Item No. 12AGENDA ITEM NO. 12
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: May 17, 2022
TO: Mayor and City Council
FROM: David Carmany
City Manager
SUBJECT: CONSIDERATION OF ORDINANCE AMENDING THE CONTRACT BETWEEN THE
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY OF WEST
COVINA TO IMPLEMENT COST -SHARING IN ACCORDANCE WITH SECTION 20516 OF
THE CALIFORNIA GOVERNMENT CODE AND THE MEMORANDUM OF
UNDERSTANDING BETWEEN THE CITY OF WEST COVINA AND THE WEST COVINA
POLICE OFFICERS' ASSOCIATION
RECOMMENDATION:
It is recommended that the City Council adopt the following ordinance:
ORDINANCE NO. 2496 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST
COVINA, CALIFORNIA, AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN
THE CITY OF WEST COVINA AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BACKGROUND:
The City of West Covina (City) and the West Covina Police Officer's Association (POA) ratified their 2021
to 2024 Memorandum of Understanding (MOU) on January 18, 2022. Under the terms of this MOU, the
City and POA seek to amend the City's contract with the California Public Employees' Retirement
System ("CaIPERS") and establish cost -sharing by a contract amendment under Government Code
section 20516(a).
The City and POA agreed to amend their MOU to reflect the following:
That cost -sharing will be done by contract amendment under Government Code section 20516(a).
Further, until the City effectuates the cost -sharing by amendment under Government Code section
20516(a), the cost -sharing will continue to be by an agreement under Government Code section
20516(f).
That this cost -sharing provision will be applicable to the West Covina Police Officer's
Association bargaining unit consisting of the following Safety members: Police Officers, Police
Corporals, and Police Sergeants.
That this amended contract is applicable to Classic Members. Under the amended contract,
cost -sharing will operate as follows:
Classic Members:
Classic Members shall pay an additional three percent (3%) of compensation earnable towards the
employer contribution as cost -sharing in accordance with Government Code section 20516(a).
In January 2022, the City submitted its request to CalPERS to initiate this contract amendment. In March
2022, CalPERS sent the City the necessary amendment packet to proceed with the process. On April 5,
2022, the City Council adopted a Resolution of Intent to approve the contract amendment and introduced
Ordinance No. 2496 to formally initiate the CaIPERS contract amendment process to reflect the
cost -sharing arrangement summarized above.
DISCUSSION:
The City has been working with CaIPERS on the contract amendment process to implement employee
cost -sharing as described above. CalPERS has provided the City with the amended contract draft
(Exhibit A to Attachment No. 1) needed for the contract amendment.
In order to proceed with amending the City's CaIPERS contract, City Council must first adopt a
Resolution of Intent to amend the City's CaIPERS contract and conduct a first reading of the Ordinance.
The City Council took these actions on April 5, 2022. Following the adoption of the Resolution of Intent,
POA employees must hold a secret ballot election and vote to approve the adoption. The POA held a
secret ballot election over the period of April 6, 2022 through April 29, 2022, approving the adoption of the
contract amendment. Finally, under Government Code section 20471, the City Council must adopt the
Ordinance no earlier than 20 days after the adoption of the Resolution of Intent. Ordinance No. 2496 is
being presented to the City Council for adoption.
Below is the anticipated schedule of events:
. April 5, 2022 — Adoption of Resolution of Intent, Introduction of Ordinance
. April 6-29, 2022 — Vote by POA
. May 17, 2022 — Adoption of Ordinance
. June 17, 2022 — Earliest effective date of the amended CalPERS contract
. June 25, 2022 — Beginning of the first pay period following the effective date of the ordinance
Staff recommends that the City Council conduct the second reading and adopt Ordinance No. 2496. The
Ordinance will take effect on the 31st day following adoption, which is on or about June 17, 2022.
LEGAL REVIEW:
The City Attorney's Office has reviewed the ordinance and approved it as to form.
Fiscal Impact
FISCAL IMPACT:
The contract amendment provides that the City employees in the membership described above will pay
an additional 3% of the employer's share of the CalPERS employer contribution. This cost sharing
arrangement is expected to save the City approximately $290,000 per fiscal year.
Attachments
Attachment No. 1 - Ordinance No. 2496
CITY COUNCIL GOALS & OBJECTIVES: Achieve Fiscal Sustainability and Financial Stability
ATTACHMENT NO. 1
ORDINANCE NO.2496
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA, CALIFORNIA, AUTHORIZING AN
AMENDMENT TO THE CONTRACT BETWEEN THE CITY
OF WEST COVINA AND THE BOARD OF
ADMINISTRATION OF THE CALIFORNIA PUBLIC
EMPLOYEES'RETIREMENT SYSTEM
WHEREAS, the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the Public Employees' Retirement System (PERS) by the
execution of a contract, and sets forth the procedure by which public agencies may elect to subject
themselves and their employees to amendments to said law; and
WHEREAS, the City of West Covina, by action of the City Council in accordance with
the Public Employee's Retirement Law, entered into a contract with PERS effective January 1,
1966, and subsequently amended said contract, with the most recent amendment occurring
December 20, 2012, which PERS contract provides for participation of the City and its employees
in PERS; and
WHEREAS, one of the steps in the procedures to amend the contract with PERS is the
adoption by the governing body of the public agency of a resolution giving notice of its intention
to approve an amendment to its contract, which resolution must contain a summary of the proposed
contract change; and
WHEREAS, on April 5, 2022, the West Covina City Council adopted Resolution No.
2022-25 giving notice of its intention to approve an amendment to its contract with PERS in
accordance with the 2021 to 2024 Memorandum of Understanding between the City and the West
Covina Police Officers' Association and providing the following summary of the proposed change:
Under Government Code section 20516(a), the City will effectuate cost sharing by
amendment such that Classic Members of the West Covina Police Officers' Association
shall pay an additional three percent (3%) of compensation earnable towards the employer
contribution; and
WHEREAS, all legal requirements prior to the adoption of this Ordinance have occurred.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA,
CALIFORNIA DOES ORDAIN AS FOLLOWS:
SECTION 1. An amendment to the contract between the City Council of the City
of West Covina and the Board of Administration, California Public Employees' Retirement
System is hereby authorized. A copy of the amendment is attached, marked Exhibit A, and
by such reference made a part of this Ordinance as though set out in full.
SECTION 2. The Mayor of the City of West Covina is hereby authorized,
empowered, and directed to execute the amendment for and on behalf of the City of West
Covina.
SECTION 3. This Ordinance shall take effect and be in force thirty (30) days from
and after the date of its passage.
SECTION 4. The City Clerk shall certify to the adoption of this Ordinance and
shall cause this Ordinance to be published or posted as required by law.
PASSED, APPROVED AND ADOPTED this 17th day of May, 2022.
APPROVED AS TO FORM
Thomas P. Duarte
City Attorney
Dario Castellanos
Mayor
ATTEST
Lisa Sherrick
Assistant City Clerk
I, LISA SBERRICK, Assistant City Clerk of the City of West Covina, California, do
hereby certify that the foregoing Ordinance No. 2496 was introduced at a regular meeting of the
City Council held on the 5th day of April, 2022, and adopted at a regular meeting of the City
Council on the 17th day of May, 2022 by the following vote of the City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
Lisa Sherrick
Assistant City Clerk
EXHIBIT A
AMENDMENT TO CALPERS CONTRACT
Ali,,-
Ca1PERS
California
Public Employees' Retirement System
EXHIBIT
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of West Covina
The Board of Administration, California Public Employees' Retirement System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective July 1,
1966, and witnessed May 26, 1966, and as amended effective November 1, 1968,
October 1, 1970, September 16, 1977, December 11, 1978, January 1, 1979, June 1,
1983, December 16, 1983, December 16, 1984, December 16, 1987, February 16,
1989, July 1, 1989, June 17, 1992, January 6, 1994, June 24, 1997, September 24,
1997, October 2, 1998, November 17, 1998, July 16, 1999, July 8, 2000, August 4,
2001, October 12, 2002, July 1, 2006, January 8, 2011, July 20, 2011 and December
20, 2012 which provides for participation of Public Agency in said System, Board and
Public Agency hereby agree as follows:
A. Paragraphs 1 through 20 are hereby stricken from said contract as executed
effective December 20, 2012, and hereby replaced by the following paragraphs
numbered 1 through 22 inclusive:
1. All words and terms used herein which are defined in the Public
Employees' Retirement Law shall have the meaning as defined therein
unless otherwise specifically provided. "Normal retirement age" shall
mean age 55 for classic local miscellaneous members entering
membership in the miscellaneous classification on or prior to January 8,
2011, age 60 for classic local miscellaneous members entering
membership for the first time in the miscellaneous classification after
January 8, 2011, age 62 for new local miscellaneous members, age 50 for
classic local fire members entering membership in the fire classification on
or prior to July 20, 2011 and for those classic local police members
entering membership in the police classification on or prior to December
20, 2012, age 55 for classic local fire members entering membership for
the first time in the fire classification after July 20, 2011 and for those
classic local police members entering membership for the first time in the
police classification after December 20, 2012 and age 57 for new local
safety members.
2. Public Agency shall participate in the Public Employees' Retirement
System from and after July 1, 1966 making its employees as hereinafter
provided, members of said System subject to all provisions of the Public
Employees' Retirement Law except such as apply only on election of a
contracting agency and are not provided for herein and to all amendments
to said Law hereafter enacted except those, which by express provisions
thereof, apply only on the election of a contracting agency.
3. Public Agency agrees to indemnify, defend and hold harmless the
California Public Employees' Retirement System (CaIPERS) and its
trustees, agents and employees, the CaIPERS Board of Administration,
and the California Public Employees' Retirement Fund from any claims,
demands, actions, losses, liabilities, damages, judgments, expenses and
costs, including but not limited to interest, penalties and attorney fees that
may arise as a result of any of the following;
(a) Public Agency's election to provide retirement benefits,
provisions or formulas under this Contract that are different than
the retirement benefits, provisions or formulas provided under
the Public Agency's prior non-CaIPERS retirement program.
(b) Any dispute, disagreement, claim, or proceeding (including
without limitation arbitration, administrative hearing, or litigation)
between Public Agency and its employees (or their
representatives) which relates to Public Agency's election to
amend this Contract to provide retirement benefits, provisions or
formulas that are different than such employees' existing
retirement benefits, provisions or formulas.
(c) Public Agency's agreement with a third party other than
CalPERS to provide retirement benefits, provisions, or formulas
that are different than the retirement benefits, provisions or
formulas provided under this Contract and provided for under
the California Public Employees' Retirement Law.
4. Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
C. Employees other than local safety members (herein referred to as
local miscellaneous members).
5. In addition to the classes of employees excluded from membership by
said Retirement Law, the following classes of employees shall not become
members of said Retirement System:
a. PERSONS COMPENSATED ON AN HOURLY BASIS; AND
b. EMPLOYEES AND FORMER EMPLOYEES RETAINING RIGHTS,
OR RECEIVING BENEFITS ON ACCOUNT OF RETIREMENT
FOR SERVICE UNDER THE LOCAL SYSTEM AS OF JULY 1,
1966.
6. Benefits being received under the local system on July 1, 1966 by persons
retired for disability shall be continued by the Public Employees'
Retirement System at the rate provided in the local system in accordance
with Section 20481 of the said Retirement Law, said rate being constituted
as follows:
a. A monthly lifetime allowance in the amount of one-half of the retired
person's basis salary at the date of disability retirement reduced by
the worker's compensation payments, each month during the
retired person's entitlement to such payments.
b. A $500 death benefit payable upon death of the retired person
described above.
7. Public Agency, in accordance with Section 20685 of the Government
Code, shall provide that the normal rate of contribution for those
employees who were members of the Local Retirement System be based
on age at entry into said local system.
8. Assets heretofore accumulated with respect to members in the local
retirement system have been transferred to the Public Employees'
Retirement System and applied against the liability for prior service
incurred thereunder. That portion of the assets so transferred which
represent the accumulated contributions (plus interest thereof) required of
the employees under said local system has been credited to the individual
membership account of each such employee under the Public Employees'
Retirement System.
9. This contract shall be a continuation of the contract of the San Gabriel
Valley Fire Authority. A portion of the function of The San Gabriel Valley
Fire Authority has been transferred to the City of West Covina. The
accumulated contributions, assets and liability for prior and current service
under the Former Agency's contract shall be merged pursuant to Section
20508 of the Government Code. Such merger occurred February 1, 1989.
10. The percentage of final compensation to be provided for each year of
credited prior and current service as a classic local miscellaneous member
in employment before and not on or after July 1, 2006 shall be determined
in accordance with Section 21354 of said Retirement Law (2% at age 55
Full).
11. The percentage of final compensation to be provided for each year of
credited prior and current service as a classic local miscellaneous member
in employment on or after July 1, 2006 and not entering membership for
the first time in the miscellaneous classification after January 8, 2011 shall
be determined in accordance with Section 21354.4 of said Retirement Law
(2.5% at age 55 Full).
12, The percentage of final compensation to be provided for each year of
credited current service as a classic local miscellaneous member entering
membership for the first time in the miscellaneous classification after
January 8, 2011 shall be determined in accordance with Section 21353 of
said Retirement Law (2% at age 60 Full).
13. The percentage of final compensation to be provided for each year of
credited prior and current service as a new local miscellaneous member
shall be determined in accordance with Section 7522.20 of said
Retirement Law (2% at age 62 Full),
14. The percentage of final compensation to be provided for each year of
credited prior and current service as a classic local fire member entering
membership in the fire classification on or prior to July 20, 2011 and for
those classic local police members entering membership in the police
classification on or prior to December 20, 2012 shall be determined in
accordance with Section 21362.2 of said Retirement Law (3% at age 50
Full).
15. The percentage of final compensation to be provided for each year of
credited current service as a classic local fire member entering
membership for the first time in the fire classification after July 20, 2011
and for those classic local police members entering membership for the
first time in the police classification after December 20, 2012 shall be
determined in accordance with Section 21363.1 of said Retirement Law
(3% at age 55 Full).
16. The percentage of final compensation to be provided for each year of
credited prior and current service as a new local safety member shall be
determined in accordance with Section 7522.25(d) of said Retirement Law
(2.7% at age 57 Full).
17. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 21389 (Second Opportunity to Elect 1959 Survivor
Benefits). Legislation repealed said Section effective September
27, 1979.
b, Section 21536 (Local System Service Credit Included in Basic
Death Benefit).
C. Section 20903 (Two Years Additional Service Credit) for local
miscellaneous members only.
d. Sections 21624 and 21626 (Post -Retirement Survivor Allowance)
for local safety members only.
e. Section 20042 (One -Year Final Compensation) for classic
members only.
f. Section 20965 (Credit for Unused Sick Leave).
g. Section 21622 ($600 Retired Death Benefit) for local fire members
only.
h. Section 21024 (Military Service Credit as Public Service).
I. Section 21574 (Fourth Level of 1959 Survivor Benefits).
j. Section 21548 (Pre -Retirement Option 2W Death Benefit) for local
safety members only.
k. Section 20475 (Different Level of Benefits). Section 21353 (2% @
60 Full formula) is applicable to classic local miscellaneous
members entering membership for the first time with this agency in
the miscellaneous classification after January 8, 2011.
Section 21363.1 (3% @ 55 Full formula) is applicable to classic
local fire members entering membership for the first time with this
agency in the fire classification after July 20, 2011.
Section 213631 (3% @ 55 Full formula) is applicable to classic
local police members entering membership for the first time with
this agency in the police classification after December 20, 2012.
Section 20516 (Employees Sharing Additional Cost):
From and after the effective date of this amendment to contract, 3%
for classic local police members in the West Covina Police Officer's
Association.
The portion of the employer's contribution that the member agrees
to contribute from his or her compensation, over and above the
member's normal contribution ("Cost Sharing Percentage"), shall
not exceed the Employer Normal Cost Rate, as that rate is defined
in the CalPERS Actuarial Valuation for the relevant fiscal year. If
the Cost Sharing Percentage will exceed the relevant Employer
Normal Cost Rate, the Cost Sharing Percentage shall automatically
be reduced to an amount equal to, and not to exceed, the Employer
Normal Cost Rate for the relevant fiscal year.
18. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
September 16, 1977. Accumulated contributions of Public Agency shall
be fixed and determined as provided in Government Code Section 20834,
and accumulated contributions thereafter shall be held by the Board as
provided in Government Code Section 20834.
19. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
20. Public Agency shall also contribute to said Retirement System as follows:
a. Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local miscellaneous members and local safety members.
A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
C. A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
21. Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
22. Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System within fifteen days after the
end of the period to which said contributions refer or as may be prescribed
by Board regulation. If more or less than the correct amount of
contributions is paid for any period, proper adjustment shall be made in
connection with subsequent remittances. Adjustments on account of
errors in contributions required of any employee may be made by direct
payments betweenthe employee and the Board.
B. This amendment sh It,be'effective on the day of
BOARD OF ADMINIST.[[���TION CITY COUNCIL �y
PUBLIC EMPLOYEE - ETIREMENT SYSTEM CITY OF WEST COVI ,eQ�
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BY
MELO
PENS
, CHIEF
AND PREFUNDING
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BY
PRESID IKQQ FFICER
NMS DIVISION
EMPLOYEES' RETIREMENT SYSTEM�C`O�
Witness Date
Attest:
Clerk
AMENDMENT CaIPERS ID 03963758199
PERS•CON•702A