HomeMy WebLinkAbout2011/02/08 Item 2CITY COUNCIL
AGENDA STATEMENT
~~ CITY OF
---- CHUTAVISTA
FEBRUARY 8, 2011, Item 2.
ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CHULA VISTA TO GRANT ANOTHER
DESIGNATED PERIOD FOR TWO YEARS
ADDITIONAL SERVICE CREDIT PURSUANT TO
GOVERNMENT CODE SECTION 20903 FOR
ELIGIBLE LOCAL POLICE OFFICER MEMBERS OF
THE CALIFORNIA PUBLIC EMPLOYEES
RETIREMENT SYSTEM (CALPERS) IN THE
CLASSIFICATIONS OF POLICE OFFICER, POLICE
AGENT, POLICE SERGEANT, AND POLICE
LIEUTENANT
SUBMITTED BY: DIRECTOR OF HRESOURCES
REVIEWED BY: CITY MANAGE
ASSISTANT CIT MANAGER S %
4/STHS VOTE: YES ~ NO ^X
SUMMARY
In an effort to significantly reduce Fiscal Years 2012 General Fund expenditures and to
avoid impending mandatory transfers, layoffs and demotions, it is the City's intent to offer
the Ca1PERS Two Years Additional Service Credit benefit option as an incentive to
retirement to all local police officer members covered under the City's contracts with
Ca1PERS in the classifications of Peace Officer, Police Agent, Police Sergeant and Police
Lieutenant. Staff is proposing Council to adopt this Resolution effective February 8, 2011.
ENVIRONMENTAL REVIEW
Not applicable
RECOMMENDATION
Council adopt the Resolution.
BOARDS/COMMISSION RECOMMENDATION
Not applicable
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FEBRUARY 8, 3011, Item Z
Page 2 of 5
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
(Ca1PERS) and the City of Chula Vista to provide the optional Two Yeazs Additional
Service Credit benefit (G.C. §20903). Since that time the City has offered the benefit on
five 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:
~,
~~
• Medical incentive through
All Miscellaneous 12/31/09 if retiring between
andPolice and 11/08/07- 11/08/07-12/31/07
62
1 10/16/2007 Fire Safety 02/05/08 Medical incentive through
members 12/31/08 if retiring 01/01/08-
02/05/08
All Miscellaneous Medica( incentive through
2 04/22/2008 members and OS/OS/OS- 12/31/09 if retiring 05/05/08- IS
Police and Fire 08/05/08 06/05/08 only
manaeers
• Medical incentive throw
All Miscellaneous 12/31/10 if retiring Ol/O1/09-
and Police and 12/31/08- 03/27/09
3 12/16/2008 Fire Safety 06/26/09 Medical incentive through 3'
members 12/31/09 if retiring 03/28/09-
06YL6/09
Medical incentive for two
calendar years if retiring Under
All Miscellaneous the Two Additional Years
4 07/14/09 and Police Safety 07/15/09- Service Credit 10
members 10/12/09 Medical incentive for four
calendaz years if normal
retirement
5~ 05/04/70 Specified job 05/05/10- No medical incentive 6
classifications of 08,/02/10
the Miscellaneous
and Local Safety-~
~ Fire members
~ TOTAL ~ 129
Due to the continuhlg budgetary challenges for Fiscal Years 2011 and 2012 despite the
layoffs, mandatory transfers and demotions, it is recommended that the City again offer the
Two Years Additional Service Credit option, this time to its local police cfilcer members in
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FEBRUARY 8, 2011, Item ~-
Page 3 of 5
the classifications of Peace Officer, Police Agent, Police Sergeant and Police Lieutenant. It
is further recommended that the designated window for these employees to take advantage
of this opportunity be from February 9, 2011 tlu~ough May 9, 2011.
The City must certify that any vacancies created by individuals taking the service credits
pursuant to G.C. §20903, 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
days nor more than 180 days in length. In order to achieve savings in a timely manner, and
to avoid further layoffs, transfers and demotions, staff is recommending the shorter ninety-
day (90) window period from February 9, 2011 through May 9, 2011.
Eli Qibility
To be eligible, the following criteria must be met:
^ The member must have at least five years of Ca1PERS service credit;
• The member must be employed for at least one day during the designated
period;
• The member must retire during the designated period;
• The member cannot receive credit under this section if member is receiving
any unemployment insurance payments;
^ If a retired member subsequently reenters membership, 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 section 18704.2(a)(1) is not applicable to this decision.
CURRENT YEAR FISCAL IMPACT
The added employer cost to the retirement fund for all eligible employees who retire
during the designated period will be included in the contracting agency's employer
contribution rate. However, the amount of the increase in the employer contribution rate
will show two years after the end of the designated period. Therefore, there is no
anticipated additional cost in the current fiscal year. The total annual salary savings if all
eligible employees take advantage of the Early Retirement Incentive plan is $1.587
million. Based on experience, staff believes the salary savings will be less.
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FEBRUARY 8, 2011, Item 2
Page 4 of 5
ONGOING 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 Ca1PERS
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 may
continue for as long as 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:
1) Some of the members who are eligible to retire and receive the two yeazs service
credit (and who are included in the estimate) may choose not to retire. Staff
believes the cost will be less.
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 Emplover Contributions
There are eighteen (18) police members that are eligible to take the early retirement
incentive.
(Based on 100% participation)
Additional Employer Contribution: $1.37 million (over twenty years)
Additional Annual Employer Contribution: $103,696
Rate Increase in Employer Contribution: 0.52%
However, based on the survey conducted by the Police Officer Association, there
were only eleven (I 1}employees out of the eighteen (18) eligible members that may
be interested in taking advantage of this early retirement incentive. Thus the
estimated costs are as follows:
(Based on 11 participants)
Additional Employer Contribution $816,387 (over twenty years)
Additional Annual Employer Contribution: $61,660
Rate Increase in Employer Contribution: 0.31 °%
There are no costs to the employee/member with this option.
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FEBRUARY 8, 2011, Item ~-
Page 5 of 5
Estimated Net Annual Savings
Ca1PERS requires publishing potential costs based on 100% participation of all
eligible members. The total annual salary of all eligible employees is $1.587 million.
However, assuming all eleven (11) employees would take advantage of the early
retirement incentive, the estimated annual base salary savings would be
approximately $947;676. The net annual savings would be $886,016:
(Based on 11 participants)
Annual Salary Savings: $947,676
Additional Annual Employer Contribution: $ 61,660
Estimated Net Annual Savings: $886,016*
*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 CaIPERS after the expiration of the application window. The actual cost/savings can
be more accurately estimated at that time.
CONTRACT AMENDMENT PROCESS
A contract amendment between the City of Chula Vista and California Public
Employees' Retirement System (Ca1PERS) to grant a designated period is not required.
ATTACHMENTS
For signature:
1. Resolution to Grant Another Designated Period for Two Years Additional Service
Credit
2. Certification of Governing Body's Action (PEAS-CON-12)
3. Certification of Compliance with Government Code Section 7507 (PEAS CON-
12A)
4. Certification of Compliance with Government Code Section 20903
Signature not required:
Estimated Present Value of Additional Employer Contribution.
Prepared by.' Kellev Bacon, Director of Human Resources
2-5
RESOLUTION NO. 2011 -
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CHULA VISTA TO GRANT ANOTHER
DESIGNATED PERIOD FOR TWO YEARS
ADDITIONAL SERVICE CREDIT PURSUANT TO
GOVERNMENT CODE SECTION 20903 FOR ALL
ELIGIBLE LOCAL POLICE OFFICER MEMBERS OF
THE CALIFORNIA PUBLIC EMPLOYEES
RETIREMENT SYSTEM (CALPERS) IN THE
CLASSIFICATIONS OF POLICE OFFICER, POLICE
AGENT, POLICE SERGEANT, AND POLICE
LIEUTENANT
WHEREAS, the City Council of the City of Chula Vista is a contracting Public
Agency of the California Public Employees' Retirement System (CaIPERS); and
WHEREAS, said Public Agency desires to provide another designated period for
Two Years Additional Service Credit, pursuant to California Government Code Section
20903, based on the contract amendment included in the contract, which provided for
Two Years Additional Service Credit for eligible local police officer members of
Ca1PERS in the classifications of Police Officer, Police Agent, Police Sergeant, and
Police Lieutenant.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Chula Vista does hereby grant another designated period for Two Years Additional
Service Credit pursuant to Government Code section 20903 from February 9, 2011
through May 9, 2011 for all eligible local police officer members in the classifications of
Police Officer, Police Agent, Police Sergeant, and Police Lieutenant.
Presented by Approved as to form by
Kelley Bacon
Director of Human Resources
~~ /~~ /
Glen R. Googins
City Attorney
2-6
CITY COUNCIL
OF THE
CITY OF CHULA VSITA
RESOLUTION
TO
GRANT ANOTHER DESIGNATED PERIOD
FOR
TWO YEARS ADDITIONAL SERVICE CREDIT
WHEREAS, the City Council of the City of Chula Vista is a contracting Public Agency of
the Public Employees' Retirement System; and
WHEREAS, said Public Agency desires to provide another designated period for Two
Years Additional Service Credit, Section 20903, based on the contract
amendment included in said contract which provided for Section 20903, Two
Years Additional Service Credit, for eligible members;
NOW THEREFORE, BE IT RESOLVED, that said City council does seek to add another
designated period, and does hereby authorize this Resolution, indicating a desire
to add a designated period from February 9, 2011 through May 9. 2011
for eligible local police officer members of the California Public Employees
Retirement System (CaIPERS) in the classifications of Peace Officer, Police
Aaent Police Sergeant and Police Lieutenant.
Adopted and approved this 8th`" day of February, 2011 .
CITY COUNCIL
OF THE
CITY OF CHULA VISTA
BY
Cheryl Cox
Mayor
Attest:
Clerk/Secretary
Donna Norris, CMC
2-7
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(888) CaIPERS (225-7377)
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 Chula Vista
(public agency)
on February 8, 2011
(date)
Clerk/Secretary
Donna Norris, CMC
City Clerk
Title
PERS-CON-12 (rev.1/96)
2-8
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(888) CaIPERS (225-7377)
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 7507
I hereby certify that in accordance with Section 7507 of the Government Code
the future annual costs as determined by the System Actuary for the increase
in retirement benefit(s) have been made public at a public meeting of the
City Council of the
(governing body)
City of Chula Vista
(public agency)
on January 25, 2011 which is at least two weeks prior to the adoption of the
(date)
Resolution /Ordinance.
Date
Clerk/Secretary
Donna Norris, CMC
City Clerk
Title
PERS-CON-12A (rev. 1 /96)
2-9
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Employer Services Division
Contract Maintenance Unit
P.O. Box 942709
Sacramento, CA 94229-2709
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 20903
In accordance with Government Code Section 20903 and the contract between the Public
Employees' Retirement System, the City Council of the Citv of Chula Vista hereby certifies
that:
Because of an impending curtailment of, or change in the manner of performing
service, the best interests of the agency will be served by granting such additional
service credit.
2. The added cost to the retirement fund for all eligible employees who retire during
the designated window period will be included in the contracting agency's
employer contribution rate for the fiscal year that begins two years after the end of
the designated period.
It has elected to become subject to Section 20903 because of impending
mandatory transfers, demotions, and layoffs that constitute at least 1 percent of the
job classification, department or organizational unit, as designated by the
governing body, resulting from the curtailment of, or change in the manner of
performing, its services.
Its intention at the time Section 20903 becomes operative is to keep all vacancies
created by retirements under this section or at least one vacancy in any position in
any department or other organizational unit permanently unfilled thereby resulting
in an overall reduction in the work force of such department or organizational unit.
THEREFORE, the City Council of the Citv of Chula Vista hereby elects to provide the
benefits of Government Section Code 20903 to all eligible members who retire within the
designated period, February 9, 2011 through May 9, 2011
CITY COUNCIL
OF THE
CITY OF CHULA VISTA
BY
Attest:
Clerk/Secretary
Donna Norris, CMC, City Clerk
Date
Presiding Officer
Cheryl Cox, Mayor
2yr certification-PA (Rev. 4/04)
2-10
TWO YEARS ADDITIONAL SERVICE CREDIT
Section 20903
Estimated Employer Cost
Window Period: February 9, 2011 -May 9, 2011
N
1
J
Estimated
Cost Cost (Cost
Job Classification Age Factor Ann ual Salary Factor x
An nual Salary)
PEACE OFFICER 52 0.87 $ 77,010.44 $ 66,999.08
POLICE SERGEANT 52 0.87 $ 97,546.54 $ 84,865.49
POLICE SERGEANT 51 0.87 $ 97,546.54 $ 84,865.49
POLICE AGENT 52 0.87 $ 84,801.08 $ 73,776.94
PEACE OFFICER 56 0.82 $ 77,010.44 $ 63,148.56
POLICE SERGEANT 51 0.87 $ 97,546.54 $ 84,865.49
POLICE AGENT 52 0.67 $ 84,801.08 $ 73,776.94
POLICE AGENT 53 D.87 $ 84,801.08 $ 73,776.94
POLICE AGENT 51 0.87 $ 84,801.08 $ 73,776.94
POLICE LIEUTENANT 50 0.87 $ 117,064.74 $ 101,846.32
PEACE OFFICER 52 0.87 $ 77,010.44 $ 66,999.08
POLICE LIEUTENANT 51 0.87 $ 117,064.74 $ 101,846.32
PEACE OFFICER 50 0.87 $ 77,010.44 $ 66,999.08
POLICE SERGEANT 51 0.87 $ 97,546.54 $ 84,865.49
POLICE AGENT 55 0.82 $ 84,801.08 $ 69,536.89
PEACE OFFICER 50 0.87 $ 77,010.44 $ 66,999.08
PEACE OFFICER 51 0.87 $ 77,010.44 $ 66,999.08
PEACE OFFICER 50 0.87 $ 77,010.44 $ 66,999.08
$ 1,587,394.12 $1 ,372,942.31
Add'I Employer Contributio ns $1 ,372,942.31
Divide Additional Employer Cont ributions by 13.2 4 (20-year amorti , $ 103,696.55
Divide 20-Year P.modizatio n Amount by An nual Payroll Plan $19,9 0.52
$19,989,447