TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Lisa Jenkins, Human Resources Director
SUBJECT:Title
Consideration of Introducing an Ordinance and Adopting a Resolution of Intention to Amend the Contract Between the Board of Administration California Public Employees Retirement System (CalPERS) and the City of Manhattan Beach to Provide Provisions of Retirement Law Section 20516 - Employee Cost Sharing (Human Resources Director Jenkins).
(Estimated Time: 5 Mins.)
A) INTRODUCE ORDINANCE NO. 23-0012
B) ADOPT RESOLUTION NO. 23-0156
Line
_________________________________________________________
Recommended Action
RECOMMENDATION:
It is recommended that the City Council introduce Ordinance No. 23-0012, amending the contract between the Board of Administration of the California Public Employees’ Retirement System (CalPERS) and adopt Resolution No. 23-0156, a Resolution of Intention to approve an amendment to the contract between the Board of Administration CalPERS and the City of Manhattan Beach, to include the provisions of retirement law Government Code Section 20516 (Employees Sharing Cost of Additional Benefits) for the “Classic” sworn unrepresented employees (Police Chief, Fire Chief, and Division Chiefs)
FISCAL IMPLICATIONS:
There are no fiscal implications associated with the recommended action regarding additional employee cost sharing for CalPERS contribution.
BACKGROUND:
The California Public Employees Retirement System (CalPERS) retirement benefits are funded by contributions from the employee and employer and investment earnings. The sworn unrepresented employee contribution is fixed at 9% of each employee’s pensionable income for “classic” CalPERS members (or 50% of Normal Cost for “new members”). “Classic” members are defined as those employed within a CalPERS agency prior to the Public Employees Pension Reform Act of 2013 (PEPRA) and “new members” are those who entered the retirement system after January 1, 2013. Government Code Section 20516 permits employees to contribute to the employer’s contribution through CalPERS cost sharing provisions.
In an effort to reduce the City’s CalPERS employer contribution cost, the City increased the sworn unrepresented employees’ contribution to 3% (Cost Sharing) toward the employer contribution in March of 2022.
In order for the staff to initiate the process to amend the City’s retirement contract with CalPERS, on the September 19, 2023 meeting, the City Council adopted Resolution No. 23-0114 approving the provisions of Government Code Section 20156 (Employee Sharing Additional Cost) for sworn classic unrepresented employees in the Full-Time Unrepresented Employees Group.
DISCUSSION:
The next step in the process is for the City Council to adopt a Resolution of Intention to Approve an Amendment to Contract (Attachment 2) and to introduce an Ordinance (drafted - Attachment 1) to amend the contract. A draft version of the CalPERS Amendment to Contract is attached as an “Exhibit” with Attachment 1. In addition to adopting the Resolution of Intention, a Certification of Governing Body’s action and a Certification of Compliance with Government Code Section 20516 must be completed (Attachment 3 and 4). At least 20 days after adoption of the Resolution of Intention, the City Council must adopt an Ordinance authorizing an amendment to Contract.
During the minimum 20-day wait period, a secret ballot election must be held for employees affected by the contract amendment. Government Code 20474 requires an election when the contract amendment changes the employees’ rate of contribution. The secret ballot elections between the classic sworn unrepresented employees must be conducted within 10 days of Council Adoption of the Resolution of Intention. A sample employee ballot is attached for informational purposes (Attachment 5). If the majority of the group does not approve the change, the amendment will not move forward. The employees will continue to contribute the 3% of the employer cost on an after-tax basis.
In order to ensure that the employee contribution towards employer cost sharing continues to be made on a pre-tax basis pursuant to Government Code Section 20516(a) and IRS Code Section 414(h)(2), staff is recommending ratification of this action through Resolution of Intention, No. 23-0156.
In anticipation of positive employee election results, the final adoption of the Ordinance 23-0125 will be scheduled on the City Council agenda for the December 19, 2023 or subsequent meeting. Pursuant to Government Code Section 20471, there must be a 20-day waiting period between the adoption of the Resolution of Intention and the adoption of the final Ordinance. The contract amendment will be effective the beginning of the first day of the pay period following the effective date of the final Ordinance which is 30 days following the adoption of the Ordinance.
PUBLIC OUTREACH:
Staff determined that additional public outreach is not required for this issue.
LEGAL REVIEW:
The City Attorney has approved the resolution and employment agreement as to form.
ATTACHMENTS:
1. Ordinance No. 23-0012
2. Resolution No. 23-0156
3. Certification of Governing Body’s Action (CON-12)
4. Certification of Compliance with Government Code Section 20516 (CON-500)
5. Sample of Employee Cost Sharing Ballot