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November 14, 2023
ITEM TITLE
Contract Amendment: Approve an Amendment to the Contract with the Board of Administration and CalPERS for Local 2180 International Association of Fire Fighters Classic Members to Make an Additional Contribution Pursuant to Government Code Section 20516
Report Number: 23-0294
Location: No specific geographic location
Department: Human Resources
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Council A) Adopt a Resolution of Intention of the City of Chula Vista to approve an amendment to the contract between the Board of Administration, California Public Employees’ Retirement System (CalPERS) and the City of Chula Vista to provide a mandatory employee contribution for all classic Local Saf ety Fire members of the 2180 Local International Association of Fire Fighters of 1% of salary effective January 12, 2024 as provided under Government Code §20516 and B) place an ordinance on first reading to approve an amendment to the contract between the Board of Administration, California Public Employees’ Retirement System (CalPERS) and the City of Chula Vista to provide a mandatory employee contribution for all classic Local Safety members of the Local 2180 International Association of Fire Fighters of 1% of salary as provided under Government Code §20516. (First Reading)
SUMMARY
Per the Memorandum of Understanding (MOU) between the City of Chula Vista and the Local 2180 International Association of Fire Fighters (IAFF), effective July 1, 2022, an agreement was reached to provide Normal Cost Sharing for all Classic (Tier I & II) Local Safety Fire members pursuant to Government Code Section 20516(a) to reach the CalPERS standard of equal sharing of normal costs that will require mandatory employee contributions of an additional 1% of salary starting January 12, 2024.
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In order to amend the City’s current CalPERS retirement contract and to meet the provisions of California Government Code §20516 (Employees Sharing Additional Cost), CalPERS requires specific procedures to be followed. The first step in the process is for the City Council to adopt a Resolution of Intention and an Ordinance. The first reading of the Ordinance may occur at the same time as the adoption of the resolution.
The second reading of the Ordinance will occur at the City Council meeting of December 5, 2023 .
Concurrently, CalPERS also requires that the impacted Classic (Tier I & II) members elect this change in a secret ballot election. A CalPERS employee election ballot will be distributed to the members for this purpose and must be certified by the City . Staff is requesting City Council’s approval to adopt the Resolution of Intention and Ordinance as required by CalPERS.
ENVIRONMENTAL REVIEW
The activity is not a “Project” as d efined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
The City of Chula Vista reached agreement with Local 2180 International Association of Fire Fighters for successor Memoranda of Understanding (MOU) for the period July 1, 2022 through December 31, 2024. The MOU includes a cost sharing provision in which Classic (Tier I and Tier II) Local Safety Fire CalPERS Members represented by IAFF contribute an additional 1% toward their CalPERS retirement benefits under Government Code §20516 effective January 12, 2024. Specifically, the Local 2180 International Association of Fire Fighters Memorandum of Understanding (Article 2.18(2)) states as follows:
[Cost Sharing] Pursuant to Government Code (“GC”) section 20516(a), Tier I Employees will make additional contributions of compensation earnable toward achieving the legislative standard of equal sharing of normal costs, as follows: An additional 1% starting with the first full pay period of January 2024, for a total contribution of 10.0% and an additional 0.5% (additional total of 1.5%) starting the first full pay period of July 2024 for a total contribution of 10.5% and an additional 0.5% (additional total 2.0%) for a total contribution of 11% starting the first full pay period of December 2024. If a secret ballot election held in accordance with §20516(a) is not successful, or if for any other reason, the City is unable to amend its contract with CalPERS to allow employee cost sharing, the additional employee contributions referenced above will be made to the employers’ contribution account pursuant to GC section 20516(f) and will be reported to CalPERS as employer contributions. [Cost Sharing] Pursuant to Government Code (“GC”) section 20516(a), Tier I I Employees will make additional contributions of compensation earnable toward achieving the legislative standard of equal sharing of normal costs, as follows: An additional 1% starting with the first full pay period of January 2024, for a total contributio n of 10.0% and an additional 0.5% (additional total of 1.5%) starting the first full pay period of July 2024 for a total contribution of 10.5% and an additional 0.5% (additional total 2.0%) for a total contribution of 11% starting the first full pay period of December 2024. If a secret ballot election held in accordance with §20516(a) is not successful, or if for any other reason, the City is P a g e | 3
unable to amend its contract with CalPERS to allow employee cost sharing, the additional employee contributions referenced above will be made to the employers’ contribution account pursuant to GC section 20516(f) and will be reported to CalPERS as employer contributions.
While the MOU furthermore states an additional 0.5% employee contribution to be effective in the fir st full pay period of July 2024 and an additional 0.5% employee contribution to be effective in the first full pay period of December 2024 , CalPERS requires that this additional contribution be brought forth for Council approval separately in the fiscal year prior to the contribution taking into effect.
An amendment to the CalPERS contract will allow for the employee contribution rates to increase to 10% (currently 9%) effective January 12, 2024 for Classic Local Safety Fire members represented by the IAFF.
This action will shift an additional 1% of expected costs from the City of Chula Vista to City Classic (Tier I & Tier II) Local Safety Fire employees. In order to amend the City’s current CalPERS retirement contract and to meet the provisions of California Government Code §20516 (Employees Sharing Additional Cost), CalPERS requires specific procedures to be followed. The first step in the process is for the City Council to adopt a Resolution of Intention (Attachment 1) and an Ordinance (Attachment 2). A draft version of the contract amendment has also been included as an exhibit to the Resolution of Intention ( Attachment 1). The first reading of the Ordinance may occur at the same time as the adoption of the resolution. The second reading of the Ordinance will occur at the City Council meeting of December 5, 2023 . Concurrently, CalPERS also requires that the impacted Classic (Tier I & II) Local Safety Fire members elect this change in a secret ballot election. A CalPERS employee election ballot will be dist ributed to the members for this purpose and must be certified by the City.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
The current year fiscal impact for this action will result in a decreased cost to the City at approximately $50,875 and is reflected in the Fiscal Year 2023-24 Adopted budget.
Fund FY 2024
General Fund $ (45,288)
Measure A Sales Tax Fund (3,305)
Transport Enterprise Fund (2,281)
Total Estimated Costs $ (50,875)
ONGOING FISCAL IMPACT
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The ongoing fiscal impact for this action to achieve cost sharing will result in estimated employee contributions resulting in a decreased cost to the City in Fiscal Year 2024-25 at approximately $183,544.
Costs will change as Tier 1 and Tier 2 employees promote, demote, retire, or change employment status. The costs will be incorporated into the baseline salary budgets of the respective funds in future fiscal years. The following table reflects the estimated employee contribution resulting in estimated costs by fund:
Fund FY 2025
General Fund $ (163,388)
Measure A Sales Tax Fund (11,925)
Transport Enterprise Fund (8,231)
Total Estimated Costs $ (183,544)
ATTACHMENTS
1. Resolution of Intention – CalPERS Contract Amendment
2. Ordinance – CalPERS Contract Amendment
Staff Contact: Tanya Tomlinson, Assistant Director of Human Resources