09.02 CalPERS Retirement Contract AmendmentTO:
THRU:
FROM:
AGENDA ITEM
April 14, 2020
Honorable Mayor and Members of the City Council
Rick Otto, City Manager
Monica Espinoza,Human Resources Director _.: r '' ..
REVIEW: City Man
1. SUBJECT
inance
Ordinance No. 10-20 and Resolution No. 11220 — An Ordinance and Resolution of the
City Council of the City of Orange amending its retirement contract with the California
Public Employees' Retirement System (CaIPERS) to provide Section 21574 (Fourth Level
of 1959 Survivor Benefits) to local miscellaneous members.
2. SUMMARY
Ordinance No. 10-20 amends the City's retirement contract with CalPERS to provide
Section 21574 (Fourth Level of 1959 Survivor Benefits) to local miscellaneous members.
Resolution No. 11220 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
1. Approve Ordinance No. 10-20.
2. Approve Resolution No. 11220.
4. FISCAL IMPACT
Costing summary:
Fiscal Year 2019-20
Cost Description for Miscellaneous General Fund
First Year Employer Normal Cost 22,680
5-Year Amortization of Unfunded
Liability/Excess Asset payment (Fixed for 5
years)
74,001)
First Year Total Employer Cost 0
ITEM 1 04/14/2020
5. STRATEGIC PLAN GOALS
Goal 1: Provide for a safe community.
a: Provide staffing and resources to deliver services that ensure public safety.
Goal 2: Be a fiscally healthy community.
a: Expend fiscal resources responsibly.
6. DISCUSSION AND BACKGROUND
In August 2019, the City began the collective bargaining process with the four
miscellaneous associations. The prior contract between the parties expired on December
31, 2019. In December 2019, the parties reached agreement on the terms and conditions
of a new three-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 miscellaneous
members.
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. The following chart represents the benefit amount
payable based on the number of eligible survivors:
Benefit Level One Survivor Two Survivors Three or More Survivors
Level 350 700 840
Level 4 950 1,900 2,280
Currently miscellaneous 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, $5.40 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 agreement with miscellaneous 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 portion exceeds $6.00, miscellaneous members agree to
pay any portion of the employer portion that exceeds $6.00.
CalPERS requires two ordinance readings, this is the first, with the second to be held at
the May 12, 2020 Council meeting.
7. ATTACHMENTS
Ordinance No. 10-20
Resolution No. 11220
CalPERS Amendment to Contract — Exhibit Contract
CalPERS Certification of Compliance with Government Code Section 7507
CalPERS Certification of Governing Body's Action
ITEM 2 04/14/2020
ORDINANCE NO. 10-20
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 of the 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 the City.
SECTION III:
The City Clerk is hereby directed to certify the adoption of this Ordinance and cause the
same to be published as required by law. This Ordinance shall take effect thirty (30) days from
and after the date of its final passage.
ADOPTED this day of , 2020.
Mark A. Murphy, Mayor, City of Orange
ATTEST:
Pamela Coleman, City Clerk, City of Orange
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF ORANGE )
I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify
that the foregoing Ordinance was introduced at the regular meeting of the City Council held on
the day of , 2020, and thereafter at the regular meeting of said City Council
duly held on the day of , 2020, was duly passed and adopted by the following
vote, to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Pamela Coleman, City Clerk, City of Orange
Ord. No. 10-20 2 MEB
RESOLUTION NO. 11220
A RESOLUTION OF INTENTION TO APPROVE
AN AMENDMENT TO CONTRACT BETWEEN
THE BOARD OF ADMINISTRATION OF THE
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 miscellaneous 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 , 2020
Mark A. Murphy, Mayor, City of Orange
ATTEST:
Pamela Coleman, City Clerk, City of Orange
I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify
that the foregoing Resolution was duly and regularly adopted by the City Council of the City of
Orange at a regular meeting thereof held on the day of , 2020 by the
following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Pamela Coleman, City Clerk, City of Orange
Reso. No. 11220 2 MEB
AA\f#%,*
Ca1PERS
California
Public Employees' Retirement System
EXHIBIT
AMENDMENT TO CONTRACT
Between the
Board of A nmistration
California Public Employees' Retirement System
and the
City Council
City of Orange
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,
1958, and witnessed May 13, 1958, and as amended effective October 1, 1966, October
7, 1971, January 16, 1977, August 26, 1979, April 1, 1982, July 24, 1983, March 31, 1985,
December 31, 1989, July 23, 1991, December 7, 1997, July 1, 2000, May 20, 2001,
January 1, 2002, June 29, 2003, June 22, 2012 and April 15, 2018 which provides for
participation of Public Agency in said System, Board and Public Agency hereby agree as
follows:
A. Paragraphs 1 through 16 are hereby stricken from said contract as executed
effective April 15, 2018, and hereby replaced by the following paragraphs
numbered 1 through 16 inclusive:
1. All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided. "Normal retirement age" shall mean age 55 for classic
local miscellaneous members, age 62 for new local miscellaneous
members, age 50 for classic local safety members and age 57 for new local
safety members.
2. Public Agency shall participate in the Public Employees' Retirement System
from and after July 1, 1958 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 CaIPERS 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 attorney fees that may arise as a result
of any of the following:
a) 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.
b) Any dispute, disagreement, claim, or proceeding (including
without limitation arbitration, administrative hearing, or litigation)
between Public Agency and its employees (or their
representatives) which relates to Public Agency's election to
amend this Contract to provide retirement benefits, provisions or
formulas that are different than such employees' existing
retirement benefits, provisions or formulas.
c) Public Agency's agreement with a third party other than CaIPERS
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.
4. Employees of Public Agency in the 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 Officers (herein referred to as local safety members);
C. Employees other than local safety members (herein referred to as
local miscellaneous 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. ELECTED OFFICIALS HIRED ON OR AFTER JUNE 22, 2012.
6. The percentage of final compensation to be provided for each year of
credited prior and current service for classic local miscellaneous members
in employment before and not on or after June 29, 2003 shall be determined
in accordance with Section 21354 of said Retirement Law, subject to the
reduction provided therein for service prior to September 30, 1971,
termination of Social Security, for members whose service has been
included in Federal Social Security (2% at age 55 Full and Modified).
7. The percentage of final compensation to be provided for each year of
credited prior and current service for classic local miscellaneous members
in employment on or after June 29, 2003 shall be determined in accordance
with Section 21354.5 of said Retirement Law, subject to the reduction
provided therein for service prior to September 30, 1971, termination of
Social Security, for members whose service has been included in Federal
Social Security (2.7% at age 55 Full and Modified).
8. The percentage of final compensation to be provided for each year of
credited prior and current service as a new local miscellaneous member
shall be determined in accordance with Section 7522.20 of said Retirement
Law (2% at age 62 Full).
9. The percentage of final compensation to be provided for each year of
credited prior and current service as a classic local safety member shall be
determined in accordance with Section 21362.2 of said Retirement Law (3%
at age 50 Full).
10. The percentage of final compensation to be provided for each year of
credited prior and current service as a new local safety member shall be
determined in accordance with Section 7522.25(d) of said Retirement Law
2.7% at age 57 Full).
11. Public Agency elected and elects to be subject to the following optional
provisions:
a. Sections 21624 and 21626 (Post -Retirement Survivor Allowance).
b. Section 20042 (One -Year Final Compensation) for classic members
only.
C. Section 20903 (Two Years Additional Service Credit).
d. Section 20516 (Employees Sharing Cost of Additional Benefits):
Section 21354 (2% @ 55 Full and Modified) for local miscellaneous
members. From and after December 7, 1997 and until July 1, 2000
the miscellaneous employees of Public Agency shall be assessed an
additional 4% of their compensation for a total contribution rate of
11 % pursuant to Government Code Section 20516.
e. Section 21024 (Military Service Credit as Public Service).
Section 21027 (Military Service Credit for Retired Persons).
g. Section 21574 (Fourth Level of 1959 Survivor Benefits).
12. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
January 16, 1977. 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 20834.
13. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
14. 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 21573 of said Retirement
Law. (Subject to annual change.) In addition, all assets and liabilities
of Public Agency and its employees shall be pooled in a single
account, based on term insurance rates, for survivors of all local
miscellaneous members.
b. Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and liabilities
of Public Agency and its employees shall be pooled in a single
account, based on term insurance rates, for survivors of all local
safety members.
C. 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 valuations required by law.
d. A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
15. Contributions required of Public Agency and its employees shall 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
valuation required by said Retirement Law.
16. 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 the 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 CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF ORANGE
BY
ARNITA PAIGE, CHIEF
PENSION CONTRACTS AND PREFUNDING
PROGRAMS DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AMENDMENT CaIPERS ID #2643484567
PERS-CON-702A
BY
PRESIDING OFFICER
Witness Date
Attest:
Clerk
Ak, Ca1PERS
California Public Employees' Retirement System
Financial Office I Pension Contracts and Prefunding Programs Division
P.O. Box 942703, Sacramento, CA 94229-2703
888 CalPERS (or 888-225-7377) 1 TTY: (877) 249-7442 1 www.calpers.ca.gov
Certification of Compliance with
Government Code Section 7507
I hereby certify that in accordance with Government Code section 7507, the future annual costs
as determined by the California Public Employees' Retirement System for the increase or change
in retirement benefit(s) have been made public at a public meeting of the City Council of the
governing body)
City of Orange on April 14, 2020 which is at least two weeks prior to the adoption of
public agency) (date)
the Resolution / Ordinance. Adoption of the retirement benefit increase or change will not be
placed on the consent calendar.
Pamela Coleman
City Clerk
Title
Date April 14, 2020
PERS-CON-12A (rev. 12/11/18)
caipms
California Public Employees' Retirement System
Financial Office I Pension Contracts and Prefunding Programs Division
P.O. Box 942703, Sacramento, CA 94229-2703
888 CalPERS (or 888-225-7377) 1 TTY: (877) 249-7442 1 www.calpers.ca.gov
Certification of Governing Body's Action
I hereby certify that the foregoing is a true and correct copy of a Resolution adopted by the
City Council of the
governing body)
City of Orange
public agency)
on April 14, 2020
date)
Pamela Coleman
City Clerk
Title
PERS-CON12 (rev. 1/22/19)