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Second Retirement Tier for Nonsworn Employeesq0`N N 0 .411 i �0s gat °s COUNCIL AGENDA REPORT DATE: July 23, 2012 TO: MAYOR AND TOWN COUNCIL FROM: GREG LARSON, TOWN MANAGER MEETING DATE: 08/06/2012 ITEM NO. % o SUBJECT: ADOPT AN ORDINANCE BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE TOWN COUNCIL OF THE TOWN OF LOS GATOS TO ADD A SECOND RETIREMENT TIER FOR NONSWORN ( "MISCELLANEOUS ") EMPLOYEES RECOMMENDATION: Adopt the ordinance introduced by Council on May 21, 2012. DISCUSSION: On May 21, 2012, Council adopted a resolution of intent and introduced an ordinance authorizing an amendment to the Town's Ca1PERS contract to institute a second tier retirement plan for Non -Sworn ( "Miscellaneous ") employees. On June 18th, Council adopted the final ordinance to implement the contract amendment, however, due to a technical error CalPERS is requiring that the ordinance be re- submitted for final adoption as a non- consent item. Should Council adopt the ordinance as introduced, the amendment shall be effective September 15, 2012. Attachments: 1. Ordinance amending the Ca1PERS contract with Exhibit A PREPARED BY: RUMI PORTILLO Human Resources Dire r Reviewed by:�Assistant Town Manager V Town Attorney Finance Revised: 07/20/2012 5:16 PM Reformatted: 5/30/02 N:\PSL\ Current\ Staff \Rumi \Current\Retirement\PERS Two -Tier FINAL \Council Staff Report Two Tier Retirement 2nd Reading Aug 6 2012.doc THIS PAGE INTENTIONALLY LEFT BLANK ORDINANCE ORDINANCE OF THE TOWN OF LOS GATOS AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE TOWN COUNCIL OF THE TOWN OF LOS GATOS AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM TO ADD A SECOND RETIREMENT TIER (TO PROVIDE SECTION 21353 (2% @ 60 FULL FORMULA) FOR NONSWORN (G6MISCELLANEOUS ") EMPLOYEES THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES ORDAIN AS FOLLOWS: SECTION I That an amendment to the contract between the Town Council of the Town of Los Gatos and the Board of Administration, California Public Employees' Retirement System is hereby authorized, a copy of said amendment being attached hereto, marked "Exhibit A ", and by such reference made a part hereof as though herein set out in full. SECTION II The Mayor of the Town of Los Gatos is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said Agency. SECTION III In the event that any part of this ordinance is held to be invalid, the invalid part or parts shall be severed from the remaining portions which shall remain in full force and effect. SECTION IV This ordinance was introduced at a regular meeting of the Town Council of the Town of Los Gatos on May 21, 2012 and adopted by the following vote as an ordinance of the Town of Los Gatos at a regular meeting of the Town Council of the Town of Los Gatos on August 6, 2012. COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: ATTEST: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA Rev: 6/2/04 THIS PAGE INTENTIONALLY LEFT BLANK Ca1PERS California Public Employees' Retirement System and the Town Council. Town of Los Gatos 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 April 1, 1972, and witnessed March 1, 1972, and as amended effective August 2, 1972, June 1, 1976, July 1, 1976, October 1, 1976, January 4, 1990, December 16, 1992, August 6, 1997, June 24, 2001 and June 29, 2008 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 June 29, 2008, and hereby replaced by the following paragraphs numbered 1 through 17 inclusive: 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 entering membership in the miscellaneous classification on or prior to the effective date of this amendment to contract, age 60 for local miscellaneous members entering membership for the first time in the miscellaneous classification after the effective date of this amendment to contract and age 50 for local safety members. 2. Public Agency shall participate in the Public Employees' Retire- m-ent System from and after April 1, 1972 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 o indemnify, defend,and hold harmless the California �Publrc& Employees' Retirement Syst "em `(CalPERS) and its trustees, agents and employees,. the P, IIPERS Board of Administration, and the California Public Employees' Retirement Fund from any claims, ,.r demands, "actions, losses, liabilities, damages, °judgments, expenses and costs, including "but not limited to mtebest, llenalties and attorneys fees that may arise as a result of any-of the following: (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 nonCaIPERS' "retirement program. (b) Public Agency's election to amend this Contract to provide retirement benefits, provisions or formulas that are different than existing retirem"e'ri 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 ti e�retirement benefits, provisions or formul as p rovided under this Contract and provided for under the" Public Employees' Retirement Law. (d) Pubk Aggency's election to file for bankruptcy under Chapter 9 (commencing with section 901) of T file- ,11 of `the United States Bankruptcy Code and /or Public 4genc 1 election to reject this Contract with the CalPERS Board of Administration pursuant to section 365, of Titl6 *11, of the United States Bankruptcy Code or any'siimilar provision of law: (e) Public Agency's election to assign this Contract without the prior written consent of the CaIPERS'' Board``of Administration. (f)' The Termination of this Contract either voiuntarily by request of Public Agency or involuntarily pursuant to the Public Employees' Retirement Law. (g) Changes sponsored by Public Agency in existing retirement benefits, provisions or formulas made as a result of amendments, additions or deletions to California statute or to the California Constitution. 4. 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 Police Officers (herein referred to as local safety members); b. Employees other than local safety members (herein referred to as local miscellaneous members). 5. 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: ALL - -- PERSONS-- EMPLOYED - ON OR PRIOR- TO CONTRACT DATE WHO... WERE­ MEMBERS. OF-- THE -LOCAL _SYSTEM - EXCEPT THOSE IN EMPLOYMENT ON CONTRACT DATE WHO WAIVED THEIR RIGHTS UNDER THE LOCAL SYSTEM AND THOSE PERSONS WHO WAIVED THEIR RIGHTS BETWEEN MARCH 18 AND MARCH 26, 1976. 6. 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 20336 superseded this contract provision by providing that any such temporary and /or seasonal employees are excluded from PERS membership subsequent to January 1, 1975. Legislation repealed and replaced said Section with Government Code Section 20305 effective July 1, 1994. 7. Assets heretofore accumulated with respect to members under the local retirement system who waived their rights under that system have been transferred to the Public Employees' Retirement System on April 1, 1972 or between March 18, and March 26, 1976 and applied against the liability for prior service incurred thereunder. That portion of assets so transferred which represent the accumulated contributions (plus interest thereof) required of the employees under said local system have been credited to the individual membership account of each such employee under the Public Employees' Retirement System. 8. 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 June 29,° 2008 shall be determined in accordance with Section 21354 of said Retirement Law, subject to the reduction provided therein for service -prior to. June 30, 1976, termination of Social Security, for members whose service has been included in Federal Social Security (2% at age-55 Full! and Modified). 9. The percentage of final compensation ' to be provided for each year of credited prior and current service for local miscellaneous members in employment -ion or after June 29, 2008 and not entering membership for the first time in the miscellaneous classification after the effective date of this amendment to - contract shall be determined in accordance with Section 21354.4 of said Retirement Law subject to the reduction provided therein for service prior to June 30, 1976, termination of Social Security, for members whose service has been included in -Federal Social Security (2.5% at age 55 Full and Modified). 10. The percentage of final compensation to be provided for each year of credited current`service as a local miscellaneous meniberentering membership for;the.first;::time:m the`miscellaneous classification after the effective date of this amendment to contract shall `be determined in accordance with Section 21353 of said Retirement Law (2% at age 60 11. 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 21362.2 of said Retirement Law (3% at age 50 Full). 12. Public. Agency elected and elects to be subject :to the following optional provisions: a. Section 21536 (Local System Service Credit Included in Basic Death Benefit). b. Sectlons 21'624 and 21626 (Post= Retirement Survivor Allowance). C. Section 21574 (Fourth Level of 1959 Survivor Benefits). d. Section 20042 (One -Year Final Compensation) for those local miscellaneous members entering membership on ..or prior to the effective date of this amendment to contract and for local safety members. e. Section 21024 (Military Service Credit as Public Service). f. Section 20475 (Different Level of Benefits). Section 21353 (2% @ 60 Full formula) and Section 20037 (Three -Year Final Compensation) are applicable to local miscellaneous members entering membership for the first time in the miscellaneous classification after the effective date of this amendment to contract. 13. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on July 1, 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. 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. 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 endr of-the p6riodi to,which said. contribution's 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 yin contributions' required of,. anyemployee may be made by direct payments between the employee:and the Board. B. This amendment sh'ali be effective on the day of , BOARD OF ADMINISTRATION TOWN COUNCIL PUBLIC EMPLOYEES' RETIREMENT SYSTEM TOWN OF LOS GATOS BY BY KAREN DE FRANK, CHIEF PRESIDING OFFICER CUSTOMER ACCOUNT SERVICES DIVISION PUBLIC EMPLOYEES' RETIREMENT SYSTEM Witness Date Attest: Clerk- AMENDMENT CaIPERS ID #4589482285 PERS- CON -702A