HomeMy WebLinkAboutWorkforce Reduction Incentive Program - CalPERS Two Years Ad CITY OF HUNTINGTON BEACH
�. INTERDEPARTMENTAL COMMUNICATION
cn
TO: Honorable Mayor and City Council
FROM: William P.Workman, Assistant City Administrator
SUBJECT: California Public Employees' Retirement System Opening of a
Designation Period for the Two Year Additional Service Credit
DATE: June 16, 2003
In light of the City's budget situation and the unknowns regarding the State's budget, I
will be asking the City Council to open another designation period for offering the Two-
Year Additional Service Credit at the June 30, 2003 City Council Meeting. The
designation period for employees to retire with two additional years of service credit with
the California Public Employees' Retirement System (CaIPERS) will be July 1, 2003
through September 30, 2003.
Eligible City employees are members of the miscellaneous retirement plan with
CaIPERS. These employees are all members of the Municipal Employees' Association
(MEA), plus all non-swom members of Management Employees' Organization (MEO),
Police Officers' Association (POA) and those non-safety employees designated as non-
associated. To be eligible for the two-year additional service credit, an employee must
be age fifty and be vested with CaIPERS (a minimum of five years of service credit).
Considering those eligible employees and the personal decisions required, possibly
between fifteen to twenty-five employees will use this benefit and retire, for a total cost
of approximately $660,000. The actual final cost for offering this benefit is estimated to
be even lower, once CaIPERS calculates the final cost of each employee. The excess
earnings in the City's miscellaneous retirement plan will pay the final cost of the Two-
Year Additional Service Credit.
The California Government Code, section 7507, requires that the City Council be
notified at a regularly scheduled agendized public meeting, two weeks prior to the
adoption of the resolution to open a designation period for the Two-Year Additional
Service Credit, of the total potential cost of the benefit. If every eligible employee (a
total of 208) were to use the Two-Year Service Credit and retire, the total cost would be
$5,506,920.
On February 24, 1983 the City Council amended the City's contract with CaIPERS to
add the Two-Years Additional Service Credit Amendment. - The City has offered the
credit six times since 1983, most recently in July 2002. The reason for proposing a new
designation period for the two years additional service credit is to reduce the City's
annual salary costs and to minimize the need for staff reductions through lay-offs.
C
CALIFORNIA PUBLIC &c LOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Division
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
(916) 326-3420
CERTIFICATION OF GOVERNING BODY'S ACTION
1 hereby certify that the foregoing Is a true and correct copy of a Resolution adopted by the
City Council of the
(governing body)
City of Huntington Beach
(public agency)
on
July 1;- 2002
(date)
Clerk/Secretary
City Clerk
Title
PER S-CON-12(rev. 1/96)
RESOLUTION NO. 2002-64
A RESOLUTION OF THE CITY COUNCIL OF TIIE CITY OF HUNTINGTON BEACH
TO GRANT A DESIGATED PERIOD FOR TWO YEARS ADDITIONAL SERVICE
N CREDIT
WHEREAS, the City of Huntington Beach is a contracting Public Agency of the Public
Employees'Retirement System;and
The City desires to provide a designated period for Two Years Additional Service Credit,
pursuant to Califarlria Government Cade Section 20903, based on the contract amendment
included in said contract that provided for the Section 20903 Two Years Additional Service
Credit for eligible members,
NOW,THERFORE,the City Council of the City of Huntington Beach does hereby
resolve as follows:
I. The City Council does hereby seek to add a designated period, and does hereby
authorize this Resolution, indicating its desire to add a designated period for Two Years
Additional Service Credit, from July 2,2002, through and including September 30, 2002, for
eligible miscellaneous members in the City of Huntington Beach.
2. The City Council hereby certifies that it is electing to exercise the provisions of
said Section 20903 because of impending mandatory transfers,demotions, and layoffs that
constitute at least 1 percent of the job classification, department,or organizational unit as
designated by the City Council,resulting from the curtailment of, or change in the manner of
performing, its services.
3. The City Council hereby certifies that if any early retirements are granted after
receipt of additional service credit pursuant to the designated period set forth herein, the
intention of the City Council is that at least one vacancy in any position in any department or
other organizational unit shall remain permanently unfilled thereby resulting in an overall
reduction in the workforce of the department or organizational unit.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on July 1,2002.
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk p7.1 -4n City Attorney
REVIEWED AND APPROVED: INITIATED AN, APPROVED: C
Offy—Administrator Directo f Administrative Services
PDA:2002 Resol:pers add'l service Credit
RLS 2002-0327
6.13.2W2
Res. No. 2002-64
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
1, CONNIE BROCKWAY, the duty elected, qualified City Clerk
of the City of Huntington Beach, and ex-officio Clerk of the City Council of
said City, do hereby certify that the whcle number of members of the City
Council of the City of Huntington Beach is seven; that the foregoing resolution
was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council at a regular meeting thereof held on the
Ist day of.July, 2002 by the following vote:
AYES: Green, Dettloff, Boardman, Cook, Houchen,Winchell, Bauer
NOES: None
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio C erk of the
City Council of the City of
Huntington Beach, California
e
e z
Workforce Reduction
Incentive Program o DT
* The Workforce Reduction Incentive Program
is designed to help address an ongoing
3 $5 million General Fund budget shortfall
Z The program will offer a 90-day "window of
� opportunity" wherein employees must retire in
?� order to take advantage of the 2-Years
Additional Service Credit.
Requirements to qualify for the program :
* Age 50 before September 30, 2002
* Vested with CaIPERS (5 years of Service Credit)
* Retire before September 30, 2002
N
CITY OF HUNTINGTON BEACH
COUNCIL—ADMINISTRATOR COMMUNICATION
�1N o a
TO: Honorable Mayor and City Council
I.o2 —�
FROM; Ray Silver,City Administrator 424i To 1Cfi►"� �I,_ ��r
SUBJECT: California Public Employee Retirement System—
Invocation of Two-Years Service Credit Contract Amendment r7
,.n
DATE; June 17,2002
In light of the city's budget situation and the unknowns regarding the slate's budget, I will be
asking the City Council to invoke the city's Two-Year Senice Credit Amendment at the July 1
City Council meeting. The window for offering the Two-Year Service Credit is estimated to be
July 2 through September 30,2002.
The Two-Year Service Credit will be offered to all eligible city employees who are members of
the city miscellaneous retirement plan with California Public Employees Retirement System
(CalPERS). Members of the miscellaneous retirement plan are all members of Municipal
Employees' Association(MEA),plus all non-sworn members of Management Employees'
Organization(MEO), Police Officers'Association(POA),and Non-Associated(NA). To be
eligible for the Two-Year Service Credit,an employec must be age 50 and be vested with
CalPERS(a minimum of five-years of service credit).
Considering those eligible employees and the personal decisions required,possibly between 50
and 70 employees will use this benefit and retire,for a total cost of approximately S 1,120,000.
The actual final cost for offering this benefit is estimated to be even lower,once CaIPERS'
calculates the final cost of each individual employee. The excess earnings in the city's
miscellaneous retirement plan,the"Superfund,"will pay the final cost of the Two-Year Service
Credit. The California Government Code section 7507 requires that the City Council be notified
at a regularly scheduled, agendized public meeting,two-weeks prior to the adoption of the Two-
Years Service Credit resolution,of the total cost of the benefit. The total possible cost of
offering this benefit to all eligible employees is$6,406,292. This total cost assumes that all 240
eligible employees use the Two-Year Service Credit and retire.
On February 24, 1983 the City Council amended the city's contract with CalPERS to add the
Two-Years Service Credit Amendment. The city has offered the Two-Years Service Credit five
times since 1983,most recently in June 1988. The reason for proposing the Two-Year Service
Credit amendment is to reduce the city's annual salay costs. The Two-Year Service Credit is
one of our ways to minimize the need for extensive staff reductions through lay-offs. It is
anticipated that by offering the Two-Year Service Credit,the city will save$8,000,000 to
S9,000,000 in reduced salary costs over 30 years.
RS/WM:pf
OF HUNTINGTON BE.-
MEETING DATE: July 1, 2002 DEPARTMENT ID NUMBER: AS 02-016
Council/Agency Meeting Held: 1-
Deferred/Continued to:
Approved Conditianall pproved ❑ Denied p• City Clerk's i ature
Council Meeting Date: July 1, 2002 Department ID Number. AS42-T6
r
H �
Y
CITY OF HUNTINGTON BEACH =�
REQUEST FOR ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, CITY ADMINISTRATORar. -0 c
PREPARED BY: CLAY MARTIN, DIRECTOR OF ADMINISTRATOR SERVICES
SUBJECT: ADOPT A RESOLUTION ESTABLISHING THE WORKFORCE
REDUCTION INCENTIVE PROGRAM 6e� ; 1M
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachments)
Statement of Issue:
As announced at the June 17, 2002, City Council Meeting, the adoption of this resolution will
implement the Workforce Reduction Incentive Program.
Funding Source:
The excess earnings in the City's miscellaneous retirement plan, the "Superfund", will pay the
final cost of the Two Years Additional Service Credit. The estimated cost for offering this
benefit will be approximately $1,120,000. The actual cost will be determined by actuarial
after the close of the designated period.
Recommended Action:
Adopt Resolution.? 6f of the City Council of the City of Huntington Beach to grant a
designated period for two years additional service credit.
Alternative Action(s): Do not adopt the resolution.
Analysis:
Staff is proposing that the City Council adopt the "Workforce Reduction Incentive Program",
commonly referred by the California Public Emp'oyees' Retirement System (CaIPERS) as
the 2-Years Additional Service Credit. On February 24, 1983 the City Council amended the
contract with CaIPERS to include the Two Years Additional Service Credit Amendment. The
City has offered the Two Years Additional Service Credit, five times since 1983, most
Z:IRCAV2 year additional service credit.doc -2- 6/20/2002 9:20 AM
�' REQUEST FOR ACTION �./
MEETING DATE: July 1, 2002 DEPARTMENT ID NUMBER: AS 02-016
recently in June 1988. The designated period for offering the Two Years Additional Service
Credit is 90-- 180 days, and can be offered by classification, department or retirement plan.
The Two-Year Additional Service Credit will be offered to all eligible City employees who are
members of the City miscellaneous retirement plan with CalPERS. Members of the
miscellaneous retirement plan are all eligible members of Municipal Employees' Association
(MEA), plus all non-sworn members of the Management Employees' Organization (MEO),
Police Officers' Association (POA) and Non-Associated (NA). To be eligible for the Two
Years Additional Service Credit an employee must be age fifty, be vested with CalPERS (a
minimum of five-years of service credit), and retire between July 2, 2002 and September 30,
2002 (90 days).
The Workforce Reduction Incentive Program is designed to address the Fiscal Year (FY)
200112002 $3 million General Fund budget shortfall and an expected shortfall in FY
200212003. The Workforce Reduction Incentive Program is one of several efforts underway
to reduce expenditures. By offering the Workforce Reduction Incentive Program, it is hoped
that General Fund salary expenditures can be reduced by creating enough vacancies to only
eliminate unoccupied positions. Currently, employee salaries and benefits account for 75
percent of all General Fund expenditures. The other efforts underway to reduce
expenditures are:
A hiring freeze;
• Developing additional department-generated revenue;
• Increased departmental reductions, Department Heads have already identified $1.4
million of the needed S3 million.
It is hoped that the Workforce Reduction Incentive Program will help find the other $1.6
million still needed to balance the FY 2001/2002 budget.
CalPERS requires the reporting of the maximum possible cost (assumes all eligible
employees retire) of$6.4 million. Considering those employees who are more likely to retire,
the total cost is estimated to be approximately $1.1 million. The actual cost will be
determined by actuarial after the close of the designated period.
Environmental Status: No impact
Attachment(s):
Descriptionjl�age Number No
1 Resolution IJO , .2 O o o►--6'f
RCA Author: Sharon Hennegen
Z:IRCA's12 year additional service credit.doc i- 6/20/2002 9:20 ANI
6L
� V
ATTACHMENT # 1
CALIFORNIA PUBLIC &LOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Division
Public Agency Contract Services
P.O. Box 942709
Sacramento, CA 94229-2709
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 20903
In accordance with Government Code Section 20903 and the contract between the
Public Employees' Retirement System, the City Council of the City of Huntington Beach
hereby certifies that:
4. Because of an Impending curtailment of, or change in the manner of performing
service, the best interests of the agency will be served by granting such additional
service credit.
2. Payment shall be made of the amount equal to the actuarial equivalent of the
difference between the allowance the member receives after receipt of such service
credit and the amount the member would have received without such service credit
with respect to all eligible employees who retire during the specified period.
3. It has elected to become subject to Section 20903 because of Impending mandatary
transfers, demotions, and layoffs that constitute at least 1 percent of the job
classification, department or organizational unit, as designated by the governing
body, resulting from the curtailment of, or change In the manner of performing, its
services.
4. Its Intention at the time Section 20903 becomes operative Is to keep all vacancies
created by retirements under this section or at least one vacancy in any position in
any department or other organizational unit permanently unfilled thereby resulting in
an overall reduction In the work force of such department or organizational unit.
THEREFORE, the City Council of the City of Huntington Beach hereby elects to
provide the benefits of Govemment Code Section 20903 to all eligible members who
retire within the designated pperiod, July 2, 2002 through
September 30, 2002
CITY COUNCIL
OF THE
CITY OF HUNTINGTON BEACH
BY
Presiding Officer
Attest:
ClertclSecretary
Da D� 2yr cet�ca.ion-PA(Rev. tr�sl
y
r
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Division
Public Agency Contract Services
P.O. Box 942709
Sacramento. CA 94229 2709
(916) 326-3420
CERTIFICATION OF COMPLIANCE WITH
GOVERNMENT CODE SECTION 7507
hereby certify that in accordance with Section 7507 of the Government Code
the future annual costs as determined by the System Actuary and/or the Increase
In retirement benefit(s)have been made public at a public meeting of the
City Council - of the
(governing body)
City of Huntington Beach
(public agency)
on June 17, 2002 which is at toast two weeks prior to the adoption of the
(date)
Resolution/Ordinance.
Clerk/Secretary
City Clerk
Title
Date D
lg'"-r-c.A%,Mi%t-. Aietafta a; CAA Co*c*1 Stme 117, a-Qoz_
PERs-CON-12A(M.IM)
(6) June 17, 2002-Council/Agency Minutes -Page 6
Dave Sullivan recognized the city employees who helped so much in the Memorial Day i.
ceremonies and also ori'Flag Day. Dr. Sullivan informed Council that the agreement between
the city and Disc Sports Management appears to be a lease,which would require a"Measure Co
vote of the electorate. He also stated his opinion that the money from the Transient Occupancy
Tax should go the General Fund, not the Redevelopment Agency Fund.
Norm Westwell strongly opposed the escort service fee ordinance stating that this ordinance will
have zero impact because the city does not have this problem.
j
Joey Racano informed Council that the 301-H waiver bill proposed by Assemblyman Tom
Harman would go before the Governor for signature. Mr. Racano opposed the South East
Coastal Redevelopment Project and the proposed City Charter Amendment. He also stated his
concerns regarding the Ibiza Restaurant appeal to extend hours of operation and allow dancing.
Mr. Racano stated he concurred with the proposed ordinance relating to the display of animals.
(City Council) Announcement of Appointment made of John DeWitt to the Finance Board
by City Council Member Pam Houchen ( . )
City Council Member Pam Houchen announced her appointment of John DeWitt to the Finance
Board effective July 1. 2002.
(City Administrator's Report)Announcement Made of the Invocation of Two Years
Service Credit at the July 1,2002 Council Meeting Offered to all City Employees under
CALPERS (California Public Employee Retirement System) -
City Administrator Ray Silver presented a communication titled"Califomla Public Employee
Retirement System—Invocation of Two-Years Service Credit ContractAmendment"dated June
17,2002 recommending establishment and Implementation of a Workforce Reduction Incentive
Program as part of the city's 2002-03 budget approval process. City Administrator Silver stated
that the appearance of this Item on the agenda meets legal requirements and that the Item vrill
be presented at the July 1, 2002 Council meeting, for submittal with the budget In August 2002.
This communication from the City Administrator dated June 17,2002 is Included In the agenda
packet and allows those who qualify to accept this offer from July 1,2002 to September 30,
2002 to make a decision.
(City Council) Reviewed and Accepted Shari Freldenrich, City Treasurer's April 2002
Report Titled City of Huntington Beach Summary of City Investment Portfolio, Bond
Proceeds, and Deferred Compensation Activity (310.20)
Time City douncil considered a communication from City Treasurer Shan Freldenrich
transmitting the Monthly Investment Report for April 2002.
A motion was made by Boardman, second Cook to review and accept the monthly report.
Following review of the report, by motion of Council, accept the Monthly Investment Report
Summary of Investment Portfolio, Bond Proceeds, and Deferred Compensation Activity forApril
2002, pursuant to Section 17.0 of the Investment Policy of the C' i L"PURm r a wn
va
oWy d tM original on fk In tNs oftioo.
Aft"t c"I - 11 - 20 t z
CONNIE BROCKWAY
of the
Cound he aI Humwvton Bead%
C.tiorni�
By Deputy
t
RESOLUTION NO. 2002-64
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
TO GRANT A DESIGATED PERIOD FOR TWO YEARS ADDITIONAL SERVICE
M CREDIT
WHEREAS, the City of Huntington Beach is a contracting Public Agency of the Public
Employees'Retirement System; and
The City desires to provide a designated period for Two Years Additional Service Credit,
pursuant to Caliifornfa Government Code Section 20903,based on the contract amendment
included in said contract that provided for the Section 20903 Two Years Additional Service
Credit for eligible members,
NOW,THERFORE,the City Council of the City of Huntington Beach does hereby
resolve as follows:
I. The City Council does hereby seek to add a designated period,and does hereby
authorize this Resolution, indicating its desire to add a designated period for Two Years
Additional Service Credit, from July 2,2002,through and including September 30,2002,for
eligible miscellaneous members in the City of Huntington Beach.
2. The City Council hereby certifies that it is electing to exercise the provisions of
said Section 20903 because of impending mandatory transfers,demotions,and layoffs that
constitute at least I percent of the job classification,department,or organizational unit as
designated by the City Council,resulting from the curtailment of,or change in the manner of
performing, its services.
3. The City Council hereby certifies that if any early retirements are granted after
receipt of additional service credit pursuant to the designated period set forth herein,the
intention of the City Council is that at least one vacancy in any position in any department or
other organizational unit shall remain permanently unfilled thereby resulting in an overall
reduction in the workforce of the department or organizational unit.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on July 1,2002.
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk e7-1 -at j!!�✓City Attorney
REVIEWED AND APPROVED: LNITIATED APPR VED: �L
cg -n
r—QT . - —
Cllffy-Administrator Directo- f Administrative Services
PDA:2002 Resol:pers addl ser►ice credit
RIS 2002.0327
6-IJ-_002
a
s
Res. No. 2002-64
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk
of the City of Huntington Beach, and ex-officio Clerk of the City Council of
said City, do hereby certify that the whole number of members of the City
Council of the City of Huntington Beach Is seven; that the foregoing resolution
was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council at a regular meeting thereof held on the
I st day of July, 2002 by the following vote:
AYES: Green, Dettloff, Boardman, Cook. Houchen, Winchell, Bauer
NOES: None
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio C erk of the
City Council of the City of
Huntington Beach, California