1 STAFF REPORT
DATE: April 5, 2022
TO: Justin Hess, City Manager
FROM: Betsy McClinton, Management Services Director
VIA: Brady Griffin , Acting Assistant Management Services Director BY: Julie Chaidez , Administrative Analyst II
SUBJECT: Adoption of an Ordinance to Authorize and Approve an Amendment to a Contract between the City Council of the City of Burbank and the Board of Administration of the California Public Employees’ Retirement System (CalPERS) to Include Additional Employee Contributions toward Their Pension for Burbank City Employees’ Association
RECOMMENDATION
1. Adopt AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK
AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE
CITY OF BURBANK AND THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM TO ADD
COST SHARING PURSUANT TO GOVERNMENT CODE SECTION 20516
FOR BURBANK CITY EMPLOYEES’ ASSOCIATION .
BACKGROUND & DISCUSSION
On January 23, 2018, the City Council approved revisions to the City’s Financial Policy regarding employee compensation to provide that “the City and employees will evenly share the Normal Cost of employee pensions.” The Normal Cost of employee pensions is established annually by the California Public Employees’ Retirement System (CalPERS), based on their actuarial report. Implementing the Council’s policy does not result in any pension benefit enhancements, but, rather, Classic employees are paying more toward their existing, unenhanced pension.
Therefore, when applied consistently, the Council’s adopted compensation policy
MANAGEMENT
SERVICES
2 benefits the City by significantly improving the five- year forecast, eliminating inequities among employees, and providing consistent direction during labor negotiations.
The City reached an agreement with the Burbank City Employees’ Association (BCEA) to allow Classic employees to make additional contributions toward their pension, as listed in Column 3 below , effective June 12, 2022.
Classic CalPERS Member Contributions
Column 1 Column 2 Column 3 Column 4
Bargaining
Group
Current Employee
Contribution
Additional Employee
Contribution
Total Employee
Contribution
BCEA 8% 1.14% 9.14%
While Council has already approved the agreement with BCEA, CalPERS requires a separate administrative process when implementing the additional employee contributions (cost share) through a pension contract amendment. The first step in the process was completed on February 8, 2022, when Council adopted a Resolution of Intention and introduced an ordinance amending the CalPERS contract. An amendment to the CalPERS contract that changes employees’ rate of contribution, such as the additional contributions , requires a secret ballot election among the affected employees. The secret ballot election for Classic BCEA employees took place on March 4, 2022, through March 11, 2022, with results approving the additional employee contribution of 1.14%. Therefore, st aff is now returning to Council for the adoption of the final ordinance to finalize the CalPERS contract amendment.
FISCAL IMPACT
There is no fiscal impact associated with the adoption of the Resolution of Intention. However, upon completion of the CalPE RS contract amendment process, the employees’ additional contribution toward the Normal Cost of their pensions will result in a total cost savings of approximately $179,523 to the General Fund in Fiscal Year 2022- 2023.
CONCLUSION
To align with Council’s adopted financial policy, and because of the positive benefits that are expected to be realized from the additional pension contributions, staff recommends the City Council adopt the ordinance to authorize the CalPERS contract amendm ent (Attachment 1) . BCEA is the final employee group to go 3 through the CalPERS contract amendment process; therefore, adoption of the ordinance is the final action required from Council to fully implement the Council’s policy that all employees pay half the Normal Cost of their respective pensions .
ATTACHMENTS
Attachment 1 – Ordinance for Adoption