The URL can be used to link to this page

Home My WebLink About2010/04/20 Item 16 CITY COUNCIL AGENDA STATEMENT ~/l', ~\~ CITY OF ~ (HULA VISTA ITEM TITLE: SUBMITTED BY: REVIEWED BY: APRIL 20, 2010, Item~ 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 ~ RESOURCES 1.6~ CITY MANAGER ASSISTANT CI MANAGER <=;>-,-- 4/5THS VOTE: YES D NO ~ 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 CaIPERS Two Years Additional Service Credit benefit option as an incentive to retirement to specified classifications (Appendix A) covered under the City's contracts with CaIPERS 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 ;)7507. 16-1 APRIL 20, 2010, Item /6 Page 2 of6 BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION This item was originally presented to Council oir April 13, 2010. Council requested clarification on several points. This report addresses those concerns. 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. 920903). 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 tbrough Miscellaneous 12/31/09 if retiring between 1 10/16/2007 and Police and 11/08/07- 11/08/07-12/31/07 62 Fire Safety 02/05/08 . Medical incentive tbrough 12/31/08 if retiring 01101108- members 02/05/08 All Miscellaneous 05/05/08- . Medical incentive tbrough 2 04/22/2008 members and 08/05/08 12/31/09 if retiring 05/05/08- 18 Police and Fire 06/05/08 only managers . Medical incentive tbrough All 12/31/10 if retiring Miscellaneous 3 12/16/2008 and Police and 12/31/08- 01/01/09-03/27/09 33 06/26/09 . Medical incentive tbrough Fire Safety 12/31/09 if retiring members 03/28/09-06/26/09 . Medical incentive for two All calendar years if retiring Under the Two Additional 4 07/14/09 Miscellaneous 07/15/09- Years Service Credit 10 and Police 10/12/09 . Medical incentive for four Safety members calendar years if normal retirement TOTAL 123 16-2 APRIL 20, 2010, Item~ Page 3 of6 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 designated window for these employees to take advgntage 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 of the 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 trom May 5, 2010 to August 2, 2010. Eligibility For an employee (CalPERS 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 rule found in California Code of Regulations 9l8704.2(a)(1) is not applicable to this decision. CURRENT YEAR FISCAL IMP ACT There is no anticipated fiscal impact in the current fiscal year. 16-3 APRIL 20, 2010, ItemA Page 4 of6 ONGOING FISCAL IMPACT The fiscal year 20 I 0-11 base budget assumes a vacancy factor of 2%, which represents approximately IS additional vacancies above the current vacant positions. Realizing that attaining these additional vacancies will be challenging due to the significant staffing reductions that have occurred over the past two years, the Early Retirement Program is proposed as an option to achieve these vacancies early in the fiscal year and avoid additional reductions at this time. The longer it takes to achieve these vacancies the higher the position counts have to be in order to meet the budgeted salary savings. On a weekly basis the City would need to realize approximately $35,000 in fiscal year 2010-11 in order to meet the budgeted salary savings of $1.8 million. During the course of the year, staff will continue to monitor salary savings and identifY additional expenditure savings if there are not sufficient salary savings. 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 "additional employer contributions" will be paid by the City through an increase in the employer contribution rate, starting two fiscal years after the end of the designated period. The increase in the employer contribution rate will be amortized over twenty (20) years, unless it is prepaid. The calculations below satisfy the disclosure requirements of Government Code ~7507. The actual present value of additional contributions may differ from the estimate for two reasons: I) 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 significantly less as they are estimating that only about 5% of the eligible employees (9 people) 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. 16-4 APRIL 20, 2010, ItemA Page 5 of6 Estimated Cost of Additional Emplover Contributions (Based on 100% participation) Local Miscellaneous Additional Employer Contribution: Annual Cost: Rate Increase in Employer Contribution: "$1,198,338 (over twenty years) $ 359,917 1.31% Local Public Safety-Fire Additional Employer Contribution: Annual Cost: Rate Increase in Employer Contribution: $282,329 (over twenty years) $ 14,116 0.20% There are no costs to the employee/member with this option. Estimated Annual Salary Savin!!s If 5% of 171 eligible employees (or 9 people) retire under this program, the estimated annual base salary savings would be approximately $558,836 as follows: Local Miscellaneous Local Public Safety Fire Total Estimated Annual Salary Savings $540,398 $ 18.438 $558,836* * This amount does not include annual benefit costs 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. Estimated Net Annual Savin!!s CalPERS requires publishing potential costs based on 100% participation of all eligible members. However, based on experience and preliminary survey information, we believe 5% participation is more realistic. Based on this, the estimated net annual savings would be $707,784 as follows: Local Miscellaneous Salary Savings Benefit Cost Savings Annual Cost Net Annual Savings $540,398 $162,119 ($17,996) $684,521 Local Public Safety Fire . Salary Savings Benefit Cost Savings Annual Cost Net Annual Savings $18,438 $ 5,531 ($ 706) $23,263 16-5 APRIL 20, 2010, Item~ Page 6 of6 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 CaIPERS, 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 16-6 EARLY RETIREMENT INCENTIVE CLASSIFICATIONS ELIGIBLE TO PARTICIPATE Window Period: May 5. 2010 through August 2,2010 Classification Classficatlon 1 ADMIN. TECHNICIAN 48 POLICE RECORDS SPECIALIST 2 ADMINISTRATIVE SECRETARY 49 POLICE RECORDS TRANSCRIPTIONIST 3 ANIMAL CARE ASSISTANT 50 POLICE SUPPORT SERVICES MGR 4 ASSISTANT SURVEYOR II 51 POLICE TECHNOLOGY SPECIALIST 5 ASSOC ENGINEER 52 PRINCIPAL PLANNER 6 ASSOCIATE PLANNER 53 PRINCIPAL RECREATION MANAGER 7 BLDG PROJECT MANAGER 54 PUB WORKS SPECIALIST 8 CODE ENF OFFCR II 55 PUBLIC INFORMATION OFFICER-PD 9 CODE ENFORCEMENT MANAGER 56 PUBLIC SAFETY ANALYST 10 COMMUNITY SERVICE OFFICER 57 PUBLIC WORKS INSP II 11 CONSTRUCTION & REPAIR MGR 58 PUBLIC WORKS MANAGER 12 CRIME LABORATORY MANAGER 59 PUBLIC WORKS SUPERVISOR 13 CUSTODIAL SUPERVISOR 60 PUMP MAINT TECHNICIAN 14 CUSTODIAN 61 PUMP MAINTENANCE SUPERVISOR 15 DEPUTY FIRE CHIEF 62 REAL PROPERTY MANAGER 16 DEV PLANNING MGR 63 RECREATION SUPERVISOR II 17 DEVELOPMENT SVCS TECH II 64 RECREATION SUPERVISOR III 18 ECONOMIC DEVELOPMENT OFFICER 65 RECYCLING SPECIALIST II 19 ELECTRICIAN 66 SECRETARY 20 ELECTRONICS TECH SUPERVISOR 67 SIGNAL SYSTEMS ENGINEER II 21 ELECTRONICS TECHNICIAN 68 SR ADMINISTRATIVE SECRETARY 22 ENGINEERING TECH II 69 SR CIVIL ENGINEER 23 ENVIRON SVCS PROG MGR 70 SR CODE ENFORCEMENT OFFICER 24 EQUIPMENT MECHANIC 71 SR ENGINEERING TECHNICIAN 25 EQUIPMENT OPERATOR 72 SR EQUIPMENT MECHANIC 26 EXECUTIVE SECRETARY 73 SR FIRE INSPECTOR 27 FACILITY & SUPPLY SPECIALIST 74 SR FISCAL OFFICE SPECIALIST 28 FIRE APPARATUS MECH 75 SR GARDENER 29 FLEET MANAGER 76 SR HVAC TECHNICIAN 30 GARDENER II 77 SR LANDSCAPE INSPECTOR 31 LAND SURVEYOR 78 SR MAINTENANCE WORKER 32 LANDSCAPE ARCHITECT 79 SR OFFICE SPECIALIST 33 LANDSCAPE PLANNER II 80 SR PARK RANGER 34 LEAD CUSTODIAN 81 SR PLANNER 35 LEGAL ASSISTANT 82 SR PLANNING TECHNICIAN 36 LOCKSMITH 83 SR POLICE DATA SPECIALIST 37 MAINTENANCE WORKER II 84 SR PROJECT COORDINATOR 38 OFFICE SPECIALIST 85 SR PUB WORKS SPECIALIST 39 OFFICE SPECIALIST fMYR/(WWILL 86 SR PUBLIC WORKS INSP 40 OPEN SPACE INSPECTOR 87 SR SECRETARY 41 OPEN SPACE MANAGER 88 SURVEY TECHNICIAN II 42 PARK RANGER 89 TRAFFIC DEVICES TECH 43 PARKS MANAGER 90 TRAFFIC DEVICES TECH SUPV 44 PARKS SUPERVISOR 91 TRANSIT MANAGER 45 PLANS EXAMINER 92 TRANSPORTATION ENGINEER W/CERT 46 POLICE COMM RELATIONS SPEC 93 TREE TRIMMER 47 POLICE DATA SPECIALIST 94 WASTEWATER COLLECTIONS MANAGER Printed: 04116/2010,7:54 AM 16-7