HomeMy WebLinkAboutAGENDA REPORT 2013 0605 CCSA REG ITEM 09H ITEM 9.H.
City Councli Meeting
MOORPARK CITY COUNCIOCTION:
AGENDA REPORT
TO: Honorable City Council
FROM: Deborah S. Traffenstedt, Deputy City Manager
DATE: May 30, 2013 (CC Meeting of 6/5/13)
SUBJECT: Consider Authorizing Two Years Additional Service Credit
Retirement Incentive for One Position Pursuant to Government Code
Section 20903 and Consistent with the City's Contract with California
Public Employees' Retirement System (CaIPERS)
BACKGROUND
On July 2, 2003, the City Council adopted Ordinance No. 294, amending the CaIPERS
contract consistent with the requirements of Government Code Section 20903, which
allows the City to provide a retirement incentive of two years additional service credit in
compliance with the procedures established by CaIPERS. This benefit is intended to be
utilized by CaIPERS contracting agencies to encourage reduction of staffing levels,
when needed due to impending curtailment of or change in the manner of performing
service.
As a result of the adoption of Ordinance No. 294, the City's current contract with
CaIPERS allows the City Council to adopt a resolution affirming that the two years of
additional service credit retirement incentive is to be offered. The process requires the
scheduling of a "public meeting" agenda item, including disclosure of the costs to the
public agency, and designation of the job classification(s), department(s), or unit(s)
eligible for this benefit. The CaIPERS process also requires the City Council to adopt a
resolution at a subsequent meeting (not less than two weeks following the public
meeting agenda item), which resolution must include a designation of the time period of
90 to 180 days during which an eligible member must retire to receive the additional
service credit.
DISCUSSION
The future annual costs and the increase in retirement benefits are generally disclosed
in the CaIPERS "Procedures for Calculation of Additional Employer Contributions and
Funding Therefore to be Disclosed at the Public Meeting" (see attachment). At this
time, staff is proposing to designate the job classification of Administrative Assistant, a
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June 5, 2013, Regular Meeting
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non-exempt Competitive Service position, in the Public Works Department. There is one
potentially eligible employee. Staff is recommending that the City Council consider this
action to elect to be subject to the provisions of Government Code 20903 due to
reduced revenue concerns, as previously discussed with the adoption of the 2012-2013
Fiscal Year Budget, and the draft 2013-14 Fiscal Year Budget. The continuing budget
concerns require a proactive approach to reducing staff costs.
The total estimated cost to the City for the two years service credit for the one identified
Competitive Service position is approximately $33,218.93 (see attachment). This
amount is calculated based on the formula in the CalPERS procedures manual, and is
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 cost of the two
years additional service credit will be included in the City's employer contribution rate
commencing with the fiscal year starting two years after the end of the designated
period. The increase in the employer contribution rate may continue for as long as 20
years (or may be paid off earlier, as has been the City's practice). The City's CalPERS
employer contribution rate may vary annually based on various factors, including
investment returns. The cost of providing the additional service credit for one employee
would be offset by the elimination of one position and the proposed reorganization of
responsibilities. For example, some reorganization of staff assignments will be
necessary following the proposed elimination of the Administrative Assistant position in
the Public Works Department, and the intent is to fill the vacancy at a lower salary range
and clerical classification. As previously discussed with and approved by the City
Council, at the beginning of the new fiscal year in July 2013, the current Parks and
Landscape Manager will be promoted into the Parks and Recreation Director position
that was temporarily being filled by the Assistant City Manager. The Parks and
Landscape Manager position is shown as deleted from the draft 2013-14 Fiscal Year
Budget.
Please note that pursuant to Government Code Section 20903 (and following a public
meeting), if the City Council determines to adopt a resolution affirming that the two
years of additional service credit retirement incentive is to be offered, that resolution will
need to include the following certification:
• Because of an impending curtailment of, or change in the manner of performing
service, the best interests of the agency would be served by granting such
additional service credit.
• The added cost to the retirement fund for all eligible employees who retire during
the designated window period will be included in the City's employer contribution
rate for the fiscal year that begins two years after the end of the designated
period.
• The City Council is electing to be subject to the provisions of Government Code
Section 20903 because of mandatory transfers, demotions, and layoffs that
constitute at least one percent (1%) of the job classification, department, or
organizational unit, as designated by the City Council, resulting from the
curtailment of, or change in the manner of performing its services.
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• It is the City Council's intention at the time Section 20903 of the Government
Code becomes operative that any vacancies created by retirements under this
section or at least one vacancy in any position in any department or other
organizational unit shall remain permanently unfilled, thereby resulting in an
overall reduction in the work force of such department or organizational unit.
• The City has complied with the provisions of Government Code Section 7507,
and has disclosed and made public the future annual costs for the
increase/change in retirement benefit(s) at a public meeting of the City Council at
least two weeks prior to the adoption of a Resolution to Grant Another
Designated Period for Two Years Additional Service Credit.
The required disclosure pursuant to Government Code Section 7507 is accomplished
by disclosing an estimate of the present value of the additional employer contributions,
which is included in this report (including attachment). The disclosure is required to be
made at least two weeks prior to the adoption of an increase in any retirement plan
benefit. The two-week time period will be achieved by scheduling the adoption
resolution for a subsequent regular meeting in June or July 2013 to approve the
designated period for two years additional service credit retirement incentive for the one
eligible employee.
FISCAL IMPACT
The total estimated cost to the City for the two years additional service credit for the one
identified position is approximately $33,218.93. The cost of providing the additional
service credit for one employee would be offset by the elimination of another position at
a higher salary range and the overall reduction in staff costs through planned
reorganization of responsibilities.
STAFF RECOMMENDATION
Direct staff to schedule the adoption of a resolution to grant another designated period
for two years additional service credit for the one identified position.
Attachment: Procedures for Calculation of Additional Employer Contributions and
Funding Therefore to be Disclosed at the Public Meeting
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ATTACHMENT
Procedures for Calculation of "Additional Employer Contributions"
and Funding Therefore to be Disclosed at the Public Meeting
(Calculations and responses are shown with italic type and bold font, below)
The "additional employer contributions" that the agency discloses at its public meeting is
an estimate of the present value of additional employer contributions which will be
required in the future for providing the two years' service credit. This amount is
calculated based on the member's annual reportable compensation, the cost factor and
whether the agency's contract provides the Post-Retirement Survivor Allowance
(Survivor Continuance) and/or an increased Cost-of-Living Allowance of 3%, 4% or 5%.
The "additional employer contributions" is calculated as follows-
1. Identify all individuals who meet the minimum eligibility for retirement and who
are employed in the designated classification, department or organizational unit.
Administrative Assistant in the Public Works Department (1 employee potentially
eligible)
2. Determine the annual pay rate for each person. "Payrate" indicates that amount
of compensation a member is paid for a full unit of time. Always use the member's FULL
TIME pay rate.
$62,441.60 (x 1 employee)
3. Determine the age for each person and locate the appropriate factor on the Cost
Factor Chart.
COST FACTOR CHART
MISCELLANEOUS MEMBERS
2% 60 2% 55 2.5% (? 55 2.7% 55 3% 60
formula formula formula formula formula
Ages All All All All All
50-54 0.35 0.47 0.63 0.65 0.63
55-59 0.44 0.56 0.67 0.72 0.72
60-64 0.55 0.57 0.61 0.66 0.73
65+ 0.53 0.53 0.54 0.59 0.65
4. Multiply the annual pay rate by the cost factor, (annual pay rate) X (cost factor) _
estimated cost.
$62,441.60 x .56 cost factor= $34,967.296
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5. Determine whether your agency's contract provides for the Post-Retirement
Survivor Allowance. If yes, proceed to step #7.
NA
6. If your agency's contract does not provide for the Post-Retirement Survivor
Allowance, multiply the value determined in step #4, above, by 0.95.
$34,967.296 x 0.95 = $33,218.939 (rounded to $33,218.93)
7. Determine whether your agency's contract provides for the increased Cost-of-
Living Allowance of 3%, 4% or 5%. If not, no further calculations are needed.
NA
8. If your agency's contract provides the 3%, 4%, or 5% cost-of-living allowance,
multiply the value determined above by 1.09 to estimate the cost of providing the
additional service credit.
NA
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