15. Retirement
City Hall
10300 Torre Avenue
Cupertino, CA 95014-3255
Telephone: (408) 777-3213
FAX: (408) 777-3109
CITY OF
CUPEI\TINO
Human Resources
SUMMARY
Agenda Item No. /5
Meeting Date: May 15,2007
SUBJECT AND ISSUE
Adopt a resolution of intention to approve an amendment to the contract between the
California Public Employees' Retirement System Board of Administration and the City
Council of the City of Cupertino.
BACKGROUND
On April 17, 2007, the City Council approved labor agreements with the Cupertino City
Employees' Association and Operating Engineers, Local Union No.3. The agreements
include a CalPERS retirement amendment for 2.7% @ 55. To execute the amendment,
CalPERS requires the following:
. The attached Resolution of Intention.
· An employee vote because employees are paying for 2% of the associated cost.
Employee ballots will be counted by the City Clerk's Office on May 22, 2007.
· An ordinance if the contract amendment passes the employee vote. Should this
occur, the first reading will be scheduled for the June 5, 2007 City Council
meeting and the second reading will follow on June 19, 2007.
RECOMMENDA nON
Staff recommends that the City Council adopt Resolution No. 07-JlJf2, a resolution of
intention to approve an amendment to the City's contract with CalPERS.
Submitted by:
Approved by:
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Sandy Abe
Human Resources Director
~
David W. Knapp
City Manager
/5-/
Printed on Recycled Paper
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 CUPERTINO
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 21354.5 (2.7% @ 55 Full and Modified
formula) 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)
CON-302 (Rev. 4/96)
/5"-"2.
A
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 Cupertino
.
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 August
16,1967, and witnessed July 10,1967, and as amended effective June 1,1973, March
1,1974, December 22, 1976, December 18,1978, June 17,1981, December 30, 1981,
September 19,1991, January 7,1993, March 9, 2000, June 2,2000, February 16,2001
and November 18, 2002 which provides for participation of Public Agency in said
System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 13 are hereby stricken from said contract as executed
effective November 18, 2002, and hereby replaced by the following paragraphs
numbered 1 through 14 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 local miscellaneous members and age 55 for local safety
members.
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2. Public Agency shall participate in the Public Employees' Retirement
System from and after August 16, 1967 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. 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 law 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).
4. 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
5. After March 1, 1974 and prior to January 1, 1975, those members who
were hired by Public Agency on a temporary and/or seasonal basis not to
exceed 6 months were excluded from PERS membership by contract.
Government Code Section 20305 supersedes this contract provision by
providing that any such temporary and/or seasonal employees are
excluded from PERS membership subsequent to January 1, 1975.
6. The percentage of final compensation to be provided for each year of
credited prior and current service for local miscellaneous members in
employment before and not on or after the effective date of this
amendment to contract shall be determined in accordance with Section
21354 of said Retirement Law, subject to the reduction provided therein
for service on and after December 31, 1981, the effective date of Social
Security coverage, for members whose service has been included in
Federal Social Security (2% at age 55 Full and Modified).
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7. The percentage of final compensation to be provided for each year of
credited prior and current service for local miscellaneous members in
employment on or after the effective date of this amendment to contract
shall be determined in accordance with Section 21354.5 of said
Retirement Law, subject to the reduction provided therein for service on
and after December 31, 1981, the effective date of Social Security
coverage, for members whose service has been included in Federal
Social Security (2.7% at age 55 Full and Modified).
8. The percentage of final compensation to be provided for each year of
credited prior and current service as a local safety member shall be
determined in accordance with Section 21366 of said Retirement Law
subject to the reduction provided therein for Federal Social Security (One-
half pay at age 55 Modified).
9. 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 20965 (Credit for Unused Sick Leave) for local
miscellaneous members only.
c. Section 20614, Statutes of 1978, (Reduction of Normal Member
Contribution Rate). From December 18, 1978 and until June 17,
1981, the normal local miscellaneous member contribution rate
shall be 3.500%. Legislation repealed said Section effective
September 29, 1980.
d. Section 20690, Statutes of 1980, (To Prospectively Revoke Section
20614, Statutes of 1978) for local miscellaneous members only.
e. Section 20042 (One-Year Final Compensation) for local
miscellaneous members only.
f. Section 21024 (Military Service Credit as Public Service) for local
miscellaneous members only.
g. Section 21023.5 (Public Service Credit for Peace Corps,
AmeriCorps VISTA, or AmeriCorps Service) for local miscellaneous
members only.
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h. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local
miscellaneous members only.
Section 21583 (Additional Opportunity to Elect 1959 Survivor
Benefits) for local miscellaneous members only.
10. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
December 22, 1976. 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.
11. 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.
12. 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.
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.
13. 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.
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14. 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.
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This amendment shall be effectWe on the
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BOARD OF ADMINISTRATION""'..:''-
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PUBLIC EMPLOYEES' RETIREMENT SYSTEM
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BY "
LORI MCGARTLAND, CHIEF
EMPLOYER SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AMENDMENT ER# 0691
PERS-CON-702A (Rev. 10\05)
day of
CITY COUNCIL .,~',<.
CITY OF CUPERTINO::':/'
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BY .~~:)-.
PRESIDING OFFt~~'R
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Witness Dafe" .",'
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Attest: '
Clerk
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FUTURE ANNUAL COSTS
With CalPERS Contract Amendment for 2.7% @ 55
Fiscal Year 2007/08 2008/09
Payroll $11,331,740 $11,728,350
Change in Employer Rate 5.683% Increase 1.43% Decrease*
Change in Employee Rate 1.0% Increase No Change
Rate Increase Paid By City 4.683% 3.253%
Rate I ncrease Paid By 2.0% 2.0%
Employees
Employer Cost Increase with $265,333** $381,523***
12/22/07 Implementation
Employee Cost with 12/22/07 $113,317** $234,567***
Implementation
* FY 2008/09 estimated rate reduction recognizes an 11 % CalPERS investment
return for FY 2005/06.
**FY 2007/08 employer cost increase and employee cost reflect half-year costs
due to implementation on 12/22/07, the middle of the fiscal year.
***FY2008/09 employer cost increase and employee cost reflect full year costs.