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Home My WebLink About2010/04/13 Item 20 CITY COUNCIL AGENDA STATEMENT ~(~ CITY OF -~ (HULA VISTA ITEM TITLE: SUBMITTED BY: REVIEWED BY: APRIL 13,2010, Item ;?-I(;) REPORT OF INTENTION TO OFFER EMPLOYEES IN SPECIFIED JOB CLASSIFICATIONS WHO ARE MEMBERS OF THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM (CALPERS) LOCAL MISCELLANEOUS AND LOCAL PUBLIC SAFETY-FIRE GROUPS THE OPPORTUNITY TO RETIRE WITHIN A DESIGNATED PERIOD AND RECEIVE TWO YEARS ADDITIONAL SERVICE CREDIT PURSUANT TO GOVERNMENT CODE ~20903 DIRECTOR OF H~RESOURCES ~ CITY MANAGER ASSISTANT CIT MANAGER ~ 4/STHS VOTE: YES D NO 0 SUMMARY In an effort to significantly reduce Fiscal Years 2011 and 2012 General Fund expenditures and to avoid impending mandatory transfers, layoffs and demotions it is the City's intent to offer the CalPERS Two Years Additional Service Credit benefit option as an incentive to retirement to specified classifications (Appendix A) covered under the City's contracts with CalPERS for Local Miscellaneous and Local Public Safety Fire employees. This report is being presented to meet CaIPERS' requirement that the estimated additional employer contributions, which will be required in the future for providing the two years service credit, be disclosed prior to the adoption of the resolution implementing the option. The resolution will be presented at the May 4,2010, Council meeting. ENVIRONMENTAL REVIEW Not applicable. RECOMMENDATION That Council accept this report satisfying the cost disclosure requirements under Government Code 97507. 20-1 APRIL 13, 2010, Item dO Page 2 of5 BOARDS/COMMISSION RECOMMENDA nON Not applicable. DISCUSSION On October 16, 2007, the City amended both the'Miscellaneous and Safety contracts between the Board of Administration of the California Public Employee's Retirement Board (CaIPERS) and the City of Chula Vista to provide the optional Two Years Additional Service Credit benefit (G.c. ~20903). Since that time the City has offered the benefit on four occasions as part of an early retirement incentive to qualified employees due to impending layoffs, mandatory transfers and demotions. Below is a summary of the retirement incentive packages that have been offered: Date Approved Eligible Group Window Medical Incentive No. of by Period Retirees Council All . Medical incentive through Miscellaneous 12/31/09 if retiring between I 10/16/2007 and Police and 11/08/07- 11/08/07-12/31/07 62 Fire Safety 02/05/08 . Medical incentive through 12/31/08 if retiring 01/01/08- members 02/05/08 All Miscellaneous . Medical incentive through 2 .04/22/2008 members and 05/05/08- 12/31/09 if retiring 05/05/08- 18 Police and Fire 08/05/08 06/05/08 only managers . Medical incentive through All 12/31/10 if retiring Miscellaneous 3 12/16/2008 and Police and 12/31/08- 01/0 1/09-03/27/09 33 06/26/09 . Medical incentive through Fire Safety 12/31/09 if retiring members 03/28/09-06/26/09 . Medical incentive for two All calendar years if retiring Miscellaneous 07115/09- Under the Two Additional 4 07/14/09 Years Service Credit 10 and Police 10/12/09 . Medical incentive for four Safety members calendar years if normal retirement TOTAL 123 Due to the continuing budgetary challenges for Fiscal Years 2011 and 2012 and the likelihood there will layoffs, mandatory transfers and demotions it is recommended that the City again offer the Two Years Additional Service Credit option, this time to its Miscellaneous and Public Safety-Fire members. It is further recommended that the 20-2 APRIL 13,2010, ltem;20 Page 3 of5 designated window for these employees to take advantage of this opportunity be May 5, 2010 to August 2, 2010. The City must certify that any vacancies created by individuals taking the service credits pursuant to G.c. 920903, or at least one vacancy in any position in any department or other organizational unit, remain permanently unfilled, thereby resulting in an overall reduction in the workforce ofthe department or organizational unit. Window Period In order for an employee to qualify for the additional service credit they must retire within the period designated by the governing body. The designated period cannot be less than 90 or more than 180 days in length. In order to achieve the savings, in a timely manner, needed to avoid layoffs, transfers and demotions, staff is recommending the shorter ninety-day (90) window period from May 5,2010 to August 2, 2010. Eligibility For an employee (CaIPERS member) to be eligible to receive the additional two years credit the following requirements must be met: . The member's classification must be one of those listed in Appendix A of this report; . The member must have at least five years of CalPERS service credit; . The member must be employed for at least one day during the designated period; . The member must retire during the designated period, however, the member's retirement date may not be the first day of the designated period; . The member cannot ,receive credit under this section if the member receives any unemployment insurance payments during the designated period; . If the retired member subsequently reenters membership, the additional service credit is forfeited. DECISION MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500 foot mle found in California Code of Regulations gI8704.2(a)(I) is not applicable to this decision. FISCAL IMPACT The "additional employer contributions" that are disclosed here are an estimate of the present value of additional employer contributions which will be required in the future for providing the two years service credit. The amount is calculated based on the eligible members' annual reportable compensation, a cost factor established by CalPERS actuaries and the fact that the City contracts for the Post-Retirement Survivor Allowance (Survivor Continuance). The "additio.nal employer contributions" will be paid by the City through an increase in the employer contribution rate, starting two fiscal years after 20-3 APRIL 13,2010, Item,9V Page 4 of5 the end of the designated period. The increase in the employer contribution rate may continue for as long as 20 years, unless it is prepaid. The calculations below satisfy the disclosure requirements of Government Code 97507. The actual present value of additional contributions may differ trom the estimate for two reasons: 1) Some of the members who are eligible to retire and receive the two years service credit (and who are included in the estimate) may choose not to retire. Staff believes the cost will be less as they are estimating that only about 5% of the eligible employees will actually retire. 2) There may be an additional cost to the City (called an experience loss) if the total number of members retiring in the fiscal year exceeds the number predicted by the actuarial assumptions. An experience loss occurs very often when the two years service credit is offered because some members retire who would have otherwise waited until later years. Estimated Cost of Additional Employer Contributions (Based on 100% participation) Local Miscellaneous Additional Employer Contribution: Annual Cost: Rate Increase in Employer Contribution: $8,846,646 (over twenty years) $ 442,332 1.62% Local Public Safety-Fire - Additional Employer Contribution: Annual Cost: Rate Increase in Employer Contribution: $282,329 (over twenty years) $ 14,116 0.20% Estimated Salary Sayinl!:s If 5% of 196 eligible employees retire under this program, the estimated annual base salary savings would be approximately $682,168 as follows: Local Miscellaneous Local Public Safety Fire Total Estimated Savings $663,730 $ 18.438 $682,168 There are no costs to the employee/member with this option. A final list of employees who apply for retirement pursuant to the offer will be presented to CalPERS after the expiration of the application window. The actual cost/savings can be more accurately estimated at that time. In addition to the budgetary impacts, there is an impact to the City's unfunded liability for Other Post-Employment Benefits (OPEB) reportable in compliance with the 20-4 APRIL 13,2010, Item ,,;}V Page 5 of5 Governmental Accounting Standards Board Pronouncement 45 (GASB 45). The Finance Department will determine and report the OPEB. CalPERS Process ~ The process set out by CalPERS to offer this benefit is very specific. While a contract amendment between the City of Chula Vista and CalPERS to offer this additional designated period is not required, the City is required to announce its intent to grant another designated period and to disclose the estimated cost of that offering at a public meeting. This report will be followed in no less than two weeks, a waiting period required by CalPERS, with a request for a Council Resolution certifying that as our governing body the Council is electing to be subject to the provisions of Government Code 920903 Two Years Additional Service Credit. ATTACHMENTS Appendix A -Classifications Eligible to Participate 20-5 EARLY RETIREMENT INCENTIVE CLASSIFICATIONS ELIGIBLE TO PARTICIPATE Window Period: May 5, 2010 through August 2,2010 1 ADMIN. TECHNICIAN 62 PARK RANGER 2 ADMINISTRATIVE SECRETARY 63 PARKS MANAGER 3 ADMINISTRATIVE TECHNICIAN 64 PARKS SUPERVISOR 4 ADVANCED PLNNG MGR 65 PLANS EXAMINER 5 ANIMAL CARE ASSISTANT 66 PLUMBER 6 ASSISTANT SURVEYOR II 67 POLICE COMM RELATIONS SPEC 7 ASSOC ENGINEER 68 PQUCE COMM SYSTEMS MANAGER 8 ASSOCIATE PLANNER 69 POLICE DATA SPECIALIST 9 ASST CITY MANAGER/ADMIN 70 POLICE RECORDS SPECIALIST 10 BLDG PROJECT MANAGER 71 POLICE RECORDS TRANSCRIPTIONIST 11 CITY ATTORNEY 72 POLICE SERVICES OFFICER 12 CITY MANAGER 73 POLICE SUPPORT SERVICES MGR 13 CODE ENF OFFCR II 74 POLICE TECHNOLOGY SPECIALIST 14 CODE ENFORCEMENT MANAGER 75 PRINCIPAL CIVIL ENGINEER 15 COMMUNITY SERVICE OFFICER 76 PRINCIPAL LIBRARIAN 16 CONSTRUCTION & REPAIR MGR 77 PRINCIPAL PLANNER 17 CRIME LABORATORY MANAGER 78 PRINCIPAL RECREATION MANAGER 18 CUSTODIAL SUPERVISOR 79 PUB WORKS SPECIALIST 19 CUSTODIAN 80 PUBLIC INFORMATION OFFICER-PO 20 DEP CITY MGR/DIR OF DEV SVCS 81 PUBLIC SAFETY ANALYST 21 DEPUTY CITY ATTORNEY III 82 PUBLIC WORKS INSP II 22 DEV PLANNING MGR 83 PUBLIC WORKS MANAGER 23 DEVELOPMENT SVCS TECH II 84 PUBLIC WORKS SUPERVISOR 24 DIR OF CONSERV & ENVIR SERV 85 PUMP MAINT TECHNICIAN 25 DIR OF HUMAN RESOURCES 86 PUMP MAINTENANCE SUPERVISOR 26 DIR OF INFO TECH SVCS 87 REAL PROPERTY MANAGER 27 DIR OF LIBRARY 88 RECREATION SUPERVISOR II 28 DIR OF PUBLIC WORKS 89 RECREATION SUPERVISOR III 29 DIRECTOR OF RECREATION 90 RECYCLING SPECIALIST II 30 ECONOMIC DEVELOPMENT OFFICER 91 SECRETARY 31 ELECTRICIAN 92 SIGNAL SYSTEMS ENGINEER II 32 ELECTRONICS TECH SUPERVISOR 93 SR ADMINISTRATIVE SECRETARY 33 ELECTRONICS TECHNICIAN 94 SR CIVIL ENGINEER 34 ENGINEERING TECH II 95 SR CODE ENFORCEMENT OFFICER 35 ENVIRON SVCS PROG MGR 96 SR COUNCIL ASST 36 EQUIPMENT MECHANIC 97 SR ENGINEERING TECHNICIAN 37 EQUIPMENT OPERATOR 98 SR EQUIPMENT MECHANIC 38 EXECUTIVE SECRETARY 99 SR FIRE INSPECTOR 39 FACILITY & SUPPLY SPECIALIST 100 SR FISCAL OFFICE SPECIALIST 40 FIRE APPARATUS MECH 101 SR GARDENER 41 FLEET MANAGER 102 SR HVAC TECHNICIAN 42 GARDENER II 103 SR LANDSCAPE INSPECTOR 43 LAND SURVEYOR 104 SR MAINTENANCE WORKER 44 LANDSCAPE ARCHITECT 105 SR OFFICE SPECIALIST 45 LANDSCAPE PLANNER II 106 SR PARK RANGER 46 LEAD CUSTODIAN 107 SR PLANNER 47 LEGAL ASSISTANT 108 SR PLANNING TECHNICIAN 48 LIBRARIAN II 109 SR POLICE DATA SPECIALIST 49 LIBRARIAN III 110 SR PROJECT COORDINATOR 50 LIBRARY AIDE 111 SR PUB WORKS SPECIALIST 51 LIBRARY ASSOCIATE 112 SR PUBLIC WORKS INSP 52 LIBRARY ASSOCIATE (HRLY) 113 SR SECRETARY 53 LIBRARY DIGITAL SERVICES MGR 114 SURVEY TECHNICIAN II 54 LIBRARY TECHNICIAN 115 TRAFFIC DEVICES TECH 55 LOCKSMITH 116 TRAFFIC DEVICES TECH SUPV 56 MAINTENANCE WORKER II 117 TRANSIT MANAGER 57 MUSEUM ATTENDANT 118 TRANSPORTATION ENGINEER W/CERT 58 OFFICE SPECIALIST 119 TREE TRIMMER 59 OFFICE SPECIALIST iMYR/ia)WILL) 120 TREE TRIMMER SUPERVISOR 60 OPEN SPACE INSPECTOR 121 WASTEWATER COLLECTIONS MANAGER 61 OPEN SPACE MANAGER 20-6