1 STAFF REPORT
DATE: June 3, 2025
TO: Justin Hess, City Manager
FROM: Jennifer Becker, Financial Services Director
BY: Craig Wood, Deputy Financial Services Director
SUBJECT: Adoption of a R esolution Authorizing the Execution of a Contract with MissionSquare Retirement for the Administration of the City's §457 Deferred Compensation Plan
RECOMMENDATION
Adopt A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AUTHORIZING
THE CITY OF BURBANK TO APPROVE THE EXECUTION OF A CONTRACT WITH MISSIONSQUARE RETIREMENT FOR THE ADMINISTRATION OF THE CITY’S §457 EMPLOYEE DEFERRED COMPENSATION PLAN.
BACKGROUND
On April 20 , 2010, the City of Burbank established International City Management Association (ICMA) as the City’s Deferred Compensation Plan provider for its employees.
This deferred compensation plan, pursuant to regulations in § 457 of the Internal Revenue Code, provides participants the opportunity of saving for retirement by allowing them to defer a portion of their current earnings and associated taxes until retirement. ICMA now does business as MissionSquare Retirement.
The City currently has two deferred compensation plans , including t he § 457 Deferred Compensation Plan and the § 457P Deferred Compensation Plan:
• The purpose of the § 457 Deferred Compensation Plan (457 Plan) is to provide employees covered by the California Public Employees' Retirement System (CalPERS) with a supplemental retirement program. All officers and employees covered by Cal PERS are eligible to participate in the 457 Plan. Thus, most City employees (approximately 1400) fall under this plan.
FINANCIAL
SERVICES
2 • The § 457P Deferred Compensation Plan (457P Plan) is for temporary, seasonal employees who are not covered by CalPERS. All non- CalPERS employees are required to contribute a fixed 3.75 percent of their salary to the 457 Plan and the City matches this employee contribution. Employees in this plan are not eligible to make voluntary contributions nor can they make their own investment choices.
In December 2008, the City Council approved the creation of the Retirement Plans Committee ( Committee) to provide fiduciary oversight of the City's Deferred Compensation Plan and Trust. The Committee can adopt processes and policies, select, monitor and revise (as needed) investment options, and oversee the plan and its plan administration service provider(s). The Committee is comprised of seven members: the City Treasurer, Assistant City Manager, Financial Services Director, Management Services Director, and three bargaining group representatives. Currently serving on the Committee as voting memb ers are representatives from the Burbank Management Association, the International Brotherhood of Electrical Workers, and the Burbank Fire Fighters' Association.
DISCUSSION
The City’s most recent contract with MissionSquare expired in March of 2024, and since that time, the program has been operating under the terms of the most recent contract.
In the interim, MissionSquare was undergoing a complex system conversion as well as a transition in leadership. Staff elected to wait until those items were completed and give the Committee time to evaluate MissionSquare’s performance before considering a contract extension. At the Committee meeting held on March 20, 2025, MissionSquare staff proposed a new five- year agreement to continue their role as administrator of the City’s § 457 Deferred Compensation Plan. The Committee voted unanimously to approve a contract extension and directed the Financial Services Director to negotiate a new agreement with MissionSquare.
The City’s Deferred Compensation plan has expanded significantly over the years since its inception. As of March 2025, there are 1,832 § 457 plan participants, and 734 § 457P plan participants with over $253 million in assets under management for the participants.
This is a growth of $148 million since the contract was fully established in 2011. Under the current framework, participants are charged fees of 0.0375% of plan assets monthly.
Due to the substantial growth of the plan in both membership numbers and plan assets , MissionSquare was able to offer a new five-year agreement that reduces the monthly fee by more than half, to 0.017% of plan assets. As a result, participants will see a noticeably lower charge on their retirement statements for administration of the plan.
ENVIRONMENTAL REVIEW
This activity has no potential for resulting in either a direct physical change in the 3 environment, or a reasonably foreseeable indirect physical change in the environment, and as such, is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) Cal. Code Regs § 15378.
FISCAL IMPACT
There is no fiscal impact to the City of Burbank for the execution of this contract. However, Burbank employees and retirees who participate in the plan will benefit from reduced administrative fees for their § 457 accounts.
CONCLUSION
The new agreement with Mission Square cuts administrative costs to employees by over 50%, while continuing to provide a high level of customer service and stability for the administration of the City’s Deferred Compensation Plan. Staff recommends the City Council approve this agreement.
ATTACHMENTS
Attachment 1 – Resolution
Attachment 2 – Administrative Services Agreement with MissionSquare