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Home My WebLink AboutItem 6.2 Include Elected Officials in PERS (2)I R CITY OF DUBLIN / (� AGENDA STATEMENT CITY COUNCIL MEETING DATE: January 13, 1986 SUBJECT Actuarial Report on Inclusion of Elected Officials in PERS Membership EXHIBITS ATTACHED Actuarial Report dated 12/10/85; Comparison of Employer PERS Contributions RECOMMENDATION Review report and direct Staff to request appropriate documents to undertake inclusion of elected officials, if the Council desires to proceed. FINANCIAL STATEMENT: Annual Increased retirement costs estimated at $2, 976 - $7, 700 . Maximum increased health insurance costs of $16, 128 . DESCRIPTION At the regular City Council meeting on August 26, 1985, the City Council reviewed a report on Public Employee Retirement System (PERS ) contract options . Staff was directed to request an actuarial valuation on the removal of the , exclusion for elected officials . A valuation is required by PERS prior to adoption of a contract amendment . The removal of the exclusion was evaluated under the option assuming that the removal would apply to those holding office at the time the contract is amended and they may be credited for prior service with the agency. The current PERS program provided to full-time employees is the 2% at 60 plan. The final retirement compensation is defined as an average of the employees 3 highest years of compensation. (For example a person who has 5 years of service and has reached age 60 would receive a benefit of 10% of his/her average annual salary over the three highest years . ) The employee contributes 7 percent of their gross earnings exclusive of overtime compensation. The City' s contribution is based on an actuarial review of the employees covered. The removal of the exclusion for elected officals allows each of the elected officials the option to participate. State Law includes the City Attorney as an elected official without regard to the individual ' s elective status . Any officials which elect to participate in the PERS retirement program would also be able to participate in the PERS Public Employees Medical and Hospital Care Act . The City currently utilizes this program to provide health insurance to the City' s full-time employees . The program requires employees and annuitants, who are members of PERS, be allowed to participate . The City currently contributes up to $224 plus the administrative charges levied by PERS . The requirement to contribute towards annuitants creates an obligation for the City to contribute up to $224 per month for PERS members, who retire while employed by the City. The results of the actuarial study indicate that the City' s contribution rate would increase from 7 . 878% to 8. 262% with the removal of the exclusion. This rate is applied to the gross wages of all City employees covered by PERS. A chart comparing the amended retirement costs with the current contract is attached. The costs in the comparison were derived using salaries of the current members and an estimate of the City Attorney' s hours based on the prior year. Based on the new employer contribution, the City' s annual retirement costs would increase by 9 . 7% if only City Councilmembers elect to participate . If the City Attorney elects to participate the annual retirement costs would increase 25 . 2% . This does not include any increases as the result of merit salary adjustments or increased costs associated with the provision of health insurance. ---------------------------------------------------------------------------- COPIES TO: ITEM NO. * Z R PAGE TWO AGNEDA STATEMENT - Actuatial Report on Inclusion of Elected Officials in PERS Membership The Comparison sheet also itemizes the potential maximum cost of providing health insurance to the new members . The costs shown are an estimate assuming each of the eligible officials elected to participate. The actual cost would depend on the number of individuals participating and the premium cost of the insurance plan selected. The maximum cost of medical insurance would be $16, 128 . This assumes the maximum contribution for six City Officials . PERS has advised Staff of the time frame required to amend the current agreement. The City Council must adopt a Resolution of Intention and an Ordinance. PERS requires that the second reading of the Ordinance occur at least 20 days after the adoption of the Resolution of Intention. Based on their policies the earliest effective date would be the payroll period beginning April 14, 1985 . The City Council would also have to authorize a change in the pay periods for City Councilmembers . Currenly they are paid once each month. However, membership in PERS would require that their earnings be reported with the full-time payroll and pro-rated on a bi-weekly basis . _ If the City Attorney elected to be included he would also have to provide an accounting of hours worked on a bi-weekly basis . Staff recommends that the City Council review the results on the valuation and direct Staff as appropriate. .4org:xrv.a�enarv..w»�ezma,ww..areuewxn mnatmm!!ac xmosracx�.aaamac;^nnasiswms^��t!.n+^.!MV¢fe!rrrcr?�1�':'�a�6;t:P.a1^.Cwt°;,,+,�4,Swt.a+:E:m.+;P,n7'R+J�iL':+FB.ra!o",Y.:M,Wf F'�ig4YNS:�qM'6SFR;Ik�9�i,".157...:+F,.,.., .......• .• Item 6.2 Exhibit Missing Actuarial Report Dated 12/10/85 COMPARISON OF PERS CONTRIBUTIONS WITH AND WITHOUT EXCLUSION FOR ELECTED OFFICIALS PREPARED JANUARY 1986 Current Expense with Exclusion Gross Monthly Payroll $32 , 353 ( 13 Full-Time Employees) Monthly Amount of Employer Share PERS at 7 . 878 L_?,549 Expense Under Amended Agreement Providing For Removal of Exclusion Councilmembers Excluding City Attorney Full-Time Monthly Payroll ( 13 Employees) $32 ,353 City Officials Monthly Payroll 1 , 500 $33 , 853 Monthly Amount of Employer Share PERS at 8 . 262% $ 2, 797 City Attorney Monthly Earnings Based on 53 hours/month $ 4 ,770 Monthly Amount of Employer Share PERS at 8 . 262% 394 Total Monthly Employer Share PERS with all Eligible Officials Participating 3 191 Annual Cost (Without Adjustments for Merit Salary Changes ) Current Contract $30 , 588 Amended Contract (with only Councilmembers Participating) $33 , 564 Difference ( $2 , 976 ) Additional Annual Cost = 9 . 7% Current Contract $30 ,588 Amended Contract (Assuming City Atty. & Council Participate) $38 , 292 Difference ( $7 , 704 ) Additional Annual Cost = 25 . 20 Maximum Additional Cost for Participation in The PERS Hospital Health Care Act Assuming 5 City Councilmembers Maximum Monthly- Premium cost at $224/month $ 1 , 120 Annual Cost $13 , 440 Additional Annual Cost for City Attorney 2 ,688 Maximum Annual Increase for Health Premium $16 , 128 AGENCY NAME CITY OF DUBLIN EMPLOYER NUMBER- 1329 MISCELLANEOUS MEMBERS PRESENT BENEFITS PROPOSED BENEFITS 1982 ASSUMPTIONS 1982 ASSUMPTIONS A. VALUATION SPECIFICATIONS 1. Actuarial Data as of 6/30/ 84 2. Formula 2% @ 60 Full 2% @ 60 Full 3. Final Compensation Average 3 Years 3 Years 4. Post-Retirement Survivor Benefits NO No 5. 1959 Survivor Benefits No No 6. Credit for Unused Sick Leave No No 7. Removal of Exclusion of Elected No Yes Officials. with Prior Service Limited to the Elected Officials in Office on. Date of Contract Amendment B. AGENCY CONTRIBUTION RATE FOR CURRENT SERVICE (as % of member payroll until 6/3o/2011) 1. Retirement Benefits 7.686% 7.896% 2. Death Benefits 0.100% 0.115% 3. 1959 Survivor Benefits - - C. AGENCY CONTRIBUTION RATE FOR PRIOR SERVICE (as % of member payroll until 6/3o/.200'0 0.092% .0.251% D. TOTAL AGENCY CONTRIBUTION RATE (When change is for an individual safety 7.878% 8.262% group, rate will apply to total safety payroll) E. ACTUARIAL VALUATION FEE $ 15 +.00 DATE: December 10, 1985 PERS-CON-14 C0761 (Rev. 7/85)