SECTION 4. The City Clerk shall attest to the execution of the approved amendment to
the contract, and shall certify to the passage and adoption of this ordinance, and it shall
immediately be in full force and effect in accordance with the law.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMELBY-
THE-SEA this 6th day of March 2012 by the following roll call vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
SIGNED,
________________________
SUE McCLOUD, MAYOR
ATTEST:
_________________________________
Heidi Burch, City Clerk