Loading...
HomeMy WebLinkAboutEmployee Tax Override & Pension Reform Overview - Presentati • • N .—� O N � _ .. v� $.., .r. N r--� C �. a., N �� � ,�^� ,�' � �o ��� � ' '�\ ` � � f�d� ;.a�,0 _: �., Employee Tax Override Background • Employee Tax Override approved by the voters in 1966 • Tax is currently set at $0.015 cents per $too of assessed value • For every $ioo,000 of assessed valuation, the tax is $15.00 • For a home with an assessed value of $500,000, the tax is approximately $75.00 • The tax generates $4.2 million annually for the General Fund 2 _ What Does the Tax Pay For ? • In short, the tax can only pay for the cost of the retirement benefit level that existed prior to 1,978 (i.e. Prop 13) for ALL employees (i.e. past, present and future) • The retirement benefit level that existed prior to 1978 was the 2%@50 formula for Safety employees (and 2%@55 formula for Miscellaneous) • The current tax rate only takes into consideration the 2%@50 formula for Safety employees • As of August 20, 2012, City Council action permanently capped the tax rate at $0.01500 per sioo of assessed valuation 3 d,k ..ix Who Benefits From The Tax? 120 100% 100 4% 80 71% ■ Special District 60 ■ School District ■County 40 ■ Huntington Beach 20 9% 16% 0 Property Tax Override Tax 4 y What does the General Fund Pay For? $ 1000 City Council City Manager City Clerk < $.01 $.01 < $.O I Community City Attorne Services $.O 1 $.07 City Treasurer Economic < $.O 1 Development Public Works $.OI $.I1 Finance $.03 Fire Police. $.18 $32 Human Resources $.03 Library Services $.02 Planning and Building Non_ Information $.03 Departmental Services Depart $ $.14 ,03 5 AddressingChallengesOur • Huntington Beach has risen to the challenge of these tough economic times • Over $29.o million in cuts over the past five years - a total of 183 FTEs eliminated, and an additional 37 defunded, for a total of 22o FTEs eliminated/defunded over the past five years • In essence, funding for one in almost every five positions has been eliminated from the budget • Employees are paying $i.9 million more towards their retirement costs today than five years ago and are also paying more towards their health care benefits • If the employees picked up the full share of the CAPERS Employee Rate, the City could save an additional $2.5 million annually 6 History of City ' s Workforce 1,200.00 1,143.00 1,143.00 1,150.00 1,141.30 1,100.00 1,050.00 —FTE 1,000.00 1,000.50 —Funded 970.50 972.00 950.00 960.00 _16% 936.99 923.00 _20% 900.00 850.00 FY 2007/08 FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 7 Potential Budget Scenarios of Tax Elimination k...... ..... Io'U"P:MM Assumptions for Budget Scenarios For Discussion Purposes Only Assumptions • The annual loss of revenue to the General Fund will be $4.2million • The revenue loss is a structural loss (not one-time) • All Departments will participate in budget reductions • All reductions proposed will be structural (no one-times) • All Departments will participate at the same proportion as their current share of the General Fund Budget • PERS contributions by City employees remain at current levels • Reserves will not be used as the are one-time in nature, consistent with current City Council policy on they use of reserves • The 15% charter requirement related to infrastructure funding must be met • No additional fines, fees, penalties will be levied to increase revenues • Departmental cuts are potential budget reduction scenarios onl ; final, actual impacts will be determined by theCity Council, if neeM 9 •i `^C t kr '/r'Rxv ut Y Nr$ t {��y n'Yt+ r' ,�q�ys '5,,,�*s� ., ' z.+�. Potential Police Dept Impact $ 1 .6M • Eliminate Crime Scene Unit (6 CSI Officers) o Loss of critically important investigative personnel 0 30 suspects identified by DNA and 184 by fingerprints in a is month period • Reduce Special Enforcement Team by 50% (4 Police Officers) o Eliminate Bella Terra Footbeat o Eliminate Downtown Footbeat on weeknights - Impact on SurfCity Nights • Eliminate one Detention Officer Supervisor o Loss of supervision in extremely high risk/high liability area o Increase time to process prisoners resulting in less field time for police officers • Reduce Police Overtime resulting in slower response times to calls for service particularly summer/holidays • Civilianize one Lieutenant position • Summary: Elimination of ii positions, including 5 sworn • OR alternative cuts, efficiencies and/or employee concessions 10 \ RIF C ."V Y $2 [ lR WOO . Potential Fire Dept Impact $885K • Eliminate Urban Search & Rescue Program impacting response to industrial, traffic, structural collapse and trench rescue accidents; Severe reduction in ability to provide rescue response during earthquakes and other disasters • Eliminate Hazmat Response Program impacting response to emergencies in industrial/manufacturing, oil wells, pipelines, waterway spills, and terrorism related incidents • Eliminate Training Officer and Joint Training Center impacting critical training and safety resources and programs • Eliminate Tactical Paramedic (SWAT) Program resulting in the loss of immediate triage and treatment of injured civilians and police officers • Eliminate Volunteer Programs (CERT, RACES, and Search and Rescue) • Reduce Oil Well inspections and administrative support • Summary: Elimination of 4 positions, including i sworn • OR alternative cuts, efficiencies and/or employee concessions » Potential Library Dept Impact $ 111K • Closure of 2 branch libraries: Helen Murphy and Main Street OR Banning Branches, and reduce hours at the Central Library Public Service desk resulting in part time staff reduction of 2.5 FTE employees • Eliminate supply funding for branches; Eliminate 6 story time sessions per week, 50% cut in supplies for Story Time; and reduce craft activities, training and other Youth Services program supplies • Over 5o% cut in magazine and newspaper purchases and significant cuts in subscriptions for all locations • Summary: Elimination of 2.5 FTE part time positions • OR alternative cuts, efficiencies and/or employee concessions 12 T Potential Community Services Impact $340K • Restructure the Art Center function with $ioo,000 and the program revenue to be dedicated to a non-profit organization for the delivery of exhibits and classes at the current facility • Eliminate a Marine Safety Officer resulting in less qualified personnel to provide this service • Reduce part-time Parking and Camping staffing resulting in reduced ability to open gates in response to environmental conditions or activities • Reduce Pier Plaza contract services and Beach maintenance temporary salaries impacting maintenance and cleaning • Summary: Elimination of 3 FTE and 18 PT positions • OR alternative cuts, efficiencies and/or employee concessions 13 -."`•r aY i i '�„fy Y p ct .a 7 t r, ... ; , iad I Potential Public Works Impact* $558K • Eliminate preventive maintenance on emergency vehicle signal preemption equipment; defer signal, markings and sign replacements in residential areas from a 4-year to a 6-year cycle; and defer equipment and fleet maintenance • Reduce mowing (50%) in City parks and facilities; defer tree trimming from a 12-year to a 15-year cycle; and reduce landscape maintenance, painting and refurbishing (45%) • Eliminate Environmental Specialist in Urban Runoff reducing ability to respond to storm water violations • Eliminate Maintenance position for City facilities • Summary: Elimination of z FTE and Z PT positions • OR alternative cuts, efficiencies and/or employee concessions *Reduced spending on Infrastructure will also result. 14 ,ten.r!/` v,,. y Potential Other Dept Impacts $751K • Eliminate a Deputy City Attorney III impacting prosecutions, preparation of ordinances, resolutions and agreements • Reduce Code Enforcement Program impacting violation abatement times, inspection availability and citizen complaints • Reduce professional service contracts in Finance, imaging for Planning and Building • Reduce administrative coverage in City Manager, Economic Development, City Clerk and Human Resources Departments • Reduce operating expenses for the City Treasurer and City Clerk, such as elimination of election handbooks • Reduce communication and technical services, impacting the City's network system • OR alternative cuts, efficiencies and/or employee concessions 15 V7--'Poten- tial Workforce Impact With Current PERS Pickups ® Description MONEW City Attorney Eliminate Deputy City Attorney III/Increase Contracts (57,692) (1.00) (1.00) City Clerk Operating Reductions (18,879) City Manager Office Assistant II (41,308) (1.00) (1.00) Comm Svcs Art Center Restructuring/ Marine Safety Officer II (339,807) (1.00) (2.00) (18.00) (21.00) Economic Dev Administrative Secretary (42,609) (0.50) (0.50) Fire Deputy Fire Marshal, Training Center Staff (885,001) (1.00) (2.00) (1.00) (4.00) City Treasurer Operating Reductions (6,547) Finance Accounting Technician Supervisor (133,839) (1.00) (1.00) HR Administrative Asst/Personnel Asst (129,244) (1.50) (1.50) Info Svcs Info Services Network Administrator (155,979) (1.00) (1.00) Library Branch Library Staff (110,930) (2.50) (2.50) Planning & Code Enforcement Officer/SIRE Temp Staff (164,864) (1.00) (3.00) (4.00) Bldg Police Police Officers, Lieutenant, CSI Unit (1,571,165) (5.00) (6.00) (11.00) Public Works Environmental Specialist, Facilities Maint Tech (557,150) (2.00) (2.00) Total (4,215,014) (7.00) (19.00) (24.50) (50.50) 16 PO ', " Tax Full Employee Pick-Up Scenario Potential General Fund Savings By Bargaining Group Total EE Rate EE Potential Contract ' City Paid ' ate Savings Expiration Safety Huntington Beach Fire Association 6.75% 2.25% 9.00% 327,040 9/30/13 Fire Management Association 6.75% 2.25% 9.00% 24,308 9/30/13 Police Officers Association - Safety 4.25% 4.75% 9.00% 9841971 9/30/13 Police Management Association 4.25% 4.75% 9.00% 955583 9/30/13 Marine Safety Management 6.25% 2.75% 9.00% 34,019 9/30/13 Non Associated - Safety 5.5%/6.75% 3.5%/2.25% 9.00% 11,781 N/A Miscellaneous POA - Non Safety 4.25% 3.75% 8.00% 108,578 9/30/13 Municipal Employees Association 4.25% 3.75% 8.00% 756,130 6/30/13 Management Employees Org. 6.75% 1.25% 8.00% 11020 12/20/12 Non Associated — Executive Mgmt 6.75% 1.25% 8.00% 24.967 N/A $294859997 18 Annual City PER osts General Fund Only 30,000,000 25,000,000 Y 20,000,000 O U CA 15,000,000 Le end: W g CL4 •••••• City-Paid Employer Share M 10,000,000 City-Paid Employee Share —Total City-Paid PERS Q $4.8 M 5,000,000 . � $2.5 M 0 Actual Actual Actual Actual Revised Proposed Projected Projected FY 07/08 FY 08/09 FY 09/10 FY 10/11 Budget Budget Budget Budget FY 11/12 FY 12/13 FY 13/14 FY 14/15 19 Potential Impact of Full Employee PERS Pickups • City costs associated with the "Employee Share" of PERS costs have decreased by si.9 million over the last 5 years • If employees picked up the remaining costs of the "Employee Share" of PERS costs, the City could save an additional $2.5 million 20 i Timeline � . Description August 28, 2012 AB 340 Pension Reform Bill Passed September 17, 2012 FY 2012/13 Budget Adoption Date October i, 2oi2 New Fiscal Year Begins - FY 2012/13 November 1, 2012 First Installment Due - Property Tax Bill November 6, 2012 Election Day - Employee Tax Override Ballot Measure Z November 7, 2012 Preliminary Election Results Announced December 3 or 17, 2012 Election Results Certification/Measure Z Effective Date December lo, 2012 Last Date to Pay First Installment of Property Taxes Departmental Cuts Implemented and/or January i, Zoi3 Employee Concessions Achieved, if Applicable 21 Public Employee Pension Reform Act R A) z; f NR% % CRRYR '^l^AhR :%.:.r N'Crvt-:yt. y(•. ..J - s AB 340 Pension Reform Highlights • Governor signed into law September ia, 2012 • Most provisions effective January i, aoi3 • Effects ALL public employers, including CHARTER cities that contract with CalPERS • Exception - Charter cities and counties with an independent pension plan without CalPERS reciprocity • Generally, only "new" employees and/or "new" members impacted • Exceptions - applies to "new" and current • Prohibition against AIRTIME purchase • New Post-Retirement Employment Restrictions �4 P. L F I li;a•. Y ('f,. h„. . r:" fP.*!i' .le 1 , .) YS AB 340 Pension Reform Highlights Additional Provisions: • Defines "new" employee as employee hired on/after 01/01/13 with no prior public sector work history or public sector employment with no reciprocity to CAPERS • Defines "new" member as employee who was not a member of CalPERS on of/o1/13 or worked for a system without reciprocity to CalPERS or has a break in service from active CalPERS covered employment of greater than 6 months • Requires 3 Year Final Compensation vs. Single Highest Year for "new" employees/members • Caps Final Compensation for "new" employees/members at s11ok if in Social Security and $132k for others 25 r i rv1,iM1i x r d.i ° . ,..elm .T ,N•, �^ . ' " t i9;; , s. 101 J' AB 340 Pension Reform Highlights • Limits Post-Retirement Public Employment - applies to "new" and current employees • Mandatory Wait Period of 18o days for post-retirement employment (exception Police and Fire) • Emergency approval requires action by governing body • Prohibits Purchase of Air Time - "new" and current employees (current employees may apply by iz/31/ia) • Eliminates Benefits if Convicted Felon - applies to "new" and current employees • Eliminates Pension Spiking 26 iVtw irk _ , 1%:Sa AB 340 Pension Reform Highlights • Safety Industrial Disability Retirement changed to provide the rg_ eater of: • Fifty percent of final compensation • A service retirement allowance, if qualified • An actuarially reduced amount, determined by Ca1PERS if the service age is less than 50 or not qualified for service retirement • Benefit will not be lower than what would have been received prior to January 1, 2013 • Government Code Section ai40o effective until January i, aoi8 z, p,: u �,1 f a7 v'a" AB 340 Pension Reform Highlights Creates Reduced Benefit Formulas for NEW Employees � . Formula • . . Benefit Miscellaneous 2%@62 52 2.5%@67 Safety - Basic 1.426%@50 50 2%@57 Safety — Option 1 2%@50 50 2.5%@57 Safety — Option 2 2%@50 50 2.7%@57 'New Employee- No prior service in a public agency; or has been separated from prior active service in a public agency for more than six months. For Public Safety- it is mandatory that the Agency Option will be the plan that is LOWER than, but CLOSEST to the current Public Safety plan at age 55. For COHB - Option a. May also opt for 2W tier lower plans through collective bargaining. 28 AB 340 Pension Reform Highlights Cost Sharing Provisions • Cost sharing for current employees not impacted at this time (existing MOU language prevails) • Provides for 50/50 sharing of "Normal Cost" for "new" employees/members (minimum contribution) • Mandates 50/50 cost-sharing of "Normal Cost" in Zo18 for current employees (minimum contribution) • "Normal Cost" is NOT the required employee contribution (8% for Miscellaneous/9% for Safety) • "Normal Cost" is actuarially determined by CaIPERS • Eliminates EPMC for NEW employees 29 AB 340 Pension Reform Highlights Other Ancillary Provisions • Prohibits new supplemental defined benefit plans for ALL employees after January i, aoi3 (PARS) • Limits "PERSABLE" final compensation - eliminates • Bonus pay • Termination/Severance Payments [GC 31461 (1)(c)(4)] • Uniform Allowance • Leave payouts in excess of annual leave accruals [GC 31461 (1)(C)(2)] 30 AB 340 Pension Reform Highlights QUESTIONS ? 3.