AgdaPkt 2017-06-26 Closed and Joint SA PFA

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portion of the cost sharing will be implemented by amending the City’s contract with CalPERS, under Government Code 20516(a). This change does not increase or decrease the employee’s contributions to pensions, nor change the City’s costs. ANALYSIS State CalPERS law permits cost-sharing of required employer contributions through two different methods. Under the first method, in accordance with Government Code Section 20516(f), pursuant to an MOU, the employee is required to pay the standard employee contribution and to pay an additional amount toward the employer’s required contribution. Under this method, the CalPERS contract is not amended, and the additional payment is not credited as an employee contribution within the individual’s CalPERS account. Under the second method, in accordance with Government Code 20516(a), an agency’s contract with CalPERS may be amended to increase the employee contribution to CalPERS, thereby contractually reducing the employer’s cost toward the benefit. This amount is credited to the employee’s account as an employee contribution. In order to ensure that contributions are credited to the employee’s CalPERS accounts, the City and COA agreed to implement a portion of the cost-sharing as an increased employee contribution under Government Code 20516(a). This will also ensure that the cost-sharing arrangement is codified on a more permanent basis. In order to increase the employee contribution to CalPERS in accordance with Government Code 20516(a), the City’s contract with CalPERS must be amended. The contract amendment requires a Resolution of Intention to Approve an Amendment to Contract, and introduction of an Ordinance authorizing an amendment. Additionally, as part of the CalPERS contract amendment process, CalPERS requires that an employee election to be held. An employee election will be held from June 27, 2017 to July 18, 2017, to vote on amending the CalPERS contract to provide for the agreed upon employee cost-sharing contribution. After a successful election, Council will be presented with the final Ordinance. It is anticipated that the final Ordinance will be presented on August 28, 2017. Thirty days after the final reading, the Amendment will become effective. Beginning with the subsequent pay period, starting October 2, 2017, payroll will start reporting the cost-sharing to CalPERS. ALTERNATIVES Changes to employees’ cost-sharing were previously negotiated with the Chief Officers Association bargaining unit and approved by Council in February 2017. Therefore, no alternative actions are recommended. 6.4.A. - Page 2