CITY OF
LONG
Department of Human Resources
411 West Ocean Boulevard, 10th Floor Long Beach, CA 90802 (562) 570-6621
May 3, 2022
HONORABLE MAYOR AND CITY COUNCIL
City of Long Beach
California
RECOMMENDATION:
R-21
Authorize the City Manager, or designee, to execute a Third Amendment to Contract No. 32531 with MissionSquare Retirement, of Washington, D.C., formerly known as International City Management Association - Retirement Corporation (ICMA-RC) for recordkeeping services on behalf of the City's 457 Deferred Compensation Plan (DCP) Retirement Savings Program, to extend the contract term for an additional period ending on September 30, 2023; and,
Adopt a Resolution authorizing an amendment to the 2019-2022 Memorandum of Understanding for Long Beach Lifeguard Associations and an amendment to the 2019- 2023 Memorandum of Understanding (MOUs) for Long Beach Association of Confidential Employees, Long Beach City Attorneys Association, Long Beach City Prosecutors Association, and Long Beach Management Association, to allow the City of Long Beach (City) on behalf of employees in the impacted collective bargaining groups, to deposit any future employer contributions into a separate 401 (a) plan account in lieu of the DCP 457 Plan account. (Citywide)
DISCUSSION
City Council action is requested to amend Contract No. 32531 with MissionSquare Retirement, to allow them to continue providing third-party administrative (TPA) services for the City's 457 Deferred Compensation Retirement Savings Program. The proposed amendment will extend the term of the contract to September 30, 2023.
City Council action is also requested to authorize MOU amendments to allow future employer contributions, made on behalf of eligible employees, to be directed to a separate 401 (a) plan, in addition to the 457(b) plan. Currently, employer contributions offset the annual deferral limits that an employee is eligible for, thereby limiting the maximum amount that an employee can defer on a pre-tax basis.
The City's Deferred Compensation Retirement Saving Program (DCP) is a voluntary supplementary retirement savings plan created under Section 457(b) of the Internal Revenue Code. The DCP allows eligible employees to save and invest tax-advantaged dollars through salary deferral. The City utilizes Mission Square Retirement, as a Third-Party Administrator and custodian to post and credit employee salary deferrals to various investment options, and post investment gains and losses to participating employee accounts.
HONORABLE MAYOR AND CITY COUNCIL
May 3, 2022
As a result of this amendment, employees will be able to contribute pre-tax dollar amounts to the 457(b) plan up to the IRS annual limits, irrespective of the employer contribution amounts, which is currently not an allowable provision of the City's Deferred Compensation Plan (DCP).
Contract Extension
The City currently contracts with MissionSquare Retirement, who, in addition to recordkeeping services, also provides enrollment services, outreach, education, and communication services to plan participants. Under MissionSquare Retirement's custodianship, total plan assets have grown to over $868 million, and more than 5,500 participants, which includes retired employees, have contributed to the Plan. Plan participants pay all costs of the TPA services.
The City has contracted with ICMA-RC, now MissionSquare Retirement since 2007, and the current contract extension expired on September 30, 2021.
The Human Resources Department (Human Resources) recommends that the City defer the request for proposal (RFP) process until after the Financial Management and Human Resources systems have been fully implemented and validated through the LB COAST Project.
The new human resources and payroll platforms will have a heavy impact on record-keeping and maintenance for salary deferrals and loans administered by MissionSquare Retirement.
The implementation and system configuration, which includes human resources and payroll functionality, will require a one-year stabilization period to ensure operational accuracy and data reliability. At this time, the LB COAST team is reevaluating the previously announced "go live" date.
Prior to the proposed extension date of September 30, 2023, the Human Resources Department will issue an RFP for TPA services and include an option for a five-year pricing plan, with additional one-year extensions after the five-year agreement has expired. The proposed amendment will provide adequate time for Human Resources to complete a formal procurement process in accordance with the Purchasing Division's guidelines for contract management. The RFP and long-term contract will provide the following benefits to the Plan and participants:
• Ability to obtain favorable pricing terms and a greater willingness from the TPA vendors to invest resources in the Plan
• Greater continuity of services for plan participants
• Reduce City personnel and consultant resources needed for frequent RFP activity, contract negotiation, and transition
To ensure continuity of the DCP recordkeeping services until the procurement process has been completed and a new contract is in place, it is requested that the current contract be extended through September 30, 2023.
HONORABLE MAYOR AND CITY COUNCIL
May 3, 2022
Amended Provisions - 401 (a) Provisions
As referenced in applicable collective bargaining Memorandum of Understanding (MOU) agreements, the City will continue to make contributions to the employee's deferred compensation account, but with City Council approval, employer contributions will be made to a 401 (a) plan. Participating employees who choose to contribute to deferred compensation will continue to have pre-tax funds deposited into their personal 457(b) plan account. However, these employees will now have the option of contributing up to the maximum IRS annual limits.
This amended provision shall not be construed as a change in the members' current deferred compensation contributions, nor does this amendment allow employees to individually contribute to a 401 (a) account through MissionSquare.
The City has met and conferred with the employee collective bargaining groups impacted by the amended provisions. In accordance with Government Code Section 3505, the impacted employee groups have provided their feedback and agreed to move forward with the proposed MissionSquare 401 (a) amendment.
This matter was reviewed by Principal Deputy City Attorney Gary J. Anderson on April 15, 2022 and by Budget Management Officer Nader Kaamoush on April 8, 2022.
TIMING CONSIDERATIONS
City Council action is requested on May 3, 2022, to facilitate the execution of updated contract terms and the 401 (a) amendment in order for Human Resources staff to begin working with Central Payroll and Technology and lnnoviation Department to implement the necessary system and data file changes.
FISCAL IMPACT
There is no direct fiscal impact on the City. The TPA service costs are paid solely from DCP participant fees. This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
JOE AMBROSINI
HUMAN RESOURCES DIRECTOR
Attachments
APPROVED:
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THOMAS B. MODICA
CITY MANAGER
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OFFICE OF THE CITY ATTORNEY
CHARLES PARKIN, City Attorney
411 W. Ocean Boulevard, 9th Floor
Long Beach, CA 90802
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF LONG BEACH AUTHORIZING AN AMENDMENT
TO THE 2019-2022 MEMORANDUM OF UNDERSTANDING
FOR LONG BEACH LIFEGUARD ASSOCIATION, AND
AMENDMENTS TO THE 2019-2023 MEMORANDUM OF
UNDERSTANDING (MOUs) FOR LONG BEACH
ASSOCIATION OF CONFIDENTIAL EMPLOYEES, LONG
BEACH CITY ATTORNEYS ASSOCIATION, LONG BEACH
CITY PROSECUTORS ASSOCIATION, AND LONG BEACH
MANAGEMENT ASSOCIATION; DIRECTING THE CITY
MANAGER TO EXECUTE THE AMENDMENTS TO SUCH
MEMORANDUMS OF UNDERSTANDING; AND DIRECTING
CERTAIN IMPLEMENTING AND RELATED ACTIONS
WHEREAS, on the date of this resolution, the City Council has considered Amendments to the Memorandum of Understanding between the City of Long Beach and the Long Beach Lifeguard Association, Long Beach Association for Confidential Employees, Long Beach City Attorneys Association, Long Beach City Prosecutors Association, and Long Beach Management Association (collectively “Amendments”); and WHEREAS, it is the desire of the City Council to authorize the Amendments and to provide for their implementation; and
WHEREAS, the Amendments would allow the City, on behalf of employees in the impacted collective bargaining groups, to deposit any future employer contributions into a separate 401(a) plan account in lieu of the 457(b) plan; and WHEREAS, currently, employer contributions offset the annual deferral limits that an employee is eligible for, thereby limiting the maximum amount that an
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OFFICE OF THE CITY ATTORNEY
CHARLES PARKIN, City Attorney
411 W. Ocean Boulevard, 9th Floor
Long Beach, CA 90802
employee can defer on a pre-tax; and
WHEREAS, as a result of the Amendments, employees will be able to contribute pre-tax dollar amounts to the 457(b) plan up to the IRS annual limits, irrespective of the employer contribution amounts, which is currently not an allowable provision of the City’s Deferred Compensation Plan (DCP); and WHEREAS, the amended provision shall not be construed as a change in the members’ current deferred compensation contributions, nor does the amendment allow employees to individually contribute to a 401(a) account through MissionSquare.
NOW, THEREFORE, the City Council of the City of Long Beach resolves as follows:
Section 1. The City Manager is hereby authorized to amend the Memorandum of Understanding between the City of Long Beach and the Long Beach Lifeguard Associations, Long Beach Association for Confidential Employees, Long Beach City Attorneys Association, Long Beach City Prosecutors Association, and Long Beach Management Association, and is hereby authorized to execute said Amendments on behalf of the City and to implement, pursuant to Sections 503 and 504 of the Long Beach City Charter, all matters affecting compensation contained in and prescribed by the Amendments as of the operative date of this resolution.
Section 2. The City Manager is also aut horized and directed to cause the preparation of amendments to the Memorandums of Understanding, and to such other documents as may be necessary, to conform such resolution and documents to the provisions of the Amendments and this resolution, and the City Attorney is requested to cooperate fully with the City Manager in order to cause the required documents to be prepared as required by law and brought before the appropriate bodies.
Section 3. This resolution shall take effect immediately upon its adoption by the City Council. The City Clerk shall certify the vote adopting this resolution. //
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OFFICE OF THE CITY ATTORNEY
CHARLES PARKIN, City Attorney
411 W. Ocean Boulevard, 9th Floor
Long Beach, CA 90802
I hereby certify that the foregoing resolution was adopted by the City Council of the City of Long Beach at its meeting of , 20 , by the following vote:
Ayes: Councilmembers:
Noes: Councilmembers:
Absent: Councilmembers:
Recusal(s): Councilmembers:
City Clerk