HomeMy WebLinkAboutAGENDA REPORT 2013 0619 CCSA REG ITEM 09F ITEM 9.F.
MOORPARK CITY COUNCIL CRY Councoi Meeting
AGENDA REPORT /. -/ 3
ACTION: 2.�
TO: Honorable City Council
FROM: Deborah S. Traffenstedt, Deputy City Manager 05T
DATE: June 13, 2013 (CC Meeting of 6/19/13)
SUBJECT: Consider Revised Estimate of Cost for 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
Reference the June 5, 2013, regular meeting agenda report for Item 9.1-1. for prior
disclosure of the estimated cost for authorizing two years additional service credit
retirement incentive for one Administrative Assistant position in the City's Public Works
Department. Staff is rescheduling the required "public meeting" agenda item, in order to
disclose a corrected estimate of cost to the City as further explained below. 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. That resolution
will be scheduled for the July 17, 2013, regular meeting agenda. The planned
retirement is intended to be effective by the end of the current calendar year.
DISCUSSION
The future annual costs and the increase in retirement benefits are generally disclosed
in the CaIPERS Procedures for Calculation of Estimated Employer Cost (see revised
attachment to this agenda report). The reason for rescheduling this item is due to a
calculation error in the June 5 agenda report. The CaIPERS Cost Factor Chart, which
was provided to the City for the current proposed retirement incentive action has a
revision date of February 2006; however, after the June 5, 2013, regular meeting staff
found that the cost factor chart had been revised in 2013 and the applicable cost factor
has changed from .56 to .57. With this change, the total estimated cost to the City for
the two years service credit for the one identified Competitive Service position is now
estimated to be $33,812.13 (see revised calculation attached to this agenda report).
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Honorable City Council
June 19, 2013, Regular Meeting
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The previous calculation using the .56 cost factor was $33,218.93. This is a small
difference; however, staff felt it was necessary to disclose the corrected estimate before
scheduling the adoption resolution. All other information contained in the attached June
5, 2013, agenda report remains the same.
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 on July 17, 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 $33,812.13. 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 for the July 17, 2013, regular
meeting to grant another designated period for two years additional service credit for the
one identified position.
Attachment: Two Years Additional Service Credit, Section 20903, Revised Calculation
of Estimated Employer Cost
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Honorable City Council
June 19, 2013, Regular Meeting
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ATTACHMENT
Two Years Additional Service Credit
Section 20903
Procedures for Calculation of Estimated Employer Cost
(Calculations and responses are shown with italic type and bold font, below)
The cost of providing the two years additional service credit 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 employer cost may be estimated as follows:
1. Determine 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. "Pay Rate" 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% Cad 55 2.7% 55 3% 60
formula formula formula formula formula
Ages All All All All All
50-54 0.35 0.47 0.64 0.66 0.64
55-59 0.45 0.57 0.67 0.73 0.73
60-64 0.56 0.59 0.62 0.67 0.74
65+ 0.54 0.54 0.55 0.60 0.67
4. Multiply the annual pay rate by the cost factor.
$62,441.60 x.57 cost factor= $35,591.712
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June 19, 2013, Regular Meeting
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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.
$35,591.712 x 0.95 = $33,812.126 (rounded to $33,812.13)
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
9. Please note the cost of any additional service credit benefits paid out of PERF
(Public Employee Retirement Fund) is calculated as the amount of present value of
those benefits. Any benefit amounts over the Internal Revenue Code (IRC) Section
415(b) limit will be paid from the Replacement Benefit Program (RBP) over the life of
the participant. The RBP is a pay-as-you-go program. CalPERS will bill the employer
annually for the benefits paid from the RBP. Refer to the following link for the details of
the IRC Section 415 and CalPERS RBP: hftp://www.calpers.ca.gov/eip-
docs/about/pubs/member/intemal-revenue-code-section415.pdf
PERS-CON3 PA(Section 20903)
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