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ADOPT A RESOLUTION APPROVING THE AGREEMENT BETWEEN THE UNREPRESENTED POLICE SAFETY UNIT AND THE CITY OF STOCKTON TO SHARE THE COST OF THE EMPLOYER CONTRIBUTION FOR RETIREMENT BENEFITS PURSUANT TO GOVERNMENT CODE SECTION 20516 (COST-SHARING)
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RECOMMENDATION
It is recommended that the City Council adopt a Resolution to approve the Agreement between the Unrepresented Police Safety Unit and the City of Stockton to include the provisions of retirement law Government Code Section 20516 (Cost-Sharing) of the employer’s contribution for retirement benefits for the Unrepresented Police Safety Unit.
The City Manager is authorized to take whatever actions are necessary and appropriate to carry out the purpose and intent of this Resolution.
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Summary
The Unrepresented Management/Confidential and Law Employees’ Compensation Plan approved on October 29, 2019, by the City Council includes provisions that change how the Unrepresented Police Safety Unit will contribute toward the cost of their retirement benefits. To implement these provisions, the City must amend its contract with CalPERS to include the cost-sharing provision. This contract amendment will allow the Unrepresented Police Safety Unit to share the cost of what is defined as “employer contributions” to the CalPERS retirement system on a pre-tax basis. Also, the member contributions will be credited to each member’s account as normal contributions and will be included in the refund of accumulated contributions to members who separate from CalPERS covered employment and elect to withdraw their contributions.
Before the City can start the contract amendment process described above, CalPERS requires contracting agency adopt a Resolution approving an Agreement between the Employer and the membership group (Unrepresented Police Safety Unit) to acknowledge the Cost-Sharing Agreement by both parties and the amount of the cost-share.
DISCUSSION
Background
On October 29, 2019, the Council, by motion, authorized the City Manager to execute the Unrepresented Compensation Plan between the Unrepresented Management/Confidential and Law employees and the City of Stockton, effective September 16, 2019. Included in the compensation plan are provisions relating to contributions towards retirement benefits for the Unrepresented Police Safety Unit.
The Unrepresented Compensation Plan, Retirement Benefits, Section 1.1 (d) provides that effective September 16, 2019, the Classic Police Safety Management Employees shall pay nine percent (9%) toward the employer’s contribution of PERS.
Additionally, Section 1.5, PERS Pick-Up Contribution for Police Chief and Deputy Police Chiefs states that effective July 1, 2016, unrepresented police personnel (regardless of status under the Public Employees’ Pension Reform Act (PEPRA)) shall pay an additional 3% toward the employer contribution of PERS. For example, Classic Members will pay a total of 12% (9% plus 3%). The parties recognize that this contribution satisfies the provision of California Government Code section 20516.5(b).
The nine percent (9%) contribution listed above is not included in the Cost-Sharing Agreement because it is not an amount over and above the Employer’s Normal Cost Rate, and therefore, not eligible for “cost-sharing.” However, CalPERS confirmed this contribution would be treated the same as the three percent (3%) cost-sharing amount and tax-deferred.
Present Situation
Currently, the members of the Unrepresented Police Safety Unit affected by the cost-sharing provision are the Chief of Police and two Deputy Police Chiefs. To begin the CalPERS contract amendment process to include the Section 20516 optional benefit provision, the City Council must first adopt a Resolution approving the Agreement between the Unrepresented Police Safety Unit and the City of Stockton (Attachment A). As mentioned, the Agreement serves as an acknowledgment by both parties to 1) agree to the cost-sharing arrangement, and 2) state the cost-share amount. CalPERS requires such an Agreement for unrepresented members.
The next step in the contract amendment process is adopting a Resolution of Intention to start the CalPERS contract amendment process to include G.C. 20516 Cost-Sharing. This item is tentatively scheduled to be presented to the City Council at its November 17, 2020, meeting.
FINANCIAL SUMMARY
There is no financial impact to the City of Stockton as the cost-sharing arrangement will not increase the City’s expenditures for retirement benefits and allows the employees’ contributions toward the employer cost of retirement benefits to be deducted on a pre-tax basis.
Attachment A - Cost Share Agreement