09.04 Amending CalPERS Contract1. SUBJECT
Ordinance No. 05 -18 and Resolution No. 11063 — An ordinance and resolution of the City
Council of the City of Orange Amending its retirement contract with the California Public
Employees' Retirement System (Ca1PERS) to provide Section 21574 (Fourth Level of 1959
Survivor Benefits) to local safety members.
2. SUMMARY
Ordinance No. 05 -18 amends the City's retirement contract with Ca1PERS to provide Section
21574 (Fourth Level of 1959 Survivor Benefits) to local safety members. Resolution No. 11063
memorializes the City's intent to approve said contract. Details of this agreement are provided
under Section 6, "Discussion and Background" below.
3. RECOMMENDED ACTION
Approve Ordinance No. 05 -18 and Resolution No. 11063.
4. FISCAL IMPACT
Fiscal Year 2018 -19
Cost Description for Fire
General Fund
First Year Employer Normal Cost
$7,728
5 -Year Amortization of Unfunded Liability/
Excess Asset payment (Fixed for 5 ears
($15,325)
First Year Total Employer Cost
$0
Fiscal Year
2018 -19
Cost Description for Police
General Fund
First Year Employer Normal Cost
$10,013
5 -Year Amortization of Unfunded Liability/
Excess Asset payment (Fixed for 5 years)
($32,542)
First Year Total Employer Cost
$0
5. STRATEGIC PLAN GOAL(S)
1. Provide for a safe community.
a. Provide staffing and resources to deliver services that ensure public safety.
2. Be a fiscally healthy community.
a. Expend fiscal resources responsibly.
6. DISCUSSION and BACKGROUND
In April 2017, the City began the collective bargaining process with the four safety associations.
The prior contract between the parties expired on June 30, 2017. On October 17, 2017, the
parties reached agreement on the terms and conditions of a new two -year labor contract that
included the increase of the 1959 Survivor's third level of benefits to the fourth level
(Government Code Section 21382.4) for safety members, including the Police Chief and Fire
Chief.
The 1959 Survivor Benefit is available to employees who aren't covered by Social Security and is
designed to provide a monthly allowance to eligible survivors of covered members who die
before retirement. There are six different benefit levels. The applicable level depends on the
contract the employer has with Ca1PERS. Currently safety employees are covered under the third
level.
For the fourth level of 1959 Survivor Benefits, the employer cost for the program is the payment
of the pool's annual employer normal cost, $5.60 per covered member per month (subject to
annual change). The City will be billed annually and the normal cost will be recalculated each
year. However, because the City had excess assets in the third level pool, CalPERS will amortize
this excess over a period of five years. This amortization is larger than the total normal cost,
which makes the City's cost zero for the first five years. After the first five years, the City is
required to pay the net premium for the fourth level pool, which will vary from year to year due
to investment returns and experiences by the pool.
Per our agreements with safety associations, members shall pay the $2.00 employee portion, and
the City shall pay the employer portion subject to the following limit: In the event the employer
ITEM 2 02/13/18
portion exceeds $6.00, safety members agree to pay any portion of the employer portion that
exceeds $6.00.
Ca1PERS requires two ordinance readings, this is the first, with the second to be held at the
March 13, 2018 Council meeting.
7. ATTACHMENTS
• Ordinance No. 05 -18
• Resolution No. 11063
• CalPERS Amendment to Contract - Exhibit Contract
ITEM 3 02/13/18
ORDINANCE NO. 05-18
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF ORANGE AUTHORIZING AN
AMENDMENT TO THE CONTRACT BETWEEN THE
CITY COUNCIL OF THE CITY OF ORANGE AND
THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT
SYSTEM.
THE CITY COUNCIL OF THE CITY OF ORANGE DOES ORDAIN AS
FOLLOWS:
SECTION I:
That an amendment to the contract between the City Council of the City of Orange and
the Board of Administration, California Public Employees' Retirement System is hereby
authorized, a copy of said amendment being attached hereto, marked Exhibit, and by such
reference made a part hereof as though herein set out in full.
SECTION II:
The Mayor of the City of Orange is hereby authorized, empowered, and directed to
execute said amendment for and on behalf of said Agency.
SECTION III:
The summary of this Ordinance shall be published and a certified copy of the full text of
this Ordinance shall be posted in the Office of the City Clerk at least five (5) days prior to the
City Council meeting at which this Ordinance is adopted. A summary of this Ordinance shall
also be published once within fifteen (15) days after this Ordinance's passage in a newspaper of
general circulation, published, and circulated in the City of Orange. The City Clerk shall post in
the Office of the City Clerk a certified copy of the full text of such adopted Ordinance along with
the names of those City Council members voting for and against the Ordinance in accordance
with Government Code Section 36933. This Ordinance shall take effect thirty (30) days from
and after the date of its final passage.
ADOPTED this day of , 2018.
Teresa E. Smith, Mayor, City of Orange
RESOLUTION NO. 11063
A RESOLUTION OF INTENTION TO APPROVE
AN AMENDMENT TO CONTRACT BETWEEN
THE BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM AND THE CITY
COUNCIL OF THE CITY OF ORANGE
WHEREAS, the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the 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; and
WHEREAS, one of the steps in the procedures to amend this contract is the adoption by
the governing body of the public agency of a resolution giving notice of its intention to approve
an amendment to said contract, which resolution shall contain a summary of the change proposed
in said contract; and
WHEREAS, the following is a statement of the proposed change:
To provide Section 21574 (Fourth Level of 1959 Survivor
Benefits) for local safety members.
NOW, THEREFORE, BE IT RESOLVED that the governing body of the above
agency does hereby give notice of intention to approve an amendment to the contract between
said public agency and the Board of Administration of the Public Employees' Retirement System,
a copy of said amendment being attached hereto, as an "Exhibit" and by this reference made a
part hereof.
ADOPTED this day of , 2018
Teresa E. Smith, Mayor, City of Orange
ATTEST:
Mary E. Murphy, City Clerk, City of Orange
CITY COUNCIL MINUTES FEBRUARY 13, 2018
9. LEGAL AFFAIRS (Continued)
9.3 Ordinance Amending Chapter 12.32 of the Orange Municipal Code regarding tree
preservation. Ordinance No. 04 -18 (First Reading). (A2500.0)
An Ordinance of the City Council of the City of Orange amending Chapter 12.32 of the
Orange Municipal Code regarding tree preservation.
Public Speaker:
Paula Meyer, attorney for William Warne — spoke in opposition of adopting the Ordinance.
MOTION — Smith
SECOND — Murphy
AYES — Whitaker, Smith, Murphy, Nichols
NOES — Alvarez
Moved to approve Ordinance No. 04 -18 for First Reading and same was set for Second
Reading by the preceding vote.
9.4 Ordinance and Resolution amending the City's contract with Ca1PERS to provide
Section 21574 benefits to local safety members. Ordinance No. 05 -18 (First Reading).
Resolution No. 11063. (A2500.0)
An Ordinance of the City Council of the City of Orange amending the City's retirement
contract with Ca1PERS to provide Section 21574 (Fourth Level of 1959 Survivor Benefits)
to local safety members; and a Resolution of intention to approve an amendment to contract
between the Board of Administration California Public Employees' Retirement system and
the City Council of the City of Orange.
MOTION — Smith
SECOND — Murphy
AYES — Alvarez, Whitaker, Smith, Murphy, Nichols
Moved to approve Ordinance No. 05 -18 for First Reading and same was set for Second
Reading by the preceding vote.
MOTION — Nichols
SECOND — Whitaker
AYES — Alvarez, Whitaker, Smith, Murphy, Nichols
Moved to approve Resolution No. 11063.
10. ITEMS RELATING TO THE SUCCESSOR AGENCY OF THE ORANGE
REDEVELOPMENT AGENCY — None
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