Title
Adoption of 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 Council of the City of Alameda to Include Provisions Pursuant to Government Code 20516 "Cost Sharing" for Local Police Members and for Local Fire Members in Accordance with the Previously Approved Memorandum of Understanding. (Human Resources 2510)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Adopt 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 Council of the City of Alameda to Include Provisions Pursuant to Government Code 20516 "Cost Sharing" for Local Police Members and for Local Fire Members
BACKGROUND
At the City Council meeting on April 30, 2015, the City Council adopted Resolutions No. 15027, 15028, 15029 and 15030 approving the revised Memorandum of Understandings (MOUs) between the Alameda Police Officers Association (APOA), Alameda Police Managers Association (APMA), International Association of Firefighters (IAFF), and Alameda Fire Chiefs Association (AFCA) and the City of Alameda, for the period of November 1, 2015, through December 18, 2021.
At the City Council meeting on February 24, 2016, the City Council also adopted Resolution No. 15127 approving the revised Executive Management Compensation Plan, which covers the public safety classifications of Chief of Police and Fire Chief for the period of December 27, 2015, through December 26, 2018.
Employees in these bargaining units have agreed to pay, in addition to the 9% employee contribution, up to 6% in employee cost sharing. The employees cost share was 2% in June 2013 and has increased 1% a year in July of 2013, 2014, and 2015 and will cap at 6% based on the current agreements in July 2016.
In 2012, the City amended the contract with California Public Employees Retirement System (CalPERS) for variable cost rate sharing of up to 5.057% under Government Code Section 20516(a), based on the City’s contract with CalPERS for the 3% @ 50 and One-Year Final Compensation optional benefits for local fire and local police employees. Government Code section 20516 permits employees to share a portion of their employer’s pension cost. In order for a member’s contribution to be credited to each member’s account and be refundable to members who separate from CalPERS and withdraw their contribution, the contract with PERS must reflect this as well as the cost share contribution amount.
Since our current CalPERS contract only permits cost sharing of up to 5.057%, the City’s contract with CalPERS must be amended to allow for the employees’ additional 1% contribution to be credited to the employees’ retirement account as is the current 5% employee cost share.
On April 25, 2016, City staff submitted to CalPERS a request for a contract amendment for local police and local fire employees to establish a fixed cost share amount of 6% in order to comply with the respective MOUs. On May 31, 2016, CalPERS issued the amendment documents and instructions.
DISCUSSION
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 change the employees’ rate of contribution. This election must be held for each contract group following the adoption of the Resolution of Intention, and prior to the adoption of the Ordinance to amend the CalPERS contract. The election is scheduled to be conducted the week of June 27, 2016.
• The Ordinance, which will be an Urgency Ordinance, and a City Council vote on adoption, must occur no sooner than 20 days after the adoption of the Resolution of Intention. This Urgency Ordinance will be presented to the City Council for adoption on July 19, 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 anticipated to be July 24, 2016.
FINANCIAL IMPACT
This contract amendment merely reflects the city’s existing agreement with the safety unions. Approval of the amendment does not provide any additional benefit to the affected employees nor does it save to the City’ General Fund any additional amount because the proposed FY 2016-17 Budget already assumes the additional 1% CalPERS savings (i.e. pick up by the safety employees.)
The value of the 1% contribution being made by public safety employees is estimated at $84,000 for Alameda Police Officers Association, $15,000 for Alameda Police Management Association, $108,000 for International Association of Fire Fighters and $11,000 for Alameda Fire Chiefs Association for Fiscal Year 2016-17.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, pursuant to Guideline section 15378.
RECOMMENDATION
Adopt a Resolution of Intention to approve an amendment to the contract between the Board of Administration of the California Public Employees’ Retirement System and the City Council of the City of Alameda to include provisions pursuant to Government Code 20516 "Cost Sharing" for local police members and for local fire members.
Respectfully submitted,
Nancy Bronstein, Human Resources Director
By,
Nancy Bronstein, Human Resources Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Amendment to CalPERS Contract