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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 PAGE 11