HomeMy Public PortalAboutOrdinance 829Ordinance No. 829
An Ordinance of the City Council of the City of Beaumont authorizing
an amendment to the Contract between the City Council of the City of
Beaumont and the Board of Administration of the California Public
Employees' Retirement System.
THE CITY COUNCIL OF THE CITY OF BEAUMONT, CALIFORNIA, DOES
HEREBY ORDAIN AS FOLLOWS:
Section 1:
That an amendment to the contract between the City Council of the City of Beaumont
and the Board of Administration, California Public Employees' Retirement System is
hereby authorized, a copy of said amendment being attached hereto, marked Exhibit, and
by such reference made a part hereof as though herein set out in full.
Section 2:
The Mayor of the City Council is hereby authorized, empowered, and directed to execute
said amendment for and on behalf of said Agency.
Section 3:
This ordinance shall take effect 60 days after the date of its adoption, and prior to the
expiration of 15 days from the passage thereof shall be published at least twice in the
Record Gazette, a newspaper of General Circulation, published and circulated in the City
of Beaumont and thenceforth and thereafter the same shall be in full force and effect.
MOVED, PASSED and ADOPTED this 21st day of May 2001 by
the following vote:
AYES: Mayor DeForge, Council Member Fox, Dressel, and Valdivia
NOES: None
ABSTAIN: None
ABSENT: Council Member Berg
ATTEST:
Deputy City Cl
Mayor of th ty of Beaumont
�111/I,,
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 Beaumont
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 September 1, 1967, and
witnessed June 27, 1967, and as amended effective October 23, 1974, June 16, 1979,
December 2, 1983, March 3, 1989, February 16, 1990, January 1, 2000, June 23, 2000 and
June 22, 2001 which provides for participation of Public Agency in said System, Board and
Public Agency hereby agree as follows:
A. Paragraphs 1 through 14 are hereby stricken from said contract as executed effective
June 22, 2001, and hereby replaced by the following paragraphs numbered 1 through
14 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 60 for local
miscellaneous members; age 55 for local fire members and age 50 for local
police members.
2. Public Agency shall participate in the Public Employees' Retirement System
from and after September 1, 1967 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.
PL
EASE DO NOT SIGN "EXHIBIT ONLY"
3. 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).
4. 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:
NO ADDITIONAL EXCLUSIONS
5. Prior to January 1, 1975, those members who were hired by Public Agency on a
temporary and/or seasonal basis not to exceed 6 months were excluded from
PERS membership by contract. Government Code Section 20336 superseded
this contract provision by providing that any such temporary and/or seasonal
employees are excluded from PERS membership subsequent to January 1,
1975. Legislation repealed and replaced said Section with Government Code
Section 20305 effective July 1, 1994.
6. The percentage of final compensation to be provided for each year of credited
prior and current service for local miscellaneous members shall be determined
in accordance with Section 21354.3 of said Retirement Law, subject to the
reduction provided therein for service prior to December 31, 1978, termination
of Social Security, for members whose service has been included in Federal
Social Security (3% at age 60 Full and Modified).
[Note that future legislative proposals are being considered. One
proposal could amend the 3% at 60 benefit formula under Government
Code Section 21354.3 to coincide with the 2.7% at 55 benefit formula
under Section 21354.5 between the ages of 50 and 55. Another proposal
being considered could amend Government Code Section 21354.3 to
make the 3% @ 60 formula applicable to both active and inactive members
who have not yet retired. If enacted, this amendment could have an effect
on your agency's actuarial valuation and employer contribution rates in
future years.]
7. The percentage of final compensation to be provided for each year of credited
prior and current service as a local fire member shall be determined in
accordance with Section 21366 of said Retirement Law subject to the reduction
provided therein for Federal Social Security (One-half pay at age 55 Modified).
PLEASE DO NOT SIGN "EXHIBIT ONLY"
8. The percentage of final compensation to be provided for each year of credited
prior and current service as a local police member shall be determined in
accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full).
9. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 20042 (One -Year Final Compensation) for local miscellaneous
members only.
b. Section 20965 (Credit for Unused Sick Leave) for local miscellaneous
members only.
c. Section' 21024 (Military Service Credit as Public Service), Statutes of
1976 for local miscellaneous members and local police members only.
10. Public Agency, in accordance with Government Code Section 20790, ceased to
be an "employer" for purposes of Section 20834 effective on December 2, 1983.
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.
11. 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.
12. Public Agency shall also contribute to said Retirement System as follows:
a. 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.
b. 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.
13. 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.
14. 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 between the employee and the
Board.
B. This amendment shall be effective on the . day of
BOARD OF ADMINISTRATION ,�C CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT S3`EM CITY OF BEAUMONT y
revv
BY BY
KENNETH W. MARZION, CHIFFj' PRESIDING OFFICER ;9
ACTUARIAL & EMPLOYER ,S RVICES DIVISION +VPUBLIC EMPLOYEES' RETIREMENT SYSTEM ro\
�V, m
rE? Witness Datt-)
Atte$';y
Clerk
AMENDMENT
PERS-CON-702A (Rev. 8\96)
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
New CaIPERS' Board Resolution Concerning Value of Assets
On June 20, 2001, the Ca1PERS' Board adopted a new resolution concerning the value of assets to be
used in determining the employer contribution rate due to benefit increases for amendments to public
agency contracts. This new resolution applies to all contract amendments based upon the June 30, 2000
annual actuarial valuation and for which a Resolution of Intention to amend is filed with Ca1PERS by
June 30, 2002.
This new resolution provides an increase in the actuarial value of assets in the amount of two times the
increase in the Present Value of Benefits. Under the new resolution, the employer has the option of
taking no increase in the actuarial value of assets and allowing the regular asset smoothing method to
operate as it normally would. In addition, the employer may limit the actuarial value of assets used for
rate setting purposes to 100% of market value if normal application of the resolution would otherwise
exceed this limit. Under no circumstances will an actuarial value of assets in excess of 110% of market
value be utilized. Further, the new resolution will apply to agencies whether or not they utilized the 95%
asset value offered in the previous resolution.
The available rate choices are offered under three different Alternatives:
• Alternative 1 — No increase in Actuarial Value of Assets
• Alternative 2 — Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment, limited to 100% of Market Value of Assets
• Alternative 3 — Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment, limited to 110% of Market Value of Assets
The employer should carefully consider its choices in choosing its new rate under the options made
available by the new resolution. The recent stock market volatility and the choices created under this
new board resolution can complicate your plan's future financial position. For many plans at Ca1PERS,
the financial soundness of the plan will not be jeopardized regardless of the choice made by the employer.
However, it is possible that, for some plans, some choices under the resolution would represent poor
financial decisions. You are strongly encouraged to have in-depth discussions with your Ca1PERS
actuary about the financial consequences ofany amendment.
Present Value of Projected Benefits
The table below shows the change in the total present value of benefits for the proposed plan amendment.
The present value of benefits represents the total dollars needed today to fund all future benefits for
current members of the plan, i.e. without regard to future employees. The difference between this amount
and current plan assets must be paid by future employee and employer contributions. As such, the change
in the present value of benefits due to the plan amendment represents the "cost" of the plan amendment.
However, for plans with excess assets some or all of this "cost" may already be covered by current excess
assets.
In this analysis, the increase in the present value of benefits due to the amendment is $1,710,629. Two
times this increase is $3,421,258, or 43.3% of market value of assets. Therefore, under alternative 2, the
actuarial value of assets will be increased to 1100.0% of the market value of assets. Under alternative 3,
the actuarial value of assets will be increased to 110.0% of the market value of assets.
December 28, 2001 Page 1 of 8
10:17 AM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: NNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
As of June 30, 2000
Current Plan
Post -Amendment
Alternative 1
Post -Amendment
Alternative 2
Post -Amendment
Alternative 3
Total Assets at Market Value
$ 7,909,463
$ 7,909,463
5 7,909,463
5 7,909,463
(MVA)
Actuarial Value of Assets (AVA)
7,340,326
7340,326
7,909,463
8,700,409
Increase in AVA
0
569,137
1,360,083
AVA / MVA
92.8%
92.8%
100.0%
110.0%
Present Value of Projected
$ 5,429,285
$ 7,139,914
$ 7,139,914
$ 7,139,914
Benefits (PVB)
Actuarial Value of Assets (AVA)
7 340.326
7.340.326
7 909.463
8,700 409
Present Value of Future Employer
and Employee Contributions
$ (1,911,041)
$ (200,412)
$ (769,549)
5 (1,560,495)
(PVB— AVA)
Change to PVB
1,710,629
1,710,629
1,710,629
Accrued Liability
It is not required, nor necessarily desirable, to have accumulated assets sufficient to cover the total present
value of benefits until every member has left employment. Instead, the actuarial funding process
calculates a regular contribution schedule of employee contributions and employer contributions (called
normal costs) which are designed to accumulate with interest to equal the total present value of benefits
by the time every member has left employment. As of each June 30, the actuary calculates the
"desirable" Level of plan assets as of that point in time by subtracting the present value of scheduled future
employee contributions and future employer normal costs from the total present value of benefits. The
resulting "desirable" level of assets is called the accrued liability.
A plan with assets exactly equal to the plan's accrued liability is simply "on schedule" in funding that
plan, and only future employee contributions and future employer normal costs are needed. A plan with
assets below the accrued liability is "behind schedule", or is said to have an unfunded liability, and must
temporarily increase contributions to get back. on schedule. A plan with assets in excess of the plan's
accrued liability is "ahead of schedule", or is said to have excess assets, and can temporarily reduce future
contributions. A plan with assets in excess of the total present value of benefits is called super funded,
and neither future employer nor employee contributions are required. Of course, events such as plan
amendments and investment or demographic gains or losses can change a plan's condition from year to
year. For example, a plan amendment could cause a plan to move all the way from being super -funded to
being in an unfunded position.
The changes in your plan's accrued liability, unfunded accrued liability, and the funded ratio as of June
30, 2000 due to the plan amendment are shown in the table below.
December 28, 2001 Page 2 of 8
10:17 AM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
As of June 30, 2000
Current Plan
Post -Amendment
Alternative 1
Post -Amendment
Alternative 2
Post -Amendment
Alternative 3
Entry Age Normal Accrued
$ - 4,556,172
$ 5,904,579
5 5,904,579
$ 5,904,579
Liability (AL)
Actuarial Value of Assets (AVA)
7 3400 326
7 340 326
7,909.463
8 700,409
Unfunded Liability/(Excess
5 (2,784,154)
5 (1,435,747)
$ (2,004,884)
$ (2,795,830)
Assets) (UAL = AL - AVA)
Funded Ratio (AVA / AL)
161.1%
124.3%
134.0%
147.4%
Change to AL
1,348,407
1,348,407
1,348,407
Change to UAL
1,348,407
779,270
(11,676)
Total Employer Contribution Rate -
While the tables above give the changes in the "cost" and funded status of the plan due to the amendment,
there remains the question of what will happen to the employer contribution rate because of the change in
plan provisions.
Ca1PERS policy is to implement rate changes due to plan amendments immediately on the effective date
of the change in plan benefits. In general, the policy also provides that the change in unfunded liability
due to the plan amendment will be separately amortized over a period of 20 years from the effective date
of the amendment and all other components of the plan's unfunded liability/excess assets will continue to
be amortized separately.
However, special administrative rules have been applied to plans with a current employer contribution
rate of zero. The pre -amendment excess assets in these plans were sufficient to cover the employer's
normal cost for one or more years into the future. A plan amendment will use up some or all of the pre -
amendment excess assets. If there were still excess assets (i.e. if the plan is still ahead of schedule) after
the plan amendment, the remaining excess assets were spread over the greater of 15 years or the number
of years for which the excess assets would keep the employer rate equal to zero. If the amendment uses
up all excess assets and creates an unfunded liability (i.e. from being ahead of schedule to behind
schedule), the post -amendment unfunded liability was amortized over 20 years.
One aspect of the Board's June 20, 2001 Resolution is that, generally, if an agency elects an alternative
which increases the actuarial value of assets (alternative 2 or 3), the result will be a lower short-term
contribution and a higher longer-term contribution. To illustrate this we have estimated what the impact
might be when the June 30, 2001 valuation is prepared. Please be aware this estimate assumes there are
no changes to actuarial assumptions or methods, there are no actuarial gains or losses, and there are no
plan changes such as work force changes and. employer paid member contributions converted to pay.
However, we have taken into account Ca1PERS' June 30, 2001 year-end market value rate of return,
-7.2%. The actual employer rate from July 1, 2003 to June 30, 2004 will be set by the June 30, 2001
annual valuation and will likely deviate from this estimate.
December 28, 2001 Page 3 of 8
10:17 AM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: NNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
The table below shows the change in your plan's employer contribution rate due to the plan amendment.
l - Details of the current amortization base are shown on page 7 of June 30, 2000 annual valuation report. If you have adopted any other
subsequent amendments, the current amortization base is the schedule after these adopted amendments.
2 - If a fixed number of years is shown, it means that the current unfunded actuarial liability is projected and amortized over this fixed number of
years. This amortization replaces the amortization schedule shown in your June 30, 2000 annual valuation and any other subsequent
amendments you have adopted.
3 - If 20 -year is shown, it means that changes in liability due to plan amendments and changes in actuarial value of assets are amortized
separately over a 20 -year period. This amortization schedule is in addition to the amortization schedule shown in the June 30, 2000 annual
valuation and any other subsequent amendments you have adopted.
4 - Excludes 1959 Survivor Benefit Program rate.
In the above table, the information shown in the 2002-2003 box represents the actual initial contribution
rate that will apply during fiscal 2002-2003 if you adopt the amendment by June 30, 2002. However,
these figures do not incorporate the -7.2% investment return in 2000-2001. The estimated employer rates
shown in the 2003-2004 box do take the negative return into consideration and will give you a better
estimate of what to expect in 2003-2004.
Note that the change in normal cost in the table above may be much more indicative of the long term
change in the employer contribution rate due to the plan amendment. The plan's unfunded
liability/excess asset cost shown in the table above is a temporary adjustment to the employer contribution
to "get the plan back on schedule". This temporary adjustment to the employer rate varies in duration
from plan to plan. For example, a plan with initial excess assets being amortized over a short period of
time will typically experience a large rate increase when excess assets are fully amortized. While a plan
amendment for such a plan may produce Little or no increase in the employer contribution rate now, the
change in normal cost due to the plan amendment will become fully reflected in the employer
contribution rate as soon as initial excess assets are fully amortized.
December 28, 2001 Page 4 of 8
10:17 AM
As of June 30, 2000
Current Plan
Post -Amendment
Alternative 1
Post -Amendment
Alternative 2
Post -Amendment
Alternative 3
2002-2003
Payment for Normal Cost
4.874%
9.545%
9.545%
9.545%
Payment on Amortization Bases
-4.874%
-9.545%
-9.545%
-9.545%
Payment for 1959 Survivor
0.000%
0.000%
0.000%
0.000%
Benefit Program
Total Employer Rate
0.000%
0.000%
0.000%
0.000%
Change to Normal Cost
4.671%
4.671%
4.671%
Change to Total Employer Rate
0.000%
0.000%
0.000%
Current Amortization Base t
9999 -year
Amendment Amortization Base
- Fresh Start 2
26 -year
78 -year
9999 -year
- Multiple Base'
N/A
N/A
N/A
2003-2004
Estimated Employer Rate 4
(recognizing -7.2% investment
return for 2000-2001)
0.0%
0.0%
0.0%
0.0%
Projection Amortization Base
9999 -year
19 -year
29 -year
29 -year
l - Details of the current amortization base are shown on page 7 of June 30, 2000 annual valuation report. If you have adopted any other
subsequent amendments, the current amortization base is the schedule after these adopted amendments.
2 - If a fixed number of years is shown, it means that the current unfunded actuarial liability is projected and amortized over this fixed number of
years. This amortization replaces the amortization schedule shown in your June 30, 2000 annual valuation and any other subsequent
amendments you have adopted.
3 - If 20 -year is shown, it means that changes in liability due to plan amendments and changes in actuarial value of assets are amortized
separately over a 20 -year period. This amortization schedule is in addition to the amortization schedule shown in the June 30, 2000 annual
valuation and any other subsequent amendments you have adopted.
4 - Excludes 1959 Survivor Benefit Program rate.
In the above table, the information shown in the 2002-2003 box represents the actual initial contribution
rate that will apply during fiscal 2002-2003 if you adopt the amendment by June 30, 2002. However,
these figures do not incorporate the -7.2% investment return in 2000-2001. The estimated employer rates
shown in the 2003-2004 box do take the negative return into consideration and will give you a better
estimate of what to expect in 2003-2004.
Note that the change in normal cost in the table above may be much more indicative of the long term
change in the employer contribution rate due to the plan amendment. The plan's unfunded
liability/excess asset cost shown in the table above is a temporary adjustment to the employer contribution
to "get the plan back on schedule". This temporary adjustment to the employer rate varies in duration
from plan to plan. For example, a plan with initial excess assets being amortized over a short period of
time will typically experience a large rate increase when excess assets are fully amortized. While a plan
amendment for such a plan may produce Little or no increase in the employer contribution rate now, the
change in normal cost due to the plan amendment will become fully reflected in the employer
contribution rate as soon as initial excess assets are fully amortized.
December 28, 2001 Page 4 of 8
10:17 AM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF' BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
Disclosure
If your agency is requesting cost information for two or more benefit changes, the cost of adopting more
than one of these changes may not be obtained by adding the individual costs. Instead, a separate
valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed
plan amendment applies to only some of the employees in the plan, the rate change due to the plan
amendment still applies to the entire plan, and is still based on the total plan payroll.
Any mandated benefit improvements not included in the June 30, 2000 annual valuation (such as the
change to the 90% cap for safety plans) have not been incorporated into this cost analysis.
Please note that the cost analysis provided in this document may not be relied upon once the Ca1PERS
actuarial staff have completed the next annual valuation, that is, the annual valuation as of June 30, 2001.
If you have not taken action to amend your contract, and we have already mailed the June 30, 2001
annual valuation report, you must contact our office for an updated cost analysis, based on the new annual
valuation.
Descriptions of the actuarial methodologies, actuarial assumptions, and plan benefit provisions may be
found in the appendices of the June 30, 2000 annual report. Please note that the results shown here are
subject to change if any of the data or plan provisions change from what was used in this study.
Certification
This actuarial valuation for the proposed plan amendment is based on the participant, benefits, and asset
data used in the June 30, 2000 annual valuation, with the benefits modified if necessary to reflect what is
currently provided under your contract with Ca1PERS, and further modified to reflect the proposed plan
amendment. The valuation has been performed in accordance with standards of practice prescribed by the
Actuarial Standards Board, and the assumptions and methods are internally consistent and reasonable for
this plan, as prescribed by the Ca1PERS Board of Administration according to provisions set forth in the
California Public Employees' Retirement Law. The valuation has been prepared in accordance with
generally accepted actuarial practice except that, under a Ca1PERS Board resolution, an increased
actuarial value of assets may be substituted for the actuarial value of assets that would have been
produced by the current and generally accepted actuarial asset smoothing method described in the annual
report. If your agency elects not to increase the actuarial value of assets permitted by the Board
resolution, then no exception exists.
0,Nt ! /0'IO
David Du Bois, F.S.A.
Associate Pension Actuary, Ca1PERS
Fin Process Ids: Annual -67768 Base -83872 Alt1-83873 A1t2-83874 Alt3-83875
December 28, 2001
10:17 AM
Page 5 of 8
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
Summary of Plan Amendments Valued
COVERAGE GROUP 70001
Pre -Amendment
• The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 2% @ 60 benefit factor,
years of service, and final compensation. (Final compensation is reduced by $133.33
per month for members with a modified formula). The benefit factors for retirement
at integral ages are shown below:
Retirement 2% at 60 Retirement 2% at 60
Age Factor Age Factor
50 1.092% 57 1.650%
51 1.156% 58 1.758%
52 1.224% 59 1.874%
53 1.296% 60 2.000%
54 1.376% 61 2.134%
55 1.460% 62 2.272%
56 1.552% 63 and older 2.418%
• This group of members is required to contribute 7% reportable earnings. (Members with a
modified formula contribute 7% of reportable eamings in excess of $133.33 per month).
Post -Amendment
• The Service Retirement benefit calculated for service earned by this group of
members (including all non -retired members) is a monthly allowance equal to the
product of the 3% @ 60 benefit factor, years of service, and final compensation.
(Final compensation is reduced by $133.33 per month for members with a modified
formula). The benefit factors for retirement at integral ages are shown below:
Retirement 3% at 60 Retirement 3% at 60
Age Factor Age Factor
50 2.000% 56 2.600%
51 2.100% 57 2.700%
52 2.200% 58 2.800%
53 2.300% 59 2.900%
54 2.400% 60 and older 3.000%
55 2.500%
• This group of members is required to contribute 8% reportable eamings. (Members with a
modified formula contribute 8% of reportable earnings in excess of $133.33 per month).
December 28, 2001 Page 6 of 8
10:17 AM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
COVERAGE GROUP 70002
Pre -Amendment
• The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 2% @ 60 benefit factor,
years of service, and final compensation. (Final compensation is reduced by $133.33
per month for members with a modified formula). The benefit factors for retirement
at integral ages are shown below:
Retirement 2% at 60 Retirement 2% at 60
Aqe Factor Aqe Factor
50 1.092% 57 1.650%
51 1.156% 58 1.758%
52 1.224% 59 1.874%
53 1.296% 60 2.000%
54 1.376% 61 2.134%
55 1.460% 62 2.272%
56 1.552% 63 and older 2.418%
• This group of members is required to contribute 7% reportable earnings. (Members with a
modified formula contribute 7% of reportable earnings in excess of $133.33 per month).
Post -Amendment
• The Service Retirement benefit calculated for service earned by this group of
members (including all non -retired members) is a monthly allowance equal to the
product of the 3% @ 60 benefit factor, years of service, and final compensation.
(Final compensation is reduced by $133.33 per month for members with a modified
formula). The benefit factors for retirement at integral ages are shown below:
Retirement 3% at 60 Retirement 3% at 60
Aqe Factor Aqe Factor
50 2.000% 56 2.600%
51 2.100% 57 2.700%
52 2.200% 58 2.800%
53 2.300% 59 2.900%
54 2.400% 60 and older 3.000%
55 2.500%
• This group of members is required to contribute 8% reportable earnings. (Members with a
modified formula contribute 8% of reportable earnings in excess of $133.33 per month).
December 28, 2001 Page 7 of 8
10:17 AM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
MISCELLANEOUS PLAN FOR THE CITY OF BEAUMONT
EMPLOYER NUMBER 689
Benefit Description: Section 21354.3, 3%@60 Full and Modified Formula
(Includes All Non -Retired Local Miscellaneous Members)
Probability of Retirement for New Miscellaneous Benefit Formulas
The introduction of the three new miscellaneous formulas will affect future retirement behavior. As a
result, we developed 3 sets of probability of retirements to reflect the estimated changes in retirement
pattern. At this point, we cannot lcnow the exact impact the new formulas will have. As we perform
experience studies in the future, we will modify our retirement assumptions accordingly. The table below
contains the new probability of retirement.
December 28, 2001
10:17 AM
Page 8 of 8
2.5% @
55
2.7% •
55
3% @ 60
Retirement Age
Male
Female
Male
Female
Male
Female
50
5%
7%
5%
7%
5%
7%
51
2%
5%
2%
5%
2%
5%
52
3%
5%
3%
5%
3%
5%
53
3%
5%
3%
6%
3%
5%
54
4%
5%
4%
6%
4%
5%
55
8%
9%
9%
10%
8%
9%
56
6%
7%
7%
8%
7%
8%
57
7%
6%
8%
7%
8%
7%
58
8%
10%
8%
10%
9%
11%
59
9%
9%
10%
9%
11%
10%
60
16%
12%
17%
13%
19%
15%
61
15%
10%
16%
11%
17%
12%
62 -
26%
21%
28%
23%
31%
25%
63
22%
18%
23%
20%
26%
22%
64
15%
13%
16%
14%
18%
16%
65
25%
25%
27%
27%
30%
30%
66
14%
15%
15%
16%
17%
18%
67
12%
14%
13%
16%
14%
17%
68
12%
11%
13%
12%
15%
13%
69
9%
13%
10%
14%
11%
15%
70
100%
100%
100%
100%
100%
100%
December 28, 2001
10:17 AM
Page 8 of 8
To:
From:
Date:
Item#: 3. 01
City of Beaumont
Staff Report
Mayor and City Council
City Manager / Administrative Services
April 16, 2002
Subject: Amendment to the City Contract with Cal -PERS to 3% @ 60
Background:
The City has is a subscriber to the State retirement program, loving called Cal -PERS.
During the past several years, there have been improvements in to programs offered and made
available to member agencies. The latest is the 3% @ 60 Plan. The City currently has the 2% @
60 Plan.
During recent negotiations for the Dispatchers and the General Unit, both stated a great
interest in moving to the new Plan. They have shown support by agreeing to reduce future
compensation to help offset the expected cost increases that will come from moving to the better
Plan.
The benefit to the City is the ability to offer an excellent compensation and benefit
package for our current and future employees. As the need arises, the benefits will assist in
filling open job positions.
Fiscal Impact:
Currently the City is a "Super -Funded" agency, meaning that we have deposited more
money in the past than is necessary. As such, the City is not currently making deposits to the
Cal -PERS system and will not again begin making deposits until the outstanding credit has been
used. At the current 2% @ 60 Plan, it was expected that the City would have a surplus until
2008-9. With the new 3% @ 60 Plan that has been chosen, the "Super -Fund" is expected to last
until 2004-5, if Cal -PERS earnings estimates are met. Other 3% @ 60 Plans were available that
could have extended the Super -Fund" until 2006-7, but incurring potential future costs are not
being recommended by staff. Once the "Super -Funded" period expires, the City would again
make direct deposits to Cal -PERS. The estimated for the 3% @ 60 Plan is a 4.9% to 6.9%
increase in Cal -PERS costs to the City. In agreements with the Dispatchers and General Unit,
they have foregone a 2% increase each year for 2003, 2004, and 2005. This will over time help
in offsetting the expected increase.
Recommendation:
Adopt Resolution 2002-22 and the first reading of Ordinance 829, order an election of the
affected emplo -es, and set a public hearing on Ordinance 829 for May 21, 2002
espectfu y • omitted:
Alan C. Kapanicas
City Manager
Item #: 3 , 0 -
City
City of Beaumont
Staff Report
To: Mayor and City Council
From: City Manager / Administrative Services
Date: May 14, 2002
Subject: Amendment to the City Contract with Cal -PERS to 3% @ 60
Background:
The City has is a subscriber to the State retirement program, loving called Cal -PERS.
During the past several years, there have been improvements in to programs offered and made
available to member agencies. The latest is the 3% @ 60 Plan. The City currently has the 2% @
60 Plan.
During recent negotiations for the Dispatchers and the General Unit, both stated a great
interest in moving to the new Plan. They have shown support by agreeing to reduce future
compensation to help offset the expected cost increases that will come from moving to the better
Plan.
The benefit to the City is the ability to offer an excellent compensation and benefit
package for our current and future employees. As the need arises, the benefits will assist in
filling open job positions.
As required by Cal -PERS, the City has held an election of the affected employees. The
results of the election will be available at the Council Meeting.
Fiscal Impact:
Currently the City is a "Super -Funded" agency, meaning that we have deposited more
money in the past than is necessary. As such, the City is not currently making deposits to the
Cal -PERS system and will not again begin making deposits until the outstanding credit has been
used. At the current 2% @ 60 Plan, it was expected that the City would have a surplus until
2008-9. With the new 3% @ 60 Plan that has been chosen, the "Super -Fund" is expected to last
until 2004-5, if Cal -PERS earnings estimates are met. Other 3% @ 60 Plans were available that
could have extended the Super -Fund" until 2006-7, but incurring potential future costs are not
being recommended by staff. Once the "Super -Funded" period expires, the City would again
make direct deposits to Cal -PERS. The estimated for the 3% @ 60 Plan is a 4.9% to 6.9%
increase in Cal -PERS costs to the City. In agreements with the Dispatchers and General Unit,
they have foregone a 2% increase each year for 2003, 2004, and 2005. This will over time help
in offsetting the expected increase. A detailed breakdown of potential future costs and the
actuarial analysis is attached and made a part of this staff report.
Recommendation:
Hold a public hearing; Accept the election results from the affected employees, and
Adopt Ordinance 829 at its second reading.
Respectfully Submitted:
Alan C. Kapanicas
City Manager