City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JUNE 27, 2023 FROM: HUMAN RESOURCES DEPARTMENT WARDS: ALL
SUBJECT: A RESOLUTION TO AMEND THE CONTRACT BETWEEN THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM AND THE CITY OF RIVERSIDE TO IMPLEMENT A RETIREMENT COST-SHARING PROVISION FOR ALL CLASSIC, TIER 1 (HIRED PRIOR TO JUNE 13, 2012) UNREPRESENTED POLICE MANAGEMENT EMPLOYEES IN THE POLICE SAFETY GROUP TO PAY SIX AND A HALF PERCENT (6.5%) OF THE EMPLOYER CONTRIBUTION OF PENSIONABLE INCOME PURSUANT TO GOVERNMENT CODE SECTION 20516 AND A RESOLUTION TO EFFECTUATE A PROVISION FOR PAYING AND REPORTING THE VALUE OF EMPLOYER PAID MEMBER CONTRIBUTIONS FOR TIER 1 EMPLOYEES IN THE RIVERSIDE POLICE OFFICERS’ ASSOCIATION HIRED BETWEEN FEBRUARY 17, 2012 AND JUNE 12, 2012, EFFECTIVE JULY 7, 2023.
ISSUE:
Adopt a Resolution to amend the contract between the California Public Employees’ Retirement System (CalPERS) and the City of Riverside for the implementation of a retirement cost-sharing provision for all Classic, Tier 1 (hired prior to June 13, 2012) Unrepresented Police Management employees in the Police Safety group to pay 6.5% of the employer contribution of pensionable income pursuant to Government Code Section 20516 effective as soon as administratively possible. Adopt a Resolution for paying and reporting the value of Employer Paid Member Contributions (EPMC) for Tier 1 employees in the Riverside Police Officers’ Association hired between February 17, 2012 and June 12, 2012, effective July 7, 2023.
RECOMMENDATIONS:
That the City Council:
Adopt a Resolution to request an amendment to the contract between CalPERS and the City of Riverside for the implementation of a cost-sharing provision of 6.5% for all Tier 1 (hired prior to June 13, 2012) Unrepresented Police Management employees in the Police Safety group to pay 6.5% of the employer contribution of pensionable income pursuant to Government Code Section 20516 effective as soon as administratively possible; and Adopt a Resolution for paying 5% of the normal member contributions as Employer Paid Member Contributions (EPMC) and reporting the same percent (5%) as compensation earnable (excluding Government Code Section 20636(c)(4)) as additional compensation for Tier 1 employees in the Riverside Police Officers’ Association hired between February 17, 2012 and June 12, 2012, effective July 7, 2023.
BACKGROUND:
The 2022-2023 approved Memorandum of Understanding (MOU) for Riverside Police Administrators’ Association (RPAA) employees resulted in agreements to further reform pension provision benefits for Tier 1 Classic employees. As specified in the respective MOU beginning the first pay period following July 1, 2023, Tier 1 RPAA employees would pay an additional portion of the required employer contribution equal to 1% of pensionable income pursuant to the cost-sharing provisions set forth in California Government Code Section 20516, for a total cost-sharing of 6.5%. The cost-sharing provision affects all Tier 1 Police Safety RPAA employees hired before June 13, 2012. Although Unrepresented Police Management (Police Chief and Deputy Chiefs) are not represented under the RPAA MOU, the same cost-sharing provisions apply to these classifications, however because they are Unrepresented, the attached Resolution is required by CalPERS. The effective date of the increase to the cost-sharing provision for Unrepresented Police Management employees will be the date when the CalPERS contract amendment process is completed, which has not yet been determined.
In 2012, the RPOA and the City agreed to adopt a CalPERS Resolution effective February 17, 2012, requiring all new employees hired after the Resolution effective date to pay 9% of the employee contribution to CalPERS. In addition, the City and the Union amended the CalPERS Police contract to create a Tier 2, for all employees hired on or after June 13, 2012. The adoption of these provisions created an overlap in the application of retirement contributions for three employees hired between February 17, 2012, and June 12, 2012. These employees are considered Tier 1 employees and subject to the employer contribution cost-sharing provisions effective January 1, 2018, in addition to the Resolution requiring the 9% employee contribution. In January 2018, the City and the RPOA agreed to off-set payment for the affected employees to ensure that they are able to maintain a combined contribution of 9% toward their retirement. The City has adopted three EPMC Resolutions for these employees as cost-sharing percentages have increased as agreed in the MOU: March 6, 2018 (1.5%), January 11, 2019 (3%), and January 10, 2020 (4.5%).
DISCUSSION:
Unrepresented Police Management Resolution – Cost-Sharing Cost-sharing allows employees to share a portion of the employer costs through a written agreement with an employee group. The employer contribution rate will be reduced by the agreed upon percentage of cost sharing. The process of enacting cost-sharing provision changes under Government Code Section 20516 with CalPERS is initiated by the adoption of a Resolution. The Resolution specifies that the cost-sharing applies to the Unrepresented Police Management members under what CalPERS considers Tier 1 and Tier 2 classic members; these two CalPERS tiers combined represent City of Riverside Tier 1 members only and not City of Riverside Tier 2 members as defined in the Fringe Benefit and Salary Plan. Government Code Section 20516 requires that the City and the impacted employees agree in writing to share the additional costs.
Adoption of a Resolution, pursuant to the cost-sharing provisions set forth in the California Government Code Section 20516 is required by CalPERS for all Unrepresented Police Management employees in Tier 1 to begin paying an additional portion of the employer contribution for a total of 6.5% as soon as administratively possible.
Riverside Police Officers’ Association Resolution – EPMC As per the 2022-2023 RPOA MOU, represented employees in Tier 1 shall pay an additional portion of the required employer contribution equal to one half (0.5%) percent of pensionable income for a total of 5% effective the first pay period following July 1, 2023. Therefore, adoption of the EPMC Resolution would effectuate the off-set to the cost-sharing provision; whereby the employee contribution will be adjusted to 4% and the employer contribution (employee-paid) will increase to 5% for a combined employee contribution of 9% and EPMC will be adjusted to 5% effective July 7, 2023.
STRATEGIC PLAN ALIGNMENT:
Adopting a Resolution to request an amendment to the contract with CalPERS to increase the cost share for Tier 1 Unrepresented Police Management employees contributes to Strategic Priority 5 – High Performing Government and Goal 5.4: Achieve and maintain financial health by addressing gaps between revenues and expenditures and aligning resources with strategic priorities to yield the greatest impact.
This action aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – Requiring employees to pay their share into the CalPERS pension plan will improve public trust that the City is implementing changes to ensure its long-term financial health.
Equity – Cost sharing is a fair and equitable method to distribute the burden of rising pension costs.
Fiscal Responsibility – Increasing the employee contribution creates an immediate cost reduction for the City using a phased approach and requiring employees to pay the full employee share.
Innovation – CalPERS cost-sharing is a creative solution to meet the City’s current and changing needs. This change provides the City with an opportunity to save money by requiring employees to share a portion of the employer costs.
Sustainability & Resiliency – In order for the City to sustain the rising cost of pension obligations an increase to employee contributions for Tier 1 Police management employees (Tier 2 and PEPRA employees have always paid 100% of the employee’s share) are necessary and have already been negotiated.
FISCAL IMPACT:
The fiscal impact resulting from the 1% reduction in the City contribution to retirement and 0.5% EPMC. The estimated total dollar savings for FY 2023/24 is approximately $52,600 which has been included in the FY 2023/24 budget which was brought forward to Council in June 2023 for adoption.
Prepared by: Rene Goldman, Human Resources Director
Certified as to
availability of funds: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer
Approved by: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Resolution to request the California Public Employees’ Retirement System Contract Amendment Resolution of the City Council of the City of Riverside, California, for paying and reporting the value of Employer Paid Member Contributions for Riverside Police Officers’ Association Tier 1 employees hired between February 17, 2012 and June 12, 2012.
CalPERS Resolutions ● Page 2