City Council Agenda
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Memo to: |
Manteca City Council |
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From: |
Stephanie Van Steyn, Director of Human Resources |
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Date: |
April 2, 2024 |
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Subject: |
Amendment to CalPERS Contract for bargaining units: 1) Manteca Police Officers Association; and 2) Manteca Public Safety Management Association |
Recommendation:
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Adopt a resolution approving an amendment to contract between the Board of Administration California Public Employees Retirement System (CalPERS) and the City Council of Manteca to provide provisions of Retirement Law (Government Code) section 20516, Employee Cost Sharing and waive the first readying of substitution of the tile and introduce an ordinance of the City Council of the City of Manteca, state of California, adding chapter 2.48.045 to the Manteca Municipal Code to amend the contract between the California Public Employee Retirement System and the City of Manteca per government code section 20516.
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Background:
CalPERS retirement benefits are funded with member (employee) contributions and employer contributions. Under Government Code section 20516 of the California Public Employees’ Retirement Law (PERL), a contracting agency and its employees may agree, in writing, to share the costs of the employer contribution.
Manteca Police Officers Association (MPOA) - Employee Cost Sharing
The City’s CalPERS contract includes employee cost-sharing for classic tier 1 (3% @ 50 formula) and classic tier 2 (3% @ 55 formula) members covered under the MPOA bargaining unit. Since 2014, CalPERS would only allow a maximum cost-share of 5.174%, and the cost-sharing provision was only allowed through December 31, 2023. Although cost sharing has continued under the MOU, a contract amendment is preferred for the reasons set forth below.
Pursuant to the approved memorandum of understanding (MOU) with MPOA effective July 1, 2023, through June 30, 2026, under MOU provision V. 34 - Retirement, the City agreed to initiate the CalPERS contract amendment process as soon as practicable to extend cost-sharing. Additionally, CalPERS will now allow a full 9% of additional employee cost share. In January 2024, the City and MPOA signed a side letter to confirm the 9% employee cost sharing agreement.
Manteca Public Safety Managers Association (MPSMA) - Employee Cost Sharing
The City’s existing CalPERS contract includes employee cost-sharing for classic tier 1, classic tier 2 members covered under MPSMA. Employees in this bargaining unit include a combination of safety members (3% @ 50 or 3% @ 55) and miscellaneous/non-safety members (2.7% @ 55 or 2% @ 60).
Since 2014, CalPERS would only allow a maximum cost-share of 5.174%, and the cost-sharing provision was only allowed through December 31, 2023. Pursuant to the approved MOU with MPSMA effective July 1, 2023, through June 30, 2026, under MOU provision V. 26 - Retirement, the City agreed to extend the cost-sharing agreement, at a higher allowable rate of 5.75%. Additionally, in January 2024, the City and MPSMA signed a side letter to confirm the 5.75% employee cost sharing agreement.
Under a CalPERS contract amendment 20516 (b), the additional employee contributions will be accounted for as “normal member contributions,” which are vested and refundable to members upon separation; therefore it is a benefit to these participating employees.
Below are the intended employee contribution amounts under the CalPERS contract cost-sharing:
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Bargaining Unit |
CalPERS Tier |
Employee/Member Contribution |
Employee Cost Sharing % of Employer Cost |
Total Employee Contribution |
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MPOA |
Classic Police Safety |
9% |
9% |
18% |
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MPSMA |
Classic Safety (Police & Fire) |
9% |
5.75% |
14.75% |
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MPSMA |
Classic Tier 1 Miscellaneous (Non-Sworn) |
8% |
5.75% |
13.75% |
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MPSMA |
Classic Tier 2 Miscellaneous (Non-Sworn) |
7% |
5.75% |
12.75% |
To amend the contract with CalPERS to include the provisions of section 20516, the City Council must adopt a Resolution of Intention to Approve an Amendment to Contract (Exhibit “A” of the Resolution) and adopt an Ordinance Authorizing an Amendment to Contract. The Ordinance must be adopted no less than 20 calendar days following the adoption of the Resolution of Intention. A Certification of Governing Body’s Action (Exhibit “B” of the Resolution); Government Code section 7507 requires that the future annual costs or benefit change of the proposed contract amendment be made public at a public meeting at least two weeks prior to the adoption of the final Ordinance. The City will certify compliance on the Certification of Compliance with Government Code section 7507 (Exhibit “C”); and a Certification of Compliance with Government Code Section 20516 (Exhibit “D” of the Resolution) must also be completed upon adoption of the Resolution of Intention.
Section 20474 requires a secret ballot election by the employees when amending a retirement contract to provide a benefit that changes the employees’ contribution rate. The secret ballot election must be conducted after the adoption of the Resolution of Intention and before the adoption of the Ordinance. A secret ballot election for the MPOA and MPSMA units will be conducted, and the results of the election will be certified on the Certification of Employee Election (Exhibit “D”). A sample employee ballot is attached for informational purposes (Attachment 6). If the majority of MPOA and MPSMA employees approve the proposed plan, the City’s CalPERS contract will be amended.
Assuming favorable employee election results, the Ordinance will be placed on the City Council agenda for a Council meeting in mid-April or May 2024. The effective date of the contract amendment will be the first day of the payroll period following the effective date of the final Ordinance. The contract amendment will cover applicable members of the MPOA and MPSMA.
Fiscal Impact:
Amending the City’s contract with CalPERS to include the provisions of Government Code section 20516, Cost Sharing, will not increase City expenditures for retirement benefits.
Documents Attached:
1. Attachment 1 - Resolution
2. Attachment 2 - Exhibit “A” to the Resolution - Amendment to CalPERS Contract
3. Attachment 3 - Exhibit “B” to the Resolution - Certification of Governing Body’s Action (CON-12)
4. Attachment 4 - Exhibit “C” to the Resolution - Certification of Compliance with Government Code Section 7507 (CON-12A)
5. Attachment 5 - Exhibit “D” to the Resolution - Certification of Employee Election Form (CON-15)
6. Attachment 6 - Cost Sharing Ballots - MPOA and MPSMA (C10022)
7. Attachment 7 - Ordinance