DATE: February 20, 2024
TO: Mayor and City Council
FROM: Director of Human Resources
SUBJECT: Adopt Resolutions to Execute Side Letter Agreements Amending the Memoranda of Understanding (MOU) between the City of Hayward and the Hayward Police Officers Association (HPOA), and the City of Hayward and the International Association of Firefighters, AFL-CIO, Local 1909 (Local 1909), to Change the Existing Cost-Sharing Amount for PEPRA Members
RECOMMENDATION
That the Council adopts the resolutions (Attachments II and III) for side letter agreements amending the Memoranda of Understanding (MOU) between the City of Hayward and HPOA, and the City of Hayward and Local 1909, to change the existing cost-sharing amount for PEPRA members.
BACKGROUND AND SUMMARY
The City contracts with CalPERS for retirement benefits. The City and employees are required to make contributions towards CalPERS retirement costs to fund the benefit. On November 17, 2020, the City Council adopted Resolution 20-197 to amend the previously agreed upon contribution rate for PEPRA Police members (employees hired on or after January 1, 2013). Per the Ordinance, PEPRA Police employees contribute 13% of their salaries for the employees’ share of retirement costs, plus an additional 2% towards the employer’s required contribution for a total employee contribution of 15%.
Concurrently, on November 17, 2020, the City Council adopted Resolution 20-198 to amend the previously agreed upon contribution rate for PEPRA Fire members (employees hired on or after January 1, 2013). Per the Ordinance, PEPRA Fire employees contribute 10.5% of their salaries for the employees’ share of retirement costs, plus an additional 4.5% towards the employer’s required contribution for a total employee contribution of 15%.
Per the current MOUs (Section 8.01B of the HPOA agreement, and Section 6.01B of the Local 1909 agreement), PEPRA Safety (Police and Fire) employees shall not be required to contribute more than 15% of their salaries to fund their pension, and if CalPERS enacts a change to the employee rate as reflected in the Annual Valuation Report, the parties will amend the respective contract to ensure PEPRA members continue to contribute no more than a total of 15% of reportable wages.
DISCUSSION
The City was notified by CalPERS that effective July 1, 2023, the employee contribution rate for PEPRA Police members increased from 13% to 13.5%. In order to maintain a total 15% contribution rate for PEPRA Police members as required by the current agreement between the parties, the employee contribution to the employer’s obligation must be reduced by .5%.
The employee contribution rate for PEPRA Fire members also increased from 10.5% to 11.25%, effective July 1, 2023. In order to maintain a total 15% contribution rate for PEPRA Fire members as required by the current agreement between the parties, the employee contribution to the employer’s obligation must be reduced by 0.75%.
Currently, PEPRA Safety employees continue to contribute a total of 15% towards their pension. However, due to the change in the employee contribution rates for PEPRA safety members effective July 1, 2023, Finance staff must make manual adjustments when reporting to CalPERS, for both PEPRA Police and PEPRA Fire employees. For PEPRA Police employees, these manual adjustments are made every pay period to reflect the increase to the employee contribution by .5% and consequent reduction of the employee contribution towards the employer portion by .5%. Similarly, for PEPRA Fire employees, these manual adjustments are made every pay period to reflect the increase to the employee contribution by 0.75% and consequent reduction of the employee contribution towards the employer portion by 0.75%.
To avoid this manual process and report the correct contribution rate to CalPERS, side letters reflecting the exact percentages of cost-sharing, are required by CalPERS.
The City has reached agreement with both HPOA and Local 1909 on the language presented in Attachments IV and V.
FISCAL IMPACT
There is no fiscal impact associated with this report. Both PEPRA Police and PEPRA Fire members will continue to contribute 15% to fund their CalPERS pensions, as previously agreed to (Resolution 14-122, Resolution 13-097).
STRATEGIC INITIATIVES
This agenda item is a routine operational item and does not relate to one of the Council’s Strategic Initiatives.
NEXT STEPS
Human Resources staff will work with CalPERS to change the existing cost-sharing amounts in the CalPERS system.
Prepared by: Marisa Guerrero, Human Resources Manager Recommended by: Brittney Frye, Director of Human Resources Approved by:
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Kelly McAdoo, City Manager
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