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CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report
SR 2016-1205
November 1, 2016
Public Hearing
TO:

Honorable Mayor and City Council Members

SUBMITTED BY:

Maxine Gullo, Human Resources Manager

APPROVED BY:

Chip Rerig, City Administrator

SUBJECT:

1. Adoption of a Resolution of Intention to approve an amendment to the contract


between the Board of Administration of the California Public Employees Retirement
System (CalPERS) and the City of Carmel-by-the-Sea to include provisions pursuant
to Government Code 20516 Cost Sharing for Miscellaneous members in accordance
with the previously approved Memorandum of Understanding and 2. Adoption of an
Ordinance Authorizing an Amendment to the contract between the City of Carmel-bythe-Sea and the Board of Administration California Public Employees Retirement
System (CalPERS).

RECOMMENDATION
1. Adopt the Resolution of Intention to approve an amendment to the contract between the Board of
Administration of the California Public Employees Retirement System (CalPERS) and the City of
Carmel-by-the-Sea to include provisions pursuant to Government Code 20516 Cost Sharing for
Miscellaneous members in accordance with the previously approved Memorandum of Understanding.
2. Waive reading in full and introduce on first reading an Ordinance Authorizing an Amendment to the
contract between the City of Carmel-by-the-Sea and the Board of Administration California Public
Employees Retirement System (CalPERS).
BACKGROUND / SUMMARY
At the City Council meeting on November 30, 2015, the City Council adopted Resolution No. 2015-108
approving the Memorandum of Understanding (MOU) for represented employees of the general employees
union and management employees union, LIUNA/UPEX, Local 792, AFL-CIO and the City of Carmel-by-theSea, for the period of July 1, 2014 through December 31, 2016.
Employees in this bargaining unit agreed to pay, in addition to the employee contribution the following:
Tier 1: Bargaining unit members hired on or before November 1, 2011
Effective November 1, 2015, or when the PERS contract amendment is processed whichever is sooner,
in addition to paying 7.0% member contribution, bargaining unit members covered by this Section shall
pay, through payroll deduction, an additional 1.5% of PERSable compensation towards the Citys costs,
for a total contribution of 8.5% toward the normal cost of pension benefits as permitted by Cal. Gov.
Code Section 201516.

Effective July 1, 2016, in addition to paying the 7.0% member contribution, as well as 1.5% of the
employer contribution, bargaining unit members covered by this Section shall pay, through payroll
deduction, an additional 1.5% of PERSable compensation towards the Citys costs, for a total
contribution of 10% toward the normal cost of pension benefits, as permitted by Cal. Gov Code Section
20516.

Tier II: Bargaining Unit Members Hired After November 1, 2011 and Prior to January 1, 2013, and Unit
Members Qualified for Reciprocity (Classic Members).
Effective November 1, 2015, in addition to paying 7% member contribution, bargaining unit members
covered by this Section shall pay, through payroll deduction, an additional 1.5% of PERSable
compensation towards the Citys costs, for a total contribution of 8.5% toward the normal cost of
pension benefits as permitted by Cal. Gov. Code Section 201516.
Effective July 1, 2016, in addition to paying the 7% member contribution, and 1.5% of the employer
contribution, bargaining unit members covered by this Section shall pay, through payroll deduction, an
additional 1.5% of PERSable compensation towards the Citys costs, for a total contribution of 10%
toward the normal cost of pension benefits, as permitted by Cal. Gov Code Section 20516.
Tier III: PEPRA Retirement Tier Required for Bargaining Unit Members Hired On or After January 1, 2013
(Non-Classic Members)
Effective November 11, 2015, in addition to paying 50% of normal costs as described above,
bargaining unit members covered by this Section shall pay, through payroll deduction, an additional
1.5% of PERSable compensation toward the Citys costs of pension benefits, as permitted by Cal. Gov.
Code Section 20516.
Effective July 1, 2016, in addition to paying 50% of normal costs as described above, bargaining
members covered by this Section shall pay, through payroll deduction, an additional 1.5% of PERS
compensation toward the Citys normal costs of pension benefits as permitted by Cal. Gov. Code
Section 20516, for a total of 3.0% of PERSable compensation paid toward the Citys costs.

Although employees in this bargaining unit agreed to pay, staff failed to process the required CalPERS
documents and employees have not been required to pay the additional member contribution. CalPERS
requires that clearly defined procedures be followed for contract amendments. The following steps are being
taken in order to complete the contract amendment process:

The City Council must adopt a Resolution of Intention.

Government Code Section 20474 requires a secret ballot election by the employees affected whenever
the contract is amended to provide a benefit that changes the employees rate of contribution. This
election must be held for the contract group following the adoption of the Resolution of Intention, and
prior to the adoption of the Ordinance to amend the CalPERS contract.

The City must certify compliance under Government Section 7507 that the future annual costs of the
proposed CalPERS contract amendment were made public.

Following the Resolution of Intention to amend the Citys contract with CalPERS, an Ordinance must be
adopted as follows:

The Ordinance and a City Council vote on adoption, must occur no sooner than 20 days after the
adoption of the Resolution of Intention. The final ordinance will be presented to the City council for
adoption on December 6, 2016.

The effective date of the contract amendment must be the first day of a payroll period and may not be
earlier than the day following the effective date of the Ordinance. The contract amendment effective

date is January 16, 2017 and employees will begin paying the agreed upon 3% of the Citys
contribution.
FISCAL IMPACT
The City has been paying the approved upon employee cost sharing contribution which is approximately
$71,665 on behalf of the miscellaneous members for the time period April December 2016. Moving forward,
the City will be saving approximately $114,000 in the General Fund per fiscal year.
FISCAL IMPACT
PRIOR CITY COUNCIL ACTION
Resolution #2015-108: A resolution of the City Council of the City of Carmel-by-the-Sea approving a
Memorandum of Understanding (MOU) for represented employees of the general employees union and
management employees union, LIUNA/UPEX, Local 792, AFL-CIO.

ATTACHMENTS
1. Resolution of Intention to Approve an Amendment to Contract between the Board of Administration
California Public Employees Retirement System (CalPERS) and the City of Carmel-by-the-Sea
2. Ordinance of the City of Carmel-by-the-Sea Authorizing an Amendment to the contract between the
City of Carmel-by-the-Sea and the Board of Administration California Public Employees Retirement
System (CalPERS)
3. Exhibit Amendment to Contract

RESOLUTION OF INTENTION
TO APPROVE AN AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
CITY OF CARMEL-BY-THE-SEA
WHEREAS, the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the Public Employees' Retirement System by
the execution of a contract, and sets forth the procedure by which said public
agencies may elect to subject themselves and their employees to amendments
to said Law; and
WHEREAS, one of the steps in the procedures to amend this contract is the adoption by
the governing body of the public agency of a resolution giving notice of its
intention to approve an amendment to said contract, which resolution shall
contain a summary of the change proposed in said contract; and
WHEREAS, the following is a statement of the proposed change:
To provide Section 20516 (Employees Sharing Additional
Cost) of 3% for local miscellaneous members.
NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency does
hereby give notice of intention to approve an amendment to the contract
between said public agency and the Board of Administration of the Public
Employees' Retirement System, a copy of said amendment being attached
hereto, as an "Exhibit" and by this reference made a part hereof.
By:_________________________________
Presiding Officer
_________________________________
Title
________________________________
Date adopted and approved

(Amendment) CalPERS ID# 7011478504


CON-302 (Rev. 3/9/2016 rc)

DRAFT
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
ORDINANCE NO. 2016-___
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING AN
AMENDMENT TO THE CONTRACT BETWEEN THE CITY OF CARMEL-BY-THE-SEA AND THE BOARD OF
ADMINISTRATION OF THE PUBLIC EMPLOYEES RETIREMENT SYSTEM
WHEREAS, the City entered into a contract with the California Public Employees Retirement System
(CalPERS) in 1955 and numerous amendments since that date; and
WHEREAS, as a result of labor negotiations with the represented employees of the general employees
union and management employees union, LIUNA/UPEX, Local 792, AFL-CIO, the parties agreed that the
employees would make an additional employee contribution towards the Employers portion of the PERS Rate
of 3.0% for Miscellaneous members; and
WHEREAS, an amendment to the CalPERS contract is needed in order to implement this new benefit.
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BYTHE-SEA DOES ORDAIN AS FOLLOWS:
Section 1.
The City Council of the City of Carmel-by-the-Sea hereby authorizes entering into the Amendment to
the Contract between the Board of Administration, California Public Employees Retirement System and
the City of Carmel-by-the-Sea (Amendment), a copy of which is attached hereto, marked as Exhibit 1,
and incorporated herein by reference as though set out in full
Section 2.
The City Administrator of the City of Carmel-by-the-Sea is hereby authorized, empowered, and directed
to execute the Amendment for and on behalf of the City.
Section 3.
The City Clerk has prepared and published, at least five days before the date of adoption, a summary
of this ordinance once in a newspaper of general circulation printed and published in Monterey County
and circulated in the City of Carmel-by-the-Sea and thenceforth and thereafter the same shall be full
force and effect.
Section 4.

EFFECTIVE DATE

This ordinance shall take effect thirty (30) days after its second reading by the City Council.
ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this 1st day of
November, by the following roll call vote:
AYES:

COUNCILMEMBERS:

NOES:

COUNCILMEMBERS:

ABSENT:

COUNCILMEMBERS:

ABSTAIN:

COUNCILMEMBERS:

SIGNED:

ATTEST:

_______________________
Steve G. Dallas, Mayor

___________________________
Ashlee Wright, City Clerk

.~.
CalPERS

EXHIBIT
California
Public Employees' Retirement System

AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Carmel-By-The-Sea

The Board of Administration, California Public Employees' Retirement System, hereinafter


referred to as Board, and the governing body of the above public agency, hereinafter referred
to as Public Agency, having entered into a contract effective January 1, 1955, and witnessed
December 13, 1954, and as amended effective October 1, '1960, July 1, 1968, July 1, 1973,
March 16, 1983, .July 1, 1990, June 5, 1993, June 5, 1997, October 16, 1998, January 7,
2000, September 7, 2001, July 1, 2003, September 5, 2003 and April 15, 2012 which
provides for participation of Public Agency in said System, Board and Public Agency hereby
agree as follows:

A.

Paragraphs 1 through 15 are hereby stricken from said contract as executed effective
April 15, 2012, and hereby replaced by the following paragraphs numbered 1 through
17 inclusive:
1.

All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided ... Normal retirement age" shall mean age 55 for classic
local miscellaneous members entering membership in the miscellaneous
classification on or prior to April 15, 2012, age 60 for classic local miscellaneous
members entering membership for the first time in the miscellaneous
classification after April15, 2012, age 62 for new local miscellaneous members,
age 50 for classic local safety members and age 57 for new local safety
members.

PLEASE DO NOT SIGN "EXHIBIT ONLY"


2.

Public Agency shall participate in the Public Employees' Retirement System


from and after January 1, 1955 making its employees as hereinafter provided,
members of said System subject to all provisions of the Public Employees'
Retirement Law except such as apply only on election of a contracting agency
and are not provided for herein and to all amendments to said Law hereafter
enacted except those, which by express provisions thereof, apply only on the
election of a contracting agency.

3.

Public Agency agrees to indemnify, defend and hold harmless the California
Public Employees' Retirement System (CaiPERS) and its trustees, agents and
employees, the CaiPERS Board of Administration, and the California Public
Employees' Retirement Fund from any claims, demands, actions, losses,
liabilities, damages, judgments, expenses and' costs, including but not limited to
interest, penalties and attorney fees that may arise as a result of any of the
following:

4.

5.

(a)

Public Agency's election to provide retirement benefits, provisions or


formulas under this Contract that are different than the retirement
benefits, provisions or formulas provided under the Public Agency's
prior non-CaiPERS retirement program.

(b)

Any dispute, disagreement, claim, or proceeding (including without


limitation arbitration, administrative hearing, or litigation) between
Public Agency and its employees (or their representatives) which
relates to Public Agency's election to amend this Contract to provide
retirement benefits, provisions or formulas that are different than such
employees' existing retirement benefits, provisions or formulas.

(c)

Public Agency's agreement with a third party other than CaiPERS to


provide retirement benefits, provisions, or formulas that are different
than the retirement benefits, provisions or formulas provided under
this Contract and provided for under the California Public Employees'
Retirement Law.

Employees of Public Agency in the following classes shall become members of


said Retirement System except such in each such class as are excluded by Jaw
or this agreement:
a.

Local Fire Fighters (herein referred to as local safety members);

b.

Local Police Officers (herein referred to as local safety members);

c.

Employees other than local safety members (herein referred to as local


miscellaneous members).

In addition to the classes of employees excluded from membership by said


Retirement Law, the following classes of employees shall not become members
of said Retirement System:
NO ADDITIONAL EXCLUSIONS

PLEASE DO NOT SIGN "EXHIBIT ONLY"


6.

The percentage of final compensation to be provided for each year of credited


prior and current service as a classic local miscellaneous member entering
membership in the miscellaneous classification on or prior to April 15, 2012
shall be determined in accordance with Section 21354 of said Retirement Law
(2%. at age 55 Full).

7.

The percentage of final compensation to be provided for each year of credited


current service as a classic local miscellaneous member entering membership
for the first time with this agency in the miscellaneous classification after April
15, 2012 shall be determined in accordance with Section 21353 of said
Retirement Law (2% at age 60 Full).

8.

The percentage of final compensation to be provided for each year of credited


prior and current service as a new local miscellaneous member shall be
determined in accordance with Section 7522.20 of said Retirement Law (2% at
age 62 Full).

9.

The percentage of final compensation to be provided for each year of credited


prior and current service as a classic local safety member entering membership
in the safety classification on or prior to April 15, 2012 shall be determined in
accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full).

10.

The percentage of final compensation to be provided for each year of credited


current service as a classic local safety member entering membership for the
first time with this agency in the safety classification after April15, 2012 shall be
determined in accordance with Section 21362 of said Retirement Law (2% at
age 50 Full).

11 .

The percentage of final compensation to be provided for each year of credited


prior and current service as a new local safety member shall be determined in
accordance with Section 7522.25(d) of said Retirement Law (2.7% at age 57
Full).

12.

Public Agency elected and elects to be subject to the following optional


provisions:
a.

Section 21222.1 (One~Time 5% Increase - 1970). Legislation repealed


said Section effective January 1, 1980.

b.

Section 20042 (One-Year Final Compensation) for classic local


miscellaneous members and classic local safety members entering
membership on or prior to April15, 2012.

c.

Section 21574 (Fourth Level of 1959 Survivor Benefits).

d.

Section 21024 (Military Service Credit as Public Service).

e.

Section 21583 (Additional Opportunity to Elect 1959 Survivor Benefits).

PLEASE DO NOT SIGN "EXHIBIT ONLY"


f.

Section 20965 (Credit for Unused Sick Leave).

g.

Section 20903 (Two Years Additional Service Credit) for local


miscellaneous members only.

h.

Section 20475 (Different Level of Benefits). Section 21353 (2% @ 60


Full formula) and Section 20037 (Three-Year Final Compensation) are
applicable to classis local miscellaneous members entering membership
for the first time with this agency in the miscellaneous classification after
April 15, 20.12.
Section 21362 (2% @ 50 Full formula) and Section 20037 (Three-Year
Final Compensation) are applicable to classic local safety members
entering membership for the first time with this agency in the safety
classification after April 15, 2012.

i.

Section 20516 (Employees Sharing Additional Cost):


From and after the effective date of this amendment to contract, 3% for
local miscellaneous members.
The portion of the employer's contribution that the member agrees to
contribute from his or her compensatio.n, over and above the member's
normal contribution ("Cost Sharing Percentage"), shall not exceed the
Employer Normal Cost Rate, as that rate is defined in the CaiPERS
Actuarial Valuation for the relevant fiscal year.
If the Cost Sharing
Percentage will exceed the relevant Employer Normal Cost Rate, the
Cost Sharing Percentage shall automatically be reduced to an amount
equal to, and not to exceed, the Employer Normal Cost Rate for the
relevant fiscal year.

13.

Public Agency, in accordance with Government Code Section 20790, ceased to


be an "employer" for purposes of Section 20S34 effective on March 16, 1983.
Accumulated contributions of Public Agency shall be fixed and determined as
provided in Government Code Section 20834, and accumulated contributions
thereafter shall be held by the Board as provided in Government Code Section

20834.
14.

Public Agency shall contribute to said Retirement System the contributions


determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.

15.

Public Agency shall also contribute to said Retirement System as follows:


a.

Contributions required per covered member on account of the 1959


Survivor Benefits provided under Section 21574 of said Retirement Law.
(Subject to annual change.) In addition, all assets and liabilities of Public
Agency and its employees shall be pooled in a single account, based on
term insurance rates, for survivors of all local miscellaneous members
and local safety members.

PLEASE DO NOT SIGN "EXHIBIT ONLY"

B.

b.

A reasonable amount, as fixed by the Board, payable in one installment


within 60 days of date of contract to cover the costs of administering said
System as it affects the employees of Public Agency, not including the
costs of special valuations or of the periodic investigation and valuations
required by law.

c. .

A reasonable amount, as fixed by the Board, payable in one installment


as the occasions arise, to cover the costs of special valuations on
account of employees of Public Agency, and costs of the periodic
investigation and valuations required by law.

16.

Contributions required of Public Agency and its employees shall be subject to


adjustment by Board on account of amendments to the Public Employees'
Retirement Law, and on account of the experience under the Retirement
System as determined by the periodic investigation and valuation required by
said Retirement Law.

17.

Contributions required of Public Agency and its employees shall be paid by


Public Agency to the Retirement System within fifteen days after the end of the
period to which said contributions refer or as may be prescribed by Board
regulation. If more or less than the correct amount of contributions is paid for
any period, proper adjustment shall be made in connection with subsequent
remittances. Adjustments on account of errors in contributions required of any
employee may be made by direct payments. between the employee and the
Board.

This amendment shall be effective on the _ _ day of _ _ _ _ _ _ ____

BY_______________________________
CHERYL EASON
CHIEF FINANCIAL OFFICER
PUBLIC EMPLOYEES' RETIREMENT SYSTEM

AMENDMENT CaiPERS 10 #7011478504


PERS-CON-702A

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