TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Teresia Zadroga-Haase, Human Resources Director
SUBJECT:Title
Resolution Approving the Agreement with the City of Manhattan Beach Police Officers’ Association modifying Article 20 Retirement of the Memorandum of Understanding (Human Resources Director Zadroga-Haase)
ADOPT RESOLUTION NO. 16-0040
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Recommended Action
RECOMMENDATION:
It is recommended that the City Council adopt by Resolution the attached Side Letter Agreement with the City of Manhattan Beach Police Officers’ Association (POA) modifying Article 20 Retirement of the Memorandum of Understanding (MOU). The City Council adoption will authorize the City Manager to execute the Side Letter Agreement and take appropriate actions necessary to carry out the terms of the Side Letter Agreement.
FISCAL IMPLICATIONS:
The Side Letter Agreement will allow the City to modify the CalPERS contract with no fiscal impact.
BACKGROUND:
The current Police Officers’ Association MOU provides that the employees pay the nine percent (9%) CalPERS member contribution and an additional three percent (3%) share of the employer retirement contribution as cost sharing pursuant to Government Code section 20516(f). In order to allow employees to pay the additional three percent (3%) as a pre-tax deduction, the City needs to amend the CalPERS contract.
During labor contract negotiations with the Fire Association last year, the City agreed to implement this amendment to the CalPERS contract as soon as administratively possible. The Fire Association Memorandum of Understanding was adopted by the City Council on January 19, 2016. The contract amendment process with CalPERS is approximately a four month process with multiple public hearings and only one contract amendment allowed to be in process at any given time. Therefore, the most efficient approach is to process all pending contract amendments in one concurrent process with CalPERS.
DISCUSSION:
The POA representatives and City representatives desire to modify the MOU language to reflect the necessary steps the City will take to amend the CalPERS contract in accordance with Government Code section 20516(a). Implementing cost-sharing under Government Code Section 20516(a) versus 20516(f) allows the additional cost-sharing amount to be made on a pre-tax basis under Internal Revenue Code Section 414(h)(2). This will increase take home wages for affected employees, and there is no fiscal impact to the City. Section 20516(a) also changes the nature of the cost sharing to be contractually required by California Public Employment Retirement law, meaning it can only be eliminated or modified by subsequent amendment of the City’s contract with CalPERS
POLICY ALTERNATIVES:
The recommended action is administrative in nature and there are no viable alternatives.
PUBLIC OUTREACH/INTEREST:
Staff determined that public outreach was not required for this issue.
LEGAL REVIEW
The agreement has been reviewed and approved by the City Attorney’s office as to legal form.
Attachments:
1. Resolution No. 16-0040 - Side Letter Agreement with POA
2. Side Letter Agreement