AgdaPkt 2011-08-22 - Laserfiche WebLink

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6.4.A. - Page 2 California Government Code § 20471, there must be a twenty (20) day period between the adoption of the Resolution of Intention and the adoption of the final ordinance. The ordinance to amend the contract will be presented for introduction during this meeting and for final adoption at the September 12, 2011 City Council meeting, which meets the statutory notice requirements. In addition, California Government Code §7507 requires that future annual costs of the proposed contract amendment be made public at a public meeting at least two weeks prior to the adoption of the proposed ordinance. That information is attached and has been circulated and posted with the meeting agenda and satisfies this requirement. CaIPERS offers Redwood City a choice of two options in implementing a second tier pension plan. The first option is the Standard Method which reduces the City's contribution rate gradually over time as new employees are hired with second tier lower benefits. The second option is the Temporary Pooling Method, whereby the City would temporarily have a lower employer contribution rate for new employees than for first tier employees. The Temporary Pooling Method provides more immediate but temporary relief until June 30, 2014. Then on July 1, 2015 the City would receive a blended contribution rate for all employees that would be slightly larger than under the Standard Method. The Standard Method is recommended to promote consistency, ease of administration in the payroll system, and an incremental smoothing effect on the City's pension cost structure. ALTERNATIVES Pursue other alternatives as directed by the City Council. FISCAL IMPACT The proposed changes will not result in significant immediate savings; however savings to the City will accrue as new employees are hired under the second-tier retirement formulas. The City's employer rate reduction will occur gradually, beginning on July 1, 2013. Ultimately when all employees are under the second tier, the expected normal cost would decrease 3.8% for Miscellaneous employees and 3.1 % for Safety employees. To put this savings in perspective, if the second tier formulas were applied to all current employees, the FY 2011-12 payroll would be reduced by approximately $1.8 million.