Resolution No. 79781
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RESOLUTION NO. 7978
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON DECLARING ITS INTENTION TO APPROVE AN
AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE CITY
OF VERNON
WHEREAS, the Public Employees' Retirement Law permits the
participation of public agencies and their employees in the Public
Employees' Retirement System ("PERS") by the execution of a contract,
and sets forth the procedure by which public agencies may elect to
subject themselves and their employees to amendments to said Law; and
WHEREAS, the PERS Board of Administration and the City of
Vernon entered into a contract dated October 23, 1948 (the
"Contract"), effective November 1, 1948, that provides for
participation of the City of Vernon and its employees in the PERS, and
have made amendments to the Contract effective April 1, 1956, October
1, 1960, July 1, 1966, October 1, 1972, May 1, 1974, November 1, 1975,
December 1, 1976, March 1, 1979, July 6, 1986, October 17, 1986,
September 7, 1990, January 19, 1991, September 21, 1991, December 24,
1993, October 30, 1994 and July 18, 1997; and
WHEREAS, one of the steps in the procedures to amend the
Contract is the adoption by the governing body of the public agency of
a resolution giving notice of its intention to approve an amendment to
the Contract, which shall contain a summary of the change proposed in
the Contract; and
WHEREAS, the following is a statement of the proposed change:
To provide Section 21362.2 (30 @ 50 Full formula) for local police
members only.
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon does
hereby give notice of its intention to approve an amendment to the
Contract between the City Council and the Board of Administration of
the Public Employees' Retirement System, a copy of said amendment
being attached hereto, as an "Exhibit" and by this reference made a
part hereof.
SECTION 2: The City Council of the City of Vernon hereby
directs the City Clerk, or his designee, to send a certified copy of
this resolution together with a completed "Certification of Governing
Body's Action" and certified copy of "Certificate of Compliance with
Government Code Section 7507" to:
Barbara Patterson
Employer Representative
Public Agency Contract Services
CalPers Actuarial & Employer Services Division
P.O. Box 942709
Sacramento, CA 94229-2709
SECTION 3: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 5th day of June, 2002.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
2
LEONIS C. MALAURG, Ma r
e
Ca1PERS
California
Public Employees' Retirement System
EXHIBIT
A MEhIDMEN'd"A'O CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Vernon
The Board of Administration, California Public Employees' Retirement System, hereinafter
referred to as Board, and the governing body of the above public agency, hereinafter referred
to as Public Agency, having entered into a contract effective November 1, 1948, and
witnessed October 23, 1948, and as amended effective April 1, 1956, October 1, 1960, July
1, 1966, October 1, 1972, May 1, 1974, November 1, 1975, December 1, 1976, March 1,
1979, July 6, 1986, October 17, 1986, September 7, 1990, January 19, 1991, September 21,
1991, December 24, 1993, October 30, 1994 and July 18, 1997 which provides for
participation of Public Agency. in said System, Board and Public Agency hereby agree as
follows:
A. Paragraphs 1 through 12 are hereby stricken from said contract as executed effective
July 18, 1997, and hereby replaced by the following paragraphs numbered 1 through
13 inclusive:
1. All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided. "Normal retirement age" shall mean age 55 for local
miscellaneous members and age 50 for local safety members.
2. Public Agency shall participate in the Public Employees' Retirement System
from and after November 1, 1948 making its employees as hereinafter
provided, members of said System subject to all provisions of the Public
Employees' Retirement Law except such as apply only on election of a
contracting agency and are not provided for herein and to all amendments to
said Law hereafter enacted except those, which by express provisions thereof,
apply only on the election of a contracting agency.
PLEASE DO NOT SIGN "EXHIBIT ONLY"
3. Employees of Public Agency in the following classes shall become members of
said Retirement System except such in each such class as are excluded by law
or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
C. Employees other than local safety members (herein referred to as local
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said
Retirement Law, the following classes of employees shall not become members
of said Retirement System:
NO ADDITIONAL EXCLUSIONS
5. The percentage of final compensation to be provided for each year of credited
prior and current service as a local miscellaneous member shall be determined
in accordance with Section 21354 of said Retirement Law (2% at age 55 Full).
6. The percentage of final compensation to be provided for each year of credited
prior and current service as a local fire member shall be determined in
accordance with Section 21362 of said Retirement Law (2% at age 50 Full).
7. The percentage of final compensation to be provided for each year of credited
prior and current service as a local police member shall be determined in
accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full).
8. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 21571 (Basic Level of 1959 Survivor Benefits) for local police
members only.
b. Sections 21624, 21626 and 21628 (Post -Retirement Survivor
Allowance).
C. Section 21024 (Military Service Credit as Public Service), Statutes of
1974.
d. Section 20042 (One -Year Final Compensation).
y '
PLEASE DO NOT SIGN "EXHIBIT ONLY"
e. Section 21573 (Third Level of 1959 Survivor Benefits) for local
miscellaneous members and local fire members only.
f. Section 21548 (Pre -Retirement Optional Settlement 2 Death Benefit) for
local miscellaneous members and local fire members only.
9. Public Agency, in accordance with Government Code Section 20790, ceased to
be an "employer" for purposes of Section 20834 effective on November 1, 1975.
Accumulated contributions of Public Agency shall be fixed and determined as
provided in Government Code Section 20334, and accumulated contributions
thereafter shall be held by the Board as provided in Government Code Section
20834.
1 0. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21573 of said Retirement Law.
(Subject to annual change.) In addition, all assets and liabilities of Public
Agency and its employees shall be pooled in a single account, based on
term insurance rates, for survivors of all local miscellaneous members
and local fire members.
b. A reasonable amount, as fixed by the Board, payable in one installment
within 60 days of date of contract to cover the costs of administering said
System as it affects the employees of Public Agency, not including the
costs of special valuations or of the periodic investigation and valuations
required by law.
C. A reasonable amount, as fixed by the Board, payable in one installment
as the occasions arise, to cover the costs of special valuations on
account of employees of Public Agency, and costs of the periodic
investigation and valuations required by law.
12. Contributions required of Public Agency and its employees shall be subject to
adjustment by Board on account of amendments to the Public Employees'
Retirement Law, and on account of the experience under the Retirement
System as determined by the periodic investigation and valuation required by
said Retirement Law.
13. Contributions required of Public Agency and its employees shall be paid by
Public Agency to the Retirement System within fifteen days after the end of the
period to which said contributions refer or as may be prescribed by Board
regulation. If more or less than the correct amount of contributions is paid for
any period, proper adjustment shall be made in connection with subsequent
remittances. Adjustments on account of errors in contributions required of any
employee may be made by direct payments between the employee and the
Board.
B. This amendment shall be �ctive on the
BOARD OF ADMINISTRATION
Sl-
PUBLIC EMPLOYEES' RETIReENT SYSTEM
BY
KENNETH W. MARZION, IEF
ACTUARIAL & EMPLO*IREMENT
SERVICES DIVISION
PUBLIC EMPLOYEES' SYSTEM
6
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AMENDMENT
PERS-CON-702A (Rev. 8\96)
day of
CITY COUNCIL
CITY OF VERNON ®Cv
BY
PRESIDING OFFICER
Cam
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Witness Date 0-
Attest: QO
Clerk v
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SUPPORTING
DOCUMENTS
CITY ADMINISTRATOR/CITY CLERK'S
INTER -OFFICE MEMORANDUM
DATE: June 10, 2002
TO: Joan Francone, Risk Manager/Personnel Assistant
FROM: Nelly Giron
Assistant to the Chief Deputy City Clerk
RE: Resolution No. 7978
Per your request, transmitted herewith is a copy of Resolution No.
7978 declaring its intention to approve an amendment to the contract
between the Board of Administration of the California Public
Employees' Retirement System, approved on June 5, 2002.
FLOW
ORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ZIF,
M
ctuarial and Employer Services Division
y Contract Maintenance Unit
P.O. Box 942709 (�
Sacramento, CA 94229-2709 fig,
(916) 326-3420 FAX (916) 326-3005
SCHEDULE OF AGENCY ACTIONS
FOR PLANNING YOUR AMENDMENT TO CONTRACT
CaiPERS will prepare the documents necessary to amend your contract and provide
them to you within 30 days -of receipt of an amendment to contract request in our
office. Of course, if needed, the contracting agency must have a current
Amendment Cost Analysis before requesting the amendment to contract.
1. -.5'^9%-#kNTER A DATE THAT IS 30 DAYS FROM THE DATE YOU EXPECT Ca1PERS
TO RECEIVE THE CONTRACT AMENDMENT REQUEST FORM YOU .
SUBMIT-TED OR WILL BE SUBMITTING. This is the date you may expect to
receive the documents from CaIPERS that you will need to amend the Contract.
2 _p ckENT.ER THE DATE THE GOVERNING BODY WILL ADOPT THE RESOLUTION
OF- INTENTION DOCUMENT. Allow the necessary time after the date you expect
�' ,� to receive the needed documents from Ca1PERS (#1 above) to include adoption of
tip` c the Resolution of Intention on the Governing Body's meeting agenda. The first
reading of the Ordinance may be field on the same day the Resolution of Intention
is adopted.
3. ENTER THE DATE THE EMPLOYEE ELECTION WILL BE HELD. An employee
election is required only if the employee contribution rate will change. If
required, this date may be as early as the day after the date the Governing Body
adopts the Resolution of Intention (#2 above) and must be prior to the Adoption
of the Ordinance (#4 below).
02-6
2 7 4"� NTER THE DATE THE GOVERNING BODY WILL ADOPT THE ORDINANCE.
This date must be at least 20 days after the date the Governing Body adopts the
Resolution of Intention (#2 above).
5. 4 ENTER THE EFFECTIVE DATE OF THE ORDINANCE. This date is usually 30
days after the date the Governing Body adopts the final ordinance (#4 above)
unless an -Urgency Ordinance is adopted which establishes an earlier Ordinance
effective date.
6. '�/l 0-LENTER THE EFFECTIVE DATE OF THE AMENDMENT TO CONTRACT. If there
is no change in the employee or the employer contribution rates this date may be as
early as the day after the effective date of the Ordinance. (#5 above). If there is a
change in the employee and/or the employer contribution rates, this date must be
the first day of a payroll period and may not be earlier than the �►y after the
ffeptive of a Ordinance (date #5).d Gv 7��`I� 2.
THIS FORM leBEING PROVIDED�Toiq�AN EMPLOYER SE -SERVICE TOOL FOR PROPERLY
PLANNING AND SCHEDULING THE AGENCY ACTIONS TO AMEND THE CONTRACT WITH CaiPERS.
CAREFULLY FOLLOWING THE GUIDELINES IN THIS FORM CAN PREVENT THE NEED TO RESCIND
ACTIONS TAKEN BY THE GOVERNING BODY OF YOUR AGENCY AND REPEATING THE PROCESS
AS WELL AS AVOIDING UNNECESSARY DELAYS IN THE AMENDMENT EFFECTIVE DATE. THE
FORM IS FOR YOUR USE ONLY AND NEED NOT BE RETURNED TO CalPERS. PLEASE CALL THE
CONTRACTS MAINTENANCE UNIT IF YOU HAVE QUESTIONS.
Cities and Counties Schedule of Agency Actions (Eff. 4/1/02)
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro-Tem
WM. "BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
City Council
City of Vernon
Honorable Members:
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
May 28, 2002
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
140
LG`40
V V
Transmitted herewith is the Actuarial Valuation Report prepared for
the City of Vernon dated May 2, 2002, from CalPERS and an Amendment to
the Contract. A copy of this Report is available for review by the
general public.
At this time it is recommended that the City provide additional
retirement benefits (3% @ 50 Full Formula) to the Police Department's
Sworn Personnel. In order to do so we must amend our contract with
CalPERS. The change in the present value of benefits if we proceed
with the amendment is $4,057,512.00. The present value of future
employer and employee contributions is $7,571,009.00.
It is hereby recommended that the Actuarial Valuation Report be
accepted and that approval be granted to proceed with a Notice of
Intent which will enable us to proceed with required necessary action.
Very truly yours,
Bruce V. Malkenhorst
City Administrator/City Clerk
BVM/gm
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
May 22, 2002
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
Mr. Bruce V. Malkenhorst
City Administrator
City Of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Re: CalPERS Contract Amendment;
Police Members Onlv
Dear Bruce:
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
3% at 50 Full Formula for
On June 20, 2001, the City Council passed Resolu ,
declaring its intention to approve an amendment to the contract
between the CalPERS' Board and the City. This amendment was
intended to increase the retirement payout benefits to 3% at 50
for the entire Safety Department, Police and Fire, of the City.
CalPERS required the City to adopt this resolution by June 30,
2001 and adopt an ordinance by June 30, 2002.
Subsequent to that time, the City negotiated with its Police and
Fire Departments about various benefit matters. Said
negotiations only concluded several weeks ago. At that time,
the City_determined that the additional retirement benefits
would only apply to the Police epar enu. The City imme iately m
requested a new actuaria cos report and contract amendment
implementation schedule from CalPERS. (5wo2.n F-QAS011 n a)
CalPERS could not supply the City with the needed data until two
days ago. The City must meet an accelerated time schedule if
the required CalPERS ordinance is to be passed before June 30,
2002. I attach said schedule for your reference.
Mr. Bruce V. Malkenhorst
May 22, 2002
Page 2
In addition, the total required employer and employee
contributions for the 3% at 50 Full Formula Plan for Police
Members Only will equal $7,571,000. The change to the City's
present value of projected benefits will total $4,057,512.
I look forward to discussing this matter with you at your
earliest convenience.
Sincerely,
Eric Fresch
Legal Counsel
EF:j1
Enclosure
cc: Eddie Olivo (w/Encl.)
Joan Francone (w/Encl.)
LIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Division
y Contract Maintenance Unit
P.O. Box 942709
Sacramento, CA 94229-2709
(916) 326-3420 FAX (916) 326-3005
SCHEDULE OF AGENCY ACTIONS
FOR PLANNING YOUR AMENDMENT TO CONTRACT
CalPERS will prepare the documents necessary to amend your contract and provide
them to you within 30 days of receipt of an amendment to contract request in our
office. Of course, if needed, the contracting agency must have a current
Amendment Cost Analysis before requesting the amendment to contract.
1. % -,W- AENTER A DATE THAT IS 30 DAYS FROM THE DATE YOU EXPECT CalPERS
TO RECEIVE THE CONTRACT AMENDMENT REQUEST FORM YOU
I SUBMIT-TED OR WILL BE SUBMITTING. This is the date you may expect to
f receive the documents from CalPERS that you will need to amend the Contract.
2 '0 07,ENTER THE DATE THE GOVERNING BODY WILL ADOPT THE RESOLUTION
OF INTENTION DOCUMENT. Allow the necessary time after the date you expect
to receive the needed documents from CalPERS (#1 above) to include adoption of
S the Resolution of Intention on the Governing Body's meeting agenda. The first
reading of the Ordinance may be held on the same day the Resolution of Intention
is adopted.
3. 'VI-9
ENTER THE DATE THE EMPLOYEE ELECTION WILL BE HELD. An employee
election is required only if the employee contribution rate will change. If
required, this date may be as early as the day after the date the Governing Body
adopts the Resolution of Intention (#2 above) and must be prior to the Adoption
of the Ordinance (#4 below).
ENTER THE DATE THE GOVERNING BODY WILL ADOPT THE ORDINANCE.
This date must be at least 20 days after the date the Governing Body adopts the
Resolution of Intention (#2 above).
5.6 _074-0TENTER THE EFFECTIVE DATE OF THE ORDINANCE. This date is usually 30
days after the date the Governing Body adopts the final ordinance (#4 above)
unless an Urgency Ordinance is adopted which establishes an earlier Ordinance
effective date.
6. -/% ,O O-LENTER THE EFFECTIVE DATE OF THE AMENDMENT TO CONTRACT. If there
is no change in the employee or the employer contribution rates this date may be as
early as the day after the effective date of the Ordinance. (#5 above). If there is a
change in the employee and/or the employer contribution rates, this date must be
the first day of a payroll period and may not be earlier than the day after the
ffegtiv' a of " Ordinance (date #5). 7W-e
THIS FORM I BEING PROVIDED TO O 410A'�N 'I PLOYER SEL -SERVICE TOOL FOR PROPERLY
PLANNING AND SCHEDULING THE AGENCY ACTIONS TO AMEND THE CONTRACT WITH CalPERS.
CAREFULLY FOLLOWING THE GUIDELINES IN THIS FORM CAN PREVENT THE NEED TO RESCIND
ACTIONS TAKEN BY THE GOVERNING BODY OF YOUR AGENCY AND REPEATING THE PROCESS
AS WELL AS AVOIDING UNNECESSARY DELAYS IN THE AMENDMENT EFFECTIVE DATE. THE
FORM IS FOR YOUR USE ONLY AND NEED NOT BE RETURNED TO C81PERS. PLEASE CALL THE
CONTRACTS MAINTENANCE UNIT IF YOU HAVE QUESTIONS.
Cities and Counties Schedule of Agency Actions (Eff. 4/1/02)
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro—Tem
WM. `BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
May 22, 2002
43
Mr. Bruce V. Malke
City Administrator
City Of Vernon
4305 Santa Fe Aver
Vernon, California
PD011il j
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
TCRXTXTRTTJ T n." A RTI-1
Re: CalPERS Contract Amendment; 3% at 50 Full Formula for
Police Members Only
Dear Bruce:
On June 20, 2001, the City Council passed Resolu
declaring its intention to approve an amendment to the contract
between the CalPERS' Board and the City. This amendment was
intended to increase the retirement payout benefits to 3% at 50
for the entire Safety Department, Police and Fire, of the City.
CalPERS required the City to adopt this resolution by June 30,
2001 and adopt an ordinance by June 30, 2002.
Subsequent to that time, the City negotiated with its Police and
Fire Departments about various benefit matters. Said
negotiations only concluded several weeks ago. At time,
R��ld�nly
d t-tt additional retirement benefits
apply o the Police epar ment. The City immediately
requested a new actuarla cos report an contract amendment
implementation schedule from CalPERS. 5 � 45®nT� el
CalPERS coul
days ago. T
the required
2002. I att
(not supply the City with the needed data until two
e City must meet an accelerated time schedule if
CalPERS ordinance is to be passed before June 30,
ch said schedule for your reference.
Vlr""-V' dk C -
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro-Tem
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
May 29, 2002
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
Mr. Bruce V. Malkenhorst
City Administrator
City Of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
Re: CalPERS Contract Amendment; 3% at 50 Full Formula for
Police Members Onlv
Dear Bruce:
The attached package was sent by CalPERS to aid the City in
amending its contract with CalPERS to provide the 3% @ 50
benefits to the Police Department. The change in the present
value of benefits due to the amendment is $4,057,512. The
present value of future employer and employee contributions is
$7, 571, 009.
Our intent for this CalPERS package is to recommend to the City
Council that it pass the Resolution of Intention at its June 5,
2002 meeting. This will allow the City to implement the change
in the plan benefits for the Police Department in fiscal year
ended June 30, 2002.
The anticipated amendment schedule is as follows:
June 5, 2002 Adopt Resolution of Intention. Make costs
public
June 27, 2002 Adoption of Urgency Ordinance
Mr. Bruce V.
May 29, 2002
Page 2
Malkenhorst
June 27, 2002 Effective Date of Ordinance
June 28, 2002 Effective Date of CalPERS Amendment to
Contract
In compliance with Government Code Section 7507, please make
public the Contract Amendment Cost Analysis information as
determined by the PERS Actuarial Division. Please also announce
orally that a copy of this information is available for review
by any member of the public or press. A copy of the Contract
Amendment Cost Analysis is attached.
I look forward to discussing this matter with you at your
earliest convenience.
Sincerely,
;c
--�4z
Eric
Fresch
Legal
Counsel
EF:j1
Enclosures: (1) Contract Amendment Cost Analysis
(2) May 23, 2002 letter from PERS
(3) Form CON-12, Certification of Governing
Body's Action
(4) Form CON-12A, Certification of Compliance
with Government Code Section 7507
(5) Form CON-302, Resolution of Intention
(6) Form CON-11A, Sample Ordinance
cc: Eddie Olivo (w/o Encls.)
s
� � �
� a �
Y� s
M.
H
Actuarial & Employer Services Division
P.O. Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
CaIPERS FAX (916) 326-3005
May 2, 2002
Employer Number: 209
Employer Name: CITY OF VERNON
Dear Requestor:
A contract amendment(s) cost analysis for the valuation(s) requested and related information is
enclosed.
As your contract reads, the agency is required to pay a reasonable amount to cover the costs of
special valuations. Each agency may receive one actuarial valuation per fiscal year at no cost for
each plan group. Each additional actuarial valuation is $200. If applicable, you will receive an
invoice from our Fiscal Services Division. Labor organizations are required to pay $200 for each
actuarial valuation they request.
The information is based on the most recent annual valuation and is good until the next annual
valuation report is sent to your agency. If your agency does not take action to amend its contract
and we have mailed the next annual valuation report to your agency, you must contact our office
for an updated cost analysis.
Any change in the employer contribution rate will become effective as of the effective date of the
contract amendment. This change is displayed in the "Change to Total Employer Rate" on page
4. If the contract amendment effective date is on or before June 30, 2002, the change in the
employer contribution rate under the applicable alternative should be added to the employer's
current rate. Any change to employee contribution rates are also made upon the effective date of
the amendment.
To initiate an amendment to the contract, the enclosed Contract Amendment Request form must
be completed and returned to this office. For your convenience, a Schedule of Agency Actions
for Planning Your Amendment to Contract form is also enclosed. If you have questions
regarding the contract amendment process, please call Barbara Patterson at (916) 326-3616. If
you have questions regarding the actuarial valuation, please contact me at (916) 326-341 1.
Kung-pei Hwang, A.S.A., M.A.A.A.
Senior Pension Actuary, Ca1PERS
enc.
Actuarial & Employer Services Division
P.O. Box 942709
- Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
C1IPE 'S FAX (916) 326-3005
CONTRACT AMENDMENT REQUEST
To initiate an amendment to contract, complete and return this form to the address above. The
necessary documents will be prepared and mailed to you within 30 days of the date this request is
received in our office.
Employer Name: CITY OF VERNON
Employer Number: 209
Member Group or Plan: SAFETY PLAN
Coverage Groups affected by the Amendment: 75001
Description of Benefit Provisions and Section(s): Section 21362.2, 3% @ 50 Full Formula for Local
Police Members Only
In accordance with Board Resolution # 01-03-131), the amendment cost analysis provided three
alternatives. If a resolution of intention is filed with Ca1PERS on or before June 30, 2002, you must
choose one of the following alternatives. If a resolution of intention is filed with Ca1PERS after June 30,
2002 only Alternative 1 is valid. Please initial the alternative selected.
Alternative 1 Alternative 2 Alternative 3
Ca1PERS Valuation ID#: 92911 92912 92913
Please Initial Selection
Please initiate the amendment to this employer's contract with Ca1PERS:
Name and Title: (Please Print):
Signature:
Mailing Address:
Street Address:
City/State/Zip:
Telephone Number:
E-mail Address:
Fax Number:
Date:
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Actuarial and Employer Services Division
Contract Maintenance Unit
P.O. Box 942709
Sacramento, CA 94229-2709
(916) 326-3420 FAX (916) 326-3005
SCHEDULE OF AGENCY ACTIONS
FOR PLANNING YOUR AMENDMENT TO CONTRACT
CaIPERS will prepare the documents necessary to amend your contract and provide
them to you within 30 days of receipt of an amendment to contract request in our
office. Of course, if needed, the contracting agency must have a current
Amendment Cost Analysis before requesting the amendment to contract.
1. ENTER A DATE THAT IS 30 DAYS FROM THE DATE YOU EXPECT CaIPERS
TO RECEIVE THE CONTRACT AMENDMENT REQUEST FORM YOU
SUBMIT-TED OR WILL BE SUBMITTING. This is the date you may expect to
receive the documents from CalPERS that you will need to amend the Contract.
2. ENTER THE DATE THE GOVERNING BODY WILL ADOPT THE RESOLUTION
OF INTENTION DOCUMENT. Allow the necessary time after the date you expect
to receive the needed documents from CalPERS (#1 above) to include adoption of
the Resolution of Intention on the Governing Body's meeting agenda. The first
reading of the Ordinance may be held on the same day the Resolution of Intention
is adopted.
3. ENTER THE DATE THE EMPLOYEE ELECTION WILL BE HELD. An employee
election is required only if the employee contribution rate will change. If
required, this date may be as early as the day after the date the Governing Body
adopts the Resolution of Intention (#2 above) and must be prior to the Adoption
of the Ordinance (#4 below).
4. ENTER THE DATE THE GOVERNING BODY WILL ADOPT THE ORDINANCE.
This date must be at least 20 days after the date the Governing Body adopts the
Resolution of Intention (#2 above).
5. ENTER THE EFFECTIVE DATE OF THE ORDINANCE. This date is usually 30
days after the date the Governing Body adopts the final ordinance (#4 above)
unless an Urgency Ordinance is adopted which establishes an earlier Ordinance
effective date.
6. ENTER THE EFFECTIVE DATE OF THE AMENDMENT TO CONTRACT. If there
is no change in the employee or the employer contribution rates this date may be as
early as the day after the effective date of the Ordinance. (#5 above). If there is a
change in the employee and/or the employer contribution rates, this date must be
the first day of a payroll period and may not be earlier than the day after the
effective date of the Ordinance (date #5).
THIS FORM IS BEING PROVIDED TO YOU AS AN EMPLOYER SELF-SERVICE TOOL FOR PROPERLY
PLANNING AND SCHEDULING THE AGENCY ACTIONS TO AMEND THE CONTRACT WITH CaIPERS.
CAREFULLY FOLLOWING THE GUIDELINES IN THIS FORM CAN PREVENT THE NEED TO RESCIND
ACTIONS TAKEN BY THE GOVERNING BODY OF YOUR AGENCY AND REPEATING THE PROCESS
AS WELL AS AVOIDING UNNECESSARY DELAYS IN THE AMENDMENT EFFECTIVE DATE. THE
FORM IS FOR YOUR USE ONLY AND NEED NOT BE RETURNED TO CaIPERS. PLEASE CALL THE
CONTRACTS MAINTENANCE UNIT IF YOU HAVE QUESTIONS.
Cities and Counties Schedule of Agency Actions (Eff. 4/1/02)
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
SAFETY PLAN FOR CITY OF VERNON
EMPLOYER NUMBER 209
Benefit Description: Section 21362.2, 3 % @ 50 Full Formula for Police Members Only
New CalPERS' Board Resolution Concerning Value of Assets
On June 20, 2001, the Ca1PERS' Board adopted a new resolution concerning the value of assets to be
used in determining the employer contribution rate due to benefit increases for amendments to public
agency contracts. This new resolution applies to all contract amendments based upon the June 30, 2000
annual actuarial valuation and for which a Resolution of Intention to amend is filed with CalPERS by
June 30, 2002.
This new resolution provides an increase in the actuarial value of assets in the amount of two times the
increase in the Present Value of Benefits. Under the new resolution, the employer has the option of
taking no increase in the actuarial value of assets and allowing the regular asset smoothing method to
operate as it normally would. In addition, the employer may limit the actuarial value of assets used for
rate setting purposes to 100% of market value if normal application of the resolution would otherwise
exceed this limit. Under no circumstances will an actuarial value of assets in excess of 110% of market
value be utilized. Further, the new resolution will apply to agencies whether or not they utilized the 95%
asset value offered in the previous resolution.
The available rate choices are offered under three different Alternatives:
• Alternative 1— No increase in Actuarial Value of Assets
• Alternative 2 — Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment, limited to 100% of Market Value of Assets
• Alternative 3 — Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment, limited to 110% of Market Value of Assets
The employer should carefully consider its choices in choosing its new rate under the options made
available by the new resolution. The recent stock market volatility and the choices created under this
new board resolution can complicate your plan's future financial position. For many plans at CalPERS,
the financial soundness of the plan will not be jeopardized regardless of the choice made by the employer.
However, it is possible that, for some plans, some choices under the resolution would represent poor
financial decisions. You are strongly encouraged to have in-depth discussions with your CalPERS
actuary about the financial consequences of any amendment.
Present Value of Projected Benefits
The table below shows the change in the total present value of benefits for the proposed plan amendment.
The present value of benefits represents the total dollars needed today to fund all future benefits for
current members of the plan, i.e. without regard to future employees. The difference between this amount
and current plan assets must be paid by future employee and employer contributions. As such, the change
in the present value of benefits due to the plan amendment represents the "cost" of the plan amendment.
However, for plans with excess assets some or all of this "cost" may already be covered by current excess
assets.
In this analysis, the increase in the present value of benefits due to the amendment is $4,057,512. Two
times this increase is $8,115,024, or 6.7% of market value of assets. Therefore, under alternative 2, the
actuarial value of assets will be increased to 100.0% of the market value of assets. Under alternative 3,
the actuarial value of assets will be increased to 102.5% of the market value of assets.
May 2, 2002 Page 1 of 6
5:03 PM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
SAFETY PLAN FOR CITY OF VERNON
EMPLOYER NUMBER 209
Benefit Description: Section 21362.2, 3% @ 50 Full Formula for Police Members Only
As of June 30, 2000
Current Plan
Post -Amendment
Alternative 1
Post -Amendment
Alternative 2
Post -Amendment
Alternative 3
Total Assets at Market Value
$ 120,449,582
$ 120,449,582
$ 120,449,582
$ 120,449,582
(MVA)
Actuarial Value of Assets (AVA)
115,328,796
115,328,796
120,449,582
123,443,820
Increase in AVA
0
5,120,786
8,115,024
AVA / MVA
95.7%
95.7%
100.0%
102.5%
Present Value of Projected
$ 118,842,293
$ 122,899,805
$ 122,899,805
$ 122,899,805
Benefits (PVB)
Actuarial Value of Assets (AVA)
115,328,796
115,328,796
120,449,582
123,443.820
Present Value of Future Employer
and Employee Contributions
$ 3,513,497
$ 7,571,009
$ 2,450,223
$ (544,015)
(PVB — AVA)
Change to PVB
4,057,512
4,057,512
4,057,512
Accrued Liability
It is not required, nor necessarily desirable, to have accumulated assets sufficient to cover the total present
value of benefits until every member has left employment. Instead, the actuarial funding process
calculates a regular contribution schedule of employee contributions and employer contributions (called
normal costs) which are designed to accumulate with interest to equal the total present value of benefits
by the time every member has left employment. As of each June 30, the actuary calculates the
"desirable" level of plan assets as of that point in time by subtracting the present value of scheduled
future employee contributions and future employer normal costs from the total present value of benefits.
The resulting "desirable" level of assets is called the accrued liability.
A plan with assets exactly equal to the plan's accrued liability is simply "on schedule" in funding that
plan, and only future employee contributions and future employer normal costs are needed. A plan with
assets below the accrued liability is "behind schedule", or is said to have an unfunded liability, and must
temporarily increase contributions to get back on schedule. A plan with assets in excess of the plan's
accrued liability is "ahead of schedule", or is said to have excess assets, and can temporarily reduce
future contributions. A plan with assets in excess of the total present value of benefits is called super -
funded, and neither future employer nor employee contributions are required. Of course, events such as
plan amendments and investment or demographic gains or losses can change a plan's condition from year
to
year. For example, a plan amendment could cause a plan to move all the way from being super -funded to
being in an unfunded position.
The changes in your plan's accrued liability, unfunded accrued liability, and the funded ratio as of June
30, 2000 due to the plan amendment are shown in the table below.
May 2, 2002 Page 2 of 6
5:03 PM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
SAFETY PLAN FOR CITY OF VERNON
EMPLOYER NUMBER 209
Benefit Description: Section 21362.2, 3% @ 50 Full Formula for Police Members Only
As of June 30, 2000
Current Plan
Post -Amendment
Alternative 1
Post -Amendment
Alternative 2
Post -Amendment
Alternative 3
Entry Age Normal Accrued
$ 95,822,557
$ 98,803,900
$ 98,803,900
$ 98,803,900
Liability (AL)
Actuarial Value of Assets (AVA)
115,328,796
115,328,796
120,449,582
123,443,820
Unfunded Liability/(Excess
$ (19,506,239)
$ (16,524,896)
$ (21,645,682)
$ (24,639,920)
Assets) (UAL = AL - AVA)
Funded Ratio (AVA / AL)
120.4%
116.7%
121.9%
124.9%
Change to AL
2,981,343
2,981,343
2,981,343
Change to UAL
2,981,343
(2,139,443)
(5,133,681)
Total Employer Contribution Rate
While the tables above give the changes in the "cost" and funded status of the plan due to the amendment,
there remains the question of what will happen to the employer contribution rate because of the change in
plan provisions.
CalPERS policy is to implement rate changes due to plan amendments immediately on the effective date
of the change in plan benefits. In general, the policy also provides that the change in unfunded liability
due to the plan amendment will be separately amortized over a period of 20 years from the effective date
of the amendment and all other components of the plan's unfunded liability/excess assets will continue to
be amortized separately.
However, your actuary may choose to apply different rules to plans with a current employer contribution
rate of zero. The pre -amendment excess assets in these plans were sufficient to cover the employer's
normal cost for one or more years into the future. A plan amendment will use up some or all of the pre -
amendment excess assets. In order to maintain our goal of providing rates that are relatively stable, while
taking into account known or expected future events, your actuary may decide to spread any remaining
excess assets over a single number of years. This is known as a "fresh start" and will generally be for a
period not less than 10 years. If the amendment uses up all excess assets and creates an unfunded liability
(i.e. from being ahead of schedule to behind schedule), the total post -amendment unfunded liability may
be amortized over 20 years.
In no case may the annual contribution with regard to a positive unfunded liability be less than the amount
which would be required to amortize that unfunded liability, as a level percent of pay, over 30 years.
One aspect of the Board's June 20, 2001 Resolution is that, generally, if an agency elects an alternative
which increases the actuarial value of assets (alternative 2 or 3), the result will be a lower short-term
contribution and a higher longer -term contribution. To illustrate this we have estimated what the impact
might be when the June 30, 2001 valuation is prepared. Please be aware this estimate assumes there are
no changes to actuarial assumptions or methods, there are no actuarial gains or losses, and there are no
plan changes such as work force changes and employer paid member contributions converted to pay.
However, we have taken into account Ca1PERS' June 30, 2001 year-end market value rate of return,
-7.2%. The actual employer rate from July 1, 2003 to June 30, 2004 will be by the June 30, 2001
annual valuation and will likely deviate from this estimate.
May 2, 2002 Page 3 of 6
5:03 PM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
SAFETY PLAN FOR CITY OF VERNON
EMPLOYER NUMBER 209
Benefit Description: Section 21362.2, 3% @ 50 Full Formula for Police Members Only
The table below shows the change in your plan's employer contribution rate due to the plan amendment.
As of June 30, 2000
Current Plan
Post -Amendment
Alternative 1
Post -Amendment
Alternative 2
Post -Amendment
Alternative 3
2002-2003
Payment for Normal Cost
12.823%
14.774%
14.774%
14.774%
Payment on Amortization Bases
-12.823%
-13.223%
-14.774%
-14.774%
Payment for 1959 Survivor
2.091 %
2.091 %
2.091 %
2.091 %
Benefit Program
Total Employer Rate
2.091 %
3.642%
2.091 %
2.091 %
Change to Normal Cost
1.951 %
1.951 %
1.951 %
Change to Total Employer Rate
1.551%
0.000%
0.000%
Current Amortization Base 1
30-year
Amendment Amortization Base
- Fresh Start 2
20-year
28-year
38-year
- Multiple Base 3
N/A
N/A
N/A
2003-2004
Estimated Employer Rate °
0.0%
6.7%
9.2%
13.1%
(recognizing —7.2 % investment
return for 2000-2001)
Projection Amortization Base
19-year
Multiple Base
Multiple Base
Multiple Base
1— Details of the current amortization base are shown on page 7 of June 30, 2000 annual valuation report. If you have adopted any other
subsequent amendments, the current amortization base is the schedule after these adopted amendments.
2 - If a fixed number of years is shown, it means that the current unfunded actuarial liability is projected and amortized over this fixed number of
years. This amortization replaces the amortization schedule shown in your June 30, 2000 annual valuation and any other subsequent
amendments you have adopted.
3 - If 20-year is shown, it means that changes in liability due to plan amendments and changes in actuarial value of assets are amortized
separately over a 20-year period. This amortization schedule is in addition to the amortization schedule shown in the June 30, 2000 annual
valuation and any other subsequent amendments you have adopted.
4 - Excludes 1959 Survivor Benefit Program rate.
In the above table, the information shown in the 2002-2003 box represents the actual initial contribution
rate that will apply during fiscal 2002-2003 if you adopt the amendment by June 30, 2002. However,
these figures do not incorporate the —7.2% investment return in 2000-2001. The estimated employer rates
shown in the 2003-2004 box do take the negative return into consideration and will give you a better
estimate of what to expect in 2003-2004.
Note that the change in normal cost in the table above may be much more indicative of the long term
change in the employer contribution rate due to the plan amendment. The plan's unfunded
liability/excess asset cost shown in the table above is a temporary adjustment to the employer contribution
to "get the plan back on schedule". This temporary adjustment to the employer rate varies in duration
from plan to plan. For example, a plan with initial excess assets being amortized over a short period of
time will typically experience a large rate increase when excess assets are fully amortized. While a plan
amendment for such a plan may produce little or no increase in the employer contribution rate now, the
change in normal cost due to the plan amendment will become fully reflected in the employer
contribution rate as soon as initial excess assets are fully amortized.
May 2, 2002 Page 4 of 6
5:03 PM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
SAFETY PLAN FOR CITY OF VERNON
EMPLOYER NUMBER 209
Benefit Description: Section 21362.2, 3 % @ 50 Full Formula for Police Members Only
Disclosure
If your agency is requesting cost information for two or more benefit changes, the cost of adopting more
than one of these changes may not be obtained by adding the individual costs. Instead, a separate
valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed
plan amendment applies to only some of the employees in the plan, the rate change due to the plan
amendment still applies to the entire plan, and is still based on the total plan payroll.
Any mandated benefit improvements not included in the June 30, 2000 annual valuation (such as the
change to the 90% cap for safety plans) have not been incorporated into this cost analysis.
Please note that the cost analysis provided in this document may not be relied upon once the CalPERS
actuarial staff have completed the next annual valuation, that is, the annual valuation as of June 30, 2001.
If you have not taken action to amend your contract, and we have already mailed the June 30, 2001
annual valuation report, you must contact our office for an updated cost analysis, based on the new annual
valuation.
Descriptions of the actuarial methodologies, actuarial assumptions, and plan benefit provisions may be
found in the appendices of the June 30, 2000 annual report. Please note that the results shown here are
subject to change if any of the data or plan provisions change from what was used in this study.
Certification
This actuarial valuation for the proposed plan amendment is based on the participant, benefits, and asset
data used in the June 30, 2000 annual valuation, with the benefits modified if necessary to reflect what is
currently provided under your contract with CalPERS, and further modified to reflect the proposed plan
amendment. The valuation has been performed in accordance with standards of practice prescribed by the
Actuarial Standards Board, and the assumptions and methods are internally consistent and reasonable for
this plan, as prescribed by the CalPERS Board of Administration according to provisions set forth in the
California Public Employees' Retirement Law. The valuation has been prepared in accordance with
generally accepted actuarial practice except that, under a CalPERS Board resolution, an increased
actuarial value of assets may be substituted for the actuarial value of assets that would have been
produced by the current and generally accepted actuarial asset smoothing method described in the annual
report. If your agency elects not to increase the actuarial value of assets permitted by the Board
resolution, then no exception exists.
Kung-pei Hwang, A.S.A., M.A.A.A.
Senior Pension Actuary, CalPERS
Fin Process Ids: Annual-92894 Base-92910 Altl-92911 Alt2-92912 Alt3-92913
May 2, 2002 Page 5 of 6
5:03 PM
CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2000
SAFETY PLAN FOR CITY OF VERNON
EMPLOYER NUMBER 209
Benefit Description: Section 21362.2, 3% @ 50 Full Formula for Police Members Only
Summary of Plan Amendments Valued
COVERAGE GROUP 75001
Pre -Amendment
• The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 2% @ 50 benefit factor,
years of service, and final compensation. (Final compensation is reduced by $133.33
per month for members with a modified formula). The benefit factors for retirement
at integral ages are shown below:
Retirement 2% at 50
Age Factor
50 2.000%
51 2.140%
52 2.280%
53 2.420%
54 2.560%
55 and older 2.700%
Post -Amendment
• The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 3% @ 50 benefit factor,
years of service, and final compensation. (Final compensation is reduced by $133.33
per month for members with a modified formula). The benefit factors for retirement
at integral ages are shown below:
Retirement 3% at 50
Age Factor
50 3.000%
51 3.000%
52 3.000%
53 3.000%
54 3.000%
55 and older 3.000%
May 2, 2002 Page 6 of 6
5:03 PM