PURPOSE

The purpose of this report is to request City Council approval of a proposed resolution and ordinance which would ensure that the following amendments to the City�s contract with the Public Employees� Retirement System are effective as of July 1, 2003:

• The 3% at 55 and Option 2 Death Benefit PERS amendment are in accordance with the Memorandum of Understanding between the City and the Burbank Fire Fighters Association (BFFA) and Burbank Fire Fighters Chief Officers Unit (BFF-COU);
• The 4^th Level Survivor Benefit and Option 2 Death Benefit PERS amendment are in accordance with the Memorandum of Understanding between the City and all miscellaneous members which include: Burbank City Employees Association (BCEA), Burbank Management Association (BMA), and International Brotherhood of Electrical Workers (IBEW), Unrepresented Management, and Executive members; and,.
• The Option 2 Death Benefit PERS amendment is in accordance with the Memorandum of Understanding between the City and the Burbank Police Officers Association (BPOA).

BACKGROUND

During the 2002-2003 fiscal year, the City had completed negotiations with several associations. The BFFA and BFF-COU Memorandum of Understanding (MOU) required the implementation of the 3% at 55 safety retirement formula and Option 2 Death Benefit. For BPOA, negotiations included the provision of the Option 2 Death Benefit. All MOUs related to miscellaneous employees require the increase of the Survivor Benefit from level 1 to level 4. As with the Police and Fire members, miscellaneous members will also have the provision for the Option 2 Death Benefit. Pursuant to the approved MOUs these provisions were to become effective July 1, 2003. As a first step in this process, Council must adopt a Resolution of Intention along with a first reading of the Ordinance amending the contract with PERS. Due to the time constraints for the effective date of the contract amendment, the first reading of the Ordinance will be done at the same time the Resolution of Intention is presented to Council. There must be a 20- day period between the adoption of the Resolution of Intention and the adoption of the Final Ordinance.  The final adoption of the Ordinance would occur on May 27, 2003. This would allow the benefits to be effective on July 1, 2003.

ANALYSIS

The enhanced benefit of a 3% at 55 retirement formula was necessary to maintain competition among the other cities in recruitment and retention of qualified firefighters.

The current 1959 Survivor Benefit at Level 1 provides $430 per month to a surviving spouse with two children. The new Level IV benefit will provide $2,280 in the same circumstance. All PERS miscellaneous employees will implement this provision on July 1, 2003.

The Option 2 Death Benefit provides the spouse a monthly allowance equal to the Service Retirement benefit that the member would have received had the member elected Option 2 and retired on the date of his or her death. A member�s survivor may choose this benefit in lieu of the Basic Death Benefit.   

FISCAL IMPACT

The Fourth Level 1959 Survivor benefit is administered by pooling the assets and liabilities of many public agencies that have already contracted for this benefit. The increase to Level 4 Survival benefits is funded from surplus assets, which can only be used for this benefit. Annual costs are calculated based on the claims of the entire pool. The board meets yearly to set rates for the upcoming year. As such, the normal cost basis can fluctuate year-to-year based on the experience of the pool. Therefore, while CalPERS anticipates there will not be any employer costs for a year, there remains a possibility that future fiscal years will require the City to pay employer costs based on the formula designated and unfunded liability calculations.

For the Fiscal Year of 03-04, the employer rate for Safety Police members will be 8.872%. With the addition of the Option 2 Death Benefit, the employer rate will be increased to 8.910%, a 0.038% increase from the current rate. For all other employees, excluding the Safety Fire members, there will be no additional cost to the City for the Option 2 Death Benefit since there are still surplus funds available to offset the normal costs.

For the Fire Safety members, the FY 03-04 employer rate will be 3.058%. With the additional benefits of 3% at 55 and Option 2 Death Benefit, the City�s employer rate will increase to 10.812%, which is a 7.754% increase from the current rate.  

RECOMMENDATION

Staff recommends that the Council adopt the proposed resolution entitled �A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK PROVIDING NOTICE OF INTENT TO APPROVE AN AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES� RETIREMENT SYSTEM AND THE CITY OF BURBANK  and introduce the ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES� REITREMENT SYSTEM AND THE CITY OF BURBANK.�

Attachments

go to the top